NORWOOD [LOGO]
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FINANCIAL CORP. 717 Main Street o Honesdale, Pennsylvania 18431 o 570-253-1455
FOR IMMEDIATE RELEASE
NORWOOD FINANCIAL CORP
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EARNINGS INCREASE 18%
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July 19, 2005-Honesdale, PA
William W. Davis, Jr., President and Chief Executive Officer of Norwood
Financial Corp (Nasdaq - NWFL) and its subsidiary, Wayne Bank announced earnings
for the three months ended June 30, 2005 of $1,330,000. This represents an
increase of $203,000, or 18.0% over the $1,127,000 earned in the similar period
of 2004. Earnings per share (fully diluted) were $.49 in the 2005 period, a
16.7% increase over $.42 earned in the similar period in 2004. Annualized return
on average assets for the three months ended June 30, 2005 was 1.29% with an
annualized return on equity of 11.48%. Net income for six months ended June 30,
2005 was $2,573,000, which represents a 10.6% increase over the $2,327,000
earned for the similar period in 2004. Earnings per share (fully diluted)
reflected a 9.3% increase, at $.94 per share in the 2005 period compared to $.86
in 2004.
Total assets as of June 30, 2005 were $422.6 million, an increase of $22.7
million from the prior year. Deposits totaled $338.9 million, reflecting a $20.9
million increase from the prior year. Loans receivable increased $29.3 million,
or 11.9% to $275.6 million as of June 30, 2005. The increase was principally due
to growth in commercial real estate and home equity lending. All measures of
loan quality improved from the prior year, with non-performing loans at .04% of
total loans as of June 30, 2005, declining from .12% as of June 30, 2004. Net
charge-offs for the six months ended June 30, 2005 totaled $38,000, declining
significantly from $195,000 for the similar period in 2004. As a result, the
Company reduced the provision for loan losses to $190,000 for the
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six months ended June 30, 2005 compared to $290,000 for the 2004 period.
Notwithstanding the lower provision, the allowance for loan losses increased by
$238,000 to $3.6 million at June 30, 2005 and equaled 1.31% of total loans at
that date.
Net interest income for the three months ended June 30, 2005 totaled
$3,796,000, an increase of 12.3% over the similar period in 2004. The net
interest margin, (fully taxable equivalent) was 4.03% in the current period
increasing from 3.84% for the 2004 period. The increase in net interest margin
was due to a higher percentage of loans on the balance sheet and the increase in
the prime rate which has occurred over the past twelve months. For the six
months ended June 30, 2005, net interest income totaled $7,366,000 with a net
interest margin (fte) of 3.95%, improving from $6,813,000 and a net interest
margin (fte) of 3.90% for the similar period in 2004.
Other income for the three months ended June 30, 2005 totaled $865,000, an
increase of 13.5% over the $762,000 in the similar period in 2004. A lower level
of gains on sales of securities, $3,000, declining from $84,000 in 2004 was more
than offset by growth in service charges on deposits and income from the Wealth
Management Division. For the six months ended June 30, 2005, Other Income was
$1,785,000 compared to $1,701,000 in the prior year. Gains on sales of
securities, were much lower at $80,000 compared to $262,000 for the period in
2004 but were offset by higher income from service charges and fees and
fiduciary activities.
Other expenses for the three months ended June 30, 2005 totaled $2,677,000
an increase of $233,000 or 9.5% over the similar period in 2004. The increase
was principally due to benefit costs, and costs associated with the Company's
Sarbanes-Oxley compliance. For the six months ended June 30, 2005, other
expenses totaled $5,328,000 an increase of 5.7% over the similar period in 2004.
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Mr. Davis commented, "We are encouraged by our results in 2005. Our market
areas in Wayne, Pike and Monroe Counties continue to grow, loan demand remains
strong and credit quality is good. The Company recently announced a stock buy
back and we have repurchased 10,000 shares. We have also recently received
regulatory approval for a new office in Tannersville, Monroe County."
Norwood Financial Corp, through its subsidiary Wayne Bank, operates eleven
offices in Wayne, Pike and Monroe Counties. The Company's stock is traded on the
Nasdaq Market, under the symbol, "NWFL".
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 interest rates, risks associated with the effect of opening a
new branch, the ability to control costs and expenses, and general economic
conditions. Norwood Financial Corp does 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.
Contact: Lewis J. Critelli
Executive Vice President &
Chief Financial Officer
NORWOOD FINANCIAL CORP
570-253-1455
www.waynebank.com
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NORWOOD FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)
June 30
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2005 2004
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ASSETS
Cash and due from banks $ 11,895 $ 9,651
Interest bearing deposits with banks 119 83
Federal funds sold 5,290 7,875
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Cash and cash equivalents 17,304 17,609
Securities available for sale 111,497 116,484
Securities held to maturity, fair value 2005: $3,415
2004: $6,014 3,337 5,718
Loans receivable (net of unearned Income) 275,558 246,220
Less: Allowance for loan losses 3,600 3,362
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Net loans receivable 271,958 242,858
Investment in FHLB Stock 1,973 1,976
Bank premises and equipment,net 5,434 5,559
Accrued interest receivable 1,715 1,638
Other assets 9,337 8,081
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TOTAL ASSETS $ 422,555 $ 399,923
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LIABILITIES
Deposits:
Non-interest bearing demand $ 53,628 $ 50,592
Interest-bearing 285,305 267,407
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Total deposits 338,933 317,999
Short-term borrowings 10,928 15,040
Long-term debt 23,000 23,000
Accrued interest payable 1,149 1,058
Other liabilities 1,714 48
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TOTAL LIABILITIES 375,724 357,145
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value, authorized 10,000,000
shares issued: 2,705,715 shares 270 270
Surplus 5,525 5,081
Retained earnings 41,837 38,467
Treasury stock, at cost: 2005: 15,979 shares,
2004: 14,097 shares (449) (228)
Unearned ESOP Shares (249) (450)
Accumulated other comprehensive income (103) (362)
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TOTAL STOCKHOLDERS' EQUITY 46,831 42,778
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 422,555 $ 399,923
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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
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2005 2004 2005 2004
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INTEREST INCOME
Loans receivable, including fees $ 4,288 $ 3,564 $ 8,208 $ 7,116
Securities 1,020 1,021 2,061 2,151
Other 5 10 17 17
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Total Interest income 5,313 4,595 10,286 9,284
INTEREST EXPENSE
Deposits 1,102 862 2,089 1,770
Short-term borrowings 112 34 211 59
Long-term debt 303 319 620 642
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Total Interest expense 1,517 1,215 2,920 2,471
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NET INTEREST INCOME 3,796 3,380 7,366 6,813
PROVISION FOR LOAN LOSSES 90 165 190 290
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,706 3,215 7,176 6,523
OTHER INCOME
Service charges and fees 603 473 1,182 914
Income from fiduciary activities 92 69 176 155
Net realized gains on sales of securities 3 84 80 262
Gains on sale of loans 15 5 55 62
Other 152 131 292 308
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Total other income 865 762 1,785 1,701
OTHER EXPENSES
Salaries and employee benefits 1,334 1,262 2,721 2,564
Occupancy, furniture and equipment 365 338 749 690
Data processing related 153 156 313 302
Losses on lease residuals -- -- -- 90
Taxes, other than income 109 92 207 183
Professional Fees 139 71 248 156
Other 577 525 1,090 1,054
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Total other expenses 2,677 2,444 5,328 5,039
INCOME BEFORE TAX 1,894 1,533 3,633 3,185
INCOME TAX EXPENSE 564 406 1,060 858
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NET INCOME $ 1,330 $ 1,127 $ 2,573 $ 2,327
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Basic earnings per share $ 0.50 $ 0.43 $ 0.96 $ 0.88
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Diluted earnings per share $ 0.49 $ 0.42 $ 0.94 $ 0.86
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NORWOOD FINANCIAL CORP.
Financial Highlights (Unaudited)
(dollars in thousands, except per share data)
Three Months Ended June 30 2005 2004
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Net interest income $ 3,796 $ 3,380
Net income 1,330 1,127
Net interest spread (fully taxable equivalent) 3.64% 3.52%
Net interest margin (fully taxable equivalent) 4.03% 3.84%
Return on average assets 1.29% 1.16%
Return on average equity 11.48% 10.44%
Basic earnings per share $ 0.50 $ 0.43
Diluted earnings per share 0.49 0.42
Six Months Ended June 30
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Net interest income $ 7,366 $ 6,813
Net income 2,573 2,327
Net interest spread (fully taxable equivalent) 3.58% 3.59%
Net interest margin (fully taxable equivalent) 3.95% 3.90%
Return on average assets 1.27% 1.21%
Return on average equity 11.22% 10.76%
Basic earnings per share $ 0.96 $ 0.88
Diluted earnings per share 0.94 0.86
As of June 30
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Total Assets $ 422,555 $ 399,923
Total Loans receivable 275,558 246,220
Allowance for loan losses 3,600 3,362
Total deposits 338,933 317,999
Stockholders' equity 46,831 42,778
Trust Assets under management 83,487 77,137
Book value per share $ 17.41 $ 15.89
Equity to total assets 11.08% 10.70%
Allowance to total loans receivable 1.31% 1.37%
Nonperforming loans to total loans 0.04% 0.12%
NORWOOD FINANCIAL CORP
Consolidated Balance Sheets (unaudited)
(dollars in thousands)
30-Jun 31-Mar 31-Dec 30-Sep 30-Jun
2005 2005 2004 2004 2004
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ASSETS
Cash and due from banks $ 11,895 $ 7,186 $ 7,488 $ 10,290 $ 9,651
Interest bearing deposits with banks 119 29 118 101 83
Federal funds sold 5,290 -- 13,060 610 7,875
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Cash and cash equivalents 17,304 7,215 20,666 11,001 17,609
Securities available for sale 111,497 119,490 116,933 111,100 116,484
Securities held to maturity 3,337 5,103 5,724 5,720 5,718
Loans receivable (net of unearned Income) 275,558 266,032 254,757 256,919 246,220
Less: Allowance for loan losses 3,600 3,523 3,448 3,418 3,362
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Net loans receivable 271,958 262,509 251,309 253,501 242,858
Investment in FHLB stock 1,973 2,477 2,225 2,183 1,976
Bank premises and equipment, net 5,434 5,475 5,489 5,602 5,559
Foreclosed real estate -- -- -- -- --
Other assets 11,052 10,919 9,280 9,464 9,719
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TOTAL ASSETS $ 422,555 $ 413,188 $ 411,626 $ 398,571 $ 399,923
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LIABILITIES
Deposits:
Non-interest bearing demand $ 53,628 $ 46,774 $ 44,450 $ 51,752 $ 50,592
Interest- bearing deposits 285,305 270,174 274,195 266,193 267,407
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Total deposits 338,933 316,948 318,645 317,945 317,999
Other borrowings 33,928 47,956 45,982 34,194 38,040
Other liabilities 2,863 2,689 1,314 1,644 1,106
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TOTAL LIABILITIES 375,724 367,593 365,941 353,783 357,145
STOCKHOLDERS' EQUITY 46,831 45,595 45,685 44,788 42,778
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 422,555 $ 413,188 $ 411,626 $ 398,571 $ 399,923
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NORWOOD FINANCIAL CORP
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
30-Jun 31-Mar 31-Dec 30-Sep 30-Jun
Three months ended 2005 2005 2004 2004 2004
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INTEREST INCOME
Loans receivable, including fees $ 4,288 $ 3,920 $ 3,908 $ 3,770 $ 3,564
Securities 1,020 1,041 987 1,004 1,021
Other 5 12 45 8 10
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Total Interest income 5,313 4,973 4,940 4,782 4,595
INTEREST EXPENSE
Deposits 1,102 987 927 858 862
Borrowings 415 416 372 366 353
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Total Interest expense 1,517 1,403 1,299 1,224 1,215
NET INTEREST INCOME 3,796 3,570 3,641 3,558 3,380
PROVISION FOR LOAN LOSSES 90 100 65 100 165
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,706 3,470 3,576 3,458 3,215
OTHER INCOME
Service charges and fees 603 579 633 575 473
Income from fiduciary activities 92 84 63 83 69
Net realized gains on sales of securities 3 77 145 51 84
Gains on sale of loans 15 40 4 1 5
Other 152 140 129 161 131
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Total other income 865 920 974 871 762
OTHER EXPENSES
Salaries and employee benefits 1,334 1,387 1,293 1,276 1,262
Occupancy, furniture and equipment , net 365 384 330 335 338
Other 978 880 919 898 844
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Total other expenses 2,677 2,651 2,542 2,509 2,444
INCOME BEFORE TAX 1,894 1,739 2,008 1,820 1,533
INCOME TAX EXPENSE 564 496 645 500 406
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NET INCOME $ 1,330 $ 1,243 $ 1,363 $ 1,320 $ 1,127
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Basic earnings per share $ 0.50 $ 0.47 $ 0.51 $ 0.50 $ 0.43
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Diluted earnings per share $ 0.49 $ 0.46 $ 0.50 $ 0.49 $ 0.42
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Book Value per share $ 17.41 $ 16.90 $ 16.95 $ 16.63 $ 15.89
Return on average equity 11.48% 10.96% 11.98% 12.01% 10.44%
Return on average assets 1.29% 1.24% 1.33% 1.32% 1.16%
Net interest spread 3.64% 3.52% 3.60% 3.60% 3.52%
Net interest margin 4.03% 3.86% 3.93% 3.93% 3.84%
Allowance for loan losses to total loans 1.31% 1.32% 1.35% 1.33% 1.37%
Net charge-offs to average loans (annualized) 0.02% 0.04% 0.05% 0.07% 0.17%
Nonperforming loans to total loans 0.04% 0.03% 0.03% 0.03% 0.12%
Nonperforming assets to total assets 0.02% 0.02% 0.02% 0.02% 0.07%