GlobeNewswire Inc | Jan 27, 2021 08:15AM EST

January 27, 2021

HONESDALE, Pa., Jan. 27, 2021 (GLOBE NEWSWIRE) -- Lewis J. Critelli, President and Chief Executive Officer of Norwood Financial Corp (Nasdaq Global Market NWFL) and its subsidiary Wayne Bank, announced earnings for the three months ended December 31, 2020 of $5,513,000 compared to $3,596,000 earned in the corresponding period of 2019. The increase in earnings reflects the benefits derived from the Companys acquisition of UpState New York Bancorp, Inc. (UpState), which closed on July 7, 2020. For the year ended December 31, 2020 net income totaled $15,080,000, an increase of $865,000 from the $14,215,000 earned in the prior year. The increase reflects the benefits derived from the acquisition of UpState, which offset a $4,200,000 increase in the provision for loan losses and $2,049,000 of merger related expenses.

Earnings per share (fully diluted) were $0.67 and $0.57 for the three-month period ended December 31, 2020 and 2019, respectively. For the year ended December 31, 2020, earnings per share on a fully diluted basis were $2.09, compared to $2.25 for the year ended December 31, 2019. For the year ended December 31, 2020, the return on average assets was 0.97%, and the return on average equity was 9.06%, compared to 1.18% and 10.83%, respectively, for the year ended December 31, 2019.

Total assets were $1.852 billion as of December 31, 2020. Loans receivable totaled $1.411 billion as of December 31, 2020, with total deposits of $1.535 billion and stockholders equity of $194.8 million as of December 31, 2020.

Loans receivable increased $486.2 million from the prior year-end due primarily to the $420 million of loan balances acquired from UpState and $66 million of Paycheck Protection Program (PPP) loans originated during the year ended December 31, 2020. For the three months and year ended December 31, 2020, net charge-offs totaled $125,000 and $809,000, respectively, compared to $96,000 and $1,194,000, respectively, for the corresponding periods in 2019.

Net interest income, on a fully taxable equivalent basis (fte), totaled $15,821,000 for the three months ended December 31, 2020, an increase of $5,755,000 compared to the same period in 2019. For the year ended December 31, 2020, net interest income (fte) totaled $51,359,000, an increase of $11,747,000 compared to 2019 due primarily to the higher volume of earning assets, including a $292.0 million increase in average loans outstanding.

Other income for the three months ended December 31, 2020 totaled $2,661,000 compared to $1,696,000 for the similar period in 2019. Gains on the sale of loans and securities increased $176,000, while all other items of other income increased $789,000 in the aggregate due primarily to service charges and fees related to the acquisition of UpState. Other income for the year ended December 31, 2020 totaled $7,780,000 compared to $6,778,000 in 2019, an increase of $1,002,000 due primarily to a $665,000 increase in service charges and fees. Gains on the sale of loans and investment securities increased $175,000 in the aggregate, while all other items of other income increased $165,000, net.

Other expenses totaled $9,909,000 for the three months ended December 31, 2020, compared to $7,088,000 in the similar period of 2019. The $2,821,000 increase reflects the costs of the operations acquired from UpState. For the year ended December 31, 2020, other expenses totaled $34,440,000 compared to $27,311,000 for 2019, an increase of $7,129,000. The increase reflects the costs of operations acquired from UpState, including four new Community Offices, and $2,049,000 of merger related expenses.

Mr. Critelli commented, Our results for the 2020 year have been significantly impacted by our efforts to assist our customers during the COVID-19 pandemic, restrictions on business activity, and the costs associated with and the revenue generated by our acquisition of UpState New York Bancorp, Inc. Our balance sheet reflects the full impact of the UpState acquisition, resulting in a Company with over $1.8 billion of total assets, $1.4 billion of loans and $1.5 billion of deposits. Our cash dividend of $0.26 per share declared in the fourth quarter of 2020 represents a 4.0% increase over the same period of last year. We appreciate the opportunity to serve our Wayne Bank customers and our new customers at the Bank of the Finger Lakes and Bank of Cooperstown locations. We continue to search out opportunities available to us as we service 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 sixteen offices in Delaware, Sullivan, Ontario, Otsego and Yates Counties, New York. The Companys 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 risks and uncertainty posed by, and the effect and impact of, the COVID-19 pandemic on the economy and the Companys results of operation and financial condition, the ability to control costs and expenses, demand for real estate, government fiscal and trade policies, cybersecurity and general economic conditions. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Non-GAAP Financial Measures This release references tax-equivalent interest income and net interest income, which are non-GAAP (Generally Accepted Accounting Principles) financial measures. Tax-equivalent net interest income is derived from GAAP interest income and net interest income using an assumed tax rate of 21%. We believe the presentation of interest income on a taxequivalent basis ensures comparability of interest income arising from both taxable and tax-exempt sources and is consistent with industry practice.

The following table reconciles net interest income to net interest income on a fully tax-equivalent basis:

(dollars in thousands) Three months ended Year ended December 31 December 31 2020 2019 2020 2019Net interest income $ 15,614 $ 9,833 $ 50,476 $ 38,606Tax equivalent basis adjustmentusing 21% marginal tax rate 207 233 883 1,006Net interest income on a fullytaxable equivalent basis $ 15,821 $ 10,066 $ 51,359 $ 39,612

This release also references average tangible equity, which is also a non-GAAP financial measure. Average tangible equity is calculated by deducting average goodwill and other intangible assets from average stockholders equity. The Company believes that disclosure of tangible equity ratios enhances investor understanding of our financial position and improves the comparability of our financial data.

The following reconciles average equity to average tangible equity:

Three months ended Year ended December 31, December 31,(dollars in 2020 2019 2020 2019thousands) Average equity $ 193,740 $ 136,920 $ 166,427 $ 131,271Average goodwilland other (30,747) (11,575) (17,942) (11,611)IntangiblesAverage tangible $ 162,993 $ 125,345 $ 148,485 $ 119,660equity

William S. Lance Executive Vice President &Contact: Chief Financial Officer NORWOOD FINANCIAL CORP 570-253-8505 www.waynebank.com

NORWOOD FINANCIAL CORP.Consolidated Balance Sheets(dollars inthousands, except share andper share data)(unaudited) December 31 2020 2019 ASSETS Cash and due $ 19,445 $ 15,038 from banksInterest-bearingdeposits with 92,248 377 banksCash and cash 111,693 15,415 equivalents Securitiesavailable for 226,586 210,205 saleLoans receivable 1,410,732 924,581 Less: Allowance 13,150 8,509 for loan lossesNet loans 1,397,582 916,072 receivableRegulatory 3,981 4,844 stock, at costBank premisesand equipment, 17,814 14,228 netBank owned life 39,608 38,763 insuranceForeclosed real 965 1,556 estate ownedAccrued interest 6,232 3,719 receivableGoodwill 29,290 11,331 Other intangible 530 235 assetsOther assets 17,583 14,242 TOTAL ASSETS $ 1,851,864 $ 1,230,610 LIABILITIES Deposits: Non-interest $ 359,559 $ 207,299 bearing demandInterest-bearing 1,175,826 750,230 Total deposits 1,535,385 957,529 Short-term 63,303 62,256 borrowingsOther borrowings 42,459 56,438 Accrued interest 1,601 2,432 payableOther 14,331 14,527 liabilitiesTOTAL 1,657,079 1,093,182 LIABILITIES STOCKHOLDERS' EQUITYPreferred Stock, nopar value per share, - - authorized 5,000,000sharesCommon Stock,$.10 par value per share,authorized:20,000,000 shares,issued: 2020:8,236,331 824 634 shares, 2019:6,340,563 sharesSurplus 95,388 49,471 Retained 93,796 86,536 earningsTreasury stock,at cost: 2020:10,263 shares, (342 ) (400 ) 2019: 12,007sharesAccumulatedother 5,119 1,187 comprehensiveincomeTOTALSTOCKHOLDERS' 194,785 137,428 EQUITY TOTAL LIABILITIES ANDSTOCKHOLDERS' $ 1,851,864 $ 1,230,610 EQUITY NORWOOD FINANCIAL CORP.ConsolidatedStatements of Income(dollars inthousands, except per sharedata)(unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2020 2019 2020 2019INTEREST INCOME Loansreceivable, $ 16,336 $ 10,815 $ 54,046 $ 41,889 including feesSecurities 1,064 1,159 4,337 5,314 Other 29 11 72 81 Total Interest 17,429 11,985 58,455 47,284 income INTEREST EXPENSE Deposits 1,514 1,784 6,610 7,139 Short-term 81 124 325 468 borrowingsOther borrowings 220 244 1,044 1,071 Total Interest 1,815 2,152 7,979 8,678 expenseNET INTEREST 15,614 9,833 50,476 38,606 INCOMEPROVISION FOR 1,600 200 5,450 1,250 LOAN LOSSESNET INTEREST INCOMEAFTER PROVISION FOR 14,014 9,633 45,026 37,356 LOAN LOSSES OTHER INCOME Service charges 1,913 1,168 5,115 4,450 and feesIncome fromfiduciary 150 156 682 610 activitiesNet realizedgains on sales - 21 71 254 of securitiesGains on sales 241 44 527 169 of loans, netEarnings andproceeds on life 208 200 845 830 insurancepoliciesOther 149 107 540 465 Total other 2,661 1,696 7,780 6,778 income OTHER EXPENSES Salaries andemployee 5,243 3,740 17,121 14,655 benefitsOccupancy,furniture and 1,165 938 4,148 3,719 equipmentData processingand related 808 469 2,457 1,869 operationsTaxes, other 356 232 997 751 than incomeProfessional 328 362 1,062 1,113 feesFDIC Insurance 213 3 399 153 assessmentForeclosed real 8 9 53 45 estateAmortization of 35 22 114 101 intangiblesMerger related 66 - 2,049 - Other 1,687 1,313 6,040 4,905 Total other 9,909 7,088 34,440 27,311 expenses INCOME BEFORE 6,766 4,241 18,366 16,823 TAXINCOME TAX 1,253 645 3,286 2,608 EXPENSENET INCOME $ 5,513 $ 3,596 $ 15,080 $ 14,215 Basic earnings $ 0.67 $ 0.57 $ 2.09 $ 2.27 per share Diluted earnings $ 0.67 $ 0.57 $ 2.09 $ 2.25 per share NORWOOD FINANCIAL CORP.FinancialHighlights (Unaudited)(dollars inthousands, except per sharedata) For the ThreeMonths Ended 2020 2019 December 31 Net interest $ 15,614 $ 9,833 incomeNet income 5,513 3,596 Net interestspread (fully 3.50 % 3.33 % taxableequivalent)Net interestmargin (fully 3.65 % 3.59 % taxableequivalent)Return on 1.18 % 1.18 % average assetsReturn on 11.32 % 10.42 % average equityReturn onaverage tangible 13.46 % 11.38 % equityBasic earnings $ 0.67 $ 0.57 per shareDiluted earnings $ 0.67 $ 0.57 per share For the TwelveMonths Ended 2020 2019 December 31 Net interest $ 50,476 $ 38,606 incomeNet income 15,080 14,215 Net interestspread (fully 3.36 % 3.28 % taxableequivalent)Net interestmargin (fully 3.55 % 3.53 % taxableequivalent)Return on 0.97 % 1.18 % average assetsReturn on 9.06 % 10.83 % average equityReturn onaverage tangible 10.16 % 11.88 % equityBasic earnings $ 2.09 $ 2.27 per shareDiluted earnings $ 2.09 $ 2.25 per share As of December 2020 2019 31 Total assets $ 1,851,864 $ 1,230,610 Total loans 1,410,732 924,581 receivableAllowance for 13,150 8,509 loan lossesTotal deposits 1,535,385 957,529 Stockholders' 194,785 137,428 equityTrust assets 168,085 170,685 under management Book value per $ 23.72 $ 21.67 shareTangible book $ 20.10 $ 19.84 value per shareEquity to total 10.52 % 11.17 % assetsAllowance tototal loans 0.93 % 0.92 % receivableNonperformingloans to total 0.85 % 0.09 % loansNonperformingassets to total 0.70 % 0.19 % assets NORWOOD FINANCIAL CORP.ConsolidatedBalance Sheets (unaudited)(dollars in thousands) December 31 September 30 June 30 March 31 December 31 2020 2020 2020 2020 2019ASSETS Cash and due $ 19,445 $ 23,874 $ 15,387 $ 14,712 $ 15,038 from banksInterest-bearingdeposits with 92,248 100,566 67,989 23,706 377 banksCash and cash 111,693 124,440 83,376 38,418 15,415 equivalents Securitiesavailable for 226,586 197,436 196,735 196,998 210,205 saleLoans receivable 1,410,732 1,414,662 988,679 928,565 924,581 Less: Allowance 13,150 11,674 10,312 9,088 8,509 for loan lossesNet loans 1,397,582 1,402,988 978,367 919,477 916,072 receivableRegulatory 3,981 3,876 3,677 3,770 4,844 stock, at costBank owned life 39,608 39,400 39,183 38,971 38,763 insuranceBank premisesand equipment, 17,814 18,124 14,040 14,071 14,228 netForeclosed real 965 965 965 1,077 1,556 estate ownedGoodwill andother 29,820 30,778 11,522 11,543 11,566 intangiblesOther assets 23,815 24,100 26,676 17,966 17,961 TOTAL ASSETS $ 1,851,864 $ 1,842,107 $ 1,354,541 $ 1,242,291 $ 1,230,610 LIABILITIES Deposits: Non-interest $ 359,559 $ 372,237 $ 284,754 $ 213,359 $ 207,299 bearing demandInterest-bearing 1,175,826 1,143,685 801,484 776,801 750,230 depositsTotal deposits 1,535,385 1,515,922 1,086,238 990,160 957,529 Borrowings 105,762 115,732 106,027 92,006 118,694 Other 15,932 19,906 19,612 17,938 16,959 liabilitiesTOTAL 1,657,079 1,651,560 1,211,877 1,100,104 1,093,182 LIABILITIES STOCKHOLDERS' 194,785 190,547 142,664 142,187 137,428 EQUITY TOTAL LIABILITIES ANDSTOCKHOLDERS' $ 1,851,864 $ 1,842,107 $ 1,354,541 $ 1,242,291 $ 1,230,610 EQUITY NORWOOD FINANCIAL CORP.ConsolidatedStatements of Income(unaudited)(dollars inthousands, except per sharedata) December 31 September 30 June 30 March 31 December 31Three months 2020 2020 2020 2020 2019endedINTEREST INCOME Loansreceivable, $ 16,336 $ 16,260 $ 10,767 $ 10,683 $ 10,815 including feesSecurities 1,064 1,031 1,063 1,179 1,159 Other 29 18 19 6 11 Total interest 17,429 17,309 11,849 11,868 11,985 income INTEREST EXPENSE Deposits 1,514 1,676 1,630 1,790 1,784 Borrowings 301 303 352 413 368 Total interest 1,815 1,979 1,982 2,203 2,152 expenseNET INTEREST 15,614 15,330 9,867 9,665 9,833 INCOMEPROVISION FOR 1,600 1,850 1,300 700 200 LOAN LOSSESNET INTERESTINCOME AFTER PROVISIONFOR LOAN LOSSES 14,014 13,480 8,567 8,965 9,633 OTHER INCOME Service charges 1,913 1,301 837 1,063 1,168 and feesIncome fromfiduciary 150 205 175 153 156 activitiesNet realizedgains on sales - 33 - 38 21 of securitiesGains on sales 241 164 65 56 44 of loans, netEarnings andproceeds on life 208 217 212 208 200 insurancepoliciesOther 149 152 103 136 107 Total other 2,661 2,072 1,392 1,654 1,696 income OTHER EXPENSES Salaries andemployee 5,243 4,812 3,289 3,777 3,740 benefitsOccupancy,furniture and 1,165 1,109 906 968 938 equipment, netForeclosed real 8 31 (2 ) 16 9 estateFDIC insurance 213 144 42 - 3 assessmentMerger related 66 386 1,597 - - Other 3,214 2,898 2,260 2,298 2,398 Total other 9,909 9,380 8,092 7,059 7,088 expenses INCOME BEFORE 6,766 6,172 1,867 3,560 4,241 TAXINCOME TAX 1,253 1,173 379 481 645 EXPENSENET INCOME $ 5,513 $ 4,999 $ 1,488 $ 3,079 $ 3,596 Basic earnings $ 0.67 $ 0.62 $ 0.24 $ 0.49 $ 0.57 per share Diluted earnings $ 0.67 $ 0.62 $ 0.24 $ 0.49 $ 0.57 per share Book Value per $ 23.72 $ 23.30 $ 22.62 $ 22.52 $ 21.67 shareTangible Book 20.10 19.55 20.80 20.70 19.84 Value per share Return onaverage assets 1.18 % 1.11 % 0.45 % 1.01 % 1.18 %(annualized)Return onaverage equity 11.32 % 10.64 % 4.17 % 8.79 % 10.42 %(annualized)Return onaverage tangible 13.46 % 11.75 % 4.54 % 9.57 % 11.38 %equity(annualized) Net interest 3.50 % 3.55 % 3.03 % 3.23 % 3.33 %spread (fte)Net interest 3.65 % 3.73 % 3.25 % 3.48 % 3.59 %margin (fte) Allowance forloan losses to 0.93 % 0.83 % 1.04 % 0.98 % 0.92 %total loansNet charge-offsto average loans 0.04 % 0.14 % 0.03 % 0.05 % 0.04 %(annualized)Nonperformingloans to total 0.85 % 0.89 % 0.30 % 0.30 % 0.09 %loansNonperformingassets to total 0.70 % 0.74 % 0.29 % 0.31 % 0.19 %assets