EX-99.1 2 ex99-1.htm PRESS RELEASE ex99-1.htm


 FOR IMMEDIATE RELEASE

NORWOOD FINANCIAL CORP
ANNOUNCES EARNINGS FOR THE THIRD QUARTER

October 21, 2010-Honesdale, PA
 
Lewis J. Critelli, President and Chief Executive Officer of Norwood Financial Corp. (Nasdaq Global Market-NWFL) and its subsidiary, Wayne Bank announced earnings for the three months ended September 30, 2010 of $1,890,000.  This represents an increase of $115,000, or 6.5%, over the $1,775,000 earned in the third quarter of 2009.  Earnings per share (fully diluted) were $.68 in the 2010 period, increasing from the $.64 earned in the similar period of last year.  Annualized return on average assets for the three months ended September 30, 2010 was 1.39% with an annualized return on average equity of 10.98%.  Net income for the nine months ended September 30, 2010 totaled $5,505,000, which is $244,000, or 4.6% higher than the similar period of 2009.  Earnings per share (fully diluted) for the nine months ended September 30, 2010 totaled $1.99 per share compared to $1.92 per share in the 2009 period.
 
Total assets as of September 30, 2010 were $534.6 million with loans receivable of $358.4 million, deposits of $398.7 million and stockholders’ equity of $68.4 million.  Total assets have increased $19.7 million during the twelve months ended September 30, 2010.
 
Loans receivable decreased $1.1 million from September 30, 2009 due to the sale of fixed rate residential mortgage loans.  The commercial loan portfolio, principally real estate related, increased $5.0 million, while installment loans decreased $2.2 million.  During the twelve month period ending September 30, 2010, the Company experienced a significant volume of residential mortgage activity but sold $10.6 million of fixed-rate residential mortgages, principally with 30 year terms, for purposes of interest rate risk
 
1
 
 
 
 
 
management.  As a result, mortgage loans outstanding decreased $3.9 million for the period.
 
Non-performing assets, which include non-performing loans and foreclosed real estate owned, totaled $4,399,000 and represented .82% of total assets as of September 30, 2010 compared to $5,407,000 and 1.02% of assets as of December 31, 2009 and $3,739,000 or .73% of total assets as of September 30, 2009.  Net charge-offs were $158,000 for the quarter and totaled $670,000 for the nine months ended September 30, 2010 compared to $51,000 and $155,000, respectively, for the similar periods in 2009.  The provision for loan losses totaled $250,000 and $730,000 for the three and nine month periods ended September 30, 2010, respectively, compared to $140,000 and $585,000, respectively, for the similar periods in 2009.  The allowance for loan losses totaled $5,513,000 as of September 30, 2010 and represented 1.54% of total loans, increasing from $4,663,000 as of September 30, 2009 and 1.30% of total loans.
 
For the three months ended September 30, 2010, net interest income, on a fully taxable equivalent basis (fte), totaled $5,192,000, which represents an increase of $219,000, or 4.4%, compared to $4,973,000 for the similar period in 2009.  Net interest margin (fte) for the 2010 period was 4.03% compared to 4.07% for the similar period in 2009.  The decrease in net interest margin was principally due to growth in lower yielding assets such as interest bearing deposits with banks as well as reduced yields on new investment security purchases.  This was partially offset by a decrease of 56 basis points in the cost of funds.  Net interest income (fte) for the nine months ended September 30, 2010 totaled $15,461,000, an increase of $624,000, or 4.2%, over the similar period in 2009.  Net interest margin (fte) year to date for the 2010 period was 4.05% compared to 4.08% in 2009.
 
2
 
 
 
 
 
 
Other income for the three months ended September 30, 2010 totaled $1,035,000 compared to $1,018,000 for the similar period in 2009.  The increase was principally due to increased gains on the sales of investment securities and a higher level of income from fiduciary activities.  These increases helped to offset a reduced level of service charges on deposits.  For the nine months ended September 30, 2010, other income totaled $3,053,000 compared to $3,467,000 in the 2009 period.  The 2010 period includes $208,000 in gains and servicing rights on the sale of $10.5 million of residential mortgage loans compared to $296,000 in similar gains on sales of $21.6 million of mortgage loans in the 2009 period.  Gains on the sales of investment securities totaled $380,000 on sales of $23.8 million for the 2010 period compared to $423,000 on sales of $14.7 million in the 2009 period.  The proceeds from investment securities sales were reinvested to provide current period income and to add protection from rising interest rates.  The Company also had a $150,000 gain on the sale of deposits related to a branch closure, in the 2009 period.
 
Other expenses totaled $3,112,000 for the three months ended September 30, 2010, compared to $3,174,000 in the similar period of 2009.  The decrease was principally related to a lower level of foreclosed real estate costs which totaled $3,000 in the 2010 period and $130,000 for the 2009 period.  For the nine months ended September 30, 2010, other expenses total $9,448,000 compared to $9,769,000 for the similar period in 2009, a decrease of $321,000 due to reduced FDIC assessments related to a special one-time assessment incurred in 2009 and a lower level of foreclosed real estate owned costs which totaled $32,000 in the 2010 period and $148,000 in 2009.
 
Mr. Critelli commented, “Even though we are operating in a very challenging environment, we believe the Company had a very solid first three quarters of 2010.  Our
 
3
 
 
 
 
 
 
core earnings are strong, net interest margin remains close to 4.00% and our capital levels are at the top of our peer group.  However, our economy continues to experience a high unemployment rate and a soft real estate market.  These factors will continue to have a negative impact on our customers throughout 2010 and into 2011.  Though we see near term pressure, we believe that we are well positioned to take advantage of the opportunities available as the economy rebounds.”
 
Norwood Financial Corp., through its subsidiary Wayne Bank, operates eleven offices in Wayne, Pike and Monroe Counties, Pennsylvania.  The Company’s stock is traded on the Nasdaq Global Market, under the symbol, “NWFL”.
 
Forward-Looking Statements. 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 federal and state laws, changes in the absolute and relative levels of interest rates, the ability to control costs and expenses, demand for real estate, general economic conditions and the effectiveness of governmental responses thereto.  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.
 
Non-GAAP Financial Measures
 
This release references tax-equivalent interest income and net interest income, which are non-GAAP financial measures.  Tax-equivalent interest income and net interest income are derived from GAAP interest income and net interest income using an assumed tax rate
 
4
 
 
 
 
 
of 34%.  We believe the presentation of interest income and net interest income on a tax–equivalent basis ensures comparability of interest income and net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice.
 
The following reconciles net interest income to net interest income on a fully taxable equivalent basis:
 
 
Three months ended
  
Nine months ended
(dollars in thousands)
September 30,
  
September 30,
 
  2010
  
   2009
  
    2010
  
   2009
Net interest income
$4,919
  
$4,766
  
$14,748
  
$14,282
Tax equivalent basis adjustment using 34% marginal tax rate
273
  
207
  
713
  
555
Net interest income on a fully taxable equivalent basis
$5,192
  
$4,973
  
$15,461
  
$14,837


Contact:
William S. Lance
      
 
Senior Vice President &
      
 
Chief Financial Officer
      
 
NORWOOD FINANCIAL CORP
      
 
570-253-8505
      
 
www.waynebank.com
      
 
5

 
 
 

 
            
NORWOOD FINANCIAL CORP.
            
Consolidated Balance Sheets
            
(dollars in thousands, except share data)
            
 (unaudited)
            
   
September 30
   
2010
    
2009
  
ASSETS
  
 
    
 
  
   Cash and due from banks
 $
9,057
  
 $
8,769
 
   Federal funds sold
  
3,000
    
3,000
  
   Interest-bearing deposits with banks
  
7,696
    
280
  
          Cash and cash equivalents
  
19,753
    
12,049
  
             
  Securities available for sale
  
139,308
    
126,349
  
  Securities held to maturity,  fair value 2010: $177 and 2009:  $725
169
    
708
  
  Loans receivable (net of unearned Income)
  
358,354
    
359,482
  
  Less: Allowance for loan losses
  
5,513
    
4,663
  
     Net loans receivable
  
352,841
    
354,819
  
  Investment in FHLB Stock, at cost
  
3,538
    
3,538
  
  Bank premises and equipment, net
  
5,012
    
5,258
  
  Bank owned life insurance
  
8,161
    
8,329
  
  Foreclosed real estate owned
  
748
    
562
  
  Accrued interest receivable
  
2,342
    
2,315
  
  Other assets
  
2,685
    
940
  
          TOTAL ASSETS
 $
534,557
  
 $
514,867
 
   
 
    
 
  
LIABILITIES
  
 
    
 
  
   Deposits:
            
     Non-interest bearing demand
 $
66,331
  
 $
63,600
 
     Interest-bearing
  
332,321
    
319,263
 
          Total deposits
  
398,652
    
382,863
  
  Short-term borrowings
  
24,530
    
19,553
 
  Other borrowings
  
38,000
    
43,000
 
  Accrued interest payable
  
1,652
    
2,365
 
  Other liabilities
  
3,280
    
3,350
  
            TOTAL LIABILITIES
  
466,114
    
451,131
  
             
STOCKHOLDERS' EQUITY
            
  Common Stock, $.10 par value, authorized 10,000,000 shares
    
           issued: 2,840,872
  
284
    
284
  
  Surplus
  
9,815
    
9,782
  
  Retained earnings
  
57,642
    
53,430
  
  Treasury stock, at cost: 2010: 79,977 shares, 2009: 78,089 shares
(2,437
  )  
(2,420
  )
  Accumulated other comprehensive income
  
3,139
    
2,660
  
           TOTAL STOCKHOLDERS' EQUITY
  
68,443
    
63,736
  
             
          TOTAL LIABILITIES AND
            
                 STOCKHOLDERS' EQUITY
 $
534,557
  
 $
514,867
 
 
 
 

   
 
              
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
   
2010
 
2009
  
2010
 
2009
  
INTEREST INCOME
                  
    Loans receivable, including fees
 $
5,266
 $
5,382
 $
15,894
 $
16,095
  
    Securities
  
1,115
  
1,297
  
3,477
  
4,010
  
    Other
  
14
  
1
  
43
  
8
  
         Total Interest income
  
6,395
  
6,680
  
19,414
  
20,113
  
   
 
  
 
  
 
  
 
  
INTEREST EXPENSE
                  
    Deposits
  
1,031
  
1,433
  
3,332
  
4,354
  
    Short-term borrowings
  
26
  
60
  
87
  
229
  
    Other borrowings
  
419
  
421
  
1,247
  
1,248
  
        Total Interest expense
 
1,476
 
1,914
 
4,666
 
5,831
  
NET INTEREST INCOME
  
4,919
  
4,766
  
14,748
  
14,282
  
PROVISION FOR LOAN LOSSES
 
250
  
140
  
730
  
585
  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
 
4,669
  
4,626
  
14,018
  
13,697
  
 
                  
OTHER INCOME
                  
    Service charges and fees
  
587
  
614
  
1,680
  
1,854
  
    Income from fiduciary activities
  
121
  
99
  
300
  
263
  
    Net realized gains on sales of securities
  
161
  
90
  
380
  
423
  
    Gains on sale of loans and servicing rights
  
3
  
42
  
208
  
296
  
    Gain on sale of deposits
  
0
  
0
  
0
  
150
  
    Other
  
163
  
173
  
485
  
481
  
           Total other income
  
1,035
  
1,018
  
3,053
  
3,467
  
   
 
  
 
  
 
  
 
  
OTHER EXPENSES
                  
    Salaries and  employee benefits
  
1,657
  
1,611
  
4,844
  
4,820
  
    Occupancy, furniture and equipment
  
388
  
367
  
1,190
  
1,231
  
    Data processing related
  
195
  
194
  
607
  
593
  
    Taxes, other than income
  
77
  
139
  
374
  
414
  
    Professional Fees
  
81
  
100
  
358
  
302
  
    FDIC Insurance assessment
  
121
  
133
  
357
  
617
  
    Foreclosed real estate owned
  
3
  
130
  
32
  
148
  
    Other
  
590
  
500
  
1,686
  
1,644
  
             Total other expenses
  
3,112
  
3,174
  
9,448
  
9,769
  
                   
INCOME BEFORE TAX
  
2,592
  
2,470
  
7,623
  
7,395
  
INCOME TAX EXPENSE
  
702
  
695
  
2,118
  
2,134
  
NET INCOME
 $
1,890
 $
1,775
 $
5,505
 $
5,261
  
                   
Basic earnings per share
 $
0.68
 $
0.64
 $
1.99
 $
1.92
  
           
 
      
Diluted earnings per share
 $
0.68
 $
0.64
 $
1.99
 $
1.90
  
 

 
 
 

 
 
        
NORWOOD FINANCIAL CORP.
          
Financial Highlights (Unaudited)
          
(dollars in thousands, except per share data)
          
           
For the Three Months Ended September 30
  
2010
  
2009
 
           
Net interest income
 $
4,919
 $
4,766
  
Net income
  
1,890
  
1,775
  
           
Net interest spread (fully taxable equivalent)
  
3.72%
 
3.63%
  
Net interest margin (fully taxable equivalent)
  
4.03%
 
4.07%
  
Return on average assets
  
1.39%
  
1.40%
  
Return on average equity
  
10.98%
  
11.25%
  
Basic  earnings per share
 $
0.68
 $
0.64
  
Diluted earnings per share
  
0.68
  
0.64
  
           
For the Nine Months Ended September 30
          
           
Net interest income
 $
14,748
 $
14,282
  
Net income
  
5,505
  
5,261
  
           
Net interest spread (fully taxable equivalent)
  
3.71%
  
3.64%
  
Net interest margin (fully taxable equivalent)
  
4.05%
  
4.08%
  
Return on average assets
  
1.38%
  
1.39%
  
Return on average equity
  
11.04%
  
11.51%
  
Basic  earnings per share
 $
1.99
 $
1.92
  
Diluted earnings per share
  
1.99
  
1.90
  
           
As of September 30
          
           
Total Assets
 $
534,557
 $
514,867
  
Total loans receivable
  
358,354
  
359,482
  
Allowance for loan  losses
  
5,513
  
4,663
  
Total deposits
  
398,652
  
382,863
  
Stockholders' equity
  
68,443
  
63,736
  
Trust Assets  under management
  
109,253
  
99,042
  
           
Book value per share
 $
24.79
 $
23.07
  
Equity to total assets
  
12.80%
  
12.38%
  
Allowance to total loans receivable
  
1.54%
  
1.30%
  
Nonperforming loans to total loans
  
1.02%
  
0.88%
  
Nonperforming assets to total assets
  
0.82%
  
0.73%
  
 
          
 
 

 
 
 

                     
NORWOOD FINANCIAL CORP.
      
 
            
Consolidated Balance Sheets (unaudited)
                    
(dollars in thousands)
                    
   
 Sept 30
  
 June 30
  
   March 31
   Dec 31
  
 Sept 30
   
2010
  
2010
  
2010
  
2009
  
2009
ASSETS
              
 
  
 
   Cash and due from banks
 $
9,057
 $
6,168
 $
7,945
 $
6,498
 $
8,769
   Interest-bearing deposits with banks
  
7,696
  
25,374
  
14,672
  
7,857
  
280
   Federal funds sold
  
3,000
  
3,000
  
3,000
  
3,000
  
3,000
        Cash and cash equivalents
  
19,753
  
34,542
  
25,617
  
17,355
  
12,049
                     
  Securities available for sale
  
139,308
  
141,245
  
125,653
  
130,577
  
126,349
  Securities held to maturity
  
169
  
169
  
168
  
708
  
708
  Loans receivable (net of unearned Income)
  
358,354
  
353,933
  
357,587
  
363,474
  
359,482
   Less: Allowance for loan losses
  
5,513
  
5,421
  
5,362
  
5,453
  
4,663
     Net loans receivable
  
352,841
  
348,512
  
352,225
  
358,021
  
354,819
  Investment in FHLB stock
  
3,538
  
3,538
  
3,538
  
3,538
  
3,538
  Bank premises and equipment, net
  
5,012
  
5,061
  
5,126
  
5,189
  
5,258
  Foreclosed real estate owned
  
748
  
382
  
392
  
392
  
562
  Other assets
  
13,188
  
13,131
  
13,798
  
13,916
  
11,584
          TOTAL ASSETS
 $
534,557
 $
546,580
 $
526,517
 $
529,696
 $
514,867
                     
LIABILITIES
                    
   Deposits:
                    
     Non-interest bearing demand
 $
66,331
 $
63,408
 $
60,144
 $
59,821
 $
63,600
     Interest-bearing deposits
  
332,321
  
344,355
  
331,512
  
331,652
  
319,263
          Total deposits
  
398,652
  
407,763
  
391,656
  
391,473
  
382,863
   Other borrowings
  
62,530
  
67,378
  
64,781
  
68,803
  
62,553
   Other liabilities
  
4,932
  
4,673
  
4,977
  
4,949
  
5,715
            TOTAL LIABILITIES
  
466,114
  
479,814
  
461,414
  
465,225
  
451,131
                     
STOCKHOLDERS' EQUITY
  
68,443
  
66,766
  
65,103
  
64,471
  
63,736
                     
          TOTAL LIABILITIES AND
                    
                 STOCKHOLDERS' EQUITY
 $
534,557
 $
546,580
 $
526,517
 $
529,696
 $
514,867
 
 

 
 
 

                     
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
  
2010
  
2010
  
2010
  
2009
  
2009
INTEREST INCOME
                    
    Loans receivable, including fees
 $
5,266
 $
5,218
 $
5,410
 $
5,428
 $
5,382
    Securities
  
1,115
  
1,141
  
1,221
  
1,283
  
1,297
    Other
  
14
  
18
  
11
  
11
  
1
         Total Interest income
  
6,395
  
6,377
  
6,642
  
6,722
  
6,680
                     
INTEREST EXPENSE
                    
    Deposits
  
1,031
  
1,102
  
1,199
  
1,411
  
1,433
    Borrowings
  
445
  
443
  
446
  
484
  
481
        Total Interest expense
  
1,476
  
1,545
  
1,645
  
1,895
  
1,914
NET INTEREST INCOME
  
4,919
  
4,832
  
4,997
  
4,827
  
4,766
PROVISION FOR LOAN LOSSES
  
250
  
150
  
330
  
1,100
  
140
NET INTEREST INCOME AFTER PROVISION
  
 
  
 
  
 
  
 
  
 
     FOR LOAN LOSSES
  
4,669
  
4,682
  
4,667
  
3,727
  
4,626
                     
OTHER INCOME
                    
    Service charges and fees
  
587
  
570
  
523
  
622
  
614
    Income from fiduciary activities
  
121
  
93
  
86
  
91
  
99
    Net realized gains (losses) on sales of securities
161
  
64
  
155
  
40
  
90
    Gains on sale of loans and servicing rights
  
3
  
130
  
75
  
185
  
42
    Gain on sale of deposits
   0   0   0   -   -
    Earnings and proceeds on life insurance
  
96
  
96
  
102
  
913
  
102
    Other
  
67
  
63
  
61
  
74
  
71
           Total other income
  
1,035
  
1,016
  
1,002
  
1,925
  
1,018
                     
OTHER EXPENSES
                    
    Salaries and  employee benefits
  
1,657
  
1,572
  
1,615
  
2,009
  
1,611
    Occupancy, furniture and equipment , net
  
388
  
408
  
394
  
360
  
367
    Foreclosed real estate owned
  
3
  
13
  
16
  
288
  
130
    FDIC insurance assessment
  
121
  
118
  
118
  
93
  
133
    Other
  
943
  
1,065
  
1,017
  
952
  
933
             Total other expenses
  
3,112
  
3,176
  
3,160
  
3,702
  
3,174
   
 
  
 
  
 
  
 
  
 
INCOME BEFORE TAX
  
2,592
  
2,522
  
2,509
  
1,950
  
2,470
INCOME TAX EXPENSE
  
702
  
704
  
712
  
148
  
695
NET INCOME
 $
1,890
 $
1,818
 $
1,797
 $
1,802
 $
1,775
   
 
  
 
  
 
  
 
  
 
Basic  earnings per share
 $
0.68
 $
0.66
 $
0.65
 $
0.65
 $
0.64
 
                    
Diluted earnings per share
 $
0.68
 $
0.66
 $
0.65
 $
0.65
 $
0.64
                     
Book Value per share
$
24.79
$
24.16
$
23.52
$
23.25
$
23.07
                     
Return on average equity
  
10.98%
  
11.03%
  
11.10%
  
11.09%
  
11.25%
Return on average assets
  
1.39%
  
1.36%
  
1.38%
  
1.39%
  
1.40%
                     
Net interest spread
  
3.71%
  
3.64%
  
3.79%
  
3.55%
  
3.63%
Net interest margin
  
4.03%
  
3.96%
  
4.14%
  
3.96%
  
4.07%
                     
Allowance for loan losses to total loans
  
1.54%
  
1.53%
  
1.50%
  
1.50%
  
1.30%
Net charge-offs to average loans (annualized)
  
0.18%
  
0.10%
  
0.47%
  
0.34%
  
0.06%
Nonperforming loans to total loans
  
1.02%
  
1.06%
  
1.12%
  
1.38%
  
0.88%
Nonperforming assets to total assets
  
0.82%
  
0.76%
  
0.83%
  
1.02%
  
0.73%