Norwood Financial Corp Announces Second Quarter Earnings

Friday, 23. July 2021 14:15

HONESDALE, Pa., July 23, 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 record earnings for the three months ended June 30, 2021 of $5,755,000, which was $4,267,000, or 287%, higher than the similar period of last year. The increase reflects the benefits derived from the Company’s acquisition of UpState New York Bancorp, Inc. (“UpState”), which closed on July 7, 2020, and fee income related to Paycheck Protection Program (“PPP”) loans. Earnings per share (fully diluted) were $0.70 in the 2021 period compared to $0.24 in the same period of last year. The annualized return on average assets for the three months ended June 30, 2021 was 1.15%, while the annualized return on average tangible equity was 13.63%. Net income for the six months ended June 30, 2021 totaled $11,296,000, which is $6,729,000 higher than the same six-month period of 2020 due to the benefits derived from the acquisition of UpState and PPP fees earned. Earnings per share (fully diluted) for the six months ended June 30, 2021 were $1.38 compared to $0.73 for the six months ended June 30, 2021. The annualized return on average assets for the six months ended June 30, 2021 was 1.16%. The annualized return on average tangible equity for the six months ended June 30, 2021 was 13.53%.

Total assets as of June 30, 2021 were $2.026 billion, with loans receivable of $1.387 billion, deposits of $1.689 billion and stockholders’ equity of $200.5 million.   Loans receivable increased $398.0 million since June 30, 2020, while total deposits increased $602.7 million. The increases reflect the balances acquired from UpState and the impact from economic stimulus, including loans originated through the PPP. During the six months ended June 30, 2021, the Company originated 755 new PPP loans totaling $56.8 million, and had a total of $77.6 million of PPP loans forgiven.   As of June 30, 2021, the total of all PPP loans outstanding was $74.2 million.

For the three months ended June 30, 2021, net interest income, on a fully-taxable equivalent basis (fte), totaled $16,263,000, an increase of $6,175,000 compared to the same period in 2020. A $424.5 million increase in average loans outstanding contributed to the increased income. Net interest margin (fte) for the three months ended June 30, 2021 was 3.44%, compared to 3.25% in the same period of 2020. The tax-equivalent yield on interest-earning assets decreased 14 basis points to 3.75% during the three months ended June 30, 2021, compared to the same prior year period, while the cost of interest-bearing liabilities decreased 43 basis points to 0.43%. Net interest income (fte) for the six months ended June 30, 2021 totaled $32,244,000, which was $12,253,000 higher than the same period in 2020, due to the higher volume of interest-earning assets. The net interest margin (fte) was 3.51% in the six months ended June 30, 2021, as compared to 3.36% during the six months ended June 30, 2020. The increase in the net interest margin (fte) reflects the growth in average loans outstanding resulting from the acquisition of UpState.

Other income for the three months ended June 30, 2021, totaled $2,187,000, compared to $1,392,000 for the same period in 2020. The increase is due primarily to a $695,000 increase in service charges and fees related to the acquisition of UpState.   For the six months ended June 30, 2021, other income totaled $4,176,000, compared to $3,047,000 in the 2020 period.   Service charges on deposits and fees on loans increased $881,000, net, while earnings and proceeds on bank-owned life insurance policies also increased $148,000.

Other expenses totaled $9,492,000 for the three months ended June 30, 2021, an increase of $1,400,000, compared to the $8,092,000 for the same period of 2020.   For the six months ended June 30, 2021, other expenses totaled $18,944,000, compared to $15,152,000 for the same period in 2020. The increases reflect the costs of operations acquired from UpState, including four new Community Offices.

Mr. Critelli commented, “Our results for the first half 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 look forward to continuing 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 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 interest income and 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 fully taxable-equivalent basis:

  Three months ended
June 30
Six months ended
June 30
(dollars in thousands)  2021  2020  2021  2020 
      
Net Interest Income $16,053 $9,867 $31,829 $19,532 
Taxable equivalent basis adjustment using 21% marginal tax rate  210  221  415  459 
Net interest income on a fully taxable equivalent basis $16,263 $10,088 $32,244 $19,991 
      
      
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)  2021  2020  2021  2020 
      
Average equity $199,777 $143,472 $198,689 $142,217 
      
Average goodwill and other intangibles  (29,762
)
 (11,530
)
 (29,780) (11,541)
Average tangible equity
 $170,015 $131,942 $168,909 $130,676 
      


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
  2021 2020
ASSETS    
Cash and due from banks $34,831$15,387
Interest-bearing deposits with banks 170,342 67,989
Cash and cash equivalents 205,173 83,376
     
Securities available for sale 333,636 196,735
Loans receivable 1,386,654 988,679
Less: Allowance for loan losses 15,340 10,312
Net loans receivable 1,371,314 978,367
Regulatory stock, at cost 4,084 3,677
Bank premises and equipment, net 17,298 14,040
Bank owned life insurance 39,665 39,183
Foreclosed real estate owned 844 965
Accrued interest receivable 6,190 4,383
Goodwill 29,266 11,331
Other intangible assets 461 191
Other assets 17,633 22,293
TOTAL ASSETS $2,025,564$1,354,541
     
LIABILITIES    
Deposits:    
Non-interest bearing demand $435,824$284,754
Interest-bearing 1,253,117 801,484
Total deposits 1,688,941 1,086,238
Short-term borrowings 83,599 55,204
Other borrowings 36,259 50,823
Accrued interest payable 1,462 2,826
Other liabilities 14,804 16,786
TOTAL LIABILITIES 1,825,065 1,211,877
     
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: 8,243,556 shares, 2020: 6,342,568 shares 825 634
Surplus 95,951 49,778
Retained earnings 100,818 87,939
Treasury stock, at cost: 2021: 21,568 shares, 2020: 13,778 shares (656) (469)
Accumulated other comprehensive income 3,561 4,782
TOTAL STOCKHOLDERS' EQUITY 200,499 142,664
     
TOTAL LIABILITIES AND    
STOCKHOLDERS' EQUITY $2,025,564$1,354,541
     
     


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,  
  2021 2020   2021 2020  
INTEREST INCOME            
Loans receivable, including fees$16,102$10,767  $32,248$21,450  
Securities 1,356 1,063   2,468 2,242  
Other 59 19   102 25  
Total Interest income 17,517 11,849   34,818 23,717  
             
INTEREST EXPENSE            
Deposits 1,205 1,630   2,459 3,420  
Short-term borrowings 73 73   142 184  
Other borrowings 186 279   388 581  
Total Interest expense 1,464 1,982   2,989 4,185  
NET INTEREST INCOME 16,053 9,867   31,829 19,532  
PROVISION FOR LOAN LOSSES 1,500 1,300   3,000 2,000  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 14,553 8,567   28,829 17,532  
             
OTHER INCOME            
Service charges and fees 1,532 837   2,782 1,901  
Income from fiduciary activities 181 175   341 328  
Net realized gains on sales of securities                        - -                        21 38  
Gains on sales of loans, net                    109 65                      138 121  
Earnings and proceeds on life insurance policies 194 212   568 420  
Other 171 103   326 239  
Total other income 2,187 1,392   4,176 3,047  
             
OTHER EXPENSES            
Salaries and  employee benefits 5,171 3,289   10,125 7,065  
Occupancy, furniture and equipment 1,186 906   2,406 1,875  
Data processing  and related operations 562 466   1,166 903  
Taxes, other than income 229 214   534 427  
Professional fees 343 225   883 443  
FDIC Insurance assessment                    154 42                      335 42  
Foreclosed real estate 13 (2)   42 14  
Amortization of intangibles 34 21   68 44  
Merger related                        - 1,597   0 1,597  
Other 1,800 1,334   3,385 2,742  
Total other expenses 9,492 8,092   18,944 15,152  
             
INCOME BEFORE TAX 7,248 1,867   14,061 5,427  
INCOME TAX EXPENSE 1,493 379   2,765 860  
NET INCOME $5,755$1,488   $11,296$4,567  
             
Basic earnings per share$0.70$0.24  $1.38$0.73  
             
Diluted earnings per share$0.70$0.24  $1.38$0.73  
             
             


NORWOOD FINANCIAL CORP.     
Financial Highlights (Unaudited)     
(dollars in thousands, except per share data)     
      
For the Three Months Ended June 30 2021 2020 
      
Net interest income $16,053 $9,867 
Net income 5,755 1,488 
      
Net interest spread (fully taxable equivalent) 3.32% 3.03% 
Net interest margin (fully taxable equivalent) 3.44% 3.25% 
Return on average assets 1.15% 0.45% 
Return on average equity 11.59% 4.17% 
Return on average tangible equity 13.63% 4.54% 
Basic earnings per share   $0.70 $0.24 
Diluted earnings per share  $0.70 $0.24 
      
      
For the Six Months Ended June 30 2021 2020 
      
Net interest income $31,829 $19,532 
Net income 11,296 4,567 
      
Net interest spread (fully taxable equivalent) 3.39% 3.12% 
Net interest margin (fully taxable equivalent) 3.51% 3.36% 
Return on average assets 1.16% 0.72% 
Return on average equity 11.49% 6.46% 
Return on average tangible equity 13.53% 7.03% 
Basic earnings per share   $1.38 $0.73 
Diluted earnings per share  $1.38 $0.73 
      
As of June 30 2021 2020 
      
Total assets $2,025,564 $1,354,541 
Total loans receivable 1,386,654 988,679 
Allowance for loan losses 15,340 10,312 
Total deposits 1,688,941 1,086,238 
Stockholders' equity 200,499 142,664 
Trust assets under management 180,602 149,535 
      
Book value per share  $24.47 $22.62 
Tangible book value per share  $20.85 $20.80 
Equity to total assets 9.90% 10.53% 
Allowance to total loans receivable 1.11% 1.04% 
Nonperforming loans to total loans  0.28% 0.30% 
Nonperforming assets to total assets 0.24% 0.29% 
      


NORWOOD FINANCIAL CORP.            
Consolidated Balance Sheets (unaudited)            
(dollars in thousands)            
  June 30 March December 31 September 30 June 30  
  2021 2021 2020 2020 2020  
ASSETS            
Cash and due from banks$34,831$20,364$19,445$23,874$15,387  
Interest-bearing deposits with banks 170,342 190,135 92,248 100,566 67,989  
Cash and cash equivalents 205,173 210,499 111,693 124,440 83,376  
             
Securities available for sale 333,636 275,224 226,586 197,436 196,735  
Loans receivable 1,386,654 1,421,568 1,410,732 1,414,662 988,679  
Less: Allowance for loan losses 15,340 14,509 13,150 11,674 10,312  
Net loans receivable 1,371,314 1,407,059 1,397,582 1,402,988 978,367  
Regulatory stock, at cost 4,084 4,043 3,981 3,876 3,677  
Bank owned life insurance 39,665 39,471 39,608 39,400 39,183  
Bank premises and equipment, net 17,298 17,648 17,814 18,124 14,040  
Foreclosed real estate owned 844 844 965 965 965  
Goodwill and other intangibles 29,727 29,785 29,820 30,778 11,522  
Other assets 23,823 25,263 23,815 24,100 26,676  
TOTAL ASSETS$2,025,564$2,009,836$1,851,864$1,842,107$1,354,541  
             
LIABILITIES            
Deposits:            
Non-interest bearing demand$435,824$415,395$359,559$372,237$284,754  
Interest-bearing deposits 1,253,117 1,269,793 1,175,826 1,143,685 801,484  
Total deposits 1,688,941 1,685,188 1,535,385 1,515,922 1,086,238  
Borrowings 119,858 112,283 105,762 115,732 106,027  
Other liabilities 16,266 17,258 15,932 19,906 19,612  
TOTAL LIABILITIES 1,825,065 1,814,729 1,657,079 1,651,560 1,211,877  
             
STOCKHOLDERS' EQUITY 200,499 195,107 194,785 190,547 142,664  
             
TOTAL LIABILITIES AND            
STOCKHOLDERS' EQUITY$2,025,564$2,009,836$1,851,864$1,842,107$1,354,541  
             
             
             
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 2021 2021 2020 2020 2020  
INTEREST INCOME            
Loans receivable, including fees$16,102$16,146$16,336$16,260$10,767  
Securities 1,356 1,112 1,064 1,031 1,063  
Other 59 43 29 18 19  
Total interest income 17,517 17,301 17,429 17,309 11,849  
             
INTEREST EXPENSE            
Deposits 1,205 1,255 1,514 1,676 1,630  
Borrowings 259 270 301 303 352  
Total interest expense 1,464 1,525 1,815 1,979 1,982  
NET INTEREST INCOME 16,053 15,776 15,614 15,330 9,867  
PROVISION FOR LOAN LOSSES 1,500 1,500 1,600 1,850 1,300  
NET INTEREST INCOME AFTER PROVISION            
FOR LOAN LOSSES 14,553 14,276 14,014 13,480 8,567  
             
OTHER INCOME            
Service charges and fees 1,532 1,247 1,913 1,301 837  
Income from fiduciary activities 181 160 150 205 175  
Net realized gains on sales of securities - 21 - 33 -  
Gains on sales of loans, net 109 29 241 164 65  
Earnings and proceeds on life insurance policies 194 374 208 217 212  
Other 171 158 149 152 103  
Total other income 2,187 1,989 2,661 2,072 1,392  
             
OTHER EXPENSES            
Salaries and  employee benefits 5,171 4,953 5,243 4,812 3,289  
Occupancy, furniture and equipment, net 1,186 1,220 1,165 1,109 906  
Foreclosed real estate 13 30 8 31 (2)  
FDIC insurance assessment 154 181 213 144 42  
Merger related - - 66 386 1,597  
Other 2,968 3,068 3,214 2,898 2,260  
Total other expenses 9,492 9,452 9,909 9,380 8,092  
             
INCOME BEFORE TAX 7,248 6,813 6,766 6,172 1,867  
INCOME TAX EXPENSE 1,493 1,271 1,253 1,173 379  
NET INCOME$5,755$5,542$5,513$4,999$1,488  
             
Basic earnings per share$0.70$0.68$0.67$0.62$0.24  
             
Diluted earnings per share$0.70$0.67$0.67$0.62$0.24  
             
Book Value per share$24.47$23.82$23.72$23.30$22.62  
Tangible Book Value per share 20.85 20.20 20.10 19.55 20.80  
             
Return on average assets (annualized) 1.15% 1.18% 1.18% 1.11% 0.45%  
Return on average equity (annualized) 11.59% 11.39% 11.32% 10.64% 4.17%  
Return on average tangible equity (annualized) 13.63% 13.42% 13.46% 11.75% 4.54%  
             
Net interest spread (fte) 3.32% 3.46% 3.50% 3.55% 3.03%  
Net interest margin (fte) 3.44% 3.59% 3.65% 3.73% 3.25%  
             
Allowance for loan losses to total loans 1.11% 1.02% 0.93% 0.83% 1.04%  
Net charge-offs to average loans (annualized) 0.19% 0.04% 0.04% 0.14% 0.03%  
Nonperforming loans to total loans 0.28% 0.22% 0.24% 0.29% 0.30%  
Nonperforming assets to total assets 0.24% 0.20% 0.24% 0.27% 0.29%  
             
             

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