Norwood Financial Corp Announces Earnings for the Fourth Quarter and Year

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Norwood Financial Corp (NWFL) reported a significant increase in earnings for Q4 2020, totaling $5,513,000, up from $3,596,000 in Q4 2019. For the year, net income rose to $15,080,000, reflecting a $865,000 increase over 2019. This performance was bolstered by the acquisition of UpState New York Bancorp, completed in July 2020. However, the company faced a $4,200,000 rise in loan loss provisions and $2,049,000 in merger-related expenses. EPS decreased from $2.25 in 2019 to $2.09 for 2020.

Positive

Q4 2020 earnings increased by $1,917,000 compared to Q4 2019.
Annual net income grew by $865,000.
Acquisition of UpState contributed positively to earnings.
Cash dividend increased by 4% to $0.26 per share.

Negative

Provision for loan losses increased by $4,200,000.
Merger-related expenses totaled $2,049,000.

01/27/2021 - 08:15 AM

HONESDALE, Pa., Jan. 27, 2021 (GLOBE NEWSWIRE) -- 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 December 31, 2020 of $5,513,000 compared to $3,596,000 earned in the corresponding period of 2019. The increase in earnings reflects the benefits derived from the Company’s acquisition of UpState New York Bancorp, Inc. (“UpState”), which closed on July 7, 2020. For the year ended December 31, 2020 net income totaled $15,080,000, an increase of $865,000 from the $14,215,000 earned in the prior year. The increase reflects the benefits derived from the acquisition of UpState, which offset a $4,200,000 increase in the provision for loan losses and $2,049,000 of merger related expenses.

Earnings per share (fully diluted) were $0.67 and $0.57 for the three-month period ended December 31, 2020 and 2019, respectively. For the year ended December 31, 2020, earnings per share on a fully diluted basis were $2.09, compared to $2.25 for the year ended December 31, 2019. For the year ended December 31, 2020, the return on average assets was 0.97%, and the return on average equity was 9.06%, compared to 1.18% and 10.83%, respectively, for the year ended December 31, 2019.

Total assets were $1.852 billion as of December 31, 2020. Loans receivable totaled $1.411 billion as of December 31, 2020, with total deposits of $1.535 billion and stockholders’ equity of $194.8 million as of December 31, 2020.

Loans receivable increased $486.2 million from the prior year-end due primarily to the $420 million of loan balances acquired from UpState and $66 million of Paycheck Protection Program (“PPP”) loans originated during the year ended December 31, 2020. For the three months and year ended December 31, 2020, net charge-offs totaled $125,000 and $809,000, respectively, compared to $96,000 and $1,194,000, respectively, for the corresponding periods in 2019.

Net interest income, on a fully taxable equivalent basis (fte), totaled $15,821,000 for the three months ended December 31, 2020, an increase of $5,755,000 compared to the same period in 2019. For the year ended December 31, 2020, net interest income (fte) totaled $51,359,000, an increase of $11,747,000 compared to 2019 due primarily to the higher volume of earning assets, including a $292.0 million increase in average loans outstanding.

Other income for the three months ended December 31, 2020 totaled $2,661,000 compared to $1,696,000 for the similar period in 2019. Gains on the sale of loans and securities increased $176,000, while all other items of other income increased $789,000 in the aggregate due primarily to service charges and fees related to the acquisition of UpState. Other income for the year ended December 31, 2020 totaled $7,780,000 compared to $6,778,000 in 2019, an increase of $1,002,000 due primarily to a $665,000 increase in service charges and fees. Gains on the sale of loans and investment securities increased $175,000 in the aggregate, while all other items of other income increased $165,000, net.

Other expenses totaled $9,909,000 for the three months ended December 31, 2020, compared to $7,088,000 in the similar period of 2019. The $2,821,000 increase reflects the costs of the operations acquired from UpState. For the year ended December 31, 2020, other expenses totaled $34,440,000 compared to $27,311,000 for 2019, an increase of $7,129,000. The increase reflects the costs of operations acquired from UpState, including four new Community Offices, and $2,049,000 of merger related expenses.

Mr. Critelli commented, “Our results for the 2020 year have been significantly impacted by our efforts to assist our customers during the COVID-19 pandemic, restrictions on business activity, and the costs associated with and the revenue generated by our acquisition of UpState New York Bancorp, Inc. Our balance sheet reflects the full impact of the UpState acquisition, resulting in a Company with over $1.8 billion of total assets, $1.4 billion of loans and $1.5 billion of deposits. Our cash dividend of $0.26 per share declared in the fourth quarter of 2020 represents a 4.0% increase over the same period of last year. We appreciate the opportunity to serve our Wayne Bank customers and our new customers at the Bank of the Finger Lakes and Bank of Cooperstown locations. We continue to search out opportunities available to us as we service our growing base of stockholders and customers.”

Norwood Financial Corp is the parent company of Wayne Bank, which operates from fourteen offices throughout Northeastern Pennsylvania and sixteen offices in Delaware, Sullivan, Ontario, Otsego and Yates Counties, New York. The Company’s stock is traded on the Nasdaq Global Market, under the symbol, “NWFL”.

Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements. When used in this discussion, the words “believes”, “anticipates”, “contemplates”, “expects”, and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. Those risks and uncertainties include changes in federal and state laws, changes in interest rates, the risks and uncertainty posed by, and the effect and impact of, the COVID-19 pandemic on the economy and the Company’s results of operation and financial condition, the ability to control costs and expenses, demand for real estate, government fiscal and trade policies, cybersecurity and general economic conditions. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Measures
This release references tax-equivalent interest income and net interest income, which are non-GAAP (Generally Accepted Accounting Principles) financial measures. Tax-equivalent net interest income is derived from GAAP interest income and net interest income using an assumed tax rate of 21%. We believe the presentation of interest income on a tax–equivalent basis ensures comparability of interest income arising from both taxable and tax-exempt sources and is consistent with industry practice.

The following table reconciles net interest income to net interest income on a fully tax-equivalent basis:

(dollars in thousands)	Three months ended December 31				Year ended December 31
	2020		2019		2020		2019
Net interest income	$	15,614	$	9,833	$	50,476	$	38,606
Tax equivalent basis adjustment
using 21% marginal tax rate		207		233		883		1,006
Net interest income on a fully
taxable equivalent basis	$	15,821	$	10,066	$	51,359	$	39,612

This release also references average tangible equity, which is also a non-GAAP financial measure. Average tangible equity is calculated by deducting average goodwill and other intangible assets from average stockholders’ equity. The Company believes that disclosure of tangible equity ratios enhances investor understanding of our financial position and improves the comparability of our financial data.

The following reconciles average equity to average tangible equity:

	Three months ended				Year ended
	December 31,				December 31,
(dollars in thousands)	2020		2019		2020		2019

Average equity	$	193,740	$	136,920	$	166,427	$	131,271
Average goodwill and other Intangibles		(30,747)		(11,575)		(17,942)		(11,611)
Average tangible equity	$	162,993	$	125,345	$	148,485	$	119,660

Contact:

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

NORWOOD FINANCIAL CORP.

Consolidated Balance Sheets

(dollars in thousands, except share and per share data)

(unaudited)

December 31

2020

2019

ASSETS

Cash and due from banks

19,445

15,038

Interest-bearing deposits with banks

92,248

377

Cash and cash equivalents

111,693

15,415

Securities available for sale

226,586

210,205

Loans receivable

1,410,732

924,581

Less: Allowance for loan losses

13,150

8,509

Net loans receivable

1,397,582

916,072

Regulatory stock, at cost

3,981

4,844

Bank premises and equipment, net

17,814

14,228

Bank owned life insurance

39,608

38,763

Foreclosed real estate owned

965

1,556

Accrued interest receivable

6,232

3,719

Goodwill

29,290

11,331

Other intangible assets

530

235

Other assets

17,583

14,242

TOTAL ASSETS

1,851,864

1,230,610

LIABILITIES

Deposits:

Non-interest bearing demand

359,559

207,299

Interest-bearing

1,175,826

750,230

Total deposits

1,535,385

957,529

Short-term borrowings

63,303

62,256

Other borrowings

42,459

56,438

Accrued interest payable

1,601

2,432

Other liabilities

14,331

14,527

TOTAL LIABILITIES

1,657,079

1,093,182

STOCKHOLDERS' EQUITY

Preferred Stock, no par value per share, authorized 5,000,000 shares

Common Stock, $.10 par value per share,

authorized: 20,000,000 shares,

issued: 2020: 8,236,331 shares, 2019: 6,340,563 shares

824

634

Surplus

95,388

49,471

Retained earnings

93,796

86,536

Treasury stock, at cost: 2020: 10,263 shares, 2019: 12,007 shares

(342

)

(400

)

Accumulated other comprehensive income

5,119

1,187

TOTAL STOCKHOLDERS' EQUITY

194,785

137,428

TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY

1,851,864

1,230,610

NORWOOD FINANCIAL CORP.

Consolidated Statements of Income

(dollars in thousands, except per share data)

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