Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - NORWOOD FINANCIAL CORP | f8k_012513-0160.htm |
FOR IMMEDIATE RELEASE
NORWOOD FINANCIAL CORP ANNOUNCES EARNINGS FOR THE FOURTH QUARTER AND YEAR
January 25, 2013- Honesdale, PA
Lewis J. Critelli, President and Chief Executive Officer of Norwood Financial Corp (Nasdaq Global Market – NWFL) and its subsidiary Wayne Bank announced earnings today for the three months ended December 31, 2012 of $1,759,000. This represents a decrease of $238,000 from the $1,997,000 earned in the comparable period of 2011 due primarily to increased loan loss provisions. Earnings per share (fully diluted) were $.53 and $.61 for the three-month periods, respectively. Net interest income before the provision for loan losses declined $147,000 over the same period of last year, while other income increased $88,000. The provision for loan losses was $800,000 in the current three-month period compared to $500,000 in the same period of last year, while operating expenses increased $64,000. Annualized return on average assets for the current quarter was 1.02% with an annualized return on equity of 7.54%. For the year ended December 31, 2012 net income totaled a record level of $8,403,000, an increase of $1,047,000 over the $7,356,000 earned in the prior year as an increase in net interest income and securities gains offset higher loan loss provisions and increased operating expenses. Earnings per share on a fully diluted basis were $2.56 for 2012, compared to $2.39 in
1
2011. The return on average assets for the year was 1.23% with a return on average equity of 9.22% compared to 1.18% and 9.26%, respectively, in 2011.
Total assets were $672.3 million as of December 31, 2012. Loans receivable totaled $476.7 million as of December 31, 2012, with total deposits of $524.4 million and stockholders’ equity of $92.4 million. The Company’s capital position remains “well capitalized” in accordance with risk-based capital guidelines established by bank regulators.
Loans receivable grew $18.8 million from the prior year-end due primarily to growth in commercial real estate loans, notwithstanding the sale of $7.0 million of fixed rate residential mortgages for purposes of interest rate risk management. Excluding these sales, residential mortgage loans would have increased $10.6 million. Total commercial loans grew $15.0 million in 2012, while total installment loans increased $200,000. As of December 31, 2012, total non-performing loans were $13.2 million and represented 2.77% of total loans compared to $7.8 million, or 1.71% as of December 31, 2011. The increase was due primarily to one credit secured by commercial real estate that was transferred to nonaccrual status during the year. For the three months and year ended December 31, 2012, net charge-offs totaled $639,000 and $2,406,000, respectively, compared to $387,000 and $1,733,000, respectively, for the corresponding periods in 2011. The increase in charge-offs in 2012 is due primarily to one credit which has been transferred to non-accrual status based on the borrowers inability to make scheduled payments. Based on the increase in charge-offs and non-performing loans, the Company determined that it would be appropriate to provide $800,000 and $2,450,000 for potential future losses for the three and twelve month periods, respectively, compared to $500,000 in the similar
2
quarter of last year and $1,575,000 for the year of 2011. As of December 31, 2012, the allowance for loan losses totaled $5,502,000 and 1.15% of total loans compared to $5,458,000 and 1.19% of total loans at December 31, 2011.
Net interest income (fully taxable equivalent) totaled $6,377,000 for the three months ended December 31, 2012, a decrease of $171,000 compared to the same period in 2011. Net interest margin (fte) for the three months ended December 31, 2012 was 3.98% decreasing from 4.21% for the similar period in 2011. The decrease in net interest margin was principally due to growth at historically low interest rate levels and the increase in non-performing loans which resulted in a thirty-six basis point decrease in the yield earned on assets compared to a thirteen basis point reduction in the cost of interest bearing liabilities. For the year, net interest income (fte) totaled $26,006,000, an increase of $2,242,000 or 9.43% over 2011. The net interest margin (fte) improved 2 basis points to 4.10% in 2012.
Other income for the three months ended December 31, 2012 totaled $1,116,000 compared to $1,028,000 for the similar period in 2011. The increase was due primarily to a $76,000 increase in commissions received on sales of investment products. Other income for the year ended December 31, 2012 totaled $5,206,000 compared to $4,735,000 in 2011, an increase of $471,000. Gains on the sale of investment securities increased $446,000 while earnings on bank owned life insurance policies improved $76,000 in 2012 compared to 2011. The 2012 period includes $211,000 in gains on sales of loans and servicing rights on the sale of $7.0 million of residential mortgage loans compared to $271,000 in similar gains on sales of $8.7 million of mortgage loans and servicing rights in the 2011 period.
3
Other expenses totaled $4,053,000 for the three months ended December 31, 2012, compared to $3,989,000 in the similar period of 2011. Salaries and benefit costs decreased $33,000 and occupancy and equipment expense declined $36,000 compared to the same period of last year while foreclosed real estate costs decreased $137,000. The increase in other operating expenses was related to a one-time benefit realized in 2011 related to the acquisition of North Penn Bancorp, Inc. (“North Penn”). For the year ended December 31, 2012, other expenses totaled $16,081,000 compared to $15,813,000 for the similar period in 2011, an increase of $268,000. Employment and occupancy costs rose a combined $713,000 over the 2011 total due primarily to locations and staff added from the acquisition. All other expenses decreased $445,000 compared to 2011 due to approximately $800,000 of merger related costs incurred in 2011, and a $361,000 decrease in foreclosed real estate expenses.
Mr. Critelli commented, “We are pleased with the results we achieved in 2012, which represents a record level of earnings. In addition, we increased our cash dividend for the twenty-first consecutive year in 2012 to $1.21 per share, which results in a dividend yield in excess of 4.00% based on our recent closing stock price. These results reflect the positive impact from the acquisition of North Penn in 2011. A portion of the benefits have been partially offset by continued pressure related to the fragile economy on sectors of our customer base which has resulted in increases in non-performing loans, net charge-offs and loan loss provisions. As we continue to move through the prolonged economic downturn, we will remain diligent in controlling and minimizing credit related costs brought on us by our ailing economy. We believe that we are well positioned to take advantage of
4
the opportunities available to us, and we look forward to serving our growing customer base as the economy rebounds from the recent difficulties.”
Norwood Financial Corp., through its subsidiary Wayne Bank, operates sixteen offices in 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 interest income and net interest income using an assumed tax rate of 34%. We believe the presentation of net interest income on a tax–equivalent
5
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:
|
(dollars in thousands)
|
Three months ended
December 31
|
Year ended
December 31
|
||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
Net interest income
|
$ | 6,079 | $ | 6,226 | $ | 24,764 | $ | 22,588 | ||||||||
|
Tax equivalent basis adjustment using 34% marginal tax rate
|
298 | 322 | 1,242 | 1,176 | ||||||||||||
|
Net interest income on a fully taxable equivalent basis
|
$ | 6,377 | $ | 6,548 | $ | 26,006 | $ | 23,764 | ||||||||
Contact: William S. Lance
Executive Vice President &
Chief Financial Officer
NORWOOD FINANCIAL CORP.
570-253-8505
www.waynebank.com
6
|
|
||||||||
|
NORWOOD FINANCIAL CORP.
|
||||||||
|
Consolidated Balance Sheets
|
||||||||
|
(dollars in thousands, except share data)
|
||||||||
|
(unaudited)
|
||||||||
|
December 31
|
||||||||
|
2012
|
2011
|
|||||||
|
ASSETS
|
|
|
||||||
|
Cash and due from banks
|
$ | 10,867 | $ | 8,974 | ||||
|
Interest-bearing deposits with banks
|
1,428 | 12,449 | ||||||
|
Federal funds sold
|
0 | 0 | ||||||
|
Cash and cash equivalents
|
12,295 | 21,423 | ||||||
|
Securities available for sale
|
145,390 | 150,181 | ||||||
|
Securities held to maturity, fair value 2012: $177 and 2011: $177
|
173 | 171 | ||||||
|
Loans receivable (net of unearned Income)
|
476,710 | 457,907 | ||||||
|
Less: Allowance for loan losses
|
5,502 | 5,458 | ||||||
|
Net loans receivable
|
471,208 | 452,449 | ||||||
|
Regulatory stock, at cost
|
2,630 | 3,675 | ||||||
|
Bank premises and equipment, net
|
7,326 | 7,479 | ||||||
|
Bank owned life insurance
|
15,357 | 11,887 | ||||||
|
Foreclosed real estate owned
|
852 | 2,910 | ||||||
|
Accrued interest receivable
|
2,393 | 2,468 | ||||||
|
Goodwill
|
9,715 | 9,715 | ||||||
|
Other intangible assets
|
647 | 800 | ||||||
|
Other assets
|
4,313 | 5,656 | ||||||
|
TOTAL ASSETS
|
$ | 672,299 | $ | 668,814 | ||||
|
LIABILITIES
|
||||||||
|
Deposits:
|
||||||||
|
Non-interest bearing demand
|
$ | 82,075 | $ | 71,959 | ||||
|
Interest-bearing
|
442,350 | 453,808 | ||||||
|
Total deposits
|
524,425 | 525,767 | ||||||
|
Short-term borrowings
|
28,697 | 21,794 | ||||||
|
Other borrowings
|
22,487 | 27,670 | ||||||
|
Accrued interest payable
|
1,242 | 1,321 | ||||||
|
Other liabilities
|
3,027 | 4,201 | ||||||
|
TOTAL LIABILITIES
|
579,878 | 580,753 | ||||||
|
STOCKHOLDERS' EQUITY
|
||||||||
|
Common Stock, $.10 par value, authorized 10,000,000 shares
|
||||||||
|
issued: 2012: 3,371,849 shares, 2011: 3,371,866 shares
|
337 | 337 | ||||||
|
Surplus
|
24,737 | 24,660 | ||||||
|
Retained earnings
|
66,742 | 62,308 | ||||||
|
Treasury stock, at cost: 2012: 75,426 shares, 2011: 87,370 shares
|
(2,192 | ) | (2,559 | ) | ||||
|
Accumulated other comprehensive income
|
2,797 | 3,315 | ||||||
|
TOTAL STOCKHOLDERS' EQUITY
|
92,421 | 88,061 | ||||||
|
TOTAL LIABILITIES AND
|
||||||||
|
STOCKHOLDERS' EQUITY
|
$ | 672,299 | $ | 668,814 | ||||
|
NORWOOD FINANCIAL CORP.
|
||||||||||||||||
|
Consolidated Statements of Income
|
||||||||||||||||
|
(dollars in thousands, except per share data)
|
||||||||||||||||
|
(unaudited)
|
|
|||||||||||||||
|
Three Months Ended December 31
|
Year Ended December 31
|
|||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
INTEREST INCOME
|
||||||||||||||||
|
Loans receivable, including fees
|
$ | 6,261 | $ | 6,372 | $ | 25,494 | $ | 23,289 | ||||||||
|
Securities
|
884 | 1,087 | 3,888 | 4,428 | ||||||||||||
|
Other
|
12 | 11 | 32 | 53 | ||||||||||||
|
Total Interest income
|
7,157 | 7,470 | 29,414 | 27,770 | ||||||||||||
|
INTEREST EXPENSE
|
||||||||||||||||
|
Deposits
|
860 | 980 | 3,660 | 3,851 | ||||||||||||
|
Short-term borrowings
|
15 | 17 | 53 | 92 | ||||||||||||
|
Other borrowings
|
203 | 247 | 937 | 1,239 | ||||||||||||
|
Total Interest expense
|
1,078 | 1,244 | 4,650 | 5,182 | ||||||||||||
|
NET INTEREST INCOME
|
6,079 | 6,226 | 24,764 | 22,588 | ||||||||||||
|
PROVISION FOR LOAN LOSSES
|
800 | 500 | 2,450 | 1,575 | ||||||||||||
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
|
5,279 | 5,726 | 22,314 | 21,013 | ||||||||||||
|
|
||||||||||||||||
|
OTHER INCOME
|
||||||||||||||||
|
Service charges and fees
|
563 | 533 | 2,237 | 2,255 | ||||||||||||
|
Income from fiduciary activities
|
81 | 85 | 355 | 409 | ||||||||||||
|
Net realized gains on sales of securities
|
100 | 205 | 1,419 | 973 | ||||||||||||
|
Gains on sale of loans and servicing rights
|
67 | (11 | ) | 211 | 271 | |||||||||||
|
Earnings and proceeds on life insurance policies
|
144 | 133 | 539 | 463 | ||||||||||||
|
Other
|
161 | 83 | 445 | 364 | ||||||||||||
|
Total other income
|
1,116 | 1,028 | 5,206 | 4,735 | ||||||||||||
|
OTHER EXPENSES
|
||||||||||||||||
|
Salaries and employee benefits
|
2,103 | 2,136 | 8,403 | 7,848 | ||||||||||||
|
Occupancy, furniture and equipment
|
506 | 542 | 1,995 | 1,837 | ||||||||||||
|
Data processing related
|
227 | 220 | 897 | 855 | ||||||||||||
|
Taxes, other than income
|
148 | 121 | 599 | 535 | ||||||||||||
|
Professional Fees
|
209 | 266 | 811 | 1,283 | ||||||||||||
|
FDIC Insurance assessment
|
108 | 76 | 398 | 393 | ||||||||||||
|
Foreclosed real estate owned
|
33 | 170 | 217 | 578 | ||||||||||||
|
Other
|
719 | 458 | 2,761 | 2,484 | ||||||||||||
|
Total other expenses
|
4,053 | 3,989 | 16,081 | 15,813 | ||||||||||||
|
INCOME BEFORE TAX
|
2,342 | 2,765 | 11,439 | 9,935 | ||||||||||||
|
INCOME TAX EXPENSE
|
583 | 768 | 3,036 | 2,579 | ||||||||||||
|
NET INCOME
|
$ | 1,759 | $ | 1,997 | $ | 8,403 | $ | 7,356 | ||||||||
|
Basic earnings per share
|
$ | 0.53 | $ | 0.61 | $ | 2.56 | $ | 2.39 | ||||||||
|
Diluted earnings per share
|
$ | 0.53 | $ | 0.61 | $ | 2.56 | $ | 2.39 | ||||||||
|
NORWOOD FINANCIAL CORP.
|
||||||||
|
Financial Highlights (Unaudited)
|
||||||||
|
(dollars in thousands, except per share data)
|
||||||||
|
For the Three Months Ended December 31
|
2012
|
2011
|
||||||
|
Net interest income
|
$ | 6,079 | $ | 6,226 | ||||
|
Net income
|
1,759 | 1,997 | ||||||
|
Net interest spread (fully taxable equivalent)
|
3.80 | % | 4.03 | % | ||||
|
Net interest margin (fully taxable equivalent)
|
3.98 | % | 4.21 | % | ||||
|
Return on average assets
|
1.02 | % | 1.18 | % | ||||
|
Return on average equity
|
7.54 | % | 9.03 | % | ||||
|
Basic earnings per share
|
$ | 0.53 | $ | 0.61 | ||||
|
Diluted earnings per share
|
$ | 0.53 | $ | 0.61 | ||||
|
For the Year Ended December 31
|
||||||||
|
Net interest income
|
$ | 24,764 | $ | 22,588 | ||||
|
Net income
|
8,403 | 7,356 | ||||||
|
Net interest spread (fully taxable equivalent)
|
3.91 | % | 3.86 | % | ||||
|
Net interest margin (fully taxable equivalent)
|
4.10 | % | 4.08 | % | ||||
|
Return on average assets
|
1.23 | % | 1.18 | % | ||||
|
Return on average equity
|
9.22 | % | 9.26 | % | ||||
|
Basic earnings per share
|
$ | 2.56 | $ | 2.39 | ||||
|
Diluted earnings per share
|
$ | 2.56 | $ | 2.39 | ||||
|
As of December 31
|
||||||||
|
Total assets
|
$ | 672,299 | $ | 668,814 | ||||
|
Total loans receivable
|
476,710 | 457,907 | ||||||
|
Allowance for loan losses
|
5,502 | 5,458 | ||||||
|
Total deposits
|
524,425 | 525,767 | ||||||
|
Stockholders' equity
|
92,421 | 88,061 | ||||||
|
Trust assets under management
|
112,081 | 107,696 | ||||||
|
Book value per share
|
$ | 28.04 | $ | 26.81 | ||||
|
Equity to total assets
|
13.75 | % | 13.17 | % | ||||
|
Allowance to total loans receivable
|
1.15 | % | 1.19 | % | ||||
|
Nonperforming loans to total loans
|
2.77 | % | 1.71 | % | ||||
|
Nonperforming assets to total assets
|
2.09 | % | 1.60 | % | ||||
|
|
||||||||
|
NORWOOD FINANCIAL CORP.
|
||||||||||||||||||||
|
Consolidated Statements of Income (unaudited)
|
||||||||||||||||||||
|
(dollars in thousands, except per share data)
|
||||||||||||||||||||
|
Dec 31
|
Sept 30
|
June 30
|
March 31
|
Dec 31
|
||||||||||||||||
|
Three months ended
|
2012
|
2012
|
2012
|
2012
|
2011
|
|||||||||||||||
|
INTEREST INCOME
|
||||||||||||||||||||
|
Loans receivable, including fees
|
$ | 6,261 | $ | 6,429 | $ | 6,431 | $ | 6,373 | $ | 6,372 | ||||||||||
|
Securities
|
884 | 971 | 1,007 | 1,026 | 1,087 | |||||||||||||||
|
Other
|
12 | 9 | 7 | 4 | 11 | |||||||||||||||
|
Total Interest income
|
7,157 | 7,409 | 7,445 | 7,403 | 7,470 | |||||||||||||||
|
INTEREST EXPENSE
|
||||||||||||||||||||
|
Deposits
|
860 | 897 | 942 | 961 | 980 | |||||||||||||||
|
Borrowings
|
218 | 260 | 256 | 255 | 264 | |||||||||||||||
|
Total Interest expense
|
1,078 | 1,157 | 1,198 | 1,216 | 1,244 | |||||||||||||||
|
NET INTEREST INCOME
|
6,079 | 6,252 | 6,247 | 6,187 | 6,226 | |||||||||||||||
|
PROVISION FOR LOAN LOSSES
|
800 | 900 | 400 | 350 | 500 | |||||||||||||||
|
NET INTEREST INCOME AFTER PROVISION
|
||||||||||||||||||||
|
FOR LOAN LOSSES
|
5,279 | 5,352 | 5,847 | 5,837 | 5,726 | |||||||||||||||
|
OTHER INCOME
|
||||||||||||||||||||
|
Service charges and fees
|
563 | 561 | 559 | 554 | 533 | |||||||||||||||
|
Income from fiduciary activities
|
81 | 96 | 80 | 98 | 85 | |||||||||||||||
|
Net realized gains (losses) on sales of securities
|
100 | 631 | 285 | 402 | 205 | |||||||||||||||
|
Gains on sale of loans and servicing rights
|
67 | 83 | 66 | (6 | ) | (11 | ) | |||||||||||||
|
Earnings and proceeds on life insurance
|
144 | 132 | 131 | 132 | 133 | |||||||||||||||
|
Other
|
161 | 88 | 85 | 111 | 83 | |||||||||||||||
|
Total other income
|
1,116 | 1,591 | 1,206 | 1,291 | 1,028 | |||||||||||||||
|
OTHER EXPENSES
|
||||||||||||||||||||
|
Salaries and employee benefits
|
2,103 | 2,102 | 2,047 | 2,151 | 2,136 | |||||||||||||||
|
Occupancy, furniture and equipment , net
|
506 | 512 | 490 | 487 | 542 | |||||||||||||||
|
Foreclosed real estate owned
|
33 | (23 | ) | 85 | 122 | 170 | ||||||||||||||
|
FDIC insurance assessment
|
108 | 94 | 97 | 99 | 76 | |||||||||||||||
|
Other
|
1,303 | 1,272 | 1,238 | 1,288 | 1,065 | |||||||||||||||
|
Total other expenses
|
4,053 | 3,957 | 3,957 | 4,147 | 3,989 | |||||||||||||||
|
INCOME BEFORE TAX
|
2,342 | 2,986 | 3,096 | 2,981 | 2,765 | |||||||||||||||
|
INCOME TAX EXPENSE
|
583 | 786 | 838 | 795 | 768 | |||||||||||||||
|
NET INCOME
|
$ | 1,759 | $ | 2,200 | $ | 2,258 | $ | 2,186 | $ | 1,997 | ||||||||||
|
Basic earnings per share
|
$ | 0.53 | $ | 0.67 | $ | 0.69 | $ | 0.67 | $ | 0.61 | ||||||||||
|
|
||||||||||||||||||||
|
Diluted earnings per share
|
$ | 0.53 | $ | 0.67 | $ | 0.69 | $ | 0.67 | $ | 0.61 | ||||||||||