NORWOOD
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FINANCIAL CORP 712 Main Street o Honesdale, Pennsylvania 18431 o 570-253-1455
FOR IMMEDIATE RELEASE
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NORWOOD FINANCIAL CORP ANNOUNCES EARNINGS INCREASE OF 9.7%
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Honesdale, PA - January 23, 2006
William W. Davis Jr, President and Chief Executive Officer of Norwood
Financial Corp. (Nasdaq-NWFL) and its subsidiary Wayne Bank announced record
earnings for the year ended December 31, 2005 of $5,497,000, which represented
an increase of $487,000 or 9.7% over the $5,010,000 earned in 2004. Earnings per
share on a fully diluted basis were $2.02 compared to $1.85 in 2004. The return
on average assets for the year was 1.31%, with return on average equity of
11.72%. Both of these performance measures improved over the prior year.
Earnings for the fourth quarter of 2005 totaled $1,442,000, reflecting a 5.8%
increase over the $1,363,000 earned in the similar period of 2004. Earnings per
share (diluted) for the current quarter totaled $.53, increasing from $.50 for
the prior year period.
Total assets as of December 31, 2005 were $433.6 million, with loans
receivable of $290.9 million, deposits of $340.6 million and shareholders'
equity of $48.1 million. Total assets have increased $21.9 million, or 5.3%,
when compared to December 31, 2004.
Loans receivable have increased $36.1 million, or 14.2% from the prior
year. The increase was principally due to growth in commercial real estate
loans, which showed an
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increase in excess of 20%. The Company also had growth in residential mortgage
originations and home equity lending through its branch system. Non-performing
loans totaled $353,000, or .12% of total loans compared to $67,000, or .03% as
of December 31, 2004. The increase is due to one loan relationship for which the
Company is actively pursuing a resolution. Net charge-offs were down
significantly in 2005, at $129,000 compared to $274,000 in 2004 due to a lower
level of indirect automobile charge-offs. As a result of the lower level of
charge-offs, the Company was able to reduce the provision for loan loss expense
to $350,000 in 2005 from $455,000 in 2004. Notwithstanding the lower provision,
the allowance for loan losses increased by $221,000 to $3,669,000 as of December
31, 2005 and equaled 1.26% of total loans at that date.
For the year ended December 31, 2005, net interest income, on a fully
taxable equivalent basis, totaled $15,889,000 with a net interest margin of
3.99% improving from $14,653,000 and a net interest margin of 3.91% for 2004.
Net interest income (fully taxable equivalent) for the three months ended
December 31, 2005 totaled $4,104,000, an increase of 8.1% over the similar
period in 2004. The net interest margin (fully taxable equivalent) was 4.01% in
the current period increasing from 3.93% for the 2004 period. The increases for
the year and the quarter were principally due to loan growth, a higher
percentage of loans on the balance sheet and to a lesser extent, the higher
prime rate and Fed funds rate in 2005.
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Other income for the year, excluding net gains on sales of securities,
totaled $3,506,000 compared to $3,088,000 in 2004. The increase was principally
due to an increase in deposit service charges, growth in Wealth Management and
Trust Division revenues and loan related fees. Net gains on sales of securities
were significantly lower in 2005 at $42,000 compared to $458,000 in 2004, due to
a lower level of securities sold in the higher interest environment of 2005.
Other income, excluding gains and losses on the sales of securities, for the
three months ended December 31, 2005 totaled $896,000 increasing from $829,000
in 2004. The increase was principally due to an increase in loan related fees
and revenue from the Wealth Management and Trust Division. For the year ended
December 31, 2005, expenses totaled $10,623,000, a 5.3% increase over 2004. The
change was principally due to increases in the cost of employee benefit plans,
and expense associated with the Company's Sarbanes-Oxley compliance. Other
expenses totaled $2,668,000 for the three months ended December 31, 2005, an
increase of 5.0% over the similar period in 2004.
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
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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.
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)
December 31
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2005 2004
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ASSETS (unaudited)
Cash and due from banks $ 9,746 $ 7,488
Interest bearing deposits with banks 70 118
Federal funds sold 0 13,060
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Cash and cash equivalents 9,816 20,666
Securities available for sale 115,814 116,933
Securities held to maturity, fair value 2005:$1,480 2004: $5,878 1,452 5,724
Loans receivable (net of unearned Income) 290,890 254,757
Less: Allowance for loan losses 3,669 3,448
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Net loans receivable 287,221 251,309
Investment in FHLB Stock 1,620 2,225
Bank premises and equipment,net 5,393 5,489
Accrued interest receivable 1,812 1,641
Other assets 10,428 7,639
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TOTAL ASSETS $ 433,556 $ 411,626
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LIABILITIES
Deposits:
Non-interest bearing demand $ 50,891 $ 44,450
Interest-bearing 289,712 274,195
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Total deposits 340,603 318,645
Short-term borrowings 18,564 22,982
Long-term debt 23,000 23,000
Accrued interest payable 1,691 1,200
Other liabilities 1,590 114
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TOTAL LIABILITIES 385,448 365,941
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value, authorized 10,000,000 shares
issued: 2,705,715 shares 270 270
Surplus 5,648 5,336
Retained earnings 43,722 40,222
Treasury stock, at cost: 2005: 21,189 shares, 2004: 8,913 shares (633) (149)
Unearned ESOP Shares (127) (327)
Accumulated other comprehensive income (772) 333
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TOTAL STOCKHOLDERS' EQUITY 48,108 45,685
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 433,556 $ 411,626
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NORWOOD FINANCIAL CORP.
Consolidated Statements of Income
(dollars in thousands, except per share data)
Three Months Ended December 31Year Ended December 31
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2005 2004 2005 2004
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INTEREST INCOME (unaudited) (unaudited) (unaudited)
Loans receivable, including fees $ 4,848 $ 3,908 $ 17,583 $ 14,794
Securities 999 987 4,053 4,142
Other 57 45 132 70
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Total Interest income 5,904 4,940 21,768 19,006
INTEREST EXPENSE
Deposits 1,520 927 4,871 3,555
Short-term borrowings 122 48 416 151
Long-term debt 299 324 1,218 1,288
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Total Interest expense 1,941 1,299 6,505 4,994
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NET INTEREST INCOME 3,963 3,641 15,263 14,012
PROVISION FOR LOAN LOSSES 70 65 350 455
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,893 3,576 14,913 13,557
OTHER INCOME
Service charges and fees 677 633 2,507 2,122
Income from fiduciary activities 89 63 343 301
Net realized gains/(loss) on sales of securities (41) 145 42 458
Gains on sale of loans 1 4 64 67
Other 129 129 592 598
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Total other income 855 974 3,548 3,546
OTHER EXPENSES
Salaries and employee benefits 1,329 1,293 5,410 5,133
Occupancy, furniture and equipment 398 330 1,503 1,355
Data processing related 151 146 625 597
Losses on lease residuals -- -- -- 90
Taxes, other than income 108 91 334 276
Professional Fees 94 90 444 323
Other 588 592 2,307 2,316
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Total other expenses 2,668 2,542 10,623 10,090
INCOME BEFORE TAX 2,080 2,008 7,838 7,013
INCOME TAX EXPENSE 638 645 2,341 2,003
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NET INCOME $ 1,442 $ 1,363 $ 5,497 $ 5,010
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Basic earnings per share $ 0.54 $ 0.51 $ 2.06 $ 1.89
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Diluted earnings per share $ 0.53 $ 0.50 $ 2.02 $ 1.85
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NORWOOD FINANCIAL CORP.
Financial Highlights (Unaudited)
(dollars in thousands, except per share data)
Three Months Ended December 31 2005 2004
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Net interest income $ 3,963 $ 3,641
Net income 1,442 1,363
Net interest spread (fully taxable equivalent) 3.52% 3.60%
Net interest margin (fully taxable equivalent) 4.01% 3.93%
Return on average assets 1.32% 1.33%
Return on average equity 11.97% 11.98%
Basic earnings per share $ 0.54 $ 0.51
Diluted earnings per share 0.53 0.50
Year Ended December 31
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Net interest income $ 15,263 $ 14,012
Net income 5,497 5,010
Net interest spread (fully taxable equivalent) 3.58% 3.60%
Net interest margin (fully taxable equivalent) 3.99% 3.91%
Return on average assets 1.31% 1.27%
Return on average equity 11.72% 11.39%
Basic earnings per share $ 2.06 $ 1.89
Diluted earnings per share 2.02 1.85
As of December 31
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Total Assets $ 433,556 $ 411,626
Total Loans receivable 290,890 254,757
Allowance for loan losses 3,669 3,448
Total deposits 340,603 318,645
Stockholders' equity 48,108 45,685
Trust Assets under management 86,972 83,397
Book value per share $ 17.18 $ 16.95
Equity to total assets 11.10% 11.10%
Allowance to total loans receivable 1.26% 1.35%
Nonperforming loans to total loans 0.12% 0.03%
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NORWOOD FINANCIAL CORP
Consolidated Balance Sheets (unaudited)
(dollars in thousands)
31-Dec 30-Sep 30-Jun 31-Mar 31-Dec
2005 2005 2005 2005 2004
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ASSETS
Cash and due from banks $ 9,746 $ 9,755 $ 11,895 $ 7,186 $ 7,488
Interest bearing deposits with banks 70 132 119 29 118
Federal funds sold -- 2,295 5,290 -- 13,060
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Cash and cash equivalents 9,816 12,182 17,304 7,215 20,666
Securities available for sale 115,814 113,162 111,497 119,490 116,933
Securities held to maturity 1,452 2,860 3,337 5,103 5,724
Loans receivable (net of unearned Income) 290,890 282,264 275,558 266,032 254,757
Less: Allowance for loan losses 3,669 3,643 3,600 3,523 3,448
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Net loans receivable 287,221 278,621 271,958 262,509 251,309
Investment in FHLB stock 1,620 1,711 1,973 2,477 2,225
Bank premises and equipment, net 5,393 5,454 5,434 5,475 5,489
Foreclosed real estate -- -- -- -- --
Other assets 12,240 11,621 11,052 10,919 9,280
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TOTAL ASSETS $ 433,556 $ 425,611 $ 422,555 $ 413,188 $ 411,626
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LIABILITIES
Deposits:
Non-interest bearing demand $ 50,891 $ 58,061 $ 53,628 $ 46,774 $ 44,450
Interest- bearing deposits 289,712 282,370 285,305 270,174 274,195
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Total deposits 340,603 340,431 338,933 316,948 318,645
Other borrowings 41,564 34,515 33,928 47,956 45,982
Other liabilities 3,281 3,218 2,863 2,689 1,314
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TOTAL LIABILITIES 385,448 378,164 375,724 367,593 365,941
STOCKHOLDERS' EQUITY 48,108 47,447 46,831 45,595 45,685
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 433,556 $ 425,611 $ 422,555 $ 413,188 $ 411,626
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NORWOOD FINANCIAL CORP
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
31-Dec 30-Sep 30-Jun 31-Mar 31-Dec
Three months ended 2005 2005 2005 2005 2004
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INTEREST INCOME
Loans receivable, including fees $ 4,848 $ 4,527 $ 4,288 $ 3,920 $ 3,908
Securities 999 993 1,020 1,041 987
Other 57 58 5 12 45
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Total Interest income 5,904 5,578 5,313 4,973 4,940
INTEREST EXPENSE
Deposits 1,520 1,262 1,102 987 927
Borrowings 421 382 415 416 372
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Total Interest expense 1,941 1,644 1,517 1,403 1,299
NET INTEREST INCOME 3,963 3,934 3,796 3,570 3,641
PROVISION FOR LOAN LOSSES 70 90 90 100 65
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,893 3,844 3,706 3,470 3,576
OTHER INCOME
Service charges and fees 677 648 603 579 633
Income from fiduciary activities 89 78 92 84 63
Net realized gains (losses) on sales of securities (41) 3 3 77 145
Gains on sale of loans 1 8 15 40 4
Other 129 171 152 140 129
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Total other income 855 908 865 920 974
OTHER EXPENSES
Salaries and employee benefits 1,329 1,360 1,334 1,387 1,293
Occupancy, furniture and equipment, net 398 356 365 384 330
Other 941 911 978 880 919
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Total other expenses 2,668 2,627 2,677 2,651 2,542
INCOME BEFORE TAX 2,080 2,125 1,894 1,739 2,008
INCOME TAX EXPENSE 638 643 564 496 645
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NET INCOME $ 1,442 $ 1,482 $ 1,330 $ 1,243 $ 1,363
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Basic earnings per share $ 0.54 $ 0.56 $ 0.50 $ 0.47 $ 0.51
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Diluted earnings per share $ 0.53 $ 0.54 $ 0.49 $ 0.46 $ 0.50
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Book Value per share $ 17.18 $ 17.64 $ 17.41 $ 16.90 $ 16.95
Return on average equity 11.97% 12.43% 11.48% 10.96% 11.98%
Return on average assets 1.32% 1.38% 1.29% 1.24% 1.33%
Net interest spread 3.52% 3.63% 3.64% 3.52% 3.60%
Net interest margin 4.01% 4.06% 4.03% 3.86% 3.93%
Allowance for loan losses to total loans 1.26% 1.29% 1.31% 1.32% 1.35%
Net charge-offs to average loans (annualized) 0.06% 0.07% 0.02% 0.04% 0.05%
Nonperforming loans to total loans 0.12% 0.04% 0.04% 0.03% 0.03%
Nonperforming assets to total assets 0.08% 0.02% 0.02% 0.02% 0.02%
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