NORWOOD FINANCIAL CORP
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ANNOUNCES EARNINGS INCREASE FOR 2006
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Honesdale, PA - January 23, 2007
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, 2006 of $5,910,000, which represented
an increase of $413,000, or 7.5%, over the $5,497,000 earned in 2005. Earnings
per share on a fully diluted basis were $2.07 for the current year compared to
$1.92 in 2005. The Company declared cash dividends totaling $.85 per share in
2006, an increase of $.14 per share, or 19.7%, over the $.71 per share declared
in 2005. The return on average assets for the year was 1.33% with a return on
average equity of 11.85%. Both of these performance measures improved over the
prior year. Earnings for the fourth quarter of 2006 totaled $1,579,000
reflecting a 9.5% increase over the $1,442,000 earned in the similar period of
2005. Earnings per share (diluted) for the current quarter totaled $.55
increasing from $.51 for the prior year.
Total assets as of December 31, 2006 were $454.4 million with loans
receivable of $315.6 million, deposits of $358.1 million and shareholders'
equity of $52.2 million. Total assets have increased $20.8 million from December
31, 2005.
Loans receivable have increased $24.7 million, or 8.5% from the prior
year. The Company had balanced growth throughout the year with the commercial
loan portfolio including commercial real estate, increasing $12.7 million and
residential mortgages, including home equity lending growing $13.1 million. The
majority of the loan growth was
funded with a $17.5 million increase in deposits, principally short-term
certificates of deposit (CDs).
Non-performing loans totaled $409,000 and represented .13% of total
loans as of December 31, 2006 compared to $353,000, or .12%, as of December 31,
2005. The Company had net charge-offs of $61,000 in the current year, decreasing
significantly from $129,000 in 2005. The allowance for loan losses totaled
$3,828,000 and 1.21% of total loans as of December 31, 2006, compared to
$3,669,000 and 1.26% as of year-end 2005.
For the year, net interest income (fully taxable equivalent) totaled
$16,708,000 with a net interest margin (fte) of 3.96% compared to $15,889,000,
and a net interest margin (fte) of 3.99% in 2005. Net interest income (fte) for
the three months ended December 31, 2006 totaled $4,256,000, an increase of
$152,000 over the similar period in 2005. The net interest margin (fte) was
3.94% for the current period compared to 4.01% for the similar period in 2005.
The slight decrease in net interest margin for both the quarter and the year was
principally due to the increase in deposit costs, most evident in the CD
portfolio, which was partially offset by loan volume and higher yields on loans
and investments.
For the year, other income totaled $3,583,000 compared to $3,548,000 in
the prior year. The increase was principally due to $147,000 of gains on sales
of mortgage loans and servicing rights in 2006 compared to $64,000 in similar
gains in 2005. Other income for the three months ended December 31, 2006 totaled
$862,000 compared to $855,000 for the similar period in 2005.
For the year, other expenses totaled $10,957,000, an increase of
$334,000 or 3.1% over the prior year. The increase was principally due to rising
salary and employee benefit
costs. Other expenses totaled $2,620,000 for the three months ended December 31,
2006 compared to $2,668,000 for the 2005 period.
Mr. Davis also noted that during the fourth quarter the Bank opened its
twelfth office which is located in Tannersville, PA. The Bank also completed its
Honesdale Main Office renovation project.
Norwood Financial Corp, through its subsidiary Wayne Bank, operates
twelve 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)
December 31
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2006 2005
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ASSETS
Cash and due from banks $ 9,450 $ 9,746
Interest bearing deposits with banks 67 70
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Cash and cash equivalents 9,517 9,816
Securities available for sale 112,912 115,814
Securities held to maturity, fair value 2006: $971 2005: $1,480 954 1,452
Loans receivable (net of unearned Income) 315,567 290,890
Less: Allowance for loan losses 3,828 3,669
--------- ---------
Net loans receivable 311,739 287,221
Investment in FHLB Stock 1,687 1,620
Bank premises and equipment,net 6,020 5,393
Accrued interest receivable 2,129 1,812
Other assets 9,398 10,428
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TOTAL ASSETS $ 454,356 $ 433,556
========= =========
LIABILITIES
Deposits:
Non-interest bearing demand $ 53,856 $ 50,891
Interest-bearing 304,247 289,712
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Total deposits 358,103 340,603
Short-term borrowings 22,736 18,564
Other borrowings 13,000 23,000
Accrued interest payable 2,894 1,691
Other liabilities 5,392 1,590
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TOTAL LIABILITIES 402,125 385,448
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value, authorized 10,000,000 shares
issued: 2006: 2,840,872 2005: 2,705,715 shares 284 270
Surplus 10,149 5,648
Retained earnings 43,125 43,722
Treasury stock, at cost: 2006: 43,721 shares, 2005: 21,189 shares (1,283) (633)
Unearned ESOP Shares -- (127)
Accumulated other comprehensive (loss) (44) (772)
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TOTAL STOCKHOLDERS' EQUITY 52,231 48,108
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 454,356 $ 433,556
========= =========
NORWOOD FINANCIAL CORP.
Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
Three Months Ended December 31 Year Ended December 31
------------------------------ --------------------------
2006 2005 2006 2005
------- ------- ------- -------
INTEREST INCOME
Loans receivable, including fees $ 5,771 $ 4,848 $21,422 $17,583
Securities 1,159 999 4,380 4,053
Other 26 57 147 132
------- ------- ------- -------
Total Interest income 6,956 5,904 25,949 21,768
INTEREST EXPENSE
Deposits 2,358 1,520 7,718 4,871
Short-term borrowings 238 122 823 416
Other borrowings 234 299 1,225 1,218
------- ------- ------- -------
Total Interest expense 2,830 1,941 9,766 6,505
------- ------- ------- -------
NET INTEREST INCOME 4,126 3,963 16,183 15,263
PROVISION FOR LOAN LOSSES 50 70 220 350
------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 4,076 3,893 15,963 14,913
OTHER INCOME
Service charges and fees 605 677 2,455 2,507
Income from fiduciary activities 94 89 355 343
Net realized gains/(loss) on sales of securities -- (41) 66 42
Gains on sale of loans 37 1 147 64
Other 126 129 560 592
------- ------- ------- -------
Total other income 862 855 3,583 3,548
OTHER EXPENSES
Salaries and employee benefits 1,311 1,329 5,655 5,410
Occupancy, furniture and equipment 368 398 1,446 1,503
Data processing related 189 151 700 625
Taxes, other than income 20 108 354 334
Professional Fees 62 94 341 444
Other 670 588 2,461 2,307
------- ------- ------- -------
Total other expenses 2,620 2,668 10,957 10,623
INCOME BEFORE TAX 2,318 2,080 8,589 7,838
INCOME TAX EXPENSE 739 638 2,679 2,341
------- ------- ------- -------
NET INCOME $ 1,579 $ 1,442 $ 5,910 $ 5,497
======= ======= ======= =======
Basic earnings per share $ 0.56 $ 0.52 * $ 2.11 $ 1.96 *
======= ======= ======= =======
Diluted earnings per share $ 0.55 $ 0.51 * $ 2.07 $ 1.92 *
======= ======= ======= =======
* 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 December 31 2006 2005
- ------------------------------ --------- ---------
Net interest income $ 4,126 $ 3,963
Net income 1,579 1,442
Net interest spread (fully taxable equivalent) 3.25% 3.52%
Net interest margin (fully taxable equivalent) 3.94% 4.01%
Return on average assets 1.38% 1.32%
Return on average equity 12.09% 11.97%
Basic earnings per share $ 0.56 $ 0.52 *
Diluted earnings per share 0.55 0.51 *
Year Ended December 31
- ----------------------
Net interest income $ 16,183 $ 15,263
Net income 5,910 5,497
Net interest spread (fully taxable equivalent) 3.37% 3.58%
Net interest margin (fully taxable equivalent) 3.96% 3.99%
Return on average assets 1.33% 1.31%
Return on average equity 11.85% 11.72%
Basic earnings per share $ 2.11 $ 1.96 *
Diluted earnings per share 2.07 1.92 *
As of December 31
- -----------------
Total Assets $454,356 $433,556
Total Loans receivable 315,567 290,890
Allowance for loan losses 3,828 3,669
Total deposits 358,103 340,603
Stockholders' equity 52,231 48,108
Trust Assets under management 96,879 86,972
Book value per share $ 18.67 $ 17.07 *
Equity to total assets 11.50% 11.10%
Allowance to total loans receivable 1.21% 1.26%
Nonperforming loans to total loans 0.13% 0.12%
* 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)
31-Dec 30-Sep 30-Jun 31-Mar 31-Dec
2006 2006 2006 2006 2005
-------- -------- -------- -------- --------
ASSETS
Cash and due from banks $ 9,450 $ 9,448 $ 10,509 $ 9,330 $ 9,746
Interest bearing deposits with banks 67 141 179 22 70
Federal funds sold -- 1,525 13,615 -- --
-------- -------- -------- -------- --------
Cash and cash equivalents 9,517 11,114 24,303 9,352 9,816
Securities available for sale 112,912 112,402 114,441 116,659 115,814
Securities held to maturity 954 954 954 953 1,452
Loans receivable (net of unearned Income) 315,567 313,678 299,366 291,840 290,890
Less: Allowance for loan losses 3,828 3,828 3,794 3,743 3,669
-------- -------- -------- -------- --------
Net loans receivable 311,739 309,850 295,572 288,097 287,221
Investment in FHLB stock 1,687 1,634 2,294 2,073 1,620
Bank premises and equipment, net 6,020 5,489 5,457 5,508 5,393
Other assets 11,527 11,727 12,138 11,488 12,240
-------- -------- -------- -------- --------
TOTAL ASSETS $454,356 $453,170 $455,159 $434,130 $433,556
======== ======== ======== ======== ========
LIABILITIES
Deposits:
Non-interest bearing demand $ 53,856 $ 63,331 $ 59,538 $ 54,505 $ 50,891
Interest-bearing deposits 304,247 301,275 293,929 285,002 289,712
-------- -------- -------- -------- --------
Total deposits 358,103 364,606 353,467 339,507 340,603
Other borrowings 35,736 33,086 48,687 42,765 41,564
Other liabilities 8,286 4,419 3,813 3,361 3,281
-------- -------- -------- -------- --------
TOTAL LIABILITIES 402,125 402,111 405,967 385,633 385,448
STOCKHOLDERS' EQUITY 52,231 51,059 49,192 48,497 48,108
-------- -------- -------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $454,356 $453,170 $455,159 $434,130 $433,556
======== ======== ======== ======== ========
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 2006 2006 2006 2006 2005
- ------------------ ------- ------- ------- ------- -------
INTEREST INCOME
Loans receivable, including fees $ 5,771 $ 5,506 $ 5,201 $ 4,944 $ 4,848
Securities 1,159 1,105 1,066 1,050 999
Other 26 36 83 2 57
------- ------- ------- ------- -------
Total Interest income 6,956 6,647 6,350 5,996 5,904
INTEREST EXPENSE
Deposits 2,358 2,032 1,738 1,590 1,520
Borrowings 472 513 583 480 421
------- ------- ------- ------- -------
Total Interest expense 2,830 2,545 2,321 2,070 1,941
NET INTEREST INCOME 4,126 4,102 4,029 3,926 3,963
PROVISION FOR LOAN LOSSES 50 45 55 70 70
------- ------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 4,076 4,057 3,974 3,856 3,893
OTHER INCOME
Service charges and fees 605 616 644 590 677
Income from fiduciary activities 94 89 95 77 89
Net realized gains (losses) on sales of securities -- 45 14 7 (41)
Gains on sale of loans 37 3 107 -- 1
Other 126 141 143 150 129
------- ------- ------- ------- -------
Total other income 862 894 1,003 824 855
OTHER EXPENSES
Salaries and employee benefits 1,311 1,482 1,456 1,406 1,329
Occupancy, furniture and equipment, net 368 329 369 380 398
Other 941 919 1,016 980 941
------- ------- ------- ------- -------
Total other expenses 2,620 2,730 2,841 2,766 2,668
INCOME BEFORE TAX 2,318 2,221 2,136 1,914 2,080
INCOME TAX EXPENSE 739 699 660 581 638
------- ------- ------- ------- -------
NET INCOME $ 1,579 $ 1,522 $ 1,476 $ 1,333 $ 1,442
======= ======= ======= ======= =======
Basic earnings per share $ 0.56 $ 0.54 $ 0.53 $ 0.48 * $ 0.52 *
======= ======= ======= ======= ========
Diluted earnings per share $ 0.55 $ 0.53 $ 0.52 $ 0.47 * $ 0.51 *
======= ======= ======= ======= =======
Book Value per share $ 18.67 $ 18.25 $ 17.57 $ 17.29 * $ 17.07 *
Return on average equity 12.09% 12.06% 12.06% 11.14% 11.97%
Return on average assets 1.38% 1.35% 1.34% 1.25% 1.32%
Net interest spread 3.25% 3.34% 3.39% 3.49% 3.52%
Net interest margin 3.94% 3.98% 3.95% 3.98% 4.01%
Allowance for loan losses to total loans 1.21% 1.22% 1.27% 1.28% 1.26%
Net charge-offs/(recoveries) to average loans (annualized) 0.06% 0.01% 0.01% (.01)% 0.06%
Nonperforming loans to total loans 0.13% 0.13% 0.10% 0.14% 0.12%
Nonperforming assets to total assets 0.09% 0.09% 0.07% 0.10% 0.08%
* References to share amounts and per-share amounts reflect the 5% stock
dividend distributed to shareholders on May 26, 2006.