SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2003
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ------------------------
Commission file number 0-28366
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Norwood Financial Corp.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2828306
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(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
717 Main Street, Honesdale, Pennsylvania 18431
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (570)253-1455
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N/A
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Former name, former address and former fiscal year,
if changed since last report.
Indicated by check (x) whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]
----- -----
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act) Yes No X
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of August 12, 2003
--------------------------------------- ---------
common stock, par value $0.10 per share 2,670,825
NORWOOD FINANCIAL CORP.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2003
INDEX
Page
Number
Part I - CONSOLIDATED FINANCIAL INFORMATION OF NORWOOD
FINANCIAL CORP.
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Item 3. Qualitative and Quantitative Disclosures about Market Risk 23
Item 4. Controls and Procedures 23
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 24
Item 2. Changes in Securities and Use of Proceeds 24
Item 3. Defaults upon Senior Securities 24
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 25
Signatures 26
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets (unaudited)
(dollars in thousands, except per share data)
June 30, December 31,
2003 2002
--------- ---------
ASSETS
Cash and due from banks $ 12,196 $ 9,579
Interest bearing deposits with banks 62 230
Federal funds sold 7,050 6,435
--------- ---------
Cash and cash equivalents 19,308 16,244
Securities available for sale 120,282 114,843
Securities held to maturity, fair value 2003
$6,516, 2002 $6,504 6,173 6,204
Loans receivable (net of unearned income) 225,222 217,970
Less: Allowance for loan losses 3,294 3,146
--------- ---------
Net loans receivable 221,928 214,824
Investment in FHLB Stock 1,865 1,637
Bank premises and equipment, net 5,740 5,986
Foreclosed real estate 11 21
Accrued interest receivable 1,644 1,799
Other assets 5,650 5,910
--------- ---------
TOTAL ASSETS $ 382,601 $ 367,468
========= =========
LIABILITIES
Deposits:
Non-interest bearing demand $ 40,699 $ 33,453
Interest-bearing 266,493 258,399
--------- ---------
Total deposits 307,192 291,852
Short-term borrowings 7,589 9,016
Long-term debt 23,000 23,000
Accrued interest payable 1,362 1,654
Other liabilities 1,725 1,821
--------- ---------
TOTAL LIABILITIES 340,868 327,343
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value, authorized 10,000,000 shares
Issued 2003: 2,705,715, 2002: 1,803,824 shares 270 180
Surplus 4,776 4,762
Retained earnings 35,485 34,082
Treasury stock, at cost: 2003: 42,750 shares,
2002: 31,506 shares (593) (640)
Unearned ESOP shares (650) (750)
Accumulated other comprehensive income 2,445 2,491
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 41,733 40,125
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 382,601 $ 367,468
========= =========
See accompanying notes to the unaudited consolidated financial statements
3
NORWOOD FINANCIAL CORP.Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
Three Months Ended Six Months Ended
------------------ ----------------
June 30 June 30
------- -------
2003 2002 2003 2002
------- ------- ------- -------
INTEREST INCOME
Loans receivable, including fees $ 3,627 $ 3,913 $ 7,263 $ 7,953
Securities 1,157 1,432 2,413 2,835
Other 32 78 65 117
------- ------- ------- -------
Total interest income 4,816 5,423 9,741 10,905
INTEREST EXPENSE
Deposits 1,222 1,559 2,527 3,230
Short-term borrowings 25 49 50 81
Long-term debt 321 321 638 650
------- ------- ------- -------
Total interest expense 1,568 1,929 3,215 3,961
------- ------- ------- -------
NET INTEREST INCOME 3,248 3,494 6,526 6,944
PROVISION FOR LOAN LOSSES 165 150 330 330
------- ------- ------- -------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,083 3,344 6,196 6,614
OTHER INCOME
Service charges and fees 460 430 902 849
Income from fiduciary activities 54 44 104 107
Net realized gains on sales of securities 243 333 386 344
Gain on sale of loans 33 2 173 58
Other 132 122 245 271
------- ------- ------- -------
Total other income 922 931 1,810 1,629
OTHER EXPENSES
Salaries and employee benefits 1,219 1,210 2,449 2,456
Occupancy, furniture & equipment, net 359 328 715 638
Data processing related 134 131 278 263
Losses on lease residuals 25 430 25 610
Taxes, other than income 88 78 170 156
Professional fees 79 43 128 102
Other 571 636 1,176 1,199
------- ------- ------- -------
Total other expenses 2,475 2,856 4,941 5,424
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 1,530 1,419 3,065 2,819
INCOME TAX EXPENSE 408 378 833 749
------- ------- ------- -------
NET INCOME $ 1,122 $ 1,041 $ 2,232 $ 2,070
======= ======= ======= =======
BASIC EARNINGS PER SHARE $ 0.43 $ 0.41 $ 0.86 $ 0.81
======= ======= ======= =======
DILUTED EARNINGS PER SHARE $ 0.42 $ 0.40 $ 0.85 $ 0.80
======= ======= ======= =======
Dividends per share $ 0.16 $ 0.15 $ 0.32 $ 0.30
======= ======= ======= =======
See accompanying notes to the unaudited consolidated financial statements.
4
NORWOOD FINANCIAL CORP.
Consolidated Statement of Changes in Stockholders' Equity (unaudited)
(dollars in thousands)
Accumulated
Unearned Other
Common Retained Treausry ESOP Comprehensive
Stock Surplus Earnings Stock Shares Income Total
----- ------- -------- ----- ------ ------ -----
Balance December 31, 2001 $180 $4,687 $31,265 ($1,066) ($952) $1,002 $35,116
Comprehensive Income:
Net Income 2,070 $2,070
Change in unrealized gains (losses)
on securities available for sale, net
of reclassification adjustment and
tax effects 1,035 1,035
-------
Total comprehensive income 3,105
-------
Cash dividends declared, $.30 per share (746) (746)
Stock options exercised (7) 51 44
Tax benefit of stock options exercised 5 5
Acquisition of treasury stock (8) (8)
Release of earned ESOP shares 66 52 118
---- ------ ------- ------- ----- ------ -------
Balance, June 30, 2002 $180 $4,751 $32,589 ($1,023) ($900) $2,037 $37,634
==== ====== ======= ======= ===== ====== =======
Accumulated
Unearned Other
Common Retained Treausry ESOP Comprehensive
Stock Surplus Earnings Stock Shares Income Total
----- ------- -------- ----- ------ ------ -----
Balance, December 31, 2002 $180 $4,762 $34,082 ($640) ($750) $2,491 $40,125
Comprehensive Income:
Net Income 2,232 2,232
Change in unrealized gains (losses)
on securities available for sale,
net of reclassification
adjustment and tax effects (46) (46)
-------
Total comprehensive income 2,186
-------
Cash dividend declared $.32 per share (829) (829)
Three for two stock split in the
form of a 50% stock dividend 90 (91) (1)
Stock options exercised 1 93 94
Tax benefit of stock options exercised 9 9
Acquisition of treasury stock (46) (46)
Release of earned ESOP shares 95 100 195
---- ------ ------- ----- ----- ------ -------
Balance, June 30, 2003 $270 $4,776 $35,485 ($593) ($650) $2,445 $41,733
==== ====== ======= ===== ===== ====== =======
See accompanying notes to unaudited consolidated financial statements
5
NORWOOD FINANCIAL CORP.
Consolidated Statements of Cashflows (Unaudited)
(dollars in thousands)
Six Months Ended June 30,
-------------------------
2003 2002
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,232 $ 2,070
Adjustments to reconcile net income to net cash provided
By operating activities:
Provision for loan losses 330 330
Depreciation 315 298
Amortization of intangible assets 57 89
Deferred income taxes (521) (584)
Net amortization of securities premiums and discounts 277 72
Net realized gain on sales of securities (386) (344)
Earnings on life insurance policy (97) (108)
Loss on sale of foreclosed real estate, net - (3)
Net gain on sale of mortgage loans (173) (58)
Mortgage loans originated for sale (4,821) (4,234)
Proceeds from sale of mortgage loans 4,994 4,292
Release of ESOP shares 195 166
Decrease (increase) in accrued interest receivable and other assets 762 (287)
Increase in accrued interest payable and other liabilities 158 326
-------- --------
Net cash provided by operating activities $ 3,322 $ 2,025
CASH FLOWS FROM INVESTING ACTIVITIES
Securities available for sale:
Proceeds from sales $ 11,941 $ 4,344
Proceeds from maturities and principal reductions on
mortgage-backed securities 40,362 17,716
Purchases (57,700) (27,957)
Securities held to maturity Proceeds 35 30
(Increase) decrease in investment in FHLB stock (228) 250
Net (increase) decrease in loans (7,742) 1,243
Purchase of bank premises and equipment, net (69) (387)
Proceeds from sales of foreclosed real estate 10 46
-------- --------
Net cash used in investing activities $(13,391) $ (4,715)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits $ 15,340 $ 7,482
Net increase (decrease) in short term borrowings (1,427) 3,367
Repayments of long-term debt - (2,000)
Stock options exercised 94 44
Acquisition of treasury stock (46) (8)
Repurchase of ESOP shares - (48)
Cash dividends paid (828) (745)
-------- --------
Net cash provided by financing activities $ 13,133 8,092
-------- --------
Increase in cash and cash equivalents $ 3,064 5,402
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 16,244 17,336
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 19,308 $ 22,738
======== ========
See accompanying notes to the unaudited consolidated financial statements
6
Notes to Unaudited Consolidated Financial Statements
- ----------------------------------------------------
1. Basis of Presentation
---------------------
The consolidated financial statements include the accounts of Norwood
Financial Corp. (Company) and its wholly-owned subsidiary, Wayne Bank (Bank) and
the Bank's wholly-owned subsidiaries, WCB Realty Corp., Norwood Investment Corp.
and WTRO Properties. All significant intercompany transactions have been
eliminated in consolidation.
2. Estimates
---------
The financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the balance sheet
and revenues and expenses for the period. Actual results could differ from those
estimates. The financial statements reflect, in the opinion of management, all
normal, recurring adjustments necessary to present fairly the financial position
of the Company. The operating results for the three and six month month periods
ended June 30, 2003 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2003 or any other future interim
period.
These statements should be read in conjunction with the consolidated
financial statements and related notes which are incorporated by reference in
the Company's Annual Report on Form 10-K for the year-ended December 31, 2002.
3. Accounting Policies
-------------------
The accounting policies of the Company as applied in the interim
financial statements presented are substantially the same as those followed on
an annual basis as presented in the Annual Report on Form 10-K of Norwood
Financial Corp. filed for the year ended December 31, 2002.
The Company accounts for stock option plans under the recognition and
measurement principles of APB opinion No. 25, "Accounting For Stock Issued to
Employees", and related interpretations. No stock-based employee compensation
cost is reflected in net income, as all options granted under those plans had an
exercise price equal to the market value of the underlying common stock on the
date of the grant. The following table illustrates the effect on net income and
earnings per share if the Company had applied the fair value recognition
provisions of FASB Statement No. 123 "Accounting for Stock-Based Compensation",
to stock based employee compensation.
7
(in thousands, except for per share data)
Three Months Ended Six Months Ended
---------------------- ----------------------
June 30 June 30
---------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net income as reported $ 1,122 $ 1,041 $ 2,232 $ 2,070
Total stock-based employee compensation
determined under fair value based method for all
awards, net of taxes (15) (22) (30) (44)
--------- --------- --------- ---------
$ 1,107 $ 1,019 $ 2,193 $ 2,033
========= ========= ========= =========
Earnings per share (basic)
As Reported $ .43 $ .41 $ .86 $ .81
Pro forma .43 .40 .85 .80
Earnings per share (assuming dilution)
As Reported .42 .40 .85 .80
Pro forma .42 .39 .84 .79
During 2003, directors and officers exercised stock options to acquire 6,750
shares of stock at a weighted average exercise price of $13.95 per share.
4. Stock Dividend and Earnings Per Share
-------------------------------------
On April 8, 2003, the Board of Directors declared a three-for-two stock
split in the form of a 50% stock dividend on common stock outstanding, payable
June 16, 2003 to shareholders of record on May 30, 2003. The stock split
resulted in the issuance of 901,912 additional common shares. All per share data
has been adjusted for the effect of the stock split.
Basic earnings per share represents income available to common
stockholders divided by the weighted average number of common shares outstanding
during the period. Diluted earnings per share reflects additional common shares
that would have been outstanding if dilutive potential common shares had been
issued, as well as any adjustment to income that would result from the assumed
issuance. Potential common shares that may be issued by the Company relate
solely to outstanding stock options and are determined using the treasury stock
method.
8
For the Three Months Ended For the Six Months Ended
-------------------------- ------------------------
June 30 June 30
-------------------------- ------------------------
2003 2002 2003 2002
----- ----- ----- -----
(In Thousands) (In Thousands)
Basic EPS weighted average
Shares outstanding 2,593 2,545 2,591 2,542
Dilutive effect of stock options 46 42 41 39
----- ----- ----- -----
Diluted EPS weighted average
Shares outstanding 2,639 2,587 2,632 2,581
===== ===== ===== =====
5. Cash Flow Information
---------------------
For the purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, interest-bearing deposits with
banks and federal funds sold.
Cash payments for interest for the period ended June 30, 2003 and 2002
were $3,508,000 and $4,691,000 respectively. Cash payments for income taxes in
2003 were $898,000 compared to $1,613,000 in 2002. Non-cash investing activity
for 2003 and 2002 included foreclosed mortgage loans transferred to foreclosed
real estate and repossession of other assets of $308,000 and $692,000.
6. Comprehensive Income
--------------------
Accounting principles generally require that recognized revenue,
expenses, gains and losses be included in net income. Although certain changes
in assets and liabilities such as unrealized gains and losses on available for
sale securities, are reported as a separate component of the equity section of
the balance sheet, such items, along with net income, are components of
comprehensive income. The components of other comprehensive income and related
tax effects are as follows.
(in thousands) Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
2003 2002 2003 2002
------- ------- ------- -------
Unrealized holding gains/(losses)
on available for sale securities $ 669 $ 2,187 $ 323 $ 1,918
Reclassification adjustment for gains
realized in income (243) (333) (386) (344)
------- ------- ------- -------
Net Unrealized gains/(losses) 426 1,854 (63) 1,574
Income tax (benefit) 148 634 (17) 539
------- ------- ------- -------
Other comprehensive income $ 278 $ 1,220 $ (46) $ 1,035
======= ======= ======= =======
9
7. Reclassification of Comparative Amounts
---------------------------------------
Certain comparative amounts for the prior period have been reclassified
to conform to the current period's presentation. Such reclassifications did not
affect net income.
8. Recent Accounting Standards
---------------------------
In November 2002, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 45 (FIN 45), "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others." This Interpretation expands the disclosures to be made by a guarantor
in its financial statements about its obligations under certain guarantees and
requires the guarantor to recognize a liability for the fair value of an
obligation assumed under certain specified guarantees. FIN 45 clarifies the
requirements of FASB Statement No. 5, "Accounting for Contingencies." In
general, FIN 45 applies to contracts or indemnification agreements that
contingently require the guarantor to make payments to the guaranteed party
based on changes in an underlying that is related to an asset, liability or
equity security of the guaranteed party, which would include financial standby
letters of credit. Certain guarantee contracts are excluded from both the
disclosure and recognition requirements of this Interpretation, including, among
others, guarantees related to commercial letters of credit and loan commitments.
The disclosure requirements of FIN 45 require disclosure of the nature of the
guarantee, the maximum potential amount of future payments that the guarantor
could be required to make under the guarantee and the current amount of the
liability, if any, for the guarantor's obligations under the guarantee. The
accounting recognition requirements of FIN 45 are to be applied prospectively to
guarantees issued or modified after December 31, 2002. Adoption of FIN 45 did
not have any impact on the Company's financial condition or results of
operations.
Outstanding letters of credit written are conditional commitments issued by the
Company to guarantee the performance of a customer to a third party. The
Company's exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for standby letters of credit is represented
by the contractual amount of those instruments. The Company had $811,000 of
standby letters of credit as of June 30, 2003. The Bank uses the same credit
policies in making conditional obligations as it does for on-balance sheet
instruments.
The majority of these standby letters of credit expire within the next twelve
months. The credit risk involved in issuing letters of credit is essentially the
same as that involved in extending other loan commitments. The Company requires
collateral and personal guarantees supporting these letters of credit as deemed
necessary. Management believes that the proceeds obtained through a liquidation
of such collateral and the enforcement of personal guarantees would be
sufficient to cover the maximum potential amount of future payments required
under the corresponding guarantees. The current amount of the liability as of
June 30, 2003 for guarantees under standby letters of credit issued after
December 31, 2002 is not material.
10
In April 2003, the Financial Accounting Standards Board issued Statement No.,
149, "Amendment of Statement No. 133, Accounting for Derivative Instruments and
Hedging Activities". This statement clarifies the definition of a derivative and
incorporates certain decisions made by the Board as part of the Derivatives
Implementation Group process. This statement is effective for contracts entered
into or modified, and for hedging relationships designated after June 30, 2003
and should be applied prospectively. The provisions of the Statement that relate
to implementation issues addressed by the Derivatives Implementation Group that
have been effective should continue to be applied in accordance with their
respective effective dates. Adoption of this standard is not expected to have a
significant impact on the Corporation's financial condition or results of
operations.
In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51". This interpretation provides new guidance for the
consolidation of variable interest entities (VIEs) and requires such entities to
be consolidated by their primary beneficiaries if the entities do not
effectively disperse risk among parties involved. The interpretation also adds
disclosure requirements for investors that are involved with unconsolidated
VIEs. The disclosure requirements apply to all financial statements issued after
January 31, 2003. The consolidation requirements apply to all financial
statements issued after January 31, 2003 and are effective for the first fiscal
year or interim period beginning after June 15, 2003 for VIEs acquired before
February 1, 2003. The adoption of this interpretation did not have any impact on
the Company's financial condition or results of operations.
In May 2003, the Financial Accounting Standards Board issued Statement No. 150,
"Accounting for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity." This Statement requires that an issuer classify a
financial instrument that is within its scope as a liability. Many of these
instruments were previously classified as equity. This Statement was effective
for financial instruments entered into or modified after May 31, 2003, and
otherwise was effective beginning July 1, 2003. The adoption of this standard
did not have any impact on the Company's financial condition or results of
operations.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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 interest rates, risks associated with the
effect of opening a new branch, the ability to control costs and expenses, and
general economic conditions.
Critical Accounting Policies
- ----------------------------
Note 2 to the Company's consolidated financial statements (incorporated
by reference in Item 8 of the 10-K) lists significant accounting policies used
in the development and presentation of its
11
financial statements. This discussion and analysis, the significant accounting
policies, and other financial statement disclosures identify and address key
variables and other qualitative and quantitative factors that are necessary for
an understanding and evaluation of the Company and its results of operations.
The most significant estimates in the preparation of the Company's
financial statements are for the allowance for loans losses and accounting for
stock options. Please refer to the discussion of the allowance for loan losses
calculation under "Non-performing Assets and Allowance for Loan Losses" in the
"Financial Condition" section below. The Company accounts for their stock option
plans under the recognition and measurement principles of APB Opinion No. 25,
"Accounting for Stock Issued to Employees," and related Interpretations. No
stock-based employee compensation is reflected in net income, as all options
granted had an exercise price equal to the market value of the underlying common
stock on the grant date. The Company currently has no intentions of adopting the
expense recognition provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation."
Changes in Financial Condition
- ------------------------------
General
- -------
Total assets at June 30, 2003 were $382.6 million compared to $367.5
million at year-end 2002.
Securities
- ----------
The fair value of securities available for sale at June 30, 2003 was
$120.3 million, compared to $114.8 million at December 31, 2002. Total purchases
for the period were $57.7 million with securities called and principal
reductions of $40.3 million and sales of $11.9 million. The purchases were
principally obligations of U.S. Government sponsored agencies, including
callable bonds and mortgage-backed-securities.
Loans
- -----
Total loans receivable were $225.2 million at June 30, 2003, compared
to $218.0 million at December 31, 2002. The increase was principally due to
growth in the commercial real estate portfolio which increased $9.2 million or
11.6%. The Company sold $5.0 million of 30-year fixed rate residential mortgages
into the secondary market, at a gain of $173,000, included in other income. The
Company saw a continued decline in its indirect automobile portfolio, included
in consumer loans, which declined $4.9 million to $34.5 million. The decrease is
due to competition from larger banks, automakers, finance companies and a slow
down in the auto market.
The Company no longer originates automobile leases, and as a result,
the portfolio declined $816,000 from December 31, 2002 to $776,000 at June 30,
2003, which includes residual value of $690,000. The Company liquidates its
returned off-lease vehicles through various used car dealers and automobile
auction centers. At June 30, 2003 the Company had an inventory of vehicles to
liquidate of $132,000, declining from $166,000 at December 31, 2002. Total
provision for losses incurred on off-lease vehicles, included in other expense,
was $25,000 for the six months ended June 30, 2003, compared to $610,000 for
June 30 2002. The Company's reserve for future residual value losses was
$118,000 at June 30, 2003 compared to $213,000 at December 31, 2002.
12
Set forth below is selected data relating to the composition of the loan
portfolio at the dates indicated:
Types of loans
(dollars in thousands)
June 30, 2003 December 31, 2002
-------------------- -------------------
$ % $ %
--------- ---- --------- ----
Real Estate-Residential $ 70,416 31.2% $ 69,040 31.6%
Commercial 88,847 39.4 79,623 36.5
Construction 3,839 1.7 4,109 1.9
Commercial, financial and agricultural 18,257 8.1 15,074 6.9
Consumer loans to individuals 43,536 19.3 48,951 22.4
Lease financing, net of unearned income 776 .3 1,592 0.7
--------- ----- --------- -----
Total loans 225,671 100.0% 218,389 100.0%
Less:
Unearned income and deferred fees (449) (419)
Allowance for loan losses (3,294) (3,146)
--------- ----------
Total loans, net $ 221,928 $ 214,824
========= ==========
Allowance for Loan Losses and Non-performing Assets
- ---------------------------------------------------
Following is a summary of changes in the allowance for loan losses for
the periods indicated:
Three Six
(dollars in thousands) Months Ended June 30 Months Ended June 30
--------------------- --------------------
2003 2002 2003 2002
------- ------- ------- -------
Balance, beginning $ 3,212 $ 3,272 $ 3,146 $ 3,216
Provision for loan losses 165 150 330 330
Charge-offs (119) (188) (252) (341)
Recoveries 36 26 70 55
------- ------- ------- -------
Net charge-offs (83) (162) (182) (286)
------- ------- ------- -------
Balance, ending $ 3,294 $ 3,260 $ 3,294 $ 3,260
======= ======= ======= =======
Allowance to total loans 1.46% 1.54% 1.46% 1.54%
Net charge-offs to average loans
(annualized) .15% .31% .16% .27%
The allowance for loan losses totaled $3,294,000 at June 30, 2003 and
represented 1.46% of total loans, compared to $3,146,000 at year-end, and
$3,260,000 at June 30, 2002. Net charge-offs for the six month period ended June
30, 2003, totaled $182,000 and consisted principally of losses on the sale of
repossessed automobiles. The Company's loan review process assesses the adequacy
of the allowance for loan losses on a quarterly basis. The process includes an
analysis of the risks inherent in the loan portfolio. It includes an analysis of
impaired loans and an historical review of credit losses by loan type. Other
factors considered include: concentration of credit in specific industries;
economic and industry conditions; trends in delinquencies, large dollar
exposures and loan
13
growth. Management considers the allowance adequate at June 30, 2003 based upon
the factors in the analysis. However, there can be no assurance that the
allowance for loan losses will be adequate to cover significant losses, if any,
that might be incurred in the future.
At June 30, 2003, non-performing loans totaled $403,000, which is
..18% of total loans compared to $221,000, or .10% of total loans at December 31,
2002 and $688,000 and .32% as of June 30, 2002. The increase from year-end is
due to a credit secured by automobiles, with the collateral scheduled for
liquidation in the third quarter. The following table sets forth information
regarding non-performing loans and foreclosed real estate at the date indicated:
(dollars in thousands) June 30, 2003 December 31, 2002
------------- -----------------
Loans accounted for on a non-accrual basis:
Commercial and all other $220 $ -
Real Estate 174 213
Consumer 1 3
---- ----
Total 395 216
Accruing loans which are contractually
past due 90 days or more 8 5
---- ----
Total non-performing loans $403 $221
Foreclosed real estate 11 21
---- ----
Total non-performing assets $414 $242
==== ====
Allowance for loan losses as a
percent of non-performing loans 817.4% 1,423.5%
Non-performing loans to total loans .18% .10%
Non-performing assets to total assets .11% .07%
Deposits
- --------
Total deposits at June 30, 2003 were $307.2 million compared to
$291.9 million at December 31, 2002. Non-interest bearing demand deposits at as
of June 30, 2003 were $40.7 million compared to $33.5 million at December 31,
2002. The increase is due in part to new commercial relationships and
seasonality of certain commercial customers. Time deposits in denominations of
$100,000 or more were $28.1 million at June 30, 2003 compared to $29.5 million
at December 31, 2002. Retail savings accounts increased $4.2 million to $55.8
million. The Company, as of June 30, 2003, had $7.1 million of commercial cash
management accounts included in short-term borrowings, which represents excess
funds invested in overnight securities, which the Company considers core
funding.
14
The following table sets forth deposit balances as of the dates indicated.
(dollars in thousands) June 30, 2003 December 31, 2002
------------- -----------------
Non-interest bearing demand $ 40,699 $ 33,453
Interest bearing demand 41,944 40,407
Money Market 41,630 38,908
Savings 55,803 51,629
Time 127,116 127,455
-------- --------
Total $307,192 $291,852
======== ========
Stockholders' Equity and Capital Ratios
- ---------------------------------------
At June 30, 2003, total stockholders' equity totaled $41.7 million,
a net increase of $1,608,000 from December 31, 2002. The net increase in
stockholders' equity was primarily due to $2,232,000 in net income, that was
partially offset by $829,000 of cash dividends declared. In addition,
accumulated other comprehensive income decreased $46,000 due to a decrease in
fair value of securities in the available for sale portfolio. This decrease in
fair value is the result of a change in interest rates, which may unfavorably
impact the value of the securities. Because of interest rate volatility, the
Company's accumulated other income comprehensive income could materially
fluctuate for each interim and year-end period.
A comparison of the Company's regulatory capital ratios is as follows:
June 30, 2003 December 31, 2002
------------- -----------------
Tier 1 Capital
(To average assets) 10.44% 10.13%
Tier 1 Capital
(To risk-weighted assets) 15.30% 15.06%
Total Capital
(To risk-weighted assets) 16.79% 16.57%
The minimum capital requirements imposed by the FDIC on the Bank for
leverage, Tier 1 and Total Capital are 4%, 4% and 8%, respectively. The Company
has similar capital requirements imposed by the Board of Governors of the
Federal Reserve System (FRB). The Bank is also subject to more stringent
Pennsylvania Department of Banking (PDB) guidelines. The Bank's capital ratios
do not differ significantly from the Company's ratios. Although not adopted in
regulation form, the PDB utilizes capital standards requiring a minimum of 6.5%
leverage capital and 10% total capital. The Company and the Bank were in
compliance in FRB, FDIC and PDB capital requirements at June 30, 2003 and
December 31, 2002.
15
Results of Operation
NORWOOD FINANCIAL CORP.
Consolidated Average Balance Sheets with Resultant Interest and Rates
(Tax-Equivalent Basis, dollars in thousands)
Three Months Ended June 30,
-----------------------------------------------------------------------
2003 2002
------------------------------------ ---------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
(2) (1) (3) (2) (1) (3)
Assets
Interest-earning assets:
Federal funds sold $ 10,566 $ 31 1.21% $ 18,391 $ 77 1.67%
Interest bearing deposits with banks 117 1 3.42 180 1 2.22
Securities held-to-maturity 6,196 136 8.78 6,220 138 8.87
Securities available for sale:
Taxable 100,808 869 3.45 85,877 1,178 5.49
Tax-exempt 16,778 297 7.08 13,622 247 7.25
--------- --------- -------- ---------
Total securities available for sale (1) 117,586 1,166 3.97 99,499 1,425 5.73
Loans receivable (4) (5) 223,938 3,645 6.51 211,955 3,923 7.40
--------- --------- -------- ---------
Total interest earning assets 358,403 4,979 5.56 336,245 5,564 6.62
Non-interest earning assets:
Cash and due from banks 8,983 8,321
Allowance for loan losses (3,260) (3,283)
Other assets 12,891 14,340
--------- ---------
Total non-interest earning assets 18,614 19,378
--------- ---------
Total Assets $ 377,017 $ 355,623
========= =========
Liabilities and Shareholders' Equity
Interest bearing liabilities:
Interest bearing demand and money market $ 80,453 136 0.68% $ 73,002 189 1.04%
Savings 54,504 130 0.95 47,531 167 1.41
Time 129,176 956 2.96 127,644 1,203 3.77
--------- --------- -------- ---------
Total interest bearing deposits 264,133 1,222 1.85 248,177 1,559 2.51
Short-term borrowings 8,684 25 1.15 9,635 49 2.03
Long-term debt 23,000 321 5.58 23,000 321 5.58
--------- --------- -------- ---------
Total interest bearing liabilities 295,817 1,568 2.12 280,812 1,929 2.75
--------- ---------
Non-interest bearing liabilities:
Demand deposits 36,928 34,502
Other liabilities 3,059 3,777
--------- ---------
Total non-interest bearing liabilities 39,987 38,279
Stockholders' equity 41,213 36,532
--------- ---------
Total Liabilities and Stockholders' Equity $ 377,017 $ 355,623
========= =========
Net interest income (tax equivalent basis) 3,411 3.44% 3,635 3.87%
===== ====
Tax-equivalent basis adjustment (163) (141)
--------- ---------
Net interest income $ 3,248 $ 3,494
========= =========
Net interest margin (tax equivalent basis) 3.81% 4.32%
==== ====
(1) Interest and yields are presented on a tax-equivalent basis using a
marginal tax rate of 34%.
(2) Average balances have been calculated based on daily balances.
(3) Annualized
(4) Loan balances include non-accrual loans and are net of unearned income.
(5) Loan yields include the effect of amortization of deferred fees, net of
costs.
16
Rate/Volume Analysis. The following table shows the fully taxable equivalent
effect of changes in volumes and rates on interest income and interest expense.
Increase/(Decrease)
-------------------
Three Months Ended June 30, 2003 Compared to
Three Months Ended June 30, 2002
Variance due to
---------------
Volume Rate Net
--------------------------------
(dollars in thousands)
Assets
Interest earning assets:
Federal funds sold $ (28) $ (18) $ (46)
Interest bearing deposits with banks (2) 2 -
Securities held to maturity (1) (1) (2)
Securities available for sale:
Taxable 1,018 (1,327) (309)
Tax-exempt securities 88 (38) 50
------- ------- -------
Total securities 1,106 (1,365) (259)
Loans receivable 1,121 (1,399) (278)
------- ------- -------
Total interest earning assets 2,196 (2,781) (585)
Interest bearing liabilities:
Interest-bearing demand deposits 107 (160) (53)
Savings 123 (160) (37)
Time 96 (343) (247)
------- ------- -------
Total interest bearing deposits 326 (663) (337)
Short-term borrowings (4) (20) (24)
Long-term debt - - -
------- ------- -------
Total interest bearing liabilities 322 (683) (361)
------- ------- -------
Net interest income (tax-equivalent basis) $ 1,874 $(2,098) $ (224)
======= ======= =======
(1) Changes in net interest income that could not be specifically identified as
either a rate or volume change were allocated proportionately to changes in
volume and changes in rate.
17
Comparison of Operating Results for Three Months Ended June 30, 2003 and June
- --------------------------------------------------------------------------------
30, 2002
- --------
General
- -------
For the three months ended June 30, 2003 net income totaled
$1,122,000 or $.43 per share basic, and $.42 per share diluted compared to
$1,041,000, or $.41 per share basic and $.40 diluted earned in the second
quarter of 2002. The resulting return on average assets and return on average
equity for the quarter were 1.19% and 10.92% respectively compared to 1.17% and
11.43% respectively for the corresponding period in 2002.
Net Interest Income
- -------------------
Net interest income, on a fully taxable equivalent basis (fte) for
the three months ended June 30, 2003 totaled $3,411,000 compared to $3,635,000
in 2002, a decrease of $224,000. The resultant fte net interest spread and net
interest margin were 3.44% and 3.81%, respectively, compared to 3.87% and 4.32%,
respectively, for the 2002 period.
Interest income (fte) totaled $4,979,000 with a yield of 5.56% for
the period in 2003, compared to $5,564,000 and 6.62% in 2002. The decrease in
yield was due in part to lower interest rates in 2003, with prime rate at 4.00%
and Federal Funds rate at 1.00% as of June 30 ,2003, declining from 4.75% and
1.75%, respectively, as of June 30, 2002. The earning asset yield was also
unfavorably impacted by increased cash flows and maturities in the investment
portfolio, as well as in loans, which was reinvested at lower yields.
Interest expense for the three months ended June 30, 2003 totaled
$1,568,000 at a cost of 2.12%, compared to $1,929,000 and 2.75% in 2002. All
categories of liability costs decreased in the lower interest rate environments.
Average interest-bearing deposits increased $15.9 million, with the proceeds
principally invested in commercial and residential real estate loans.
Other Income
- ------------
Other income totaled $922,000 for the three months ended June 30,
2003 compared to $931,000 for the period in 2002. Net realized gains on
securities transactions were $243,000 for the second quarter of 2003 compared to
$333,000 in 2002, with the gains principally due to the sale of equity holdings
and corporate bonds. Gains on the sale of long-term mortgages was $33,000 for
2003, compared to $2,000 in 2002.
Other Expense
- -------------
Other expense for the three months ended June 30, 2003 totaled
$2,475,000, a decrease of $381,000 from $2,856,000 for the three months ended
June 30, 2002. The decrease was principally due to lower losses on lease
residuals with $25,000, for the second quarter of 2003, compared to $430,000 in
the similar period in 2002, as more cars needed to be liquidated in 2002.
18
Income Tax Expense
- ------------------
Income tax expense totaled $408,000 for an effective tax rate of
26.7% for the period ending June 30, 2003, compared to $378,000 and 26.6% in the
second quarter of 2002. The effective tax rate is less than 34%, due to
tax-exempt income on municipal securities and loans.
19
Results of Operation
NORWOOD FINANCIAL CORP.
Consolidated Average Balance Sheets with Resultant Interest and Rates
(Tax-Equivalent Basis, dollars in thousands)
Six Months Ended June 30,
-------------------------------------------------------------------------
2003 2002
------------------------------------ -----------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
(2) (1) (3) (2) (1) (3)
Assets
Interest-earning assets:
Federal funds sold $ 10,832 $ 64 1.18% $ 13,924 $ 116 1.67%
Interest bearing deposits with banks 154 1 1.30 167 1 1.20
Securities held-to-maturity 6,201 272 8.77 6,223 274 8.81
Securities available for sale:
Taxable 99,285 1,851 3.73 83,365 2,334 5.60
Tax-exempt 15,716 573 7.29 13,365 485 7.26
--------- --------- --------- ---------
Total securities available for sale (1) 115,001 2,424 4.22 96,730 2,819 5.83
Loans receivable (4) (5) 221,217 7,296 6.60 214,079 7,969 7.44
--------- --------- --------- ---------
Total interest earning assets 353,405 10,057 5.69 331,123 11,179 6.75
Non-interest earning assets:
Cash and due from banks 8,459 7,879
Allowance for loan losses (3,233) (3,273)
Other assets 13,051 14,143
--------- ---------
Total non-interest earning assets 18,277 18,749
--------- ---------
Total Assets $ 371,682 $ 349,872
========= =========
Liabilities and Shareholders' Equity
Interest bearing liabilities:
Interest bearing demand and money market $ 78,303 277 0.71% $ 70,223 367 1.05%
Savings 53,524 264 0.99 46,416 324 1.40
Time 129,673 1,986 3.06 129,328 2,539 3.93
--------- --------- --------- ---------
Total interest bearing deposits 261,500 2,527 1.93 245,967 3,230 2.63
Short-term borrowings 8,240 50 1.21 7,791 81 2.08
Long-term debt 23,000 638 5.55 23,464 650 5.54
--------- --------- --------- ---------
Total interest bearing liabilities 292,740 3,215 2.20 277,222 3,961 2.86
--------- ---------
Non-interest bearing liabilities:
Demand deposits 34,904 32,390
Other liabilities 3,195 4,099
--------- ---------
Total non-interest bearing liabilities 38,099 36,489
Stockholders' equity 40,843 36,161
--------- ---------
Total Liabilities and Stockholders' Equity $ 371,682 $ 349,872
========= =========
Net interest income (tax equivalent basis) 6,842 3.49% 7,218 3.89%
==== ====
Tax-equivalent basis adjustment (316) (274)
--------- ---------
Net interest income $ 6,526 $ 6,944
========= =========
Net interest margin (tax equivalent basis) 3.87% 4.36%
==== ====
(1) Interest and yields are presented on a tax-equivalent basis using a
marginal tax rate of 34%.
(2) Average balances have been calculated based on daily balances.
(3) Annualized
(4) Loan balances include non-accrual loans and are net of unearned income.
(5) Loan yields include the effect of amortization of deferred fees, net of
costs.
20
Rate/Volume Analysis. The following table shows the fully taxable equivalent
effect of changes in volumes and rates on interest income and interest expense.
Increase/(Decrease)
-------------------
Six Months Ended June 30, 2003 Compared to
Six Months Ended June 30, 2002
Variance due to
---------------
Volume Rate Net
-------------------------------
(dollars in thousands)
Assets
Interest earning assets:
Federal funds sold $ (23) $ (29) $ (52)
Interest bearing deposits with banks - - -
Securities held to maturity (1) (1) (2)
Securities available for sale:
Taxable 959 (1,442) (483)
Tax-exempt securities 86 2 88
------- ------- -------
Total securities 1,045 (1,440) (395)
Loans receivable 671 (1,344) (673)
------- ------- -------
Total interest earning assets 1,692 (2,814) (1,122)
Interest bearing liabilities:
Interest-bearing demand deposits 101 (191) (90)
Savings 110 (170) (60)
Time 19 (572) (553)
------- ------- -------
Total interest bearing deposits 230 (933) (703)
Short-term borrowings 13 (44) (31)
Long-term debt (15) 3 (12)
------- ------- -------
Total interest bearing liabilities 228 (974) (746)
Net interest income (tax-equivalent basis) $ 1,464 $(1,840) $ (376)
======= ======= =======
(1) Changes in net interest income that could not be specifically identified as
either a rate or volume change were allocated proportionately to changes in
volume and changes in rate.
21
Comparison of Operating Results for Six Months Ended June 30, 2003 and June 30,
- ----------------------- -------------------------------------------------------
2002.
- -----
General
- -------
For the six months ended June 30, 2003 net income totaled $2,232,000
with basic eps of $.86 and diluted eps of $.85. This compares to $2,070,000
earned for the corresponding period in 2002 with basic eps of $.81 and diluted
of $.80. The resulting return on average assets (ROA) was 1.21% for 2003, with a
return on equity (ROE) of 11.02% compared to an ROA of 1.19% in 2002 and ROE of
11.54%.
Net Interest Income
- -------------------
Net interest income on a fully taxable equivalent basis (fte) for the
six months ended June 30, 2003 was $6,842,000 decreasing from $7,218,000 for the
same period in 2002.
The resultant fte net interest spread and net interest margin for
2003 were 3.49% and 3.87% respectively, compared to 3.89% and 4.36% in 2002. The
decrease in net interest income was due to asset yields declining faster than
the cost of funds. This is due in part to the increase in cash flow from the
investment and loan portfolio, with the proceeds reinvested at lower yields. Net
interest income was also unfavorably affected by the asset mix with a lower loan
to deposit ratio of 74.6% in 2003 compared to 76.9% in 2002. The Company had a
higher percentage of investments in 2003, which generally have lower yields than
loans.
Interest income (fte) for the six months ended June 30, 2003 totaled
$10,057,000 compared to $11,179,000 in 2002. The decrease was principally due to
the lower interest rate environment, with average prime rate of 4.21% in 2003
compared to 4.75% in 2002. Treasury rates were also considerably lower in 2003,
which impacted the reinvestment yield on the investment portfolio. The earning
asset yield for the 2003 period was 5.69% compared to 6.75% in 2002.
Interest expense for 2003 was $3,215,000 with a cost of 2.20%
compared to $3,961,000 and 2.86% in 2002. All deposit categories showed a
decrease in costs with total interest-bearing deposits at 1.93% compared to
2.63% in 2002. Interest-bearing deposits increased $15.5 million. The proceeds
were used in part to fund loan growth, $7.1 million, with the remainder invested
in short-term securities available for sale.
Other Income
- ------------
Other income totaled $1,810,000 for the six months ended June 30,
2003 compared to $1,629,000 for the 2002 period. Service charges and fees
increased $53,000 to $902,000 due in part to loan activity and increased debit
card revenues. Other income included $173,000 on gains on the sale of
longer-term mortgages compared to $58,000 in 2002. The gains on sales of
securities were $386,000, and consisted principally of sales of equity holdings
in other financial institutions and corporate bonds, compared to $344,000 in
similar gains in 2002.
Other Expense
- -------------
Other expense for six months ended June 30, 2003 was $4,941,000,
decreasing from $5,424,000 in 2002. The decrease was principally due to a lower
level of losses on lease residuals, as a result of a decrease in the number of
leases, $25,000 in 2003 compared to $610,000 in 2002.
22
Income Tax Expense
- ------------------
Income tax expense for the six months ended June 30, 2003 was
$833,000 for an effective tax rate of 27.2% compared to $749,000 and 26.6% in
2002.
Item 3: Quantitative and Qualitative Disclosures about Market Risk
Market Risk
- -----------
There were no significant changes for the six months ended June 30,
2003 from the information presented in the Form 10-K for the year-ended December
31, 2002.
Item 4: Controls and Procedures
The Company's management evaluated, with the participation of the
Company's Chief Executive Officer and Chief Financial Officer, the effectiveness
of the Company's disclosure controls and procedures, as of the end of the period
covered by this report. Based on that evaluation, the Chief Executive Officer
and the Chief Financial Officer concluded that the Company's disclosure controls
and procedures are effective to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms.
There were no changes in the Company's internal control over
financial reporting that occurred during the Company's last fiscal quarter that
have materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
23
Part II. Other Information
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was held on April 22, 2003.
The following incumbent directors were nominated and duly elected to the Board
of Directors for a three-year term expiring in 2006.
FOR WITHHELD
--- --------
Charles E. Case 1,458,109.59 23,010
William W. Davis, Jr. 1,452,469.52 28,650
John E. Marshall 1,438,583.52 42,536
Ratify the appointment of Beard Miller Company LLP as independent accountant of
the Company for the fiscal year ending December 31, 2003.
FOR AGAINST
--- -------
1,469,151.07 3,445
Item 5. Other Information
None
24
Item 6. Exhibits and Reports on Form 8-K
(a) 3(i) Articles of Incorporation of Norwood Financial Corp*
3(ii) Bylaws of Norwood Financial Corp.*
4.0 Specimen Stock Certificate of Norwood Financial Corp.*
10.1 Amended Employment Agreement with William W. Davis, Jr.***
10.2 Amended Employment Agreement with Lewis J. Critelli ***
10.3 Form of Change-In-Control Severance Agreement with seven key employees of the Bank*
10.4 Consulting Agreement with Russell L. Ridd**
10.5 Wayne Bank Stock Option Plan*
10.6 Salary Continuation Agreement between the Bank and William W. Davis, Jr.***
10.7 Salary Continuation Agreement between the Bank and Lewis J. Critelli***
10.8 Salary Continuation Agreement between the Bank and Edward C. Kasper***
10.9 1999 Directors Stock Compensation Plan***
31.1 Rule 13a-14(a)/15d-14(a) Certification (Chief Executive Officer)
31.2 Rule 13a-14(a)/15d-14(a) Certification (Chief Financial Officer)
32.1 Section 1350 Certification
(b) Reports on Form 8-K
On April 23, 2003, the Registrant filed a report on Form 8-K
reporting under Item 9 the announcement of earnings for the quarter
ended March 31, 2003 and the declaration of a 50% stock dividend. No
financial statements were filed with this report.
- ---------------------------
* Incorporated herein by reference into the identically numbered exhibits
of the Registrant's Form 10 Registration Statement initially filed with
the Commission on April 29, 1996.
** Incorporated herein by reference into the identically numbered exhibits
of the Registrant's Form 10-K filed with the Commission on March 31,
1997.
*** Incorporated herein by reference into the identically numbered exhibits
of the Registrant's Form 10-K filed with the Commission on March 20,
2000.
25
Signatures
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORWOOD FINANCIAL CORP.
Date: August 13, 2003 By: /s/William W. Davis, Jr.
--------------------------------------
William W. Davis, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 13, 2003 By: /s/Lewis J. Critelli
--------------------------------------
Lewis J. Critelli
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
26