FOR IMMEDIATE RELEASE
NORWOOD FINANCIAL CORP
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ANNOUNCES EARNINGS INCREASE FOR THE SECOND QUARTER
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July 25, 2006-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, 2006 of $1,476,000. This represents an
increase of $146,000, or 10.9%, over the $1,330,000 earned in the similar period
of 2005. Earnings per share (fully diluted) were $.52 in the 2006 period, a
13.0% increase over the $.46 earned in the similar period in 2005. Annualized
return on average assets for the three months ended June 30, 2006 was 1.34% with
an annualized return on average equity of 12.06%. Net income for the six months
ended June 30, 2006 totaled $2,809,000, which represents a 9.1% increase over
the $2,573,000 earned in the similar period of 2005. Earnings per share (fully
diluted) reflected an 8.9% increase at $.98 per share in the 2006 period
compared to $.90 in the 2005 period.
Total assets as of June 30, 2006 were $455.2 million with loans
receivable of $299.4 million, deposits of $353.5 million and shareholders'
equity of $49.2 million. Total assets have increased $32.6 million, or 7.7% when
compared to June 30, 2005.
Loans receivable have increased $23.8 million, or 8.6%, from the prior
year. The increase in loans was centered in residential mortgage activity,
including home equity lending and in the commercial loan portfolio. The loan
growth was funded by a $14.5 million increase in deposits and from increased
borrowings. Non-performing loans totaled
$314,000, or .10% of total loans, as of June 30, 2006 compared to $97,000, or
..04% as of June 30, 2005. The increase is due to one loan relationship for which
the Company is actively pursuing a resolution. The Company had -0- net
charge-offs for the six months ended June 30, 2006 compared to net charge-offs
of $38,000 for the similar period in 2005. As a result of the lower level of net
charge-offs the Company was able to reduce its provision for loan losses to
$125,000 for the six months ended June 30, 2006 compared to $190,000 for the
similar period in 2005. Notwithstanding the lower loan loss provision expense,
the allowance for loan losses increased $194,000 from June 30, 2005 to
$3,794,000 and represented 1.27% of total loans, as of June 30, 2006.
For the three months ended June 30, 2006, net interest income, on a
fully taxable equivalent basis (fte), totaled $4,114,000, an increase of
$180,000 or 4.5% over the similar period in 2005. Net interest margin (fte) for
the 2006 period was 3.95% decreasing from 4.03% for the similar period in 2005.
The decrease in net interest margin was principally due to increase in deposit
costs as a result of rising short-term interest rates partially offset by an
increased amount of loans on the balance sheet and higher yields on loans. Net
interest income (fte) for the six months ended June 30, 2006 totaled $8,220,000,
an increase of $526,000, or 6.8%, over the similar period in 2005. Net interest
margin (fte) for the 2006 period was 3.96% compared to 3.95% in 2005.
Other income for the three months ended June 30, 2006 totaled
$1,003,000 compared to $865,000 for the similar period in 2005. The increase was
due in part to $107,000 gain on sales of mortgage loans and servicing rights
compared to $15,000 in such gains in the similar period in 2005. For the six
months ended June 30, 2006, other income totaled $1,827,000 compared to
$1,785,000 for the similar period in 2005. The increase was partially due to
$107,000 gain on sales of mortgage loans and servicing rights
compared to $55,000 in such gains in the similar period of 2005. Net realized
gains on sales of securities totaled $21,000 for the 2006 period, decreasing
from $80,000 for the similar period in 2005.
Other expenses totaled $2,841,000 for the three months ended June 30,
2006, an increase of $164,000, or 6.1% over $2,677,000 for the similar period in
2005. The increase is partially due to $122,000 increase in salaries and the
cost of employee benefits. For the six months ended June 30, 2006, other
expenses totaled $5,607,000, an increase of $279,000, or 5.2% over $5,328,000
for the similar period in 2005. Salaries and the cost of employee benefits
accounted for $141,000 of the increase.
Mr. Davis remarked, "We are pleased with our solid financial results
through six months of 2006. As a result of this excellent performance, we have
been able to increase our quarterly cash dividend by $.01 per share. Taking into
account the 5% stock dividend paid in May, the current dividend payable August
1, 2006 at $.21 per share, is 22.5% higher than the dividend paid a year ago."
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 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.
Contact: Lewis J. Critelli
Executive Vice President &
Chief Financial Officer
NORWOOD FINANCIAL CORP.
570-253-1455
www.waynebank.com
NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
June 30
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2006 2005
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ASSETS
Cash and due from banks $ 10,509 $ 11,895
Interest bearing deposits with banks 179 119
Fedeal funds sold 13,615 5,290
------------ -------------
Cash and cash equivalents 24,303 17,304
Securities available for sale 114,441 111,497
Securities held to maturity, fair value 2006: $971
2005: $3,415 954 3,337
Loans receivable (net of unearned Income) 299,366 275,558
Less: Allowance for loan losses 3,794 3,600
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Net loans receivable 295,572 271,958
Investment in FHLB Stock 2,294 1,973
Bank premises and equipment,net 5,457 5,434
Accrued interest receivable 1,965 1,715
Other assets 10,173 9,337
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TOTAL ASSETS $ 455,159 $ 422,555
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LIABILITIES
Deposits:
Non-interest bearing demand $ 59,538 $ 53,628
Interest-bearing 293,929 285,305
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Total deposits 353,467 338,933
Short-term borrowings 13,687 10,928
Other borrowings 35,000 23,000
Accrued interest payable 1,760 1,149
Other liabilities 2,053 1,714
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TOTAL LIABILITIES 405,967 375,724
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value, authorized 10,000,000 shares
issued:2006: 2,841,000 2005: 2,705,715 shares 284 270
Surplus 5,858 5,525
Retained earnings 45,388 41,837
Treasury stock, at cost: 2006: 40,975 shares,
2005: 15,979 shares (1,205) (449)
Unearned ESOP Shares (27) (249)
Accumulated other comprehensive income (1,106) (103)
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TOTAL STOCKHOLDERS' EQUITY 49,192 46,831
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 455,159 $ 422,555
============ =============
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
---------------------------- -------------------------
2006 2005 2006 2005
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INTEREST INCOME
Loans receivable, including fees $ 5,201 $ 4,288 $ 10,145 $ 8,208
Securities 1,066 1,020 2,116 2,061
Other 83 5 85 17
------------ ------------- ----------- ------------
Total Interest income 6,350 5,313 12,346 10,286
INTEREST EXPENSE
Deposits 1,738 1,102 3,328 2,089
Short-term borrowings 163 112 350 211
Other borrowings 420 303 713 620
------------ ------------- ----------- ------------
Total Interest expense 2,321 1,517 4,391 2,920
------------ ------------- ----------- ------------
NET INTEREST INCOME 4,029 3,796 7,955 7,366
PROVISION FOR LOAN LOSSES 55 90 125 190
------------ ------------- ----------- ------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,974 3,706 7,830 7,176
OTHER INCOME
Service charges and fees 644 603 1,234 1,182
Income from fiduciary activities 95 92 172 176
Net realized gains/(loss) on sales of securities 14 3 21 80
Gains on sale of loans 107 15 107 55
Other 143 152 293 292
------------ ------------- ----------- ------------
Total other income 1,003 865 1,827 1,785
OTHER EXPENSES
Salaries and employee benefits 1,456 1,334 2,862 2,721
Occupancy, furniture and equipment 369 365 749 749
Data processing related 170 153 326 313
Taxes, other than income 111 109 224 207
Professional Fees 104 139 217 248
Other 631 577 1,229 1,090
------------ ------------- ----------- ------------
Total other expenses 2,841 2,677 5,607 5,328
INCOME BEFORE TAX 2,136 1,894 4,050 3,633
INCOME TAX EXPENSE 660 564 1,241 1,060
------------ ------------- ----------- ------------
NET INCOME $ 1,476 $ 1,330 $ 2,809 $ 2,573
============ ============= =========== ============
Basic earnings per share $ 0.53 $ 0.47 $ 1.00 $ 0.92
============ ============= =========== ============
Diluted earnings per share $ 0.52 $ 0.46 $ 0.98 $ 0.90
============ ============= =========== ============
Per share amounts have been adjusted for a 5% stock dividend paid on May 26,
2006
NORWOOD FINANCIAL CORP.
Financial Highlights (Unaudited)
(dollars in thousands, except per share data)
2006 2005
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Three Months Ended June 30
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Net interest income $ 4,029 $ 3,796
Net income 1,476 1,330
Net interest spread (fully taxable equivalent) 3.39% 3.65%
Net interest margin (fully taxable equivalent) 3.95% 4.03%
Return on average assets 1.34% 1.29%
Return on average equity 12.06% 11.48%
Basic earnings per share $ 0.53 $ 0.47
Diluted earnings per share 0.52 0.46
Six Months Ended June 30
- ------------------------
Net interest income $ 7,955 $ 7,366
Net income 2,809 2,573
Net interest spread (fully taxable equivalent) 3.44% 3.58%
Net interest margin (fully taxable equivalent) 3.96% 3.95%
Return on average assets 1.30% 1.27%
Return on average equity 11.60% 11.22%
Basic earnings per share $ 1.00 $ 0.92
Diluted earnings per share 0.98 0.90
As of June 30
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Total Assets $ 455,159 $ 422,555
Total Loans receivable 299,366 275,558
Allowance for loan losses 3,794 3,600
Total deposits 353,467 338,933
Stockholders' equity 49,192 46,831
Trust Assets under management 89,075 83,487
Book value per share $ 17.57 $ 16.58
Equity to total assets 10.81% 11.08%
Allowance to total loans receivable 1.27% 1.31%
Nonperforming loans to total loans 0.10% 0.04%
Per share amounts have been adjusted for a 5% stock dividend paid on May
26, 2006
NORWOOD FINANCIAL CORP
Consolidated Balance Sheets (unaudited)
(dollars in thousands)
30-Jun 31-Mar 31-Dec 30-Sep 30-Jun
2006 2006 2005 2005 2005
------------ ------------- ----------- ------------ -------------
ASSETS
Cash and due from banks $ 10,509 $ 9,330 $ 9,746 $ 9,755 $ 11,895
Interest bearing deposits with banks 179 22 70 132 119
Federal funds sold 13,615 --- --- 2,295 5,290
------------ ------------- ----------- ------------ -------------
Cash and cash equivalents 24,303 9,352 9,816 12,182 17,304
Securities available for sale 114,441 116,659 115,814 113,162 111,497
Securities held to maturity 954 953 1,452 2,860 3,337
Loans receivable (net of unearned Income) 299,366 291,840 290,890 282,264 275,558
Less: Allowance for loan losses 3,794 3,743 3,669 3,643 3,600
------------ ------------- ----------- ------------ -------------
Net loans receivable 295,572 288,097 287,221 278,621 271,958
Investment in FHLB stock 2,294 2,073 1,620 1,711 1,973
Bank premises and equipment, net 5,457 5,508 5,393 5,454 5,434
Other assets 12,138 11,488 12,240 11,621 11,052
------------ ------------- ----------- ------------ -------------
TOTAL ASSETS $ 455,159 $ 434,130 $ 433,556 $ 425,611 $ 422,555
============ ============= =========== ============ =============
LIABILITIES
Deposits:
Non-interest bearing demand $ 59,538 $ 54,505 $ 50,891 $ 58,061 $ 53,628
Interest- bearing deposits 293,929 285,002 289,712 282,370 285,305
------------ ------------- ----------- ------------ -------------
Total deposits 353,467 339,507 340,603 340,431 338,933
Other borrowings 48,687 42,765 41,564 34,515 33,928
Other liabilities 3,813 3,361 3,281 3,218 2,863
------------ ------------- ----------- ------------ -------------
TOTAL LIABILITIES 405,967 385,633 385,448 378,164 375,724
STOCKHOLDERS' EQUITY 49,192 48,497 48,108 47,447 46,831
------------ ------------- ----------- ------------ -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 455,159 $ 434,130 $ 433,556 $ 425,611 $ 422,555
============ ============= =========== ============ =============
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 2006 2006 2005 2005 2005
------------ ------------- ----------- ------------ -------------
INTEREST INCOME
Loans receivable, including fees $ 5,201 $ 4,944 $ 4,848 $ 4,527 $ 4,288
Securities 1,066 1,050 999 993 1,020
Other 83 2 57 58 5
------------ ------------- ----------- ------------ -------------
Total Interest income 6,350 5,996 5,904 5,578 5,313
INTEREST EXPENSE
Deposits 1,738 1,590 1,520 1,262 1,102
Borrowings 583 480 421 382 415
------------ ------------- ----------- ------------ -------------
Total Interest expense 2,321 2,070 1,941 1,644 1,517
NET INTEREST INCOME 4,029 3,926 3,963 3,934 3,796
PROVISION FOR LOAN LOSSES 55 70 70 90 90
------------ ------------- ----------- ------------ -------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,974 3,856 3,893 3,844 3,706
OTHER INCOME
Service charges and fees 644 590 677 648 603
Income from fiduciary activities 95 77 89 78 92
Net realized gains (losses) on sales of securities 14 7 (41) 3 3
Gains on sale of loans 107 --- 1 8 15
Other 143 150 129 171 152
------------ ------------- ----------- ------------ -------------
Total other income 1,003 824 855 908 865
OTHER EXPENSES
Salaries and employee benefits 1,456 1,406 1,329 1,360 1,334
Occupancy, furniture and equipment , net 369 380 398 356 365
Other 1,016 980 941 911 978
------------ ------------- ----------- ------------ -------------
Total other expenses 2,841 2,766 2,668 2,627 2,677
INCOME BEFORE TAX 2,136 1,914 2,080 2,125 1,894
INCOME TAX EXPENSE 660 581 638 643 564
------------ ------------- ----------- ------------ -------------
NET INCOME $ 1,476 $ 1,333 $ 1,442 $ 1,482 $ 1,330
============ ============= =========== ============ =============
Basic earnings per share $ 0.53 $ 0.48 $ 0.52 $ 0.53 $ 0.47
============ ============= =========== ============ =============
Diluted earnings per share $ 0.52 $ 0.47 $ 0.51 $ 0.52 $ 0.46
============ ============= =========== ============ =============
Book Value per share $ 17.57 $ 17.29 $ 17.07 $ 16.80 $ 16.58
Return on average equity 12.06% 11.14% 11.97% 12.43% 11.48%
Return on average assets 1.34% 1.25% 1.32% 1.38% 1.29%
Net interest spread 3.39% 3.49% 3.52% 3.63% 3.65%
Net interest margin 3.95% 3.98% 4.01% 4.06% 4.03%
Allowance for loan losses to total loans 1.27% 1.28% 1.26% 1.29% 1.31%
Net charge-offs/(recoveries) to average loans (annualized) 0.01% (.01)% 0.06% 0.07% 0.02%
Nonperforming loans to total loans 0.10% 0.14% 0.12% 0.04% 0.04%
Nonperforming assets to total assets 0.07% 0.10% 0.08% 0.02% 0.02%
Per share amounts have been adjusted for a 5% stock dividend paid on May 26,2006