• Norwood Financial Corp Announces Earnings for the Fourth Quarter and Year

    Source: Nasdaq GlobeNewswire / 28 Jan 2022 07:15:01   America/Chicago

    HONESDALE, Pa., Jan. 28, 2022 (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, 2021 of $6,638,000 compared to $5,513,000 earned in the corresponding period of 2020. The increase in earnings includes a $1,150,000 reduction in the provision for loan losses, and an $882,000 increase in net interest income. For the year ended December 31, 2021, net income totaled $24,915,000, an increase of $9,835,000 from net income of $15,080,000 earned in the prior year. The increase includes the benefits derived from the Company’s acquisition of UpState New York Bancorp, Inc. (“UpState”), which closed on July 7, 2020, and over $4.5 million of earnings recognized from Paycheck Protection Program (“PPP”) loans.

    Earnings per share (fully diluted) were $0.81 and $0.67 for the three-month periods ended December 31, 2021 and 2020, respectively. For the year ended December 31, 2021, earnings per share on a fully diluted basis were $3.04, compared to $2.09 for the year ended December 31, 2020. For the year ended December 31, 2021, the return on average assets was 1.24%, and the return on average equity was 12.35%, compared to 0.97% and 9.06%, respectively, for the year ended December 31, 2020.         

    Total assets were $2.069 billion as of December 31, 2021. Loans receivable totaled $1.355 billion as of December 31, 2021, with total deposits of $1.757 billion and stockholders’ equity of $205.3 million as of December 31, 2021.

    Loans receivable decreased $55.8 million from the year-ended December 31, 2020, due primarily to the $78.8 million decrease in PPP loans resulting from loan forgiveness. For the three months and year ended December 31, 2021, net charge-offs totaled $111,000 and $907,000, respectively, compared to $125,000 and $809,000, respectively, for the corresponding periods in 2020.

    Net interest income, on a fully taxable equivalent basis (fte), totaled $16,671,000 for the three months ended December 31, 2021, an increase of $850,000 compared to the same period in 2020. For the year ended December 31, 2021, net interest income (fte) totaled $66,100,000, an increase of $14,741,000 compared to 2020, due primarily to the higher volume of earning assets, including a $209.1 million increase in average loans outstanding. Loan origination fees related to PPP loans increased $3,072,000 compared to the 2020 total.

    Other income for the three months ended December 31, 2021 totaled $2,021,000 compared to $2,661,000 for the similar period in 2020. Gains on the sale of loans and securities decreased $205,000, while service charges and fees decreased $488,000. All other items of other income increased $53,000, net. Other income for the year ended December 31, 2021 totaled $8,325,000 compared to $7,780,000 in 2020, an increase of $545,000 due primarily to a $578,000 increase in service charges and fees. Gains on the sale of loans and investment securities decreased $329,000 in the aggregate, while all other items of other income increased $296,000, net.

    Other expenses totaled $10,042,000 for the three months ended December 31, 2021, compared to $9,909,000 in the similar period of 2020. For the year ended December 31, 2021, other expenses totaled $38,578,000 compared to $34,440,000 for 2020, an increase of $4,138,000. The increase reflects the costs of operations acquired from UpState, including four new Community Offices.

    Mr. Critelli commented, “In 2021, our earnings increased $9.8 million over our previous record year of 2020. Our Return on Average Assets was 1.24%, and our Return on Average Equity was 12.35%. Earnings per share (fully diluted) also improved to $3.04 per share in 2021 from $2.09 per share in 2020. While a portion of this increase reflects earnings and fees collected on PPP loans, we have continued to grow our core business lines, which bodes well for future success. Our results also reflect a full year accretion to earnings from our acquisition of UpState. During the year, we also made significant progress improving our credit quality metrics, which will benefit future results. Our cash dividend of $0.28 per share declared in the fourth quarter of 2021 represents a 7.7% increase over the same period of last year. We appreciate the opportunity to serve our Wayne Bank customers and our customers at the Bank of the Finger Lakes and Bank of Cooperstown locations. We continue to look for 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 operations and financial condition, the ability to continue to grow our core business, the ability to have success in the future, the ability to improve our credit quality metrics and benefit future results, 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 interest income and net interest income on a fully taxable equivalent basis (fte), which are non-GAAP (Generally Accepted Accounting Principles) financial measures. Fully 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 and net interest income on a fully 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:

     Three months ended
    December 31
    Year ended
    December 31
    (dollars in thousands)2021 2020 2021 2020
            
    Net interest income$16,496 $15,614 $65,313 $50,476
    Tax equivalent basis adjustment using 21% marginal tax rate175 207 787 883
    Net interest income on a fully taxable equivalent basis$16,671 $15,821 $66,100 $51,359

    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
    December 31,
    Year ended
    December 31,
    (dollars in thousands)2021 2020 2021 2020
            
    Average equity$205,053 $193,740 $201,681 $166,427
    Average goodwill and other Intangibles(29,683) (30,747) (29,738) (17,942)
    Average tangible equity$175,370 $162,993 $171,943 $148,485


    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      
      2021 2020      
    ASSETS          
    Cash and due from banks$21,073 $19,445       
    Interest-bearing deposits with banks 185,608  92,248       
    Cash and cash equivalents 206,681  111,693       
               
    Securities available for sale 406,782  226,586       
    Loans receivable 1,354,931  1,410,732       
    Less: Allowance for loan losses 16,442  13,150       
    Net loans receivable 1,338,489  1,397,582       
    Regulatory stock, at cost 3,927  3,981       
    Bank premises and equipment, net 17,289  17,814       
    Bank owned life insurance 40,038  39,608       
    Foreclosed real estate owned 1,742  965       
    Accrued interest receivable 5,889  6,232       
    Goodwill 29,266  29,290       
    Other intangible assets 407  530       
    Other assets 17,994  17,583       
    TOTAL ASSETS$2,068,504 $1,851,864       
               
    LIABILITIES          
    Deposits:          
    Non-interest bearing demand$440,652 $359,559       
    Interest-bearing 1,316,141  1,175,826       
    Total deposits 1,756,793  1,535,385       
    Short-term borrowings 60,822  63,303       
    Other borrowings 29,998  42,459       
    Accrued interest payable 1,203  1,601       
    Other liabilities 14,426  14,331       
    TOTAL LIABILITIES 1,863,242  1,657,079       
               
    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: 8,266,751 shares, 2020: 8,236,331 shares 827  824       
    Surplus 96,443  95,388       
    Retained earnings 110,015  93,796       
    Treasury stock, at cost: 2021: 65,328 shares, 2020: 10,263 shares (1,767) (342)      
    Accumulated other comprehensive (loss) income (256) 5,119       
    TOTAL STOCKHOLDERS' EQUITY 205,262  194,785       
               
    TOTAL LIABILITIES AND          
    STOCKHOLDERS' EQUITY$2,068,504 $1,851,864       
               
               
               
               
    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,
      2021 2020   2021 2020
    INTEREST INCOME          
    Loans receivable, including fees$16,149 $16,336   $65,257 $54,046 
    Securities 1,612  1,064    5,547  4,337 
    Other 92  29    266  72 
    Total Interest income 17,853  17,429    71,070  58,455 
               
    INTEREST EXPENSE          
    Deposits 1,130  1,514    4,757  6,610 
    Short-term borrowings 71  81    284  325 
    Other borrowings 156  220    716  1,044 
    Total Interest expense 1,357  1,815    5,757  7,979 
    NET INTEREST INCOME 16,496  15,614    65,313  50,476 
    PROVISION FOR LOAN LOSSES 450  1,600    4,200  5,450 
    NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES16,046  14,014    61,113  45,026 
               
    OTHER INCOME          
    Service charges and fees 1,425  1,913    5,693  5,115 
    Income from fiduciary activities 198  150    748  682 
    Net realized gains on sales of securities 36  -    92  71 
    Gains on sales of loans, net -  241    177  527 
    Earnings and proceeds on life insurance policies 174  208    941  845 
    Other 188  149    674  540 
    Total other income 2,021  2,661    8,325  7,780 
               
    OTHER EXPENSES          
    Salaries and employee benefits 4,992  5,243    20,608  17,121 
    Occupancy, furniture and equipment 1,254  1,165    4,822  4,148 
    Data processing and related operations 655  808    2,415  2,457 
    Taxes, other than income 358  356    1,122  997 
    Professional fees 510  328    1,582  1,062 
    FDIC Insurance assessment 169  213    681  399 
    Foreclosed real estate 88  8    115  53 
    Amortization of intangibles 27  35    123  114 
    Merger related -  66    -  2,049 
    Other 1,989  1,687    7,110  6,040 
    Total other expenses 10,042  9,909    38,578  34,440 
               
    INCOME BEFORE TAX 8,025  6,766    30,860  18,366 
    INCOME TAX EXPENSE 1,387  1,253    5,945  3,286 
    NET INCOME$6,638 $5,513   $24,915 $15,080 
               
    Basic earnings per share$0.81 $0.67   $3.05 $2.09 
               
    Diluted earnings per share$0.81 $0.67   $3.04 $2.09 
               
               
               
    NORWOOD FINANCIAL CORP.          
    Financial Highlights (Unaudited)          
    (dollars in thousands, except per share data)          
               
    For the Three Months Ended December 31 2021 2020      
               
    Net interest income$16,496 $15,614       
    Net income 6,638  5,513       
               
    Net interest spread (fully taxable equivalent) 3.29% 3.50%      
    Net interest margin (fully taxable equivalent) 3.39% 3.65%      
    Return on average assets 1.26% 1.18%      
    Return on average equity 12.84% 11.32%      
    Return on average tangible equity 15.02% 13.46%      
    Basic earnings per share$0.81 $0.67       
    Diluted earnings per share$0.81 $0.67       
               
               
    For the Twelve Months Ended December 31 2021 2020      
               
    Net interest income$65,313 $50,476       
    Net income 24,915  15,080       
               
    Net interest spread (fully taxable equivalent) 3.39% 3.36%      
    Net interest margin (fully taxable equivalent) 3.50% 3.55%      
    Return on average assets 1.24% 0.97%      
    Return on average equity 12.35% 9.06%      
    Return on average tangible equity 14.49% 10.16%      
    Basic earnings per share$3.05 $2.09       
    Diluted earnings per share$3.04 $2.09       
               
    As of December 31 2021 2020      
               
    Total assets$2,068,504 $1,851,864       
    Total loans receivable 1,354,931  1,410,732       
    Allowance for loan losses 16,442  13,150       
    Total deposits 1,756,793  1,535,385       
    Stockholders' equity 205,262  194,785       
    Trust assets under management 195,958  168,085       
               
    Book value per share$25.24 $23.72       
    Tangible book value per share$21.63 $20.10       
    Equity to total assets 9.92% 10.52%      
    Allowance to total loans receivable 1.21% 0.93%      
    Nonperforming loans to total loans 0.05% 0.24%      
    Nonperforming assets to total assets 0.12% 0.24%      
               
               
               
    NORWOOD FINANCIAL CORP.          
    Consolidated Balance Sheets (unaudited)          
    (dollars in thousands)          
      December 31 September 30June 30 March December 31
      2021 2021 2021 2021 2020
    ASSETS          
    Cash and due from banks$21,073 $28,353 $34,831 $20,364 $19,445 
    Interest-bearing deposits with banks 185,608  191,580  170,342  190,135  92,248 
    Cash and cash equivalents 206,681  219,933  205,173  210,499  111,693 
               
    Securities available for sale 406,782  361,988  333,636  275,224  226,586 
    Loans receivable 1,354,931  1,371,002  1,386,654  1,421,568  1,410,732 
    Less: Allowance for loan losses 16,442  16,103  15,340  14,509  13,150 
    Net loans receivable 1,338,489  1,354,899  1,371,314  1,407,059  1,397,582 
    Regulatory stock, at cost 3,927  3,898  4,084  4,043  3,981 
    Bank owned life insurance 40,038  39,864  39,665  39,471  39,608 
    Bank premises and equipment, net 17,289  17,364  17,298  17,648  17,814 
    Foreclosed real estate owned 1,742  1,876  844  844  965 
    Goodwill and other intangibles 29,673  29,700  29,727  29,785  29,820 
    Other assets 23,883  24,169  23,823  25,263  23,815 
    TOTAL ASSETS$2,068,504 $2,053,691 $2,025,564 $2,009,836 $1,851,864 
               
    LIABILITIES          
    Deposits:          
    Non-interest bearing demand$440,652 $442,534 $435,824 $415,395 $359,559 
    Interest-bearing deposits 1,316,141  1,279,988  1,253,117  1,269,793  1,175,826 
    Total deposits 1,756,793  1,722,522  1,688,941  1,685,188  1,535,385 
    Borrowings 90,820  111,382  119,858  112,283  105,762 
    Other liabilities 15,629  17,179  16,266  17,258  15,932 
    TOTAL LIABILITIES 1,863,242  1,851,083  1,825,065  1,814,729  1,657,079 
               
    STOCKHOLDERS' EQUITY 205,262  202,608  200,499  195,107  194,785 
               
    TOTAL LIABILITIES AND          
    STOCKHOLDERS' EQUITY$2,068,504 $2,053,691 $2,025,564 $2,009,836 $1,851,864 
               
               
               
    NORWOOD FINANCIAL CORP.          
    Consolidated Statements of Income (unaudited)          
    (dollars in thousands, except per share data)          
      December 31 September 30June 30 March 31 December 31
    Three months ended 2021 2021 2021 2021 2020
    INTEREST INCOME          
    Loans receivable, including fees$16,149 $16,859 $16,102 $16,146 $16,336 
    Securities 1,612  1,468  1,356  1,112  1,064 
    Other 92  72  59  43  29 
    Total interest income 17,853  18,399  17,517  17,301  17,429 
               
    INTEREST EXPENSE          
    Deposits 1,130  1,167  1,205  1,255  1,514 
    Borrowings 227  243  259  270  301 
    Total interest expense 1,357  1,410  1,464  1,525  1,815 
    NET INTEREST INCOME 16,496  16,989  16,053  15,776  15,614 
    PROVISION FOR LOAN LOSSES 450  750  1,500  1,500  1,600 
    NET INTEREST INCOME AFTER PROVISION          
    FOR LOAN LOSSES 16,046  16,239  14,553  14,276  14,014 
               
    OTHER INCOME          
    Service charges and fees 1,425  1,485  1,532  1,247  1,913 
    Income from fiduciary activities 198  209  181  160  150 
    Net realized gains on sales of securities 36  35  -  21  - 
    Gains on sales of loans, net -  39  109  29  241 
    Earnings and proceeds on life insurance policies 174  200  194  374  208 
    Other 188  160  171  158  149 
    Total other income 2,021  2,128  2,187  1,989  2,661 
               
    OTHER EXPENSES          
    Salaries and employee benefits 4,992  5,491  5,171  4,953  5,243 
    Occupancy, furniture and equipment, net 1,254  1,163  1,186  1,220  1,165 
    Foreclosed real estate 88  (15) 13  30  8 
    FDIC insurance assessment 169  177  154  181  213 
    Merger related -  -  -  -  66 
    Other 3,539  2,776  2,968  3,068  3,214 
    Total other expenses 10,042  9,592  9,492  9,452  9,909 
               
    INCOME BEFORE TAX 8,025  8,775  7,248  6,813  6,766 
    INCOME TAX EXPENSE 1,387  1,794  1,493  1,271  1,253 
    NET INCOME$6,638 $6,981 $5,755 $5,542 $5,513 
               
    Basic earnings per share$0.81 $0.85 $0.70 $0.68 $0.67 
               
    Diluted earnings per share$0.81 $0.85 $0.70 $0.67 $0.67 
               
    Book Value per share$25.24 $24.90 $24.47 $23.82 $23.72 
    Tangible Book Value per share 21.63  21.27  20.85  20.20  20.10 
               
    Return on average assets (annualized) 1.26% 1.36% 1.15% 1.18% 1.18%
    Return on average equity (annualized) 12.84% 13.50% 11.59% 11.39% 11.32%
    Return on average tangible equity (annualized) 15.02% 15.78% 13.63% 13.42% 13.46%
               
    Net interest spread (fte) 3.29% 3.49% 3.32% 3.46% 3.50%
    Net interest margin (fte) 3.39% 3.61% 3.44% 3.59% 3.65%
               
    Allowance for loan losses to total loans 1.21% 1.17% 1.11% 1.02% 0.93%
    Net charge-offs to average loans (annualized) 0.03% 0.00% 0.19% 0.04% 0.04%
    Nonperforming loans to total loans 0.05% 0.20% 0.28% 0.22% 0.24%
    Nonperforming assets to total assets 0.12% 0.22% 0.24% 0.20% 0.24%

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