Home Family Lifestyle Norwood Financial Corp Announces Second Quarter Earnings - Hub News Report

Norwood Financial Corp Announces Second Quarter Earnings – Hub News Report



HONESDALE, Pa., July 23, 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 record earnings for the three months ended June 30, 2021 of $5,755,000, which was $4,267,000, or 287%, higher than the similar period of last year. The increase reflects the benefits derived from the Company’s acquisition of UpState New York Bancorp, Inc. (“UpState”), which closed on July 7, 2020, and fee income related to Paycheck Protection Program (“PPP”) loans. Earnings per share (fully diluted) were $0.70 in the 2021 period compared to $0.24 in the same period of last year. The annualized return on average assets for the three months ended June 30, 2021 was 1.15%, while the annualized return on average tangible equity was 13.63%. Net income for the six months ended June 30, 2021 totaled $11,296,000, which is $6,729,000 higher than the same six-month period of 2020 due to the benefits derived from the acquisition of UpState and PPP fees earned. Earnings per share (fully diluted) for the six months ended June 30, 2021 were $1.38 compared to $0.73 for the six months ended June 30, 2021. The annualized return on average assets for the six months ended June 30, 2021 was 1.16%. The annualized return on average tangible equity for the six months ended June 30, 2021 was 13.53%.

Total assets as of June 30, 2021 were $2.026 billion, with loans receivable of $1.387 billion, deposits of $1.689 billion and stockholders’ equity of $200.5 million.   Loans receivable increased $398.0 million since June 30, 2020, while total deposits increased $602.7 million. The increases reflect the balances acquired from UpState and the impact from economic stimulus, including loans originated through the PPP. During the six months ended June 30, 2021, the Company originated 755 new PPP loans totaling $56.8 million, and had a total of $77.6 million of PPP loans forgiven.   As of June 30, 2021, the total of all PPP loans outstanding was $74.2 million.

For the three months ended June 30, 2021, net interest income, on a fully-taxable equivalent basis (fte), totaled $16,263,000, an increase of $6,175,000 compared to the same period in 2020. A $424.5 million increase in average loans outstanding contributed to the increased income. Net interest margin (fte) for the three months ended June 30, 2021 was 3.44%, compared to 3.25% in the same period of 2020. The tax-equivalent yield on interest-earning assets decreased 14 basis points to 3.75% during the three months ended June 30, 2021, compared to the same prior year period, while the cost of interest-bearing liabilities decreased 43 basis points to 0.43%. Net interest income (fte) for the six months ended June 30, 2021 totaled $32,244,000, which was $12,253,000 higher than the same period in 2020, due to the higher volume of interest-earning assets. The net interest margin (fte) was 3.51% in the six months ended June 30, 2021, as compared to 3.36% during the six months ended June 30, 2020. The increase in the net interest margin (fte) reflects the growth in average loans outstanding resulting from the acquisition of UpState.

Other income for the three months ended June 30, 2021, totaled $2,187,000, compared to $1,392,000 for the same period in 2020. The increase is due primarily to a $695,000 increase in service charges and fees related to the acquisition of UpState.   For the six months ended June 30, 2021, other income totaled $4,176,000, compared to $3,047,000 in the 2020 period.   Service charges on deposits and fees on loans increased $881,000, net, while earnings and proceeds on bank-owned life insurance policies also increased $148,000.

Other expenses totaled $9,492,000 for the three months ended June 30, 2021, an increase of $1,400,000, compared to the $8,092,000 for the same period of 2020.   For the six months ended June 30, 2021, other expenses totaled $18,944,000, compared to $15,152,000 for the same period in 2020. The increases reflect the costs of operations acquired from UpState, including four new Community Offices.

Mr. Critelli commented, “Our results for the first half of 2021 reflect the positive impact of, and earnings accretion resulting from, our acquisition of UpState, as well as the continued impact of economic stimulus on our earnings and balance sheet. We look forward to continuing to serve our expanded 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 trades 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 net interest income, which is a non-GAAP (Generally Accepted Accounting Principles) financial measure. Tax-equivalent net interest income was derived from GAAP interest income and net interest income using an assumed tax rate of 21%. We believe the presentation of net interest income on a tax-equivalent basis ensures comparability of 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
June 30
Six months ended
June 30
(dollars in thousands)     2021     2020     2021     2020  
           
Net Interest Income   $ 16,053   $ 9,867   $ 31,829   $ 19,532  
Taxable equivalent basis adjustment using 21% marginal tax rate     210     221     415     459  
Net interest income on a fully taxable equivalent basis   $ 16,263   $ 10,088   $ 32,244   $ 19,991  
           
           
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
June 30
Six months ended
June 30
(dollars in thousands)     2021     2020     2021     2020  
           
Average equity   $ 199,777   $ 143,472   $ 198,689   $ 142,217  
           
Average goodwill and other intangibles     (29,762 )   (11,530 )   (29,780 )   (11,541 )
Average tangible equity   $ 170,015   $ 131,942   $ 168,909   $ 130,676  
           







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)        
    June 30
    2021   2020
ASSETS        
Cash and due from banks  $ 34,831 $ 15,387
Interest-bearing deposits with banks   170,342   67,989
Cash and cash equivalents   205,173   83,376
         
Securities available for sale   333,636   196,735
Loans receivable   1,386,654   988,679
Less: Allowance for loan losses   15,340   10,312
Net loans receivable   1,371,314   978,367
Regulatory stock, at cost   4,084   3,677
Bank premises and equipment, net   17,298   14,040
Bank owned life insurance   39,665   39,183
Foreclosed real estate owned   844   965
Accrued interest receivable   6,190   4,383
Goodwill   29,266   11,331
Other intangible assets   461   191
Other assets   17,633   22,293
TOTAL ASSETS  $ 2,025,564 $ 1,354,541
         
LIABILITIES        
Deposits:        
Non-interest bearing demand  $ 435,824 $ 284,754
Interest-bearing   1,253,117   801,484
Total deposits   1,688,941   1,086,238
Short-term borrowings   83,599   55,204
Other borrowings   36,259   50,823
Accrued interest payable   1,462   2,826
Other liabilities   14,804   16,786
TOTAL LIABILITIES   1,825,065   1,211,877
         
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: 2021: 8,243,556 shares, 2020: 6,342,568 shares   825   634
Surplus   95,951   49,778
Retained earnings   100,818   87,939
Treasury stock, at cost: 2021: 21,568 shares, 2020: 13,778 shares   (656)   (469)
Accumulated other comprehensive income   3,561   4,782
TOTAL STOCKHOLDERS’ EQUITY   200,499   142,664
         
TOTAL LIABILITIES AND        
STOCKHOLDERS’ EQUITY  $ 2,025,564 $ 1,354,541
         
         





















































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,    
    2021   2020       2021   2020    
INTEREST INCOME                        
Loans receivable, including fees $ 16,102 $ 10,767     $ 32,248 $ 21,450    
Securities   1,356   1,063       2,468   2,242    
Other   59   19       102   25    
Total Interest income   17,517   11,849       34,818   23,717    
                         
INTEREST EXPENSE                        
Deposits   1,205   1,630       2,459   3,420    
Short-term borrowings   73   73       142   184    
Other borrowings   186   279       388   581    
Total Interest expense   1,464   1,982       2,989   4,185    
NET INTEREST INCOME   16,053   9,867       31,829   19,532    
PROVISION FOR LOAN LOSSES   1,500   1,300       3,000   2,000    
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   14,553   8,567       28,829   17,532    
                         
OTHER INCOME                        
Service charges and fees   1,532   837       2,782   1,901    
Income from fiduciary activities   181   175       341   328    
Net realized gains on sales of securities                          –                              21   38    
Gains on sales of loans, net                      109   65                          138   121    
Earnings and proceeds on life insurance policies   194   212       568   420    
Other   171   103       326   239    
Total other income   2,187   1,392       4,176   3,047    
                         
OTHER EXPENSES                        
Salaries and  employee benefits   5,171   3,289       10,125   7,065    
Occupancy, furniture and equipment   1,186   906       2,406   1,875    
Data processing  and related operations   562   466       1,166   903    
Taxes, other than income   229   214       534   427    
Professional fees   343   225       883   443    
FDIC Insurance assessment                      154   42                          335   42    
Foreclosed real estate   13   (2)       42   14    
Amortization of intangibles   34   21       68   44    
Merger related                          –   1,597       0   1,597    
Other   1,800   1,334       3,385   2,742    
Total other expenses   9,492   8,092       18,944   15,152    
                         
INCOME BEFORE TAX   7,248   1,867       14,061   5,427    
INCOME TAX EXPENSE   1,493   379       2,765   860    
NET INCOME  $ 5,755 $ 1,488      $ 11,296 $ 4,567    
                         
Basic earnings per share $ 0.70 $ 0.24     $ 1.38 $ 0.73    
                         
Diluted earnings per share $ 0.70 $ 0.24     $ 1.38 $ 0.73    
                         
                         
















































NORWOOD FINANCIAL CORP.          
Financial Highlights (Unaudited)          
(dollars in thousands, except per share data)          
           
For the Three Months Ended June 30   2021   2020  
           
Net interest income  $ 16,053  $ 9,867  
Net income   5,755   1,488  
           
Net interest spread (fully taxable equivalent)   3.32%   3.03%  
Net interest margin (fully taxable equivalent)   3.44%   3.25%  
Return on average assets   1.15%   0.45%  
Return on average equity   11.59%   4.17%  
Return on average tangible equity   13.63%   4.54%  
Basic earnings per share    $ 0.70  $ 0.24  
Diluted earnings per share   $ 0.70  $ 0.24  
           
           
For the Six Months Ended June 30   2021   2020  
           
Net interest income  $ 31,829  $ 19,532  
Net income   11,296   4,567  
           
Net interest spread (fully taxable equivalent)   3.39%   3.12%  
Net interest margin (fully taxable equivalent)   3.51%   3.36%  
Return on average assets   1.16%   0.72%  
Return on average equity   11.49%   6.46%  
Return on average tangible equity   13.53%   7.03%  
Basic earnings per share    $ 1.38  $ 0.73  
Diluted earnings per share   $ 1.38  $ 0.73  
           
As of June 30   2021   2020  
           
Total assets  $ 2,025,564  $ 1,354,541  
Total loans receivable   1,386,654   988,679  
Allowance for loan losses   15,340   10,312  
Total deposits   1,688,941   1,086,238  
Stockholders’ equity   200,499   142,664  
Trust assets under management   180,602   149,535  
           
Book value per share   $ 24.47  $ 22.62  
Tangible book value per share   $ 20.85  $ 20.80  
Equity to total assets   9.90%   10.53%  
Allowance to total loans receivable   1.11%   1.04%  
Nonperforming loans to total loans    0.28%   0.30%  
Nonperforming assets to total assets   0.24%   0.29%  
           





































































































NORWOOD FINANCIAL CORP.                        
Consolidated Balance Sheets (unaudited)                        
(dollars in thousands)                        
    June 30   March   December 31   September 30   June 30    
    2021   2021   2020   2020   2020    
ASSETS                        
Cash and due from banks $ 34,831 $ 20,364 $ 19,445 $ 23,874 $ 15,387    
Interest-bearing deposits with banks   170,342   190,135   92,248   100,566   67,989    
Cash and cash equivalents   205,173   210,499   111,693   124,440   83,376    
                         
Securities available for sale   333,636   275,224   226,586   197,436   196,735    
Loans receivable   1,386,654   1,421,568   1,410,732   1,414,662   988,679    
Less: Allowance for loan losses   15,340   14,509   13,150   11,674   10,312    
Net loans receivable   1,371,314   1,407,059   1,397,582   1,402,988   978,367    
Regulatory stock, at cost   4,084   4,043   3,981   3,876   3,677    
Bank owned life insurance   39,665   39,471   39,608   39,400   39,183    
Bank premises and equipment, net   17,298   17,648   17,814   18,124   14,040    
Foreclosed real estate owned   844   844   965   965   965    
Goodwill and other intangibles   29,727   29,785   29,820   30,778   11,522    
Other assets   23,823   25,263   23,815   24,100   26,676    
TOTAL ASSETS $ 2,025,564 $ 2,009,836 $ 1,851,864 $ 1,842,107 $ 1,354,541    
                         
LIABILITIES                        
Deposits:                        
Non-interest bearing demand $ 435,824 $ 415,395 $ 359,559 $ 372,237 $ 284,754    
Interest-bearing deposits   1,253,117   1,269,793   1,175,826   1,143,685   801,484    
Total deposits   1,688,941   1,685,188   1,535,385   1,515,922   1,086,238    
Borrowings   119,858   112,283   105,762   115,732   106,027    
Other liabilities   16,266   17,258   15,932   19,906   19,612    
TOTAL LIABILITIES   1,825,065   1,814,729   1,657,079   1,651,560   1,211,877    
                         
STOCKHOLDERS’ EQUITY   200,499   195,107   194,785   190,547   142,664    
                         
TOTAL LIABILITIES AND                        
STOCKHOLDERS’ EQUITY $ 2,025,564 $ 2,009,836 $ 1,851,864 $ 1,842,107 $ 1,354,541    
                         
                         
                         
NORWOOD FINANCIAL CORP.                        
Consolidated Statements of Income (unaudited)                        
(dollars in thousands, except per share data)                        
    June 30   March 31   December 31   September 30   June 30    
Three months ended   2021   2021   2020   2020   2020    
INTEREST INCOME                        
Loans receivable, including fees $ 16,102 $ 16,146 $ 16,336 $ 16,260 $ 10,767    
Securities   1,356   1,112   1,064   1,031   1,063    
Other   59   43   29   18   19    
Total interest income   17,517   17,301   17,429   17,309   11,849    
                         
INTEREST EXPENSE                        
Deposits   1,205   1,255   1,514   1,676   1,630    
Borrowings   259   270   301   303   352    
Total interest expense   1,464   1,525   1,815   1,979   1,982    
NET INTEREST INCOME   16,053   15,776   15,614   15,330   9,867    
PROVISION FOR LOAN LOSSES   1,500   1,500   1,600   1,850   1,300    
NET INTEREST INCOME AFTER PROVISION                        
FOR LOAN LOSSES   14,553   14,276   14,014   13,480   8,567    
                         
OTHER INCOME                        
Service charges and fees   1,532   1,247   1,913   1,301   837    
Income from fiduciary activities   181   160   150   205   175    
Net realized gains on sales of securities     21     33      
Gains on sales of loans, net   109   29   241   164   65    
Earnings and proceeds on life insurance policies   194   374   208   217   212    
Other   171   158   149   152   103    
Total other income   2,187   1,989   2,661   2,072   1,392    
                         
OTHER EXPENSES                        
Salaries and  employee benefits   5,171   4,953   5,243   4,812   3,289    
Occupancy, furniture and equipment, net   1,186   1,220   1,165   1,109   906    
Foreclosed real estate   13   30   8   31   (2)    
FDIC insurance assessment   154   181   213   144   42    
Merger related       66   386   1,597    
Other   2,968   3,068   3,214   2,898   2,260    
Total other expenses   9,492   9,452   9,909   9,380   8,092    
                         
INCOME BEFORE TAX   7,248   6,813   6,766   6,172   1,867    
INCOME TAX EXPENSE   1,493   1,271   1,253   1,173   379    
NET INCOME $ 5,755 $ 5,542 $ 5,513 $ 4,999 $ 1,488    
                         
Basic earnings per share $ 0.70 $ 0.68 $ 0.67 $ 0.62 $ 0.24    
                         
Diluted earnings per share $ 0.70 $ 0.67 $ 0.67 $ 0.62 $ 0.24    
                         
Book Value per share $ 24.47 $ 23.82 $ 23.72 $ 23.30 $ 22.62    
Tangible Book Value per share   20.85   20.20   20.10   19.55   20.80    
                         
Return on average assets (annualized)   1.15%   1.18%   1.18%   1.11%   0.45%    
Return on average equity (annualized)   11.59%   11.39%   11.32%   10.64%   4.17%    
Return on average tangible equity (annualized)   13.63%   13.42%   13.46%   11.75%   4.54%    
                         
Net interest spread (fte)   3.32%   3.46%   3.50%   3.55%   3.03%    
Net interest margin (fte)   3.44%   3.59%   3.65%   3.73%   3.25%    
                         
Allowance for loan losses to total loans   1.11%   1.02%   0.93%   0.83%   1.04%    
Net charge-offs to average loans (annualized)   0.19%   0.04%   0.04%   0.14%   0.03%    
Nonperforming loans to total loans   0.28%   0.22%   0.24%   0.29%   0.30%    
Nonperforming assets to total assets   0.24%   0.20%   0.24%   0.27%   0.29%    
                         
                         



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