GlobeNewswire Inc | Jan 28, 2022 08:15AM EST

January 28, 2022

HONESDALE, Pa., Jan. 28, 2022 (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, 2021 of $6,638,000 compared to $5,513,000 earned in the corresponding period of 2020. The increase in earnings includes a $1,150,000 reduction in the provision for loan losses, and an $882,000 increase in net interest income. For the year ended December 31, 2021, net income totaled $24,915,000, an increase of $9,835,000 from net income of $15,080,000 earned in the prior year. The increase includes the benefits derived from the Companys acquisition of UpState New York Bancorp, Inc. (UpState), which closed on July 7, 2020, and over $4.5 million of earnings recognized from Paycheck Protection Program (PPP) loans.

Earnings per share (fully diluted) were $0.81 and $0.67 for the three-month periods ended December 31, 2021 and 2020, respectively. For the year ended December 31, 2021, earnings per share on a fully diluted basis were $3.04, compared to $2.09 for the year ended December 31, 2020. For the year ended December 31, 2021, the return on average assets was 1.24%, and the return on average equity was 12.35%, compared to 0.97% and 9.06%, respectively, for the year ended December 31, 2020.

Total assets were $2.069 billion as of December 31, 2021. Loans receivable totaled $1.355 billion as of December 31, 2021, with total deposits of $1.757 billion and stockholders equity of $205.3 million as of December 31, 2021.

Loans receivable decreased $55.8 million from the year-ended December 31, 2020, due primarily to the $78.8 million decrease in PPP loans resulting from loan forgiveness. For the three months and year ended December 31, 2021, net charge-offs totaled $111,000 and $907,000, respectively, compared to $125,000 and $809,000, respectively, for the corresponding periods in 2020.

Net interest income, on a fully taxable equivalent basis (fte), totaled $16,671,000 for the three months ended December 31, 2021, an increase of $850,000 compared to the same period in 2020. For the year ended December 31, 2021, net interest income (fte) totaled $66,100,000, an increase of $14,741,000 compared to 2020, due primarily to the higher volume of earning assets, including a $209.1 million increase in average loans outstanding. Loan origination fees related to PPP loans increased $3,072,000 compared to the 2020 total.

Other income for the three months ended December 31, 2021 totaled $2,021,000 compared to $2,661,000 for the similar period in 2020. Gains on the sale of loans and securities decreased $205,000, while service charges and fees decreased $488,000. All other items of other income increased $53,000, net. Other income for the year ended December 31, 2021 totaled $8,325,000 compared to $7,780,000 in 2020, an increase of $545,000 due primarily to a $578,000 increase in service charges and fees. Gains on the sale of loans and investment securities decreased $329,000 in the aggregate, while all other items of other income increased $296,000, net.

Other expenses totaled $10,042,000 for the three months ended December 31, 2021, compared to $9,909,000 in the similar period of 2020. For the year ended December 31, 2021, other expenses totaled $38,578,000 compared to $34,440,000 for 2020, an increase of $4,138,000. The increase reflects the costs of operations acquired from UpState, including four new Community Offices.

Mr. Critelli commented, In 2021, our earnings increased $9.8 million over our previous record year of 2020. Our Return on Average Assets was 1.24%, and our Return on Average Equity was 12.35%. Earnings per share (fully diluted) also improved to $3.04 per share in 2021 from $2.09 per share in 2020. While a portion of this increase reflects earnings and fees collected on PPP loans, we have continued to grow our core business lines, which bodes well for future success. Our results also reflect a full year accretion to earnings from our acquisition of UpState. During the year, we also made significant progress improving our credit quality metrics, which will benefit future results. Our cash dividend of $0.28 per share declared in the fourth quarter of 2021 represents a 7.7% increase over the same period of last year. We appreciate the opportunity to serve our Wayne Bank customers and our customers at the Bank of the Finger Lakes and Bank of Cooperstown locations. We continue to look for 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 operations and financial condition, the ability to continue to grow our core business, the ability to have success in the future, the ability to improve our credit quality metrics and benefit future results, 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 interest income and net interest income on a fully taxable equivalent basis (fte), which are non-GAAP (Generally Accepted Accounting Principles) financial measures. Fully 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 and net interest income on a fully 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:

Three months ended Year ended December 31 December 31(dollars in thousands) 2021 2020 2021 2020 Net interest income $16,496 $15,614 $65,313 $50,476Tax equivalent basis adjustment using 175 207 787 88321% marginal tax rateNet interest income on a fully taxable $16,671 $15,821 $66,100 $51,359equivalent basis

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 thousands) 2021 2020 2021 2020 Average equity $205,053 $193,740 $201,681 $166,427Average goodwill and other (29,683) (30,747) (29,738) (17,942)IntangiblesAverage tangible equity $175,370 $162,993 $171,943 $148,485

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 inthousands, except share andper share data)(unaudited) December 31 2021 2020 ASSETS Cash and due $ 21,073 $ 19,445 from banksInterest-bearingdeposits with 185,608 92,248 banksCash and cash 206,681 111,693 equivalents Securitiesavailable for 406,782 226,586 saleLoans receivable 1,354,931 1,410,732 Less: Allowance 16,442 13,150 for loan lossesNet loans 1,338,489 1,397,582 receivableRegulatory 3,927 3,981 stock, at costBank premisesand equipment, 17,289 17,814 netBank owned life 40,038 39,608 insuranceForeclosed real 1,742 965 estate ownedAccrued interest 5,889 6,232 receivableGoodwill 29,266 29,290 Other intangible 407 530 assetsOther assets 17,994 17,583 TOTAL ASSETS $ 2,068,504 $ 1,851,864 LIABILITIES Deposits: Non-interest $ 440,652 $ 359,559 bearing demandInterest-bearing 1,316,141 1,175,826 Total deposits 1,756,793 1,535,385 Short-term 60,822 63,303 borrowingsOther borrowings 29,998 42,459 Accrued interest 1,203 1,601 payableOther 14,426 14,331 liabilitiesTOTAL 1,863,242 1,657,079 LIABILITIES STOCKHOLDERS' EQUITYPreferred Stock, nopar value per - - share, authorized5,000,000 sharesCommon Stock,$.10 par value per share,authorized:20,000,000 shares,issued: 2021:8,266,751 827 824 shares, 2020:8,236,331 sharesSurplus 96,443 95,388 Retained 110,015 93,796 earningsTreasury stock,at cost: 2021:65,328 shares, (1,767 ) (342 ) 2020: 10,263sharesAccumulatedother (256 ) 5,119 comprehensive(loss) incomeTOTALSTOCKHOLDERS' 205,262 194,785 EQUITY TOTAL LIABILITIES ANDSTOCKHOLDERS' $ 2,068,504 $ 1,851,864 EQUITY NORWOOD FINANCIAL CORP.ConsolidatedStatements of Income(dollars inthousands, except per sharedata)(unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 2021 2020INTEREST INCOME Loansreceivable, $ 16,149 $ 16,336 $ 65,257 $ 54,046 including feesSecurities 1,612 1,064 5,547 4,337 Other 92 29 266 72 Total Interest 17,853 17,429 71,070 58,455 income INTEREST EXPENSE Deposits 1,130 1,514 4,757 6,610 Short-term 71 81 284 325 borrowingsOther borrowings 156 220 716 1,044 Total Interest 1,357 1,815 5,757 7,979 expenseNET INTEREST 16,496 15,614 65,313 50,476 INCOMEPROVISION FOR 450 1,600 4,200 5,450 LOAN LOSSESNET INTEREST INCOMEAFTER PROVISION FOR 16,046 14,014 61,113 45,026 LOAN LOSSES OTHER INCOME Service charges 1,425 1,913 5,693 5,115 and feesIncome fromfiduciary 198 150 748 682 activitiesNet realizedgains on sales 36 - 92 71 of securitiesGains on sales - 241 177 527 of loans, netEarnings andproceeds on life 174 208 941 845 insurancepoliciesOther 188 149 674 540 Total other 2,021 2,661 8,325 7,780 income OTHER EXPENSES Salaries andemployee 4,992 5,243 20,608 17,121 benefitsOccupancy,furniture and 1,254 1,165 4,822 4,148 equipmentData processingand related 655 808 2,415 2,457 operationsTaxes, other 358 356 1,122 997 than incomeProfessional 510 328 1,582 1,062 feesFDIC Insurance 169 213 681 399 assessmentForeclosed real 88 8 115 53 estateAmortization of 27 35 123 114 intangiblesMerger related - 66 - 2,049 Other 1,989 1,687 7,110 6,040 Total other 10,042 9,909 38,578 34,440 expenses INCOME BEFORE 8,025 6,766 30,860 18,366 TAXINCOME TAX 1,387 1,253 5,945 3,286 EXPENSENET INCOME $ 6,638 $ 5,513 $ 24,915 $ 15,080 Basic earnings $ 0.81 $ 0.67 $ 3.05 $ 2.09 per share Diluted earnings $ 0.81 $ 0.67 $ 3.04 $ 2.09 per share NORWOOD FINANCIAL CORP.FinancialHighlights (Unaudited)(dollars inthousands, except per sharedata) For the ThreeMonths Ended 2021 2020 December 31 Net interest $ 16,496 $ 15,614 incomeNet income 6,638 5,513 Net interestspread (fully 3.29 % 3.50 % taxableequivalent)Net interestmargin (fully 3.39 % 3.65 % taxableequivalent)Return on 1.26 % 1.18 % average assetsReturn on 12.84 % 11.32 % average equityReturn onaverage tangible 15.02 % 13.46 % equityBasic earnings $ 0.81 $ 0.67 per shareDiluted earnings $ 0.81 $ 0.67 per share For the TwelveMonths Ended 2021 2020 December 31 Net interest $ 65,313 $ 50,476 incomeNet income 24,915 15,080 Net interestspread (fully 3.39 % 3.36 % taxableequivalent)Net interestmargin (fully 3.50 % 3.55 % taxableequivalent)Return on 1.24 % 0.97 % average assetsReturn on 12.35 % 9.06 % average equityReturn onaverage tangible 14.49 % 10.16 % equityBasic earnings $ 3.05 $ 2.09 per shareDiluted earnings $ 3.04 $ 2.09 per share As of December 2021 2020 31 Total assets $ 2,068,504 $ 1,851,864 Total loans 1,354,931 1,410,732 receivableAllowance for 16,442 13,150 loan lossesTotal deposits 1,756,793 1,535,385 Stockholders' 205,262 194,785 equityTrust assets 195,958 168,085 under management Book value per $ 25.24 $ 23.72 shareTangible book $ 21.63 $ 20.10 value per shareEquity to total 9.92 % 10.52 % assetsAllowance tototal loans 1.21 % 0.93 % receivableNonperformingloans to total 0.05 % 0.24 % loansNonperformingassets to total 0.12 % 0.24 % assets NORWOOD FINANCIAL CORP.ConsolidatedBalance Sheets (unaudited)(dollars in thousands) December 31 September 30 June 30 March December 31 2021 2021 2021 2021 2020ASSETS Cash and due $ 21,073 $ 28,353 $ 34,831 $ 20,364 $ 19,445 from banksInterest-bearingdeposits with 185,608 191,580 170,342 190,135 92,248 banksCash and cash 206,681 219,933 205,173 210,499 111,693 equivalents Securitiesavailable for 406,782 361,988 333,636 275,224 226,586 saleLoans receivable 1,354,931 1,371,002 1,386,654 1,421,568 1,410,732 Less: Allowance 16,442 16,103 15,340 14,509 13,150 for loan lossesNet loans 1,338,489 1,354,899 1,371,314 1,407,059 1,397,582 receivableRegulatory 3,927 3,898 4,084 4,043 3,981 stock, at costBank owned life 40,038 39,864 39,665 39,471 39,608 insuranceBank premisesand equipment, 17,289 17,364 17,298 17,648 17,814 netForeclosed real 1,742 1,876 844 844 965 estate ownedGoodwill andother 29,673 29,700 29,727 29,785 29,820 intangiblesOther assets 23,883 24,169 23,823 25,263 23,815 TOTAL ASSETS $ 2,068,504 $ 2,053,691 $ 2,025,564 $ 2,009,836 $ 1,851,864 LIABILITIES Deposits: Non-interest $ 440,652 $ 442,534 $ 435,824 $ 415,395 $ 359,559 bearing demandInterest-bearing 1,316,141 1,279,988 1,253,117 1,269,793 1,175,826 depositsTotal deposits 1,756,793 1,722,522 1,688,941 1,685,188 1,535,385 Borrowings 90,820 111,382 119,858 112,283 105,762 Other 15,629 17,179 16,266 17,258 15,932 liabilitiesTOTAL 1,863,242 1,851,083 1,825,065 1,814,729 1,657,079 LIABILITIES STOCKHOLDERS' 205,262 202,608 200,499 195,107 194,785 EQUITY TOTAL LIABILITIES ANDSTOCKHOLDERS' $ 2,068,504 $ 2,053,691 $ 2,025,564 $ 2,009,836 $ 1,851,864 EQUITY NORWOOD FINANCIAL CORP.ConsolidatedStatements of Income(unaudited)(dollars inthousands, except per sharedata) December 31 September 30 June 30 March 31 December 31Three months 2021 2021 2021 2021 2020endedINTEREST INCOME Loansreceivable, $ 16,149 $ 16,859 $ 16,102 $ 16,146 $ 16,336 including feesSecurities 1,612 1,468 1,356 1,112 1,064 Other 92 72 59 43 29 Total interest 17,853 18,399 17,517 17,301 17,429 income INTEREST EXPENSE Deposits 1,130 1,167 1,205 1,255 1,514 Borrowings 227 243 259 270 301 Total interest 1,357 1,410 1,464 1,525 1,815 expenseNET INTEREST 16,496 16,989 16,053 15,776 15,614 INCOMEPROVISION FOR 450 750 1,500 1,500 1,600 LOAN LOSSESNET INTERESTINCOME AFTER PROVISIONFOR LOAN LOSSES 16,046 16,239 14,553 14,276 14,014 OTHER INCOME Service charges 1,425 1,485 1,532 1,247 1,913 and feesIncome fromfiduciary 198 209 181 160 150 activitiesNet realizedgains on sales 36 35 - 21 - of securitiesGains on sales - 39 109 29 241 of loans, netEarnings andproceeds on life 174 200 194 374 208 insurancepoliciesOther 188 160 171 158 149 Total other 2,021 2,128 2,187 1,989 2,661 income OTHER EXPENSES Salaries andemployee 4,992 5,491 5,171 4,953 5,243 benefitsOccupancy,furniture and 1,254 1,163 1,186 1,220 1,165 equipment, netForeclosed real 88 (15 ) 13 30 8 estateFDIC insurance 169 177 154 181 213 assessmentMerger related - - - - 66 Other 3,539 2,776 2,968 3,068 3,214 Total other 10,042 9,592 9,492 9,452 9,909 expenses INCOME BEFORE 8,025 8,775 7,248 6,813 6,766 TAXINCOME TAX 1,387 1,794 1,493 1,271 1,253 EXPENSENET INCOME $ 6,638 $ 6,981 $ 5,755 $ 5,542 $ 5,513 Basic earnings $ 0.81 $ 0.85 $ 0.70 $ 0.68 $ 0.67 per share Diluted earnings $ 0.81 $ 0.85 $ 0.70 $ 0.67 $ 0.67 per share Book Value per $ 25.24 $ 24.90 $ 24.47 $ 23.82 $ 23.72 shareTangible Book 21.63 21.27 20.85 20.20 20.10 Value per share Return onaverage assets 1.26 % 1.36 % 1.15 % 1.18 % 1.18 %(annualized)Return onaverage equity 12.84 % 13.50 % 11.59 % 11.39 % 11.32 %(annualized)Return onaverage tangible 15.02 % 15.78 % 13.63 % 13.42 % 13.46 %equity(annualized) Net interest 3.29 % 3.49 % 3.32 % 3.46 % 3.50 %spread (fte)Net interest 3.39 % 3.61 % 3.44 % 3.59 % 3.65 %margin (fte) Allowance forloan losses to 1.21 % 1.17 % 1.11 % 1.02 % 0.93 %total loansNet charge-offsto average loans 0.03 % 0.00 % 0.19 % 0.04 % 0.04 %(annualized)Nonperformingloans to total 0.05 % 0.20 % 0.28 % 0.22 % 0.24 %loansNonperformingassets to total 0.12 % 0.22 % 0.24 % 0.20 % 0.24 %assets