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Norwood Financial Corp Announces Third Quarter Earnings

HONESDALE, Pa., Oct. 23, 2019 (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 September 30, 2019 of $3,907,000 which represents an increase of $197,000, or 5.3%, over the $3,710,000 earned in the same three-month period of 2018.  Earnings per share (fully diluted) were $0.62 in the 2019 three-month period, increasing from the $0.58 earned in the similar period of last year.  The annualized returns on average assets and average equity for the current three-month period were 1.27% and 11.56%, respectively, compared to 1.28% and 12.55% for the three-month period ended September 30, 2018.Net income for the nine months ended September 30, 2019 totaled $10,619,000, which is $267,000 higher than the same period of 2018 primarily due to a $1,363,000 increase in net interest income and a $300,000 reduction in the provision for credit losses.  Earnings per share (fully diluted) for the nine months ended September 30, 2019 totaled $1.68 per share compared to $1.64 per share in the 2018 period. Total assets as of September 30, 2019 were $1.216 billion with loans receivable of $905.6 million, deposits of $974.4 million and stockholders’ equity of $134.9 million.  Total assets have increased $59.1 million during the past twelve months while loans and deposits have increased $86.4 million and $34.7 million, respectively. Non-performing assets, which include non-performing loans and foreclosed real estate owned, totaled $3.0 million or 0.24% of total assets as of September 30, 2019 compared to $2.3 million or 0.20% of total assets as of September 30, 2018.  The allowance for loan losses totaled $8,405,000 as of September 30, 2019 and represented 604% of total non-performing loans, compared to $8,280,000 and 719% of non-performing loans as of September 30, 2018.For the three months ended September 30, 2019, net interest income, on a fully taxable equivalent basis (fte), totaled $10,133,000, which represents an increase of $488,000 compared to the similar period in 2018.  An $84.8 million increase in average loans outstanding contributed to the increased income.  Net interest margin (fte) for the 2019 period was 3.60% compared to 3.57% for the similar period in 2018.  Net interest income (fte) for the nine months ended September 30, 2019 totaled $29,546,000, an increase of $1,334,000 compared to the similar period in 2018 due primarily to a higher volume of earning assets.  The net interest margin (fte) year-to-date for the 2019 period was 3.51% compared to 3.52% in the same period of 2018. Other income for the three months ended September 30, 2019 totaled $1,882,000 compared to $1,997,000 for the similar period in 2018.  The decrease can be attributed to a reduction in earnings and proceeds on bank-owned life insurance policies and non-recurring income related to the settlement of litigation which was recognized in the 2018 period.  For the nine months ended September 30, 2019, other income totaled $5,083,000 compared to $5,466,000 in the 2018 period.  Gains on sales of loans and securities totaled $358,000 in the 2019 year-to-date period compared to $228,000 in the corresponding 2018 period.  Earnings and proceeds on bank-owned life insurance policies decreased $218,000 compared to 2018 while the 2018 period also includes non-recurring income related to the litigation settlement.Other expenses totaled $6,791,000 for the three months ended September 30, 2019, compared to $6,572,000 in the similar period of 2018.  The higher level of expense during the 2019 period includes an increase of $90,000 for salaries and employee benefits and a $112,000 increase in data processing costs.  All other expenses increased $17,000, net.  For the nine months ended September 30, 2019, other expenses totaled $20,224,000 compared to $19,173,000 for the similar period in 2018, an increase of $1,051,000, or 5.5%.  The increase includes a $470,000 increase in salaries and benefits costs and a $373,000 increase in data processing expense.  All other expenses increased $208,000, net.Mr. Critelli commented, “Our earnings in 2019 have improved over the first nine months of last year.  Our annualized loan growth exceeds 8% in 2019, operating expenses remain well controlled with an efficiency ratio of 58.4%, and our capital base remains above regulatory ‘Well Capitalized’ targets.  The Bank also expanded its market area into Luzerne County, Pennsylvania with the opening of our Hanover Township Office in April, 2019 and has received approval to open an office in Exeter later this year.  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 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 interest income and net interest income are 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 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:
Contact:William S. Lance
Executive Vice President &
Chief Financial Officer
NORWOOD FINANCIAL CORP
570-253-8505
www.waynebank.com

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