Exhibit 99.1

 FOR IMMEDIATE RELEASE

October 22, 2018 - Honesdale, Pennsylvania

 

Lewis J. Critelli, President and Chief Executive Officer of Norwood Financial Corp. (Nasdaq Global Market-NWFL) and its subsidiary, Wayne Bank, announced earnings for the three months ended September 30, 2018 of $3,710,000 which represents an increase of $769,000 over the $2,941,000 earned in the same three-month period of 2017.  Net interest income improved $518,000 and other income increased $139,000 over the three-month period ending September 30, 2017.  Earnings per share (fully diluted) were $0.58 in the 2018 period, increasing from the $0.47 earned in the similar period of last year.  The annualized returns on average assets and average equity for the current three-month period were 1.28% and 12.55%, respectively, compared to 1.03% and 9.85% for the three-month period ending September 30, 2017.

 

Net income for the nine months ended September 30, 2018 totaled $10,352,000, which is $2,311,000 higher than the same period of 2017 primarily due to a $1,387,000 increase in net interest income and a $450,000 reduction in the provision for credit losses.  Earnings per share (fully diluted) for the nine months ended September 30, 2018 totaled $1.64 per share compared to $1.28 per share in the 2017 period.

 

Total assets as of September 30, 2018 were $1.157 billion with loans receivable of $819.2 million, deposits of $939.7 million and stockholders' equity of $116.7 million.  Total assets have increased $24.8 million during the past twelve months while loans and deposits have increased $63.2 million and $15.7 million, respectively.

 

 

 

Non-performing assets, which include non-performing loans and foreclosed real estate owned, totaled $2.4 million or 0.20% of total assets as of September 30, 2018 compared to $2.7 million or 0.23% of assets as of June 30, 2018 and $6.2 million or 0.55% of total assets as of September 30, 2017.  Net charge-offs were $421,000 for the quarter and totaled $704,000 for the nine months ended September 30, 2018 compared to $259,000 and $503,000, respectively, for the similar periods in 2017.  The allowance for loan losses totaled $8,280,000 as of September 30, 2018 and represented 719% of total non-performing loans, compared to $7,760,000 and 387% of non-performing loans as of September 30, 2017.

 

For the three months ended September 30, 2018, net interest income, on a fully taxable equivalent basis (fte), totaled $9,645,000, which represents an increase of $226,000 compared to the similar period in 2017 despite a lower tax-equivalent adjustment.  A $68.7 million increase in average loans outstanding contributed to the increased income.  Net interest margin (fte) for the 2018 period was 3.57% compared to 3.60% for the similar period in 2017, reflecting the lower tax-equivalent adjustment resulting from the Tax Cuts and Jobs Act.  Net interest income (fte) for the nine months ended September 30, 2018 totaled $28,212,000, an increase of $551,000 compared to the similar period in 2017 due primarily to a higher volume of earning assets.  The net interest margin (fte) year-to-date for the 2018 period was 3.52% compared to 3.55% in the same period of 2017.  The decrease in the net interest margin (fte) reflects the lower tax-equivalent adjustment resulting from the reduced corporate tax rate.

 

Other income for the three months ended September 30, 2018 totaled $1,997,000 compared to $1,858,000 for the similar period in 2017.  The increase was primarily attributed to non-recurring income related to the settlement of litigation.  For the nine 

 

 

 

months ended September 30, 2018, other income totaled $5,466,000 compared to $5,158,000 in the 2017 period.  Gains on sales of loans and securities totaled $228,000 in the 2018 year-to-date period compared to $234,000 in the corresponding 2017 period.  The 2017 period also includes a gain on the sale of deposits in the amount of $209,000.  Excluding gains from sales, other income improved $523,000 over the first nine months of 2017 primarily due to the non-recurring income related to the litigation settlement.

 

Other expenses totaled $6,572,000 for the three months ended September 30, 2018, compared to $6,239,000 in the similar period of 2017.  The higher level of expense during the 2018 period includes an increase of $368,000 for salaries and employee benefits offset partially by reduced foreclosed real estate costs.  For the nine months ended September 30, 2018, other expenses totaled $19,173,000 compared to $18,984,000 for the similar period in 2017, an increase of $189,000, or 1.0%.

 

Mr. Critelli commented, "Our earnings in 2018 have improved significantly over the first nine months of last year.  Pre-tax income has improved 18.8%, while net income increased 28.7%, reflecting the benefit of the reduced corporate tax rate.  Our key performance metrics improved over last year, annualized loan growth exceeds 9% in 2018, operating expenses remain well controlled and our capital base remains above regulatory "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."

 

Norwood Financial Corp is the parent company of Wayne Bank, which operates from fourteen offices throughout Northeastern Pennsylvania and twelve offices in the Southern Tier of New York.  The Company's stock is traded on the Nasdaq Global Market, under the symbol, "NWFL".

 

 

Forward-Looking Statements

 

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

 

Non-GAAP Financial Measures

 

This release references tax-equivalent interest income and net interest income, which are non-GAAP (Generally Accepted Accounting Principles) financial measures.  Tax-equivalent interest income and net interest income are derived from GAAP interest income and net interest income using an assumed tax rate of 21% for 2018 and 34% for 2017.  We believe the presentation of interest income and net interest income on a tax-equivalent basis ensures comparability of interest income and 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 taxable equivalent basis:

 

(dollars in thousands)		Three months ended September 30								Nine months ended September 30
		2018				2017				2018				2017
Net interest income		$	9,388			$	8,870			$	27,410			$	26,023
Tax equivalent basis adjustment    using marginal tax rate			257				549				802				1,638
Net interest income on a fully    taxable equivalent basis		$	9,645			$	9,419			$	28,212			$	27.661

 

The following reconciles average equity to average tangible equity:

		Three months ended September 30								Nine months ended September 30
(dollars in thousands)		2018				2017				2018				2017
Average equity		$	117,306			$	118,420			$	115,897			$	115,647
Goodwill and other intangibles			(11,707	)			(11,842	)			(11,739	)			(11,944	)
Average tangible equity		$	105,599			$	106.578			$	104,158			$	103,703

Contact:     William S. Lance

    Executive Vice President &

                    Chief Financial Officer

    NORWOOD FINANCIAL CORP

    570-253-8505

                    www.waynebank.com

 

 

 

NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets
(dollars in thousands, except share and per share data)
(unaudited)
		September 30
		2018				2017
ASSETS
Cash and due from banks		$	17,073			$	13,947
Interest-bearing deposits with banks			295				368
Cash and cash equivalents			17,368				14,315
Securities available for sale			247,517				285,706
Loans receivable			819,197				756,014
Less: Allowance for loan losses			8,280				7,760
Net loans receivable			810,917				748,254
Regulatory stock, at cost			3,261				3,115
Bank premises and equipment, net			13,797				12,922
Bank owned life insurance			37,718				36,839
Foreclosed real estate owned			1,209				4,243
Accrued interest receivable			3,792				3,729
Goodwill			11,331				11,331
Other intangible assets			364				496
Deferred tax asset			6,268				8,304
Other assets			3,206				2,699
TOTAL ASSETS		$	1,156,748			$	1,131,953
LIABILITIES
Deposits:
Non-interest bearing demand		$	218,979			$	212,844
Interest-bearing			720,735				711,178
Total deposits			939,714				924,022
Short-term borrowings			52,820				47,229
Other borrowings			36,649				31,771
Accrued interest payable			1,705				1,167
Other liabilities			9,180				10,072
TOTAL LIABILITIES			1,040,068				1,014,261
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value, authorized 10,000,000 shares
issued:  2018: 6,274,513 shares, 2017:  6,246,662 shares			628				625
Surplus			48,087				47,467
Retained earnings			76,645				71,210
Treasury stock, at cost: 2018: 5,729 shares, 2017: 11,724 shares			(188	)			(341	)
Accumulated other comprehensive loss			(8,492	)			(1,269	)
TOTAL STOCKHOLDERS' EQUITY			116,680				117,692
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY		$	1,156,748			$	1,131,953

 

 

 

 

NORWOOD FINANCIAL CORP.
Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2018				2017				2018				2017
INTEREST INCOME
Loans receivable, including fees		$	9,301			$	8,289			$	26,645			$	24,020
Securities			1,483				1,605				4,543				4,856
Other			2				2				63				37
Total Interest income			10,786				9,896				31,251				28,913
INTEREST EXPENSE
Deposits			1,116				828				3,198				2,392
Short-term borrowings			111				82				201				138
Other borrowings			171				116				442				360
Total Interest expense			1,398				1,026				3,841				2,890
NET INTEREST INCOME			9,388				8,870				27,410				26,023
PROVISION FOR LOAN LOSSES			375				600				1,350				1,800
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			9,013				8,270				26,060				24,223
OTHER INCOME
Service charges and fees			1,129				1,105				3,211				3,056
Income from fiduciary activities			151				160				463				395
Net realized gains on sales of securities			13				129				213				167
Gains on sales of loans, net			15				-				15				67
Gains on sale of deposits			-				-				-				209
Earnings and proceeds on life insurance policies			297				320				848				850
Other			392				144				716				414
Total other income			1,997				1,858				5,466				5,158
OTHER EXPENSES
Salaries and  employee benefits			3,577				3,209				10,445				9,639
Occupancy, furniture and equipment			910				799				2,659				2,519
Data processing  and related operations			368				354				1,027				1,022
Taxes, other than income			153				233				480				693
Professional fees			301				217				760				706
FDIC Insurance assessment			87				97				265				283
Foreclosed real estate			(26	)			303				68				1,028
Amortization of intangibles			29				35				97				115
Other			1,173				992				3,372				2,979
Total other expenses			6,572				6,239				19,173				18,984
INCOME BEFORE TAX			4,438				3,889				12,353				10,397
INCOME TAX EXPENSE			728				948				2,001				2,356
NET INCOME		$	3,710			$	2,941			$	10,352			$	8,041
Basic earnings per share		$	0.59			$	0.47			$	1.66			$	1.29
Diluted earnings per share		$	0.58			$	0.47			$	1.64			$	1.28

 

 

 

 

 

 

NORWOOD FINANCIAL CORP.
Financial Highlights (Unaudited)
(dollars in thousands, except per share data)
For the Three Months Ended September 30		2018				2017
Net interest income		$	9,388			$	8,870
Net income			3,710				2,941
Net interest spread (fully taxable equivalent)			3.40	%			3.48	%
Net interest margin (fully taxable equivalent)			3.57	%			3.60	%
Return on average assets			1.28	%			1.03	%
Return on average equity			12.55	%			9.85	%
Return on average tangible equity			13.94	%			10.95	%
Basic earnings per share		$	0.59			$	0.47
Diluted earnings per share		$	0.58			$	0.47
For the Nine Months Ended September 30			2018				2017
Net interest income		$	27,410			$	26,023
Net income			10,352				8,041
Net interest spread (fully taxable equivalent)			3.37	%			3.44	%
Net interest margin (fully taxable equivalent)			3.52	%			3.55	%
Return on average assets			1.21	%			0.96	%
Return on average equity			11.94	%			9.30	%
Return on average tangible equity			13.29	%			10.37	%
Basic earnings per share		$	1.66			$	1.29
Diluted earnings per share		$	1.64			$	1.28
As of September 30
Total assets		$	1,156,748			$	1,131,953
Total loans receivable			819,197				756,014
Allowance for loan losses			8,280				7,760
Total deposits			939,714				924,022
Stockholders' equity			116,680				117,692
Trust assets under management			164,852				151,373
Book value per share		$	18.49			$	18.46
Tangible book value per share		$	16.62			$	16.54
Equity to total assets			10.09	%			10.40	%
Allowance to total loans receivable			1.01	%			1.03	%
Nonperforming loans to total loans			0.14	%			0.27	%
Nonperforming assets to total assets			0.20	%			0.55	%

 

 

 

 

 

 

NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets (unaudited)
(dollars in thousands)
		September 30				June 30				March 31				December 31				September 30
		2018				2018				2018				2017				2017
ASSETS
Cash and due from banks		$	17,073			$	15,193			$	10,103			$	16,212			$	13,947
Interest-bearing deposits with banks			295				914				2,039				485				368
Cash and cash equivalents			17,368				16,107				12,142				16,697				14,315
Securities available for sale			247,517				259,442				265,862				281,121				285,706
Loans receivable			819,197				803,773				775,681				764,092				756,014
Less: Allowance for loan losses			8,280				8,326				8,099				7,634				7,760
Net loans receivable			810,917				795,447				767,582				756,458				748,254
Regulatory stock, at cost			3,261				2,313				2,545				3,505				3,115
Bank owned life insurance			37,718				37,485				37,270				37,060				36,839
Bank premises and equipment, net			13,797				13,894				13,808				13,864				12,922
Foreclosed real estate owned			1,209				1,386				1,436				1,661				4,243
Goodwill and other intangibles			11,695				11,725				11,758				11,793				11,827
Other assets			13,266				12,794				14,634				10,757				14,732
TOTAL ASSETS		$	1,156,748			$	1,150,593			$	1,127,037			$	1,132,916			$	1,131,953
LIABILITIES
Deposits:
Non-interest bearing demand		$	218,979			$	216,472			$	204,027			$	205,138			$	212,844
Interest-bearing deposits			720,735				734,417				736,122				724,246				711,178
Total deposits			939,714				950,889				940,149				929,384				924,022
Borrowings			89,469				73,608				62,998				78,475				79,000
Other liabilities			10,885				10,563				10,052				9,318				11,239
TOTAL LIABILITIES			1,040,068				1,035,060				1,013,199				1,017,177				1,014,261
STOCKHOLDERS' EQUITY			116,680				115,533				113,838				115,739				117,692
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY		$	1,156,748			$	1,150,593			$	1,127,037			$	1,132,916			$	1,131,953

 

 

 

 

 

 

 

 

NORWOOD FINANCIAL CORP.
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
		September 30				June 30				March 31				December 31				September 30
Three months ended		2018				2018				2018				2017				2017
INTEREST INCOME
Loans receivable, including fees		$	9,301			$	8,857			$	8,487			$	8,503			$	8,289
Securities			1,483				1,536				1,524				1,560				1,605
Other			2				43				18				12				2
Total interest income			10,786				10,436				10,029				10,075				9,896
INTEREST EXPENSE
Deposits			1,116				1,052				1,029				985				828
Borrowings			282				169				193				206				198
Total interest expense			1,398				1,221				1,222				1,191				1,026
NET INTEREST INCOME			9,388				9,215				8,807				8,884				8,870
PROVISION FOR LOAN LOSSES			375				425				550				400				600
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES			9,013				8,790				8,257				8,484				8,270
OTHER INCOME
Service charges and fees			1,129				1,101				980				1,023				1,105
Income from fiduciary activities			151				175				137				116				160
Net realized gains on sales of securities			13				58				142				181				129
Gains on sales of loans, net			15				-				-				-				-
Earnings and proceeds on life insurance policies			297				279				273				283				320
Other			392				161				162				151				144
Total other income			1,997				1,774				1,694				1,754				1,858
OTHER EXPENSES
Salaries and  employee benefits			3,577				3,406				3,462				3,211				3,209
Occupancy, furniture and equipment, net			910				857				892				841				799
Foreclosed real estate			(26	)			114				(19	)			136				303
FDIC insurance assessment			87				86				92				94				97
Other			2,024				1,890				1,821				1,604				1,831
Total other expenses			6,572				6,353				6,248				5,886				6,239
INCOME BEFORE TAX			4,438				4,211				3,703				4,352				3,889
INCOME TAX EXPENSE			728				698				574				4,195				948
NET INCOME		$	3,710			$	3,513			$	3,129			$	157			$	2,941
Basic earnings per share		$	0.59			$	0.57			$	0.50			$	0.03			$	0.47
Diluted earnings per share		$	0.58			$	0.56			$	0.50			$	0.03			$	0.47
Book Value per share		$	18.49			$	18.35			$	18.45			$	18.61			$	18.46
Tangible Book Value per share			16.62				16.47				16.56				16.71				16.54
Return on average assets (annualized)			1.28	%			1.23	%			1.13	%			0.05	%			1.03	%
Return on average equity (annualized)			12.55	%			12.25	%			11.00	%			0.52	%			9.85	%
Return on average tangible equity (annualized)			13.94	%			13.64	%			12.25	%			0.58	%			10.95	%
Net interest spread (fte)			3.40	%			3.40	%			3.31	%			3.44	%			3.48	%
Net interest margin (fte)			3.57	%			3.54	%			3.46	%			3.56	%			3.60	%
Allowance for loan losses to total loans			1.01	%			1.04	%			1.04	%			1.00	%			1.03	%
Net charge-offs to average loans (annualized)			0.21	%			0.10	%			0.04	%			0.28	%			0.14	%
Nonperforming loans to total loans			0.14	%			0.16	%			0.22	%			0.32	%			0.27	%
Nonperforming assets to total assets			0.20	%			0.23	%			0.28	%			0.37	%			0.55	%