FOR IMMEDIATE RELEASE
NORWOOD FINANCIAL CORP
----------------------
ANNOUNCES EARNINGS INCREASE FOR THE THIRD QUARTER
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October 19, 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 September 30 2006 of $1,522,000. This represents an
increase of $40,000, or 2.7%, over the $1,482,000 earned in the similar period
of 2005. Earnings per share (fully diluted) were $.53 in the 2006 period,
compared to $.52 in the similar period in 2005. Annualized return on average
assets for the three months ended September 30, 2006 was 1.35% with an
annualized return on average equity of 12.06%. Net income for the nine months
ended September 30, 2006 totaled $4,331,000, which represents a 6.8% increase
over the $4,055,000 earned in the similar period of 2005. Earnings per share
(fully diluted) reflected a 7.0% increase at $1.52 per share in the 2006 period
compared to $1.42 in the 2005 period.
Total assets as of September 30, 2006 were $453.2 million with loans
receivable of $313.7 million, deposits of $364.6 million and shareholders'
equity of $51.1 million. Total assets have increased $27.6 million, or 6.5% when
compared to September 30, 2005.
Loans receivable have increased $31.4 million, or 11.1%, from the prior
year. The increase in loans was balanced with residential mortgage activity,
including home equity lending increasing $18.2 million and the commercial loan
portfolio growing by $16.5 million. The loan growth was principally funded by a
$24.2 million increase in deposits. Non-performing loans totaled $395,000, or
..13% of total loans, as of September 30, 2006
compared to $107,000, or .04% as of September 30, 2005. The increase is due to
one loan relationship. The Company had net charge-offs of $11,000 for the nine
months ended September 30, 2006 declining from net charge-offs of $85,000 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 $170,000 for the
nine months ended September 30, 2006 compared to $280,000 for the similar period
in 2005. Notwithstanding the lower loan loss provision expense, the allowance
for loan losses increased $185,000 from September 30, 2005 to $3,828,000 and
represented 1.22% of total loans, as of September 30, 2006.
For the three months ended September 30, 2006, net interest income, on
a fully taxable equivalent basis (fte), totaled $4,233,000, an increase of
$140,000 over the similar period in 2005. Net interest margin (fte) for the 2006
period was 3.98% decreasing from 4.06% for the similar period in 2005. The
decrease in net interest margin was principally due to the increase in deposit
costs as a result of rising short-term interest rates, most evident in the CD
portfolio, which was partially offset by an increased amount of loans on the
balance sheet and higher yields on loans. Net interest income (fte) for the nine
months ended September 30, 2006 totaled $12,452,000, an increase of $665,000, or
5.6%, over the similar period in 2005. Net interest margin (fte) for the 2006
period was 3.97% compared to 3.99% in 2005.
Other income for the three months ended September 30, 2006 totaled
$894,000 compared to $908,000 for the similar period in 2005. The decrease was
due in part to a lower level of service charges and fees in the 2006 period.
This was partially offset by a higher level of net realized gains on sales of
securities. For the nine months ended September 30, 2006, other income totaled
$2,721,000 compared to $2,693,000 for the similar period in 2005. The increase
was due to $110,000 gain on sales of mortgage loans
and servicing rights compared to $63,000 in such gains in the similar period of
2005, which was partially offset by a decrease in realized gains on sales of
securities. Net realized gains on sales of securities totaled $66,000 for the
2006 period, decreasing from $83,000 for the similar period in 2005.
Other expenses totaled $2,730,000 for the three months ended September
30, 2006, an increase of $103,000, or 3.9% over $2,627,000 for the similar
period in 2005. The increase is principally due to $122,000 increase in salaries
and employee benefits. For the nine months ended September 30, 2006, other
expenses totaled $8,337,000, an increase of $382,000, or 4.8% over $7,955,000
for the similar period in 2005. Salaries and employee benefits accounted for
$263,000 of the increase.
Mr. Davis remarked, "We are pleased with our solid financial results
through nine months of 2006 in a very challenging environment. Despite the
inverted yield curve, our net interest margins have remained fairly stable
throughout the year. During the fourth quarter, we expect to open our twelfth
office in Tannersville, and also complete our Honesdale Main Office renovation
project, as we continue to make major capital investments to enhance future
growth of our organization."
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 Global 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)
September 30
----------------------
2006 2005
--------- ---------
ASSETS
Cash and due from banks $ 9,448 $ 9,755
Interest bearing deposits with banks 141 132
Fedeal funds sold 1,525 2,295
--------- ---------
Cash and cash equivalents 11,114 12,182
Securities available for sale 112,402 113,162
Securities held to maturity, fair value 2006: $976 2005: $2,902 954 2,860
Loans receivable (net of unearned Income) 313,678 282,264
Less: Allowance for loan losses 3,828 3,643
--------- ---------
Net loans receivable 309,850 278,621
Investment in FHLB Stock 1,634 1,711
Bank premises and equipment,net 5,489 5,454
Accrued interest receivable 2,086 1,888
Other assets 9,641 9,733
--------- ---------
TOTAL ASSETS $ 453,170 $ 425,611
========= =========
LIABILITIES
Deposits:
Non-interest bearing demand $ 63,331 $ 58,061
Interest-bearing 301,275 282,370
--------- ---------
Total deposits 364,606 340,431
Short-term borrowings 15,086 11,515
Other borrowings 18,000 23,000
Accrued interest payable 2,277 1,369
Other liabilities 2,142 1,849
--------- ---------
TOTAL LIABILITIES 402,111 378,164
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value, authorized 10,000,000 shares
issued:2006: 2,841,872 2005: 2,705,715 shares 284 270
Surplus 10,123 5,545
Retained earnings 42,187 42,840
Treasury stock, at cost: 2006: 42,900 shares, 2005: 16,026 shares (1,246) (468)
Unearned ESOP Shares -- (199)
Accumulated other comprehensive income (289) (541)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 51,059 47,447
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 453,170 $ 425,611
========= =========
NORWOOD FINANCIAL CORP.
Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
Three Months Ended September 30 Nine Months Ended September 30
------------------------------- ------------------------------
2006 2005 2006 2005
------- ------- ------- -------
INTEREST INCOME
Loans receivable, including fees $ 5,506 $ 4,527 $15,651 $12,735
Securities 1,105 993 3,221 3,054
Other 36 58 121 75
------- ------- ------- -------
Total Interest income 6,647 5,578 18,993 15,864
INTEREST EXPENSE
Deposits 2,032 1,262 5,360 3,351
Short-term borrowings 235 83 585 294
Other borrowings 278 299 991 919
------- ------- ------- -------
Total Interest expense 2,545 1,644 6,936 4,564
------- ------- ------- -------
NET INTEREST INCOME 4,102 3,934 12,057 11,300
PROVISION FOR LOAN LOSSES 45 90 170 280
------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 4,057 3,844 11,887 11,020
OTHER INCOME
Service charges and fees 616 648 1,850 1,830
Income from fiduciary activities 89 78 261 254
Net realized gains/(loss) on sales of securities 45 3 66 83
Gains on sale of loans 3 8 110 63
Other 141 171 434 463
------- ------- ------- -------
Total other income 894 908 2,721 2,693
OTHER EXPENSES
Salaries and employee benefits 1,482 1,360 4,344 4,081
Occupancy, furniture and equipment 329 356 1,078 1,105
Data processing related 185 161 511 474
Taxes, other than income 110 19 334 226
Professional Fees 62 102 279 350
Other 562 629 1,791 1,719
------- ------- ------- -------
Total other expenses 2,730 2,627 8,337 7,955
INCOME BEFORE TAX 2,221 2,125 6,271 5,758
INCOME TAX EXPENSE 699 643 1,940 1,703
------- ------- ------- -------
NET INCOME $ 1,522 $ 1,482 $ 4,331 $ 4,055
======= ======= ======= =======
Basic earnings per share $ 0.54 $ 0.53* $ 1.55 $ 1.45*
======= ======= ======= =======
Diluted earnings per share $ 0.53 $ 0.52* $ 1.52 $ 1.42*
======= ======= ======= =======
* References to share amounts and per-share amounts reflect the 5% stock
dividend distributed to shareholders on May 26, 2006.
NORWOOD FINANCIAL CORP.
Financial Highlights (Unaudited)
(dollars in thousands, except per share data)
- -------------------------------
Three Months Ended September 30 2006 2005
------------ ------------
Net interest income $ 4,102 $ 3,934
Net income 1,522 1,482
Net interest spread (fully taxable equivalent) 3.34% 3.62%
Net interest margin (fully taxable equivalent) 3.98% 4.06%
Return on average assets 1.35% 1.38%
Return on average equity 12.06% 12.43%
Basic earnings per share $ 0.54 $ 0.53 *
Diluted earnings per share 0.53 0.52 *
- -------------------------------
Nine Months Ended September 30
Net interest income $ 12,057 $ 11,300
Net income 4,331 4,055
Net interest spread (fully taxable equivalent) 3.40% 3.60%
Net interest margin (fully taxable equivalent) 3.97% 3.99%
Return on average assets 1.31% 1.31%
Return on average equity 11.76% 11.63%
Basic earnings per share $ 1.55 $ 1.45 *
Diluted earnings per share 1.52 1.42 *
- -------------------------------
As of September 30
Total Assets $ 453,170 $ 425,611
Total Loans receivable 313,678 282,264
Allowance for loan losses 3,828 3,643
Total deposits 364,606 340,431
Stockholders' equity 51,059 47,447
Trust Assets under management 93,716 86,223
Book value per share $ 18.25 $ 16.80 *
Equity to total assets 11.27% 11.15%
Allowance to total loans receivable 1.22% 1.29%
Nonperforming loans to total loans 0.13% 0.04%
* References to share amounts and per-share amounts reflect the 5% stock
dividend distributed to shareholders on May 26, 2006.
NORWOOD FINANCIAL CORP
Consolidated Balance Sheets (unaudited)
(dollars in thousands)
30-Sep 30-Jun 31-Mar 31-Dec 30-Sep
2006 2006 2006 2005 2005
-------- -------- -------- -------- --------
ASSETS
Cash and due from banks $ 9,448 $ 10,509 $ 9,330 $ 9,746 $ 9,755
Interest bearing deposits with banks 141 179 22 70 132
Federal funds sold 1,525 13,615 -- -- 2,295
-------- -------- -------- -------- --------
Cash and cash equivalents 11,114 24,303 9,352 9,816 12,182
Securities available for sale 112,402 114,441 116,659 115,814 113,162
Securities held to maturity 954 954 953 1,452 2,860
Loans receivable (net of unearned Income) 313,678 299,366 291,840 290,890 282,264
Less: Allowance for loan losses 3,828 3,794 3,743 3,669 3,643
-------- -------- -------- -------- --------
Net loans receivable 309,850 295,572 288,097 287,221 278,621
Investment in FHLB stock 1,634 2,294 2,073 1,620 1,711
Bank premises and equipment, net 5,489 5,457 5,508 5,393 5,454
Other assets 11,727 12,138 11,488 12,240 11,621
-------- -------- -------- -------- --------
TOTAL ASSETS $453,170 $455,159 $434,130 $433,556 $425,611
======== ======== ======== ======== ========
LIABILITIES
Deposits:
Non-interest bearing demand $ 63,331 $ 59,538 $ 54,505 $ 50,891 $ 58,061
Interest-bearing deposits 301,275 293,929 285,002 289,712 282,370
-------- -------- -------- -------- --------
Total deposits 364,606 353,467 339,507 340,603 340,431
Other borrowings 33,086 48,687 42,765 41,564 34,515
Other liabilities 4,419 3,813 3,361 3,281 3,218
-------- -------- -------- -------- --------
TOTAL LIABILITIES 402,111 405,967 385,633 385,448 378,164
STOCKHOLDERS' EQUITY 51,059 49,192 48,497 48,108 47,447
-------- -------- -------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $453,170 $455,159 $434,130 $433,556 $425,611
======== ======== ======== ======== ========
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 2006 2006 2006 2005 2005
------- ------- ------- ------- -------
INTEREST INCOME
Loans receivable, including fees $ 5,506 $ 5,201 $ 4,944 $ 4,848 $ 4,527
Securities 1,105 1,066 1,050 999 993
Other 36 83 2 57 58
------- ------- ------- ------- -------
Total Interest income 6,647 6,350 5,996 5,904 5,578
INTEREST EXPENSE
Deposits 2,032 1,738 1,590 1,520 1,262
Borrowings 513 583 480 421 382
------- ------- ------- ------- -------
Total Interest expense 2,545 2,321 2,070 1,941 1,644
NET INTEREST INCOME 4,102 4,029 3,926 3,963 3,934
PROVISION FOR LOAN LOSSES 45 55 70 70 90
------- ------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 4,057 3,974 3,856 3,893 3,844
OTHER INCOME
Service charges and fees 616 644 590 677 648
Income from fiduciary activities 89 95 77 89 78
Net realized gains (losses) on sales of securities 45 14 7 (41) 3
Gains on sale of loans 3 107 -- 1 8
Other 141 143 150 129 171
------- ------- ------- ------- -------
Total other income 894 1,003 824 855 908
OTHER EXPENSES
Salaries and employee benefits 1,482 1,456 1,406 1,329 1,360
Occupancy, furniture and equipment , net 329 369 380 398 356
Other 919 1,016 980 941 911
------- ------- ------- ------- -------
Total other expenses 2,730 2,841 2,766 2,668 2,627
INCOME BEFORE TAX 2,221 2,136 1,914 2,080 2,125
INCOME TAX EXPENSE 699 660 581 638 643
------- ------- ------- ------- -------
NET INCOME $ 1,522 $ 1,476 $ 1,333 $ 1,442 $ 1,482
======= ======= ======= ======= =======
Basic earnings per share $ 0.54 $ 0.53 $ 0.48* $ 0.52* $ 0.53*
======= ======= ======= ======= =======
Diluted earnings per share $ 0.53 $ 0.52 $ 0.47* $ 0.51* $ 0.52*
======= ======= ======= ======= =======
Book Value per share $ 18.25 $ 17.57 $ 17.29* $ 17.07* $ 16.80*
Return on average equity 12.06% 12.06% 11.14% 11.97% 12.43%
Return on average assets 1.35% 1.34% 1.25% 1.32% 1.38%
Net interest spread 3.34% 3.39% 3.49% 3.52% 3.63%
Net interest margin 3.98% 3.95% 3.98% 4.01% 4.06%
Allowance for loan losses to total loans 1.22% 1.27% 1.28% 1.26% 1.29%
Net charge-offs/(recoveries) to average loans (annualized) 0.01% 0.01% (.01)% 0.06% 0.07%
Nonperforming loans to total loans 0.13% 0.10% 0.14% 0.12% 0.04%
Nonperforming assets to total assets 0.09% 0.07% 0.10% 0.08% 0.02%
* References to share amounts and per-share amounts reflect the 5% stock
dividend distributed to shareholders on May 26, 2006.