FOR IMMEDIATE RELEASE
NORWOOD FINANCIAL CORP ANNOUNCES 21.6%EARNINGS INCREASE
April 17, 2008
William W. Davis, Jr., President and Chief Executive Officer of Norwood Financial Corp. (Nasdaq-NWFL) and its subsidiary Wayne Bank today announced increased earnings for the three months ended March 31, 2008.
Net income for the three months ended March 31, 2008 totaled $1,779,000, which represents a $316,000 or 21.6% increase over the $1,463,000 earned for the similar period in 2007. Earnings per share on a fully diluted basis were $.64 per share in the first quarter of 2008, increasing from $.51 per share for the 2007 period. The annualized return on average assets for the current quarter was 1.49% with an annualized return on average equity of 12.68% compared to annualized returns of 1.29% and 11.26%, respectively, for the first quarter of 2007.
Total assets as of March 31, 2008 were $484.0 million with total loans receivable of $329.4 million, deposits of $371.2 million and stockholders’ equity of $56.6 million. Total assets have increased $22.6 million when compared to March 31, 2007.
Loans receivable increased $8.6 million, from a year ago. The growth was centered in commercial lending (including real estate) which increased $8.9 million and home equity lending which reflected growth of $4.1 million. In the first quarter of 2008, the Company sold $13.9 million of fixed rate 30 year residential mortgages for purposes of interest rate risk management. Non-performing loans totaled $302,000 or .09% of total loans as of March 31, 2008 compared to $407,000, or .13% of total loans, as of March 31, 2007. The improvement over the prior year was related to the resolution of a non-performing loan in the third quarter of 2007. The Company had net charge-offs of $19,000 for the three months ended March 31, 2008. Though loan quality indicators remain strong, the Company determined that it was appropriate to increase the provision for loan losses to $75,000 for the three months ended March 31, 2007 from $50,000 for the similar period in 2007.
The allowance for loan losses totaled $4,137,000 and represented 1.26% of total loans as of March 31, 2008 compared to $3,871,000 and 1.21% as of March 31, 2007.
For the three months ended March 31, 2008, net interest income, on a fully taxable equivalent basis (fte) totaled $4,481,000 increasing from $4,220,000 for the similar period in 2007. The increase in net interest income was principally due to a lower cost of interest-bearing liabilities and a higher yield on the investment portfolio. As a result, the net interest margin increased to 3.90% in the current quarter compared to 3.85% in the similar period in the prior year.
Other income for the three months ended March 31, 2008 totaled $1,262,000 compared to $894,000 for the similar period in 2007. The increase was principally due to the gain on the sale of $13.9 million of fixed rate 30 year residential mortgages of $388,000 compared to $7,000 in similar gains in the 2007 period. Other expenses totaled $2,961,000 in the 2008 period compared to $2,861,000 in the similar period in 2007, an increase of $100,000 or 3.5%. The increase is principally due to an increase in staffing and investments in technology.
Mr. Davis commented, “We are pleased with our good start in 2008. Though Wayne Bank never participated in the sub-prime mortgage business, we do recognize the current stress on the economy and its impact on our customers. We continue to invest in technology. In the first quarter, we introduced our Remote Deposit Capture product, - Business Link, - and deployed similar technology throughout our branches. This will improve customer service and our own internal efficiencies.”
Norwood Financial Corp., through its subsidiary Wayne Bank, operates twelve offices in Wayne, Pike and Monroe Counties. The Company’s stock is traded on the Nasdaq Global Market, under the symbol, “NWFL”.
Forward-Looking Statements. The foregoing material may contain forward-looking statements. We caution that such statements may be subject to a number of uncertainties and actual results could differ materially and therefore readers should not place undue reliance on any forward looking statements. Those risks and uncertainties include changes in the absolute and relative levels of interest rates, risks associated with the
effect of opening a new branch, the ability to control costs and expenses, demand for real estate and general economic conditions. Norwood Financial Corp. does not undertake and specifically disclaims any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
Non-GAAP Financial Measures
This release references tax-equivalent interest income and net interest income, which are non-GAAP 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 34%. 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.
Contact: Lewis J. Critelli |
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Executive Vice President, Secretary & |
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Chief Financial Officer |
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NORWOOD FINANCIAL CORP |
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570-253-8512 |
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www.waynebank.com |
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NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets
(dollars in thousands, except share data)
(unaudited)
| March 31, |
| ||||
|
| 2008 |
|
| 2007 |
|
ASSETS |
|
|
|
|
|
|
Cash and due from banks |
| 8,283 |
| $ | 8,604 |
|
Interest bearing deposits with banks |
| 33 |
|
| 141 |
|
Federal funds sold |
| — |
|
| 3,130 |
|
Cash and cash equivalents |
| 8,316 |
|
| 11,875 |
|
|
|
|
|
|
|
|
Securities available for sale |
| 130,633 |
|
| 112,597 |
|
Securities held to maturity, fair value 2008: $726 2007: $974 |
| 706 |
|
| 955 |
|
Loans receivable (net of unearned Income) |
| 329,377 |
|
| 320,744 |
|
Less: Allowance for loan losses |
| 4,137 |
|
| 3,871 |
|
Net loans receivable |
| 325,240 |
|
| 316,873 |
|
Investment in FHLB Stock |
| 2,124 |
|
| 1,923 |
|
Bank premises and equipment, net |
| 5,668 |
|
| 5,935 |
|
Bank owned life insurance |
| 7,841 |
|
| 7,549 |
|
Accrued interest receivable |
| 2,409 |
|
| 2,175 |
|
Other |
| 1,030 |
|
| 1,501 |
|
TOTAL ASSETS | $ | 483,967 |
| $ | 461,383 |
|
|
|
|
|
|
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|
LIABILITIES |
|
|
|
|
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Deposits: |
|
|
|
|
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Non-interest bearing demand | $ | 55,618 |
| $ | 54,046 |
|
Interest-bearing |
| 315,535 |
|
| 305,988 |
|
Total deposits |
| 371,153 |
|
| 360,034 |
|
Short-term borrowings |
| 28,006 |
|
| 19,986 |
|
Long-term debt |
| 23,000 |
|
| 23,000 |
|
Accrued interest payable |
| 2,621 |
|
| 3,402 |
|
Other liabilities |
| 2,613 |
|
| 1,902 |
|
TOTAL LIABILITIES |
| 427,393 |
|
| 408,324 |
|
|
|
|
|
|
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STOCKHOLDERS' EQUITY |
|
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|
|
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Common Stock, $.10 par value, authorized 10,000,000 shares |
|
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|
|
|
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issued: 2,840,872 |
| 284 |
|
| 284 |
|
Surplus |
| 10,119 |
|
| 10,233 |
|
Retained earnings |
| 47,603 |
|
| 43,946 |
|
Treasury stock, at cost: 2008: 100,723 shares, 2007: 53,017 shares |
| (3,152 | ) |
| (1,556 | ) |
Accumulated other comprehensive income |
| 1,720 |
|
| 152 |
|
TOTAL STOCKHOLDERS' EQUITY |
| 56,574 |
|
| 53,059 |
|
|
|
|
|
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TOTAL LIABILITIES AND |
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STOCKHOLDERS' EQUITY | $ | 483,967 |
| $ | 461,383 |
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NORWOOD FINANCIAL CORP.
Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
|
| Three Months Ended |
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|
| March 31, |
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| 2008 |
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| 2007 |
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INTEREST INCOME |
|
|
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|
|
|
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Loans receivable, including fees |
| $ | 5,641 |
|
| $ | 5,840 |
|
Securities |
|
| 1,489 |
|
|
| 1,218 |
|
Other |
|
| 19 |
|
|
| 21 |
|
Total Interest income |
|
| 7,149 |
|
|
| 7,079 |
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
Deposits |
|
| 2,371 |
|
|
| 2,486 |
|
Short-term borrowings |
|
| 187 |
|
|
| 256 |
|
Long-term debt |
|
| 267 |
|
|
| 246 |
|
Total Interest expense |
|
| 2,825 |
|
|
| 2,988 |
|
NET INTEREST INCOME |
|
| 4,324 |
|
|
| 4,091 |
|
PROVISION FOR LOAN LOSSES |
|
| 75 |
|
|
| 50 |
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
|
| 4,249 |
|
|
| 4,041 |
|
|
|
|
|
|
|
|
|
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OTHER INCOME |
|
|
|
|
|
|
|
|
Service charges and fees |
|
| 638 |
|
|
| 606 |
|
Income from fiduciary activities |
|
| 92 |
|
|
| 125 |
|
Net realized gains on sales of securities |
|
| — |
|
|
| — |
|
Gains on sale of loans |
|
| 388 |
|
|
| 7 |
|
Other |
|
| 144 |
|
|
| 156 |
|
Total other income |
|
| 1,262 |
|
|
| 894 |
|
|
|
|
|
|
|
|
|
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OTHER EXPENSES |
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 1,546 |
|
|
| 1,497 |
|
Occupancy, furniture and equipment |
|
| 430 |
|
|
| 415 |
|
Data processing related |
|
| 188 |
|
|
| 174 |
|
Taxes, other than income |
|
| 126 |
|
|
| 118 |
|
Professional fees |
|
| 90 |
|
|
| 89 |
|
Other |
|
| 581 |
|
|
| 568 |
|
Total other expense |
|
| 2,961 |
|
|
| 2,861 |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE TAX |
|
| 2,550 |
|
|
| 2,074 |
|
INCOME TAX EXPENSE |
|
| 771 |
|
|
| 611 |
|
NET INCOME |
| $ | 1,779 |
|
| $ | 1,463 |
|
|
|
|
|
|
|
|
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Basic earnings per share |
| $ | 0.65 |
|
| $ | 0.52 |
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Diluted earnings per share |
| $ | 0.64 |
|
| $ | 0.51 |
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NORWOOD FINANCIAL CORP.
Financial Highlights (Unaudited)
(dollars in thousands, except per share data)
For the Three Months Ended March 31 |
| 2008 |
|
| 2007 |
| ||
|
|
|
|
|
|
|
|
|
Net interest income |
| $ | 4,324 |
|
| $ | 4,091 |
|
Net income |
|
| 1,779 |
|
|
| 1,463 |
|
|
|
|
|
|
|
|
|
|
Net interest spread (fully taxable equivalent) |
|
| 3.24 | % |
|
| 3.16 | % |
Net interest margin (fully taxable equivalent) |
|
| 3.90 | % |
|
| 3.85 | % |
Return on average assets |
|
| 1.49 | % |
|
| 1.29 | % |
Return on average equity |
|
| 12.71 | % |
|
| 11.26 | % |
Basic earnings per share |
| $ | 0.65 |
|
|
| 0.52 |
|
Diluted earnings per share |
|
| 0.64 |
|
|
| 0.51 |
|
|
|
|
|
|
|
|
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As of March 31 |
|
|
|
|
|
|
|
|
|
|
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Total Assets |
| $ | 483,967 |
|
| $ | 461,383 |
|
Total Loans receivable |
|
| 329,377 |
|
|
| 320,744 |
|
Allowance for loan losses |
|
| 4,137 |
|
|
| 3,871 |
|
Total deposits |
|
| 371,153 |
|
|
| 360,034 |
|
Stockholders' equity |
|
| 56,574 |
|
|
| 53,059 |
|
Trust Assets under management |
|
| 99,575 |
|
|
| 99,072 |
|
|
|
|
|
|
|
|
|
|
Book value per share |
| $ | 20.65 |
|
| $ | 18.96 |
|
Equity to total assets |
|
| 11.69 | % |
|
| 11.50 | % |
Allowance to total loans receivable |
|
| 1.26 | % |
|
| 1.21 | % |
Nonperforming loans to total loans |
|
| 0.09 | % |
|
| 0.13 | % |
NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets (unaudited)
(dollars in thousands)
| 31-Mar |
| 31-Dec |
| 30-Sep |
| 30-Jun |
| 31-Mar | |||||
| 2008 |
| 2007 |
| 2007 |
| 2007 |
| 2007 | |||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks | $ | 8,283 |
| $ | 9,014 |
| $ | 8,656 |
| $ | 9,321 |
| $ | 8,604 |
Interest bearing deposits with banks |
| 33 |
|
| 50 |
|
| 218 |
|
| 3,641 |
|
| 141 |
Federal funds sold |
| — |
|
| — |
|
| — |
|
| 5,940 |
|
| 3,130 |
Cash and cash equivalents |
| 8,316 |
|
| 9,064 |
|
| 8,874 |
|
| 18,902 |
|
| 11,875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale |
| 130,633 |
|
| 123,987 |
|
| 118,736 |
|
| 116,299 |
|
| 112,597 |
Securities held to maturity |
| 706 |
|
| 705 |
|
| 705 |
|
| 955 |
|
| 955 |
Loans receivable (net of unearned Income) |
| 329,377 |
|
| 331,296 |
|
| 328,582 |
|
| 321,654 |
|
| 320,744 |
Less: Allowance for loan losses |
| 4,137 |
|
| 4,081 |
|
| 3,979 |
|
| 3,900 |
|
| 3,871 |
Net loans receivable |
| 325,240 |
|
| 327,215 |
|
| 324,603 |
|
| 317,754 |
|
| 316,873 |
Investment in FHLB stock |
| 2,124 |
|
| 2,072 |
|
| 1,989 |
|
| 1,933 |
|
| 1,923 |
Bank premises and equipment, net |
| 5,668 |
|
| 5,742 |
|
| 5,764 |
|
| 5,853 |
|
| 5,935 |
Other assets |
| 11,280 |
|
| 11,825 |
|
| 12,195 |
|
| 12,322 |
|
| 11,225 |
TOTAL ASSETS | $ | 483,967 |
| $ | 480,610 |
| $ | 472,866 |
| $ | 474,018 |
| $ | 461,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing demand | $ | 55,618 |
| $ | 60,061 |
| $ | 60,880 |
| $ | 60,440 |
| $ | 54,046 |
Interest- bearing deposits |
| 315,535 |
|
| 309,939 |
|
| 306,673 |
|
| 313,304 |
|
| 305,988 |
Total deposits |
| 371,153 |
|
| 370,000 |
|
| 367,553 |
|
| 373,744 |
|
| 360,034 |
Other borrowings |
| 51,006 |
|
| 49,686 |
|
| 45,628 |
|
| 42,147 |
|
| 42,986 |
Other liabilities |
| 5,234 |
|
| 5,105 |
|
| 4,965 |
|
| 4,993 |
|
| 5,304 |
TOTAL LIABILITIES |
| 427,393 |
|
| 424,791 |
|
| 418,146 |
|
| 420,884 |
|
| 408,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
| 56,574 |
|
| 55,819 |
|
| 54,720 |
|
| 53,134 |
|
| 53,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY | $ | 483,967 |
| $ | 480,610 |
| $ | 472,866 |
| $ | 474,018 |
| $ | 461,383 |
NORWOOD FINANCIAL CORP.
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
| 31-Mar |
| 31-Dec |
| 30-Sep |
| 30-Jun |
| 31-Mar |
| |||||
| 2008 |
| 2007 |
| 2007 |
| 2007 |
| 2007 |
| |||||
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable, including fees | $ | 5,641 |
| $ | 5,948 |
| $ | 6,054 |
| $ | 5,878 |
| $ | 5,840 |
|
Securities |
| 1,489 |
|
| 1,448 |
|
| 1,370 |
|
| 1,278 |
|
| 1,218 |
|
Other |
| 19 |
|
| 77 |
|
| 33 |
|
| 90 |
|
| 21 |
|
Total Interest income |
| 7,149 |
|
| 7,473 |
|
| 7,457 |
|
| 7,246 |
|
| 7,079 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
| 2,371 |
|
| 2,518 |
|
| 2,489 |
|
| 2,474 |
|
| 2,486 |
|
Borrowings |
| 454 |
|
| 552 |
|
| 476 |
|
| 486 |
|
| 502 |
|
Total Interest expense |
| 2,825 |
|
| 3,070 |
|
| 2,965 |
|
| 2,960 |
|
| 2,988 |
|
NET INTEREST INCOME |
| 4,324 |
|
| 4,403 |
|
| 4,492 |
|
| 4,286 |
|
| 4,091 |
|
PROVISION FOR LOAN LOSSES |
| 75 |
|
| 120 |
|
| 90 |
|
| 55 |
|
| 50 |
|
NET INTEREST INCOME AFTER PROVISION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR LOAN LOSSES |
| 4,249 |
|
| 4,283 |
|
| 4,402 |
|
| 4,231 |
|
| 4,041 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees |
| 638 |
|
| 633 |
|
| 635 |
|
| 635 |
|
| 606 |
|
Income from fiduciary activities |
| 92 |
|
| 88 |
|
| 117 |
|
| 93 |
|
| 125 |
|
Net realized gains on sales of securities |
| — |
|
| 2 |
|
| — |
|
| 15 |
|
| — |
|
Gains on sale of loans |
| 388 |
|
| 7 |
|
| 8 |
|
| 1 |
|
| 7 |
|
Other |
| 144 |
|
| 130 |
|
| 153 |
|
| 113 |
|
| 156 |
|
Total other income |
| 1,262 |
|
| 860 |
|
| 913 |
|
| 857 |
|
| 894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
| 1,546 |
|
| 1,458 |
|
| 1,432 |
|
| 1,438 |
|
| 1,497 |
|
Occupancy, furniture and equipment , net |
| 430 |
|
| 409 |
|
| 400 |
|
| 416 |
|
| 415 |
|
Other |
| 985 |
|
| 979 |
|
| 955 |
|
| 993 |
|
| 949 |
|
Total other expenses |
| 2,961 |
|
| 2,846 |
|
| 2,787 |
|
| 2,847 |
|
| 2,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE TAX |
| 2,550 |
|
| 2,297 |
|
| 2,528 |
|
| 2,241 |
|
| 2,074 |
|
INCOME TAX EXPENSE |
| 771 |
|
| 625 |
|
| 722 |
|
| 671 |
|
| 611 |
|
NET INCOME | $ | 1,779 |
| $ | 1,672 |
| $ | 1,806 |
| $ | 1,570 |
| $ | 1,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share | $ | 0.65 |
| $ | 0.61 |
| $ | 0.65 |
| $ | 0.56 |
| $ | 0.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share | $ | 0.64 |
| $ | 0.60 |
| $ | 0.64 |
| $ | 0.55 |
| $ | 0.51 |
|
|
|
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Book Value per share | $ | 20.65 |
| $ | 20.27 |
| $ | 19.77 |
| $ | 19.11 |
| $ | 18.96 |
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Return on average equity |
| 12.71 | % |
| 12.02 | % | $ | 13.29 | % |
| 11.77 | % |
| 11.26 | % |
Return on average assets |
| 1.49 | % |
| 1.38 | % |
| 1.53 | % |
| 1.35 | % |
| 1.29 | % |
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Net interest spread |
| 3.24 | % |
| 3.24 | % |
| 3.39 | % |
| 3.31 | % |
| 3.16 | % |
Net interest margin |
| 3.90 | % |
| 3.95 | % |
| 4.11 | % |
| 4.00 | % |
| 3.85 | % |
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Allowance for loan losses to total loans |
| 1.26 | % |
| 1.23 | % |
| 1.21 | % |
| 1.21 | % |
| 1.21 | % |
Net charge-offs/(recoveries) to average loans (annualized) |
| 0.02 | % |
| 0.02 | % |
| 0.01 | % |
| 0.03 | % |
| 0.01 |
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Nonperforming loans to total loans |
| 0.09 | % |
| 0.05 | % |
| 0.04 | % |
| 0.15 | % |
| 0.13 | % |
Nonperforming assets to total assets |
| 0.06 | % |
| 0.03 | % |
| 0.03 | % |
| 0.10 | % |
| 0.09 | % |