FOR IMMEDIATE RELEASE
NORWOOD FINANCIAL CORP ANNOUNCES FIRST QUARTER EARNINGS
April 23, 2009
William W. Davis, Jr., President and Chief Executive Officer of Norwood Financial Corp (NWFL-Nasdaq Global Market) and its subsidiary, Wayne Bank announced earnings of $1,737,000 for the three months ended March 31, 2009 compared to $1,779,000 for the similar period in 2008. Earnings per share on a fully diluted basis, were $.63 in the current period compared to $.64 in the 2008 period. The return on average assets for the three months ended March 31, 2009 was 1.39% with a return on average equity of 11.80%.
Total assets as of March 31, 2009 were $511.4 million with loans receivable of $351.4 million, deposits of $370.4 million and total stockholders’ equity of $60.2 million. Assets have increased $27.5 million or 5.7% from March 31, 2008. Loans receivable reflected an increase of $22.1 million, or 6.7% since March 31, 2008. The growth in loans receivable was centered in both commercial and residential real estate loans. Non-performing assets, which include non-performing loans and foreclosed real estate, totaled $2,460,000 as of March 31, 2009 compared to $2,747,000 at December 31, 2008 and $302,000 at March 31, 2008. The increase from the prior year was related to two land development projects. Net charge-offs for the three months ended March 31, 2009 totaled $45,000 with a provision for loan losses of $225,000 compared to $19,000 in net charge-offs and a $75,000 provision for loan losses for the similar period in 2008. The allowance for loan losses was $4,413,000 at March 31, 2009, compared to $4,137,000 at March 31, 2008.
Net interest income on a fully taxable equivalent basis (fte) was $4,842,000 in the current period, an increase of $361,000 or 8.1% over the similar period in 2008. The resulting net interest margin (fte) for the three months ended March 31, 2009 was 3.96% increasing from 3.90% in the 2008 period. Other income for the three months ended March 31, 2009 totaled $1,281,000 compared to $1,262,000 in the similar period of 2008. The current period includes $133,000 related to gains on the sale of $9.7 million of residential mortgage loans compared to $388,000 in similar gains on the sale of $13.9 million of loans in the 2008 period. The mortgages, principally 30 year fixed rates, were sold for interest rate risk management. During the 2009 quarter, the Company also realized $161,000 in gains on sales of securities compared to no such gains in the 2008 quarter. Effective March 31, 2009, the Company closed its office in Hamlin and recorded a $150,000 gain on the sale of the related deposits to another financial institution. Other expenses for the three months ended March 31, 2009 totaled $3,275,000, an increase of $314,000 from $2,961,000 in the similar period in 2008. The increase is due in part to a $114,000 increase in FDIC insurance assessments.
Mr. Davis commented, “Even though we are operating in a very challenging environment, we believe the Company had a very solid start to 2009. Our core earnings are strong and our capital levels are at the top of our peer group. We are certainly aware that the slow down in the economy, increased unemployment and the soft real estate market will continue to impact our customers, but are optimistic that all the government stimulus programs will eventually turn this economy around.”
Norwood Financial Corp., through its subsidiary Wayne Bank, operates eleven offices in Wayne, Pike and Monroe Counties, Pennsylvania. 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, the ability to control costs and expenses, demand for real estate, general economic conditions and the effectiveness of governmental response thereto. 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
| Executive Vice President, Secretary & |
| Chief Financial Officer |
| NORWOOD FINANCIAL CORP |
| 570-253-8512 |
| www.waynebank.com |
NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets
(dollars in thousands, except share data)
(unaudited)
|
| March 31, |
| ||||
|
| 2009 |
| 2008 |
| ||
ASSETS |
|
|
|
|
|
|
|
Cash and due from banks |
| $ | 5,682 |
| $ | 8,283 |
|
Interest bearing deposits with banks |
|
| 9,329 |
|
| 33 |
|
Federal funds sold |
|
| 3,000 |
|
| — |
|
Cash and cash equivalents |
|
| 18,011 |
|
| 8,316 |
|
|
|
|
|
|
|
|
|
Securities available for sale |
|
| 124,222 |
|
| 130,633 |
|
Securities held to maturity, fair value 2009: $724 2008: $726 |
|
| 707 |
|
| 706 |
|
Loans receivable (net of unearned Income) |
|
| 351,433 |
|
| 329,377 |
|
Less: Allowance for loan losses |
|
| 4,413 |
|
| 4,137 |
|
Net loans receivable |
|
| 347,020 |
|
| 325,240 |
|
Investment in FHLB Stock, at cost |
|
| 3,538 |
|
| 2,124 |
|
Bank premises and equipment,net |
|
| 5,413 |
|
| 5,668 |
|
Bank owned life insurance |
|
| 8,149 |
|
| 7,841 |
|
Foreclosed real estate owned |
|
| 768 |
|
| — |
|
Accrued interest receivable |
|
| 2,314 |
|
| 2,409 |
|
Other assets |
|
| 1,282 |
|
| 1,030 |
|
TOTAL ASSETS |
| $ | 511,424 |
| $ | 483,967 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
Non-interest bearing demand |
| $ | 57,270 |
| $ | 55,618 |
|
Interest-bearing |
|
| 313,146 |
|
| 315,535 |
|
Total deposits |
|
| 370,416 |
|
| 371,153 |
|
Short-term borrowings |
|
| 29,412 |
|
| 28,006 |
|
Other borrowings |
|
| 43,000 |
|
| 23,000 |
|
Accrued interest payable |
|
| 1,944 |
|
| 2,621 |
|
Payable on sale of deposits |
|
| 3,607 |
|
| — |
|
Other liabilities |
|
| 2,895 |
|
| 2,613 |
|
TOTAL LIABILITIES |
|
| 451,274 |
|
| 427,393 |
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Common Stock, $.10 par value, authorized 10,000,000 shares |
|
|
|
|
|
|
|
issued: 2,840,872 |
|
| 284 |
|
| 284 |
|
Surplus |
|
| 9,993 |
|
| 10,119 |
|
Retained earnings |
|
| 51,394 |
|
| 47,603 |
|
Treasury stock, at cost: 2009: 106,041 shares, 2008: 101,328 shares |
|
| (3,286 | ) |
| (3,152 | ) |
Accumulated other comprehensive income |
|
| 1,765 |
|
| 1,720 |
|
TOTAL STOCKHOLDERS' EQUITY |
|
| 60,150 |
|
| 56,574 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND |
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
| $ | 511,424 |
| $ | 483,967 |
|
NORWOOD FINANCIAL CORP.
Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
|
| Three Months Ended March 31, |
| ||||
|
| 2009 |
| 2008 |
| ||
INTEREST INCOME |
|
|
|
|
|
|
|
Loans receivable, including fees |
| $ | 5,287 |
| $ | 5,641 |
|
Securities |
|
| 1,397 |
|
| 1,489 |
|
Other |
|
| 6 |
|
| 19 |
|
Total Interest income |
|
| 6,690 |
|
| 7,149 |
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
Deposits |
|
| 1,501 |
|
| 2,371 |
|
Short-term borrowings |
|
| 96 |
|
| 187 |
|
Other borrowings |
|
| 412 |
|
| 267 |
|
Total Interest expense |
|
| 2,009 |
|
| 2,825 |
|
NET INTEREST INCOME |
|
| 4,681 |
|
| 4,324 |
|
PROVISION FOR LOAN LOSSES |
|
| 225 |
|
| 75 |
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
|
| 4,456 |
|
| 4,249 |
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
|
|
|
|
|
|
Service charges and fees |
|
| 598 |
|
| 638 |
|
Income from fiduciary activities |
|
| 82 |
|
| 92 |
|
Net realized gains on sales of securities |
|
| 161 |
|
| — |
|
Gains on sale of loans and servicing rights |
|
| 133 |
|
| 388 |
|
Gain on sale of deposits |
|
| 150 |
|
| — |
|
Other |
|
| 157 |
|
| 144 |
|
Total other income |
|
| 1,281 |
|
| 1,262 |
|
|
|
|
|
|
|
|
|
OTHER EXPENSES |
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 1,614 |
|
| 1,546 |
|
Occupancy, furniture and equipment |
|
| 485 |
|
| 430 |
|
Data processing related |
|
| 196 |
|
| 188 |
|
Taxes, other than income |
|
| 136 |
|
| 126 |
|
Professional Fees |
|
| 98 |
|
| 90 |
|
FDIC Insurance assessment |
|
| 126 |
|
| 12 |
|
Foreclosed real estate owned |
|
| 12 |
|
| — |
|
Other |
|
| 608 |
|
| 569 |
|
Total other expenses |
|
| 3,275 |
|
| 2,961 |
|
|
|
|
|
|
|
|
|
INCOME BEFORE TAX |
|
| 2,462 |
|
| 2,550 |
|
INCOME TAX EXPENSE |
|
| 725 |
|
| 771 |
|
NET INCOME |
| $ | 1,737 |
| $ | 1,779 |
|
|
|
|
|
|
|
|
|
Basic earnings per share |
| $ | 0.63 |
| $ | 0.65 |
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
| $ | 0.63 |
| $ | 0.64 |
|
NORWOOD FINANCIAL CORP.
Financial Highlights (Unaudited)
(dollars in thousands, except per share data)
For the Three Months March 31 | 2009 |
| 2008 |
| ||
|
|
|
|
|
|
|
Net interest income | $ | 4,681 |
| $ | 4,324 |
|
Net income |
| 1,737 |
|
| 1,779 |
|
|
|
|
|
|
|
|
Net interest spread (fully taxable equivalent) |
| 3.54 | % |
| 3.24 | % |
Net interest margin (fully taxable equivalent) |
| 3.96 | % |
| 3.90 | % |
Return on average assets |
| 1.39 | % |
| 1.49 | % |
Return on average equity |
| 11.80 | % |
| 12.68 | % |
Basic earnings per share | $ | 0.63 |
| $ | 0.65 |
|
Diluted earnings per share |
| 0.63 |
|
| 0.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets | $ | 511,424 |
| $ | 483,967 |
|
Total Loans receivable |
| 351,433 |
|
| 329,377 |
|
Allowance for loan losses |
| 4,413 |
|
| 4,137 |
|
Total deposits |
| 370,416 |
|
| 371,153 |
|
Stockholders' equity |
| 60,150 |
|
| 56,574 |
|
Trust Assets under management |
| 85,146 |
|
| 99,575 |
|
|
|
|
|
|
|
|
Book value per share | $ | 21.99 |
| $ | 20.65 |
|
Equity to total assets |
| 11.76 | % |
| 11.69 | % |
Allowance to total loans receivable |
| 1.26 | % |
| 1.26 | % |
Nonperforming loans to total loans |
| 0.48 | % |
| 0.09 | % |
Nonperforming assets to total assets |
| 0.48 | % |
| 0.06 | % |
NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets (unaudited)
(dollars in thousands)
|
| 31-Mar |
| 31-Dec |
| 30-Sep |
| 30-Jun |
| 31-Mar |
|
|
| 2009 |
| 2008 |
| 2008 |
| 2008 |
| 2008 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
| $5,682 |
| $6,463 |
| $9,277 |
| $9,664 |
| $8,283 |
|
Interest bearing deposits with banks |
| 9,329 |
| 17 |
| 74 |
| 51 |
| 33 |
|
Federal funds sold |
| 3,000 |
| — |
| 450 |
| — |
| — |
|
Cash and cash equivalents |
| 18,011 |
| 6,480 |
| 9,801 |
| 9,715 |
| 8,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale |
| 124,222 |
| 130,120 |
| 128,287 |
| 130,811 |
| 130,633 |
|
Securities held to maturity |
| 707 |
| 707 |
| 706 |
| 706 |
| 706 |
|
Loans receivable (net of unearned Income) |
| 351,433 |
| 349,404 |
| 341,217 |
| 332,754 |
| 329,377 |
|
Less: Allowance for loan losses |
| 4,413 |
| 4,233 |
| 4,331 |
| 4,237 |
| 4,137 |
|
Net loans receivable |
| 347,020 |
| 345,171 |
| 336,886 |
| 328,517 |
| 325,240 |
|
Investment in FHLB stock |
| 3,538 |
| 3,538 |
| 3,545 |
| 2,657 |
| 2,124 |
|
Bank premises and equipment, net |
| 5,413 |
| 5,490 |
| 5,601 |
| 5,702 |
| 5,668 |
|
Foreclosed real estate owned |
| 768 |
| 660 |
| 660 |
| 1,200 |
| — |
|
Other assets |
| 11,745 |
| 12,130 |
| 13,149 |
| 12,601 |
| 11,280 |
|
TOTAL ASSETS |
| $511,424 |
| $504,296 |
| $498,635 |
| $491,909 |
| $483,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing demand |
| $57,270 |
| $56,839 |
| $63,474 |
| $59,496 |
| $55,618 |
|
Interest- bearing deposits |
| 313,146 |
| 302,796 |
| 297,083 |
| 305,775 |
| 315,535 |
|
Total deposits |
| 370,416 |
| 359,635 |
| 360,557 |
| 365,271 |
| 371,153 |
|
Other borrowings |
| 72,412 |
| 81,126 |
| 76,575 |
| 65,060 |
| 51,006 |
|
Other liabilities |
| 8,446 |
| 4,845 |
| 5,389 |
| 5,647 |
| 5,234 |
|
TOTAL LIABILITIES |
| 451,274 |
| 445,606 |
| 442,521 |
| 435,978 |
| 427,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
| 60,150 |
| 58,690 |
| 56,114 |
| 55,931 |
| 56,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND |
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
| $511,424 |
| $504,296 |
| $498,635 |
| $491,909 |
| $483,967 |
|
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 |
| |||||
Three months ended |
| 2009 |
| 2008 |
| 2008 |
| 2008 |
| 2008 |
| |||||
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable, including fees |
| $ | 5,287 |
| $ | 5,423 |
| $ | 5,509 |
| $ | 5,410 |
| $ | 5,641 |
|
Securities |
|
| 1,397 |
|
| 1,508 |
|
| 1,549 |
|
| 1,537 |
|
| 1,489 |
|
Other |
|
| 6 |
|
| 3 |
|
| 1 |
|
| 6 |
|
| 19 |
|
Total Interest income |
|
| 6,690 |
|
| 6,934 |
|
| 7,059 |
|
| 6,953 |
|
| 7,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
| 1,501 |
|
| 1,659 |
|
| 1,780 |
|
| 1,963 |
|
| 2,371 |
|
Borrowings |
|
| 508 |
|
| 548 |
|
| 503 |
|
| 416 |
|
| 454 |
|
Total Interest expense |
|
| 2,009 |
|
| 2,207 |
|
| 2,283 |
|
| 2,379 |
|
| 2,825 |
|
NET INTEREST INCOME |
|
| 4,681 |
|
| 4,727 |
|
| 4,776 |
|
| 4,574 |
|
| 4,324 |
|
PROVISION FOR LOAN LOSSES |
|
| 225 |
|
| 420 |
|
| 130 |
|
| 110 |
|
| 75 |
|
NET INTEREST INCOME AFTER PROVISION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR LOAN LOSSES |
|
| 4,456 |
|
| 4,307 |
|
| 4,646 |
|
| 4,464 |
|
| 4,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges and fees |
|
| 598 |
|
| 636 |
|
| 656 |
|
| 670 |
|
| 638 |
|
Income from fiduciary activities |
|
| 82 |
|
| 111 |
|
| 91 |
|
| 110 |
|
| 92 |
|
Net realized gains (losses) on sales of securities |
|
| 161 |
|
| — |
|
| (27 | ) |
| 9 |
|
| — |
|
Gains on sale of loans and servicing rights |
|
| 133 |
|
| 13 |
|
| 90 |
|
| 8 |
|
| 388 |
|
Gain on sale of deposits |
|
| 150 |
|
| — |
|
| — |
|
| — |
|
| — |
|
Other |
|
| 157 |
|
| 130 |
|
| 163 |
|
| 165 |
|
| 144 |
|
Total other income |
|
| 1,281 |
|
| 890 |
|
| 973 |
|
| 962 |
|
| 1,262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 1,614 |
|
| 1,525 |
|
| 1,477 |
|
| 1,498 |
|
| 1,546 |
|
Occupancy, furniture and equipment , net |
|
| 485 |
|
| 378 |
|
| 403 |
|
| 414 |
|
| 430 |
|
Foreclosed real estate owned |
|
| 12 |
|
| 11 |
|
| 519 |
|
| 52 |
|
| — |
|
FDIC insurance assessment |
|
| 126 |
|
| 54 |
|
| 12 |
|
| 12 |
|
| 12 |
|
Other |
|
| 1,038 |
|
| 978 |
|
| 950 |
|
| 996 |
|
| 973 |
|
Total other expenses |
|
| 3,275 |
|
| 2,946 |
|
| 3,361 |
|
| 2,972 |
|
| 2,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE TAX |
|
| 2,462 |
|
| 2,251 |
|
| 2,258 |
|
| 2,454 |
|
| 2,550 |
|
INCOME TAX EXPENSE |
|
| 725 |
|
| 666 |
|
| 666 |
|
| 733 |
|
| 771 |
|
NET INCOME |
| $ | 1,737 |
| $ | 1,585 |
| $ | 1,592 |
| $ | 1,721 |
| $ | 1,779 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
| $ | 0.63 |
| $ | 0.58 |
| $ | 0.58 |
| $ | 0.63 |
| $ | 0.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
| $ | 0.63 |
| $ | 0.58 |
| $ | 0.58 |
| $ | 0.62 |
| $ | 0.64 |
|
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Book Value per share |
| $ | 21.99 |
| $ | 21.45 |
| $ | 20.51 |
| $ | 20.44 |
| $ | 20.65 |
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Return on average equity |
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| 11.80 | % |
| 11.05 | % |
| 11.15 | % |
| 12.19 | % |
| 12.68 | % |
Return on average assets |
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| 1.39 | % |
| 1.26 | % |
| 1.28 | % |
| 1.42 | % |
| 1.49 | % |
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Net interest spread |
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| 3.54 | % |
| 3.61 | % |
| 3.67 | % |
| 3.50 | % |
| 3.24 | % |
Net interest margin |
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| 3.96 | % |
| 4.09 | % |
| 4.21 | % |
| 4.06 | % |
| 3.90 | % |
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Allowance for loan losses to total loans |
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| 1.26 | % |
| 1.21 | % |
| 1.27 | % |
| 1.27 | % |
| 1.26 | % |
Net charge-offs to average loans (annualized) |
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| 0.05 | % |
| 0.60 | % |
| 0.04 | % |
| 0.01 | % |
| 0.02 | % |
Nonperforming loans to total loans |
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| 0.48 | % |
| 0.60 | % |
| 0.66 | % |
| 0.09 | % |
| 0.09 | % |
Nonperforming assets to total assets |
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| 0.48 | % |
| 0.54 | % |
| 0.59 | % |
| 0.31 | % |
| 0.06 | % |