Attached files
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| 8-K - FORM 8-K - 4-19-13 NORWOOD FINANCIAL CORP. - NORWOOD FINANCIAL CORP | f8k_041913-0160.htm |
FOR IMMEDIATE RELEASE
NORWOOD FINANCIAL CORP. ANNOUNCES FIRST QUARTER EARNINGS
April 19, 2013
Lewis J. Critelli, President and Chief Executive Officer of Norwood Financial Corp. (Nasdaq Global Market – NWFL) and its subsidiary, Wayne Bank announced earnings of $2,308,000 for the three months ended March 31, 2013 which represents a $122,000 increase from the $2,186,000 recorded during the same three month period of last year. Earnings per share on a fully diluted basis were $.63 in the first quarter of this year compared to $.61 in the first quarter of 2012, after adjusting for the retroactive effect of the 10% stock dividend declared during the quarter ended March 31, 2013. The annualized return on average assets was 1.39% in the first quarter of 2013 and the annualized return on average equity was 10.02%.
Total assets were $680.8 million as of March 31, 2013, a decrease of $4.8 million compared to the prior year total. Total loans decreased $419,000 compared to March 31, 2012 but included the impact from the sale of $7.9 million of residential mortgage loans to reduce the Company’s interest rate risk position. Residential mortgage loan balances increased $4.4 million and installment loans increased $0.3 million, while commercial real estate loans have decreased $3.1 million and commercial loan balances decreased $2.1 million compared to the prior year. Total loans have increased $2.0 million as compared to December 31, 2012. Total deposits decreased $10.6 million over the past twelve months which includes a $16.2 million decrease in
certificates of deposit. Total deposits have increased $11.2 million as compared to December 31, 2012. Stockholders’ equity increased $4.1 million, or 4.6%, during the past year, due principally to the retention of earnings.
Non-performing assets totaled $13.7 million or 2.01% of total assets at March 31, 2013 comprised of $12.6 million of non-performing loans and $1.1 million of Foreclosed Real Estate Owned, compared to $14.1 million of non-performing assets or 2.09% of total assets at December 31, 2012. The decrease recorded during the quarter includes the disposition of properties previously carried in Foreclosed Real Estate Owned as well as write downs of the carrying value of the assets totaling $633,000. As of March 31, 2012, non-performing assets totaled $10.1 million. Net charge-offs for the three month period ending March 31, 2013 were $576,000 which represents an increase compared to $190,000 of net charge-offs over the first quarter of last year. Based on the current composition of the loan portfolio, management determined that it would be prudent to provide additional reserves and added $800,000 to the allowance for loan losses compared to $350,000 during the same period of last year. The allowance for loan losses was 1.20% of total loans outstanding on March 31, 2013 compared to 1.15% on December 31, 2012 and 1.17% on March 31, 2012.
Net interest income (fully taxable equivalent) was $6,387,000 during the first quarter of 2013 which is $10,000 higher than the $6,377,000 recorded during the prior three month period ended December 31, 2012 but $118,000 lower than the comparable three month period of last year. The net interest margin was negatively impacted by lower rates on new loan closings and the downward repricing of investment securities, but a $14.6 million decrease in average overnight liquidity resulted in an increase of
three basis points on the yield of earning assets while the cost of funds decreased eight basis points compared to the prior quarter. As a result, the net interest margin (fte) improved from 3.98% in the fourth quarter of 2012 to 4.07% for the three months ended March 31, 2013. Compared to the same period of last year, the net interest margin (fte) declined from 4.18% to 4.07% due to the downward repricing of the balance sheet.
Other income totaled $1,877,000 in the first quarter of 2013 compared to $1,291,000 during the same period of last year. The $586,000 increase in other income includes $770,000 of proceeds from a bank-owned life insurance policy and an $82,000 improvement in all other service charges and fees compared to the first quarter of last year. Net gains recognized on the sale of loans and securities decreased $266,000 compared to the first quarter of last year due to reduced activity in this area. During the current period, the Company recognized a gain of $138,000 from the sale of securities compared to $402,000 in the prior-year period.
Operating expenses totaled $4,301,000 in the first quarter and were $154,000, or 3.7% higher than the same period of last year. Foreclosed real estate costs were $69,000 higher than the first quarter of last year while all other operating costs increased $85,000 combined.
Mr. Critelli stated that “Our first quarter results provide a good start for 2013. We are feeling the impact of net margin pressure due to the ongoing low interest rate environment. We are continuing to work our way through credit quality issues that have been brought on by the prolonged economic downturn, and improving our credit quality will remain a top priority in 2013. Our net interest margin continues to exceed 4.00%, and our capital base continues to exceed peer and “well capitalized” targets. We
continue to search out opportunities available to us, and we look forward to serving our growing base of stockholders and customers as the economy slowly recovers from the recent downturn.”
Norwood Financial Corp. is the parent company of Wayne Bank which operates from sixteen offices throughout Wayne, Pike, Monroe and Lackawanna Counties, Pennsylvania. 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, risks associated with the acquisition of North Penn Bancorp, the ability to control costs and expenses, demand for real estate 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 is derived from GAAP using an assumed tax rate of 34%. 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:
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(dollars in thousands)
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Three months ended March 31,
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2013
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2012
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|||||||
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Net interest income
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$ | 6,101 | $ | 6,187 | ||||
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Tax equivalent basis adjustment using 34% marginal tax rate
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286 | 318 | ||||||
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Net interest income on a fully taxable equivalent basis
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$ | 6,387 | $ | 6,505 | ||||
Contact: William S. Lance
Executive Vice President &
Chief Financial Officer
NORWOOD FINANCIAL CORP.
570-253-8505
www.waynebank.com
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NORWOOD FINANCIAL CORP.
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Consolidated Balance Sheets
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(dollars in thousands, except share data)
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(unaudited)
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March 31
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2013
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2012
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ASSETS
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Cash and due from banks
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$ | 6,763 | $ | 14,250 | ||||
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Interest-bearing deposits with banks
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9,182 | 5,991 | ||||||
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Federal funds sold
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0 | 0 | ||||||
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Cash and cash equivalents
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15,945 | 20,241 | ||||||
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Securities available for sale
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148,598 | 148,407 | ||||||
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Securities held to maturity, fair value 2013: $175 and 2012: $175
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173 | 171 | ||||||
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Loans receivable (net of unearned Income)
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478,663 | 479,082 | ||||||
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Less: Allowance for loan losses
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5,726 | 5,618 | ||||||
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Net loans receivable
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472,937 | 473,464 | ||||||
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Regulatory stock, at cost
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2,533 | 3,495 | ||||||
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Bank premises and equipment, net
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7,191 | 7,468 | ||||||
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Bank owned life insurance
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14,402 | 12,003 | ||||||
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Foreclosed real estate owned
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1,099 | 1,143 | ||||||
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Accrued interest receivable
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2,456 | 2,690 | ||||||
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Goodwill
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9,715 | 9,715 | ||||||
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Other intangible assets
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610 | 760 | ||||||
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Other assets
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5,094 | 5,972 | ||||||
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TOTAL ASSETS
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$ | 680,753 | $ | 685,529 | ||||
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LIABILITIES
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Deposits:
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Non-interest bearing demand
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$ | 84,357 | $ | 78,339 | ||||
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Interest-bearing
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451,275 | 467,853 | ||||||
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Total deposits
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535,632 | 546,192 | ||||||
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Short-term borrowings
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21,859 | 15,854 | ||||||
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Other borrowings
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25,343 | 27,625 | ||||||
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Accrued interest payable
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1,082 | 1,333 | ||||||
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Other liabilities
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3,917 | 5,664 | ||||||
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TOTAL LIABILITIES
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587,833 | 596,668 | ||||||
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STOCKHOLDERS' EQUITY
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Common Stock, $.10 par value, authorized 10,000,000 shares
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issued: 2013: 3,709,034 shares, 2012: 3,371,866 shares
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371 | 337 | ||||||
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Surplus
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34,912 | 24,686 | ||||||
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Retained earnings
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57,847 | 63,513 | ||||||
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Treasury stock, at cost: 2013: 80,438 shares, 2012: 97,392 shares
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(2,345 | ) | (2,831 | ) | ||||
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Accumulated other comprehensive income
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2,135 | 3,156 | ||||||
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TOTAL STOCKHOLDERS' EQUITY
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92,920 | 88,861 | ||||||
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TOTAL LIABILITIES AND
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STOCKHOLDERS' EQUITY
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$ | 680,753 | $ | 685,529 | ||||
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NORWOOD FINANCIAL CORP.
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Consolidated Statements of Income
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(dollars in thousands, except per share data)
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(unaudited)
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Three Months Ended March 31
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2013
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2012
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INTEREST INCOME
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Loans receivable, including fees
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$ | 6,186 | $ | 6,373 | ||||
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Securities
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868 | 1,026 | ||||||
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Other
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3 | 4 | ||||||
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Total Interest income
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7,057 | 7,403 | ||||||
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INTEREST EXPENSE
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Deposits
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754 | 961 | ||||||
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Short-term borrowings
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12 | 11 | ||||||
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Other borrowings
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190 | 244 | ||||||
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Total Interest expense
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956 | 1,216 | ||||||
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NET INTEREST INCOME
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6,101 | 6,187 | ||||||
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PROVISION FOR LOAN LOSSES
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800 | 350 | ||||||
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
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5,301 | 5,837 | ||||||
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OTHER INCOME
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Service charges and fees
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600 | 554 | ||||||
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Income from fiduciary activities
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85 | 98 | ||||||
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Net realized gains on sales of securities
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138 | 402 | ||||||
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Gains on sale of loans
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3 | 5 | ||||||
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Earnings and proceeds on life insurance policies
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925 | 132 | ||||||
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Other
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126 | 100 | ||||||
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Total other income
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1,877 | 1,291 | ||||||
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OTHER EXPENSES
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Salaries and employee benefits
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2,211 | 2,151 | ||||||
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Occupancy, furniture and equipment
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529 | 487 | ||||||
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Data processing related
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221 | 232 | ||||||
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Taxes, other than income
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174 | 152 | ||||||
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Professional Fees
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187 | 227 | ||||||
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FDIC Insurance assessment
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111 | 99 | ||||||
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Foreclosed real estate owned
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191 | 122 | ||||||
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Other
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677 | 677 | ||||||
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Total other expenses
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4,301 | 4,147 | ||||||
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INCOME BEFORE TAX
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2,877 | 2,981 | ||||||
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INCOME TAX EXPENSE
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569 | 795 | ||||||
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NET INCOME
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$ | 2,308 | $ | 2,186 | ||||
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Basic earnings per share
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$ | 0.64 | $ | 0.61 | ||||
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Diluted earnings per share
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$ | 0.63 | $ | 0.61 | ||||
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NORWOOD FINANCIAL CORP.
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Financial Highlights (Unaudited)
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(dollars in thousands, except per share data)
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For the Three Months Ended March 31
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2013
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2012
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Net interest income
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$ | 6,101 | $ | 6,187 | ||||
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Net income
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2,308 | 2,186 | ||||||
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Net interest spread (fully taxable equivalent)
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3.91 | % | 4.00 | % | ||||
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Net interest margin (fully taxable equivalent)
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4.07 | % | 4.18 | % | ||||
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Return on average assets
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1.39 | % | 1.31 | % | ||||
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Return on average equity
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10.02 | % | 9.81 | % | ||||
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Basic earnings per share
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$ | 0.64 | $ | 0.61 | ||||
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Diluted earnings per share
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$ | 0.63 | $ | 0.61 | ||||
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As of March 31
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Total assets
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$ | 680,753 | $ | 685,529 | ||||
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Total loans receivable
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478,663 | 479,082 | ||||||
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Allowance for loan losses
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5,726 | 5,618 | ||||||
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Total deposits
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535,632 | 546,192 | ||||||
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Stockholders' equity
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92,920 | 88,861 | ||||||
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Trust assets under management
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118,091 | 112,476 | ||||||
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Book value per share
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$ | 25.66 | $ | 24.67 | ||||
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Equity to total assets
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13.65 | % | 12.96 | % | ||||
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Allowance to total loans receivable
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1.20 | % | 1.17 | % | ||||
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Nonperforming loans to total loans
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2.63 | % | 1.88 | % | ||||
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Nonperforming assets to total assets
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2.01 | % | 1.48 | % | ||||
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NORWOOD FINANCIAL CORP.
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Consolidated Balance Sheets (unaudited)
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(dollars in thousands)
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March 31
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December 31
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Sept 30
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June 30
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March 31
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2013
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2012
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2012
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2012
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2012
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ASSETS
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Cash and due from banks
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$ | 6,763 | $ | 10,867 | $ | 10,514 | $ | 9,135 | $ | 14,250 | ||||||||||
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Interest-bearing deposits with banks
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9,182 | 1,428 | 24,825 | 15,261 | 5,991 | |||||||||||||||
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Federal funds sold
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0 | 0 | 0 | 0 | 0 | |||||||||||||||
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Cash and cash equivalents
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15,945 | 12,295 | 35,339 | 24,396 | 20,241 | |||||||||||||||
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Securities available for sale
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148,598 | 145,390 | 147,557 | 144,638 | 148,407 | |||||||||||||||
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Securities held to maturity
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173 | 173 | 172 | 172 | 171 | |||||||||||||||
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Loans receivable (net of unearned Income)
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478,663 | 476,710 | 479,501 | 479,421 | 479,082 | |||||||||||||||
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Less: Allowance for loan losses
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5,726 | 5,502 | 5,341 | 5,775 | 5,618 | |||||||||||||||
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Net loans receivable
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472,937 | 471,208 | 474,160 | 473,646 | 473,464 | |||||||||||||||
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Regulatory stock, at cost
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2,533 | 2,630 | 3,014 | 3,325 | 3,495 | |||||||||||||||
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Bank premises and equipment, net
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7,191 | 7,326 | 7,453 | 7,371 | 7,468 | |||||||||||||||
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Foreclosed real estate owned
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1,099 | 852 | 659 | 1,268 | 1,143 | |||||||||||||||
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Goodwill and other intangibles
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10,325 | 10,362 | 10,399 | 10,435 | 10,475 | |||||||||||||||
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Other assets
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21,952 | 22,063 | 19,944 | 19,616 | 20,665 | |||||||||||||||
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TOTAL ASSETS
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$ | 680,753 | $ | 672,299 | $ | 698,697 | $ | 684,867 | $ | 685,529 | ||||||||||
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LIABILITIES
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Deposits:
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Non-interest bearing demand
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$ | 84,357 | $ | 82,075 | $ | 89,218 | $ | 82,525 | $ | 78,339 | ||||||||||
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Interest-bearing deposits
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451,275 | 442,350 | 452,372 | 451,632 | 467,853 | |||||||||||||||
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Total deposits
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535,632 | 524,425 | 541,590 | 534,157 | 546,192 | |||||||||||||||
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Other borrowings
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47,202 | 51,184 | 59,919 | 54,771 | 43,479 | |||||||||||||||
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Other liabilities
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4,999 | 4,269 | 5,237 | 5,698 | 6,997 | |||||||||||||||
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TOTAL LIABILITIES
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587,833 | 579,878 | 606,746 | 594,626 | 596,668 | |||||||||||||||
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STOCKHOLDERS' EQUITY
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92,920 | 92,421 | 91,951 | 90,241 | 88,861 | |||||||||||||||
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TOTAL LIABILITIES AND
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||||||||||||||||||||
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STOCKHOLDERS' EQUITY
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$ | 680,753 | $ | 672,299 | $ | 698,697 | $ | 684,867 | $ | 685,529 | ||||||||||
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NORWOOD FINANCIAL CORP.
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Consolidated Statements of Income (unaudited)
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(dollars in thousands, except per share data)
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March 31
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Dec 31
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Sept 30
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June 30
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March 31
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Three months ended
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2013
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2012
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2012
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2012
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2012
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INTEREST INCOME
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Loans receivable, including fees
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$ | 6,186 | $ | 6,261 | $ | 6,429 | $ | 6,431 | $ | 6,373 | ||||||||||
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Securities
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868 | 884 | 971 | 1,007 | 1,026 | |||||||||||||||
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Other
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3 | 12 | 9 | 7 | 4 | |||||||||||||||
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Total Interest income
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7,057 | 7,157 | 7,409 | 7,445 | 7,403 | |||||||||||||||
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INTEREST EXPENSE
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||||||||||||||||||||
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Deposits
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754 | 860 | 897 | 942 | 961 | |||||||||||||||
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Borrowings
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202 | 218 | 260 | 256 | 255 | |||||||||||||||
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Total Interest expense
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956 | 1,078 | 1,157 | 1,198 | 1,216 | |||||||||||||||
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NET INTEREST INCOME
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6,101 | 6,079 | 6,252 | 6,247 | 6,187 | |||||||||||||||
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PROVISION FOR LOAN LOSSES
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800 | 800 | 900 | 400 | 350 | |||||||||||||||
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NET INTEREST INCOME AFTER PROVISION
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||||||||||||||||||||
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FOR LOAN LOSSES
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5,301 | 5,279 | 5,352 | 5,847 | 5,837 | |||||||||||||||
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OTHER INCOME
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Service charges and fees
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600 | 563 | 561 | 559 | 554 | |||||||||||||||
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Income from fiduciary activities
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85 | 81 | 96 | 80 | 98 | |||||||||||||||
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Net realized gains (losses) on sales of securities
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138 | 100 | 631 | 285 | 402 | |||||||||||||||
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Gains on sale of loans and servicing rights
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3 | 67 | 83 | 66 | (6 | ) | ||||||||||||||
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Earnings and proceeds on life insurance
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925 | 144 | 132 | 131 | 132 | |||||||||||||||
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Other
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126 | 161 | 88 | 85 | 111 | |||||||||||||||
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Total other income
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1,877 | 1,116 | 1,591 | 1,206 | 1,291 | |||||||||||||||
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OTHER EXPENSES
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Salaries and employee benefits
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2,211 | 2,103 | 2,102 | 2,047 | 2,151 | |||||||||||||||
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Occupancy, furniture and equipment , net
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529 | 506 | 512 | 490 | 487 | |||||||||||||||
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Foreclosed real estate owned
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191 | 33 | (23 | ) | 85 | 122 | ||||||||||||||
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FDIC insurance assessment
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111 | 108 | 94 | 97 | 99 | |||||||||||||||
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Other
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1,259 | 1,303 | 1,272 | 1,238 | 1,288 | |||||||||||||||
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Total other expenses
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4,301 | 4,053 | 3,957 | 3,957 | 4,147 | |||||||||||||||
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INCOME BEFORE TAX
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2,877 | 2,342 | 2,986 | 3,096 | 2,981 | |||||||||||||||
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INCOME TAX EXPENSE
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569 | 583 | 786 | 838 | 795 | |||||||||||||||
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NET INCOME
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$ | 2,308 | $ | 1,759 | $ | 2,200 | $ | 2,258 | $ | 2,186 | ||||||||||
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Basic earnings per share
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$ | 0.64 | $ | 0.48 | $ | 0.61 | $ | 0.63 | $ | 0.61 | ||||||||||
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Diluted earnings per share
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$ | 0.63 | $ | 0.48 | $ | 0.61 | $ | 0.63 | $ | 0.61 | ||||||||||
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Book Value per share
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$ | 25.66 | $ | 25.49 | $ | 25.50 | $ | 25.03 | $ | 24.67 | ||||||||||
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Return on average equity (annualized)
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10.02 | % | 7.54 | % | 9.54 | % | 10.06 | % | 9.81 | % | ||||||||||
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Return on average assets (annualized)
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1.39 | % | 1.02 | % | 1.27 | % | 1.33 | % | 1.31 | % | ||||||||||
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Net interest spread (fte)
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3.91 | % | 3.80 | % | 3.87 | % | 3.95 | % | 4.00 | % | ||||||||||
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Net interest margin (fte)
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4.07 | % | 3.98 | % | 4.07 | % | 4.14 | % | 4.18 | % | ||||||||||
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Allowance for loan losses to total loans
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1.20 | % | 1.15 | % | 1.11 | % | 1.20 | % | 1.17 | % | ||||||||||
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Net charge-offs to average loans (annualized)
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0.48 | % | 0.53 | % | 1.11 | % | 0.20 | % | 0.16 | % | ||||||||||
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Nonperforming loans to total loans
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2.63 | % | 2.77 | % | 2.87 | % | 1.85 | % | 1.88 | % | ||||||||||
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Nonperforming assets to total assets
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2.01 | % | 2.09 | % | 2.07 | % | 1.48 | % | 1.48 | % | ||||||||||