FOR IMMEDIATE RELEASE
NORWOOD FINANCIAL CORP
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EARNINGS INCREASE 12%
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October 20, 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 September 30, 2005 of $1,482,000. This represents an
increase of $162,000, or 12.3% over the $1,320,000 earned in the comparable
period of 2004. Earnings per share (fully diluted) were $.54 in the 2005 period,
a 10.2% increase over $.49 earned in the similar period in 2004. Annualized
return on average assets for the three months ended September 30, 2005 was 1.38%
with an annualized return on equity of 12.43%. Net income for nine months ended
September 30, 2005 was $4,055,000, which represents an 11.2% increase over the
$3,647,000 earned for the similar period in 2004. Earnings per share (fully
diluted) reflected a 10.1% increase, at $1.49 per share in the 2005 period
compared to $1.35 in 2004.
Total assets as of September 30, 2005 were $425.6 million, an increase
of $27.0 million from a year ago. Deposits totaled $340.4 million, reflecting a
$22.5 million increase from the prior year. Loans receivable increased $25.4
million, or 9.9% to $282.3 million as of September 30, 2005. The increase was
principally due to growth in commercial real estate and home equity lending. All
measures of loan quality remain strong, with non-performing loans totaling
$107,000 or .04% of total loans, as of September 30, 2005. Net charge-offs for
the nine months ended September 30, 2005 totaled $85,000, declining
significantly from $239,000 for the similar period in 2004. As a result, the
Company reduced the provision for loan losses to $280,000 for the nine months
ended
1
September 30, 2005 compared to $390,000 for the 2004 period. Notwithstanding the
lower provision, the allowance for loan losses increased by $225,000 to $3.6
million as of September 30, 2005 and equaled 1.29% of total loans at that date.
Net interest income for the three months ended September 30, 2005
totaled $3,934,000, an increase of 10.6% over the similar period in 2004. The
net interest margin, (fully taxable equivalent) was 4.06% in the current period
increasing from 3.93% for the 2004 period. The increase in net interest margin
was due to a higher percentage of loans on the balance sheet and the increases
in the prime rate which have occurred since June 2004. For the nine months ended
September 30, 2005, net interest income totaled $11,300,000 with a net interest
margin (fte) of 3.99%, improving from $10,371,000 and a net interest margin
(fte) of 3.91% for the similar period in 2004. The increase was principally due
to loan growth and higher short-term interest rates.
Other income for the three months ended September 30, 2005 totaled
$908,000, an increase of 4.2% over the $871,000 in the similar period in 2004. A
lower level of gains on sales of securities, $3,000, declining from $51,000 in
2004, was more than offset by growth in service charges on deposits. For the
nine months ended September 30, 2005, other income totaled $2,693,000 compared
to $2,572,000 in the prior year. Gains on sales of securities were much lower at
$83,000 compared to $313,000 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 September 30, 2005 totaled
$2,627,000 an increase of $118,000 or 4.7% over the similar period in 2004. The
change was principally due to increasing employee benefit costs and expense
associated with the Company's Sarbanes-Oxley
2
compliance. For the nine months ended September 30, 2005, other expenses totaled
$7,955,000 an increase of 5.4% over the similar period in 2004.
Mr. Davis commented, "We are pleased with our results to date, in 2005,
with earnings up over 11%. Our market areas in Wayne, Pike and Monroe Counties
continue to grow, and as a result, our loan demand remains healthy and our
credit quality is good."
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
3
NORWOOD FINANCIAL CORP.
Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
2005 2004 2005 2004
------- ------- ------- -------
INTEREST INCOME
Loans receivable, including fees $ 4,527 $ 3,770 $12,735 $10,886
Securities 993 1,004 3,054 3,155
Other 58 8 75 25
------- ------- ------- -------
Total Interest income 5,578 4,782 15,864 14,066
INTEREST EXPENSE
Deposits 1,262 858 3,351 2,628
Short-term borrowings 83 46 294 103
Long-term debt 299 320 919 964
------- ------- ------- -------
Total Interest expense 1,644 1,224 4,564 3,695
------- ------- ------- -------
NET INTEREST INCOME 3,934 3,558 11,300 10,371
PROVISION FOR LOAN LOSSES 90 100 280 390
------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,844 3,458 11,020 9,981
OTHER INCOME
Service charges and fees 648 575 1,830 1,489
Income from fiduciary activities 78 83 254 238
Net realized gains on sales of securities 3 51 83 313
Gains on sale of loans 8 1 63 63
Other 171 161 463 469
------- ------- ------- -------
Total other income 908 871 2,693 2,572
OTHER EXPENSES
Salaries and employee benefits 1,360 1,276 4,081 3,840
Occupancy, furniture and equipment 356 335 1,105 1,025
Data processing related 161 149 474 451
Losses on lease residuals - - - 90
Taxes, other than income 19 2 226 185
Professional Fees 102 77 350 233
Other 629 670 1,719 1,724
------- ------- ------- -------
Total other expenses 2,627 2,509 7,955 7,548
INCOME BEFORE TAX 2,125 1,820 5,758 5,005
INCOME TAX EXPENSE 643 500 1,703 1,358
------- ------- ------- -------
NET INCOME $ 1,482 $ 1,320 $ 4,055 $ 3,647
======= ======= ======= =======
Basic earnings per share $ 0.56 $ 0.50 $ 1.52 $ 1.38
======= ======= ======= =======
Diluted earnings per share $ 0.54 $ 0.49 $ 1.49 $ 1.35
======= ======= ======= =======
NORWOOD FINANCIAL CORP.
Financial Highlights (Unaudited)
(dollars in thousands, except per share data)
Three Months Ended September 30 2005 2004
- ------------------------------- -------- --------
Net interest income $ 3,934 $ 3,558
Net income 1,482 1,320
Net interest spread (fully taxable equivalent) 3.63% 3.60%
Net interest margin (fully taxable equivalent) 4.06% 3.93%
Return on average assets 1.38% 1.32%
Return on average equity 12.43% 12.01%
Basic earnings per share $ 0.56 $ 0.50
Diluted earnings per share 0.54 0.49
Nine Months Ended September 30
- ------------------------------
Net interest income $ 11,300 $ 10,371
Net income 4,055 3,647
Net interest spread (fully taxable equivalent) 3.60% 3.59%
Net interest margin (fully taxable equivalent) 3.99% 3.91%
Return on average assets 1.31% 1.24%
Return on average equity 11.63% 11.18%
Basic earnings per share $ 1.52 $ 1.38
Diluted earnings per share 1.49 1.35
As of September 30
- ------------------
Total Assets $425,611 $398,571
Total Loans receivable 282,264 256,919
Allowance for loan losses 3,643 3,418
Total deposits 340,431 317,945
Stockholders' equity 47,447 44,788
Trust Assets under management 86,223 77,651
Book value per share $ 17.64 $ 16.63
Equity to total assets 11.15% 11.24%
Allowance to total loans receivable 1.29% 1.33%
Nonperforming loans to total loans 0.04% 0.03%
NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
September 30
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2005 2004
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ASSETS
Cash and due from banks $ 9,755 $ 10,290
Interest bearing deposits with banks 132 101
Federal funds sold 2,295 610
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Cash and cash equivalents 12,182 11,001
Securities available for sale 113,162 111,100
Securities held to maturity,
fair value 2005: $2,902 2004: $5,915 2,860 5,720
Loans receivable (net of unearned Income) 282,264 256,919
Less: Allowance for loan losses 3,643 3,418
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Net loans receivable 278,621 253,501
Investment in FHLB Stock 1,711 2,183
Bank premises and equipment,net 5,454 5,602
Accrued interest receivable 1,888 1,667
Other assets 9,733 7,797
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TOTAL ASSETS $ 425,611 $ 398,571
========= =========
LIABILITIES
Deposits:
Non-interest bearing demand $ 58,061 $ 51,752
Interest-bearing 282,370 266,193
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Total deposits 340,431 317,945
Short-term borrowings 11,515 11,194
Long-term debt 23,000 23,000
Accrued interest payable 1,369 1,136
Other liabilities 1,849 508
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TOTAL LIABILITIES 378,164 353,783
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value,
authorized 10,000,000 shares
issued: 2,705,715 shares 270 270
Surplus 5,545 5,180
Retained earnings 42,840 39,338
Treasury stock, at cost:
2005: 16,026 shares, 2004: 12,597 shares (468) (204)
Unearned ESOP Shares (199) (400)
Accumulated other comprehensive income (541) 604
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TOTAL STOCKHOLDERS' EQUITY 47,447 44,788
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 425,611 $ 398,571
========= =========
NORWOOD FINANCIAL CORP
Consolidated Balance Sheets (unaudited)
(dollars in thousands)
30-Sep 30-Jun 31-Mar 31-Dec 30-Sep
2005 2005 2005 2004 2004
-------- -------- -------- -------- --------
ASSETS
Cash and due from banks $ 9,755 $ 11,895 $ 7,186 $ 7,488 $ 10,290
Interest bearing deposits with banks 132 119 29 118 101
Federal funds sold 2,295 5,290 - 13,060 610
-------- -------- -------- -------- --------
Cash and cash equivalents 12,182 17,304 7,215 20,666 11,001
Securities available for sale 113,162 111,497 119,490 116,933 111,100
Securities held to maturity 2,860 3,337 5,103 5,724 5,720
Loans receivable (net of unearned Income) 282,264 275,558 266,032 254,757 256,919
Less: Allowance for loan losses 3,643 3,600 3,523 3,448 3,418
-------- -------- -------- -------- --------
Net loans receivable 278,621 271,958 262,509 251,309 253,501
Investment in FHLB stock 1,711 1,973 2,477 2,225 2,183
Bank premises and equipment, net 5,454 5,434 5,475 5,489 5,602
Foreclosed real estate - - - - -
Other assets 11,621 11,052 10,919 9,280 9,464
-------- -------- -------- -------- --------
TOTAL ASSETS $425,611 $422,555 $413,188 $411,626 $398,571
======== ======== ======== ======== ========
LIABILITIES
Deposits:
Non-interest bearing demand $ 58,061 $ 53,628 $ 46,774 $ 44,450 $ 51,752
Interest- bearing deposits 282,370 285,305 270,174 274,195 266,193
-------- -------- -------- -------- --------
Total deposits 340,431 338,933 316,948 318,645 317,945
Other borrowings 34,515 33,928 47,956 45,982 34,194
Other liabilities 3,218 2,863 2,689 1,314 1,644
-------- -------- -------- -------- --------
TOTAL LIABILITIES 378,164 375,724 367,593 365,941 353,783
STOCKHOLDERS' EQUITY 47,447 46,831 45,595 45,685 44,788
-------- -------- -------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $425,611 $422,555 $413,188 $411,626 $398,571
======== ======== ======== ======== ========
NORWOOD FINANCIAL CORP
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
30-Sep 30-Jun 31-Mar 31-Dec 30-Sep
Three months ended 2005 2005 2005 2004 2004
------ ------ ------ ------ ------
INTEREST INCOME
Loans receivable, including fees $4,527 $4,288 $3,920 $3,908 $3,770
Securities 993 1,020 1,041 987 1,004
Other 58 5 12 45 8
------ ------ ------ ------ ------
Total Interest income 5,578 5,313 4,973 4,940 4,782
INTEREST EXPENSE
Deposits 1,262 1,102 987 927 858
Borrowings 382 415 416 372 366
------ ------ ------ ------ ------
Total Interest expense 1,644 1,517 1,403 1,299 1,224
NET INTEREST INCOME 3,934 3,796 3,570 3,641 3,558
PROVISION FOR LOAN LOSSES 90 90 100 65 100
------ ------ ------ ------ ------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,844 3,706 3,470 3,576 3,458
OTHER INCOME
Service charges and fees 648 603 579 633 575
Income from fiduciary activities 78 92 84 63 83
Net realized gains on sales of securities 3 3 77 145 51
Gains on sale of loans 8 15 40 4 1
Other 171 152 140 129 161
------ ------ ------ ------ ------
Total other income 908 865 920 974 871
OTHER EXPENSES
Salaries and employee benefits 1,360 1,334 1,387 1,293 1,276
Occupancy, furniture and equipment, net 356 365 384 330 335
Other 911 978 880 919 898
------ ------ ------ ------ ------
Total other expenses 2,627 2,677 2,651 2,542 2,509
INCOME BEFORE TAX 2,125 1,894 1,739 2,008 1,820
INCOME TAX EXPENSE 643 564 496 645 500
------ ------ ------ ------ ------
NET INCOME $1,482 $1,330 $1,243 $1,363 $1,320
====== ====== ====== ====== ======
Basic earnings per share $ 0.56 $ 0.50 $ 0.47 $ 0.51 $ 0.50
====== ====== ====== ====== ======
Diluted earnings per share $ 0.54 $ 0.49 $ 0.46 $ 0.50 $ 0.49
====== ====== ====== ====== ======
Book Value per share $17.64 $17.41 $16.90 $16.95 $16.63
Return on average equity 12.43% 11.48% 10.96% 11.98% 12.01%
Return on average assets 1.38% 1.29% 1.24% 1.33% 1.32%
Net interest spread 3.63% 3.64% 3.52% 3.60% 3.60%
Net interest margin 4.06% 4.03% 3.86% 3.93% 3.93%
Allowance for loan losses to total loans 1.29% 1.31% 1.32% 1.35% 1.33%
Net charge-offs to average loans (annualized) 0.07% 0.02% 0.04% 0.05% 0.07%
Nonperforming loans to total loans 0.04% 0.04% 0.03% 0.03% 0.03%
Nonperforming assets to total assets 0.03% 0.02% 0.02% 0.02% 0.02%