Date of Report (Date of earliest event reported)
|
January 24, 2019
|
NORWOOD FINANCIAL CORP.
|
(Exact name of registrant as specified in its charter)
|
Pennsylvania
|
0-28364
|
23-2828306
|
(State or other jurisdiction
of incorporation)
|
(Commission
File Number)
|
(IRS Employer
Identification No.)
|
717 Main Street, Honesdale, Pennsylvania
|
18431
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant's telephone number, including area code:
|
(570) 253-1455
|
Not Applicable
|
(Former name or former address, if changed since last report)
|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
|
|
☐
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
NORWOOD FINANCIAL CORP.
|
|||
Date: January 24, 2019 |
By:
|
/s/ Lewis J. Critelli | |
Lewis J. Critelli
President and Chief Executive Officer
(Duly Authorized Representative)
|
(dollars in thousands)
|
Three months ended
December 31
|
Year ended
December 31
|
||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net interest income
|
$
|
9,429
|
$
|
8,884
|
$
|
36,839
|
$
|
34,908
|
||||||||
Tax equivalent basis adjustment
using 34% marginal tax rate
|
258
|
544
|
1,060
|
2,182
|
||||||||||||
Net interest income on a fully
taxable equivalent basis
|
$
|
9,687
|
$
|
9,428
|
$
|
37,899
|
$
|
37,090
|
Three months ended
December 31,
|
Year ended
December 31,
|
|||||||||||||||
(dollars in thousands)
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Average equity
|
$
|
118,442
|
$
|
118,661
|
$
|
116,538
|
$
|
116,407
|
||||||||
Goodwill and other
|
(11,678
|
)
|
(11,806
|
)
|
(11,723
|
)
|
(11,910
|
)
|
||||||||
Intangibles
|
||||||||||||||||
Average tangible equity
|
$
|
106,764
|
$
|
106,855
|
$
|
104,815
|
$
|
104,497
|
||||||||
NORWOOD FINANCIAL CORP.
|
||||||||
Consolidated Balance Sheets
|
||||||||
(dollars in thousands, except share and per share data)
|
||||||||
(unaudited)
|
||||||||
December 31
|
||||||||
2018
|
2017
|
|||||||
ASSETS
|
||||||||
Cash and due from banks
|
$
|
18,039
|
$
|
16,212
|
||||
Interest-bearing deposits with banks
|
309
|
485
|
||||||
Cash and cash equivalents
|
18,348
|
16,697
|
||||||
Securities available for sale
|
243,277
|
281,121
|
||||||
Loans receivable
|
850,182
|
764,092
|
||||||
Less: Allowance for loan losses
|
8,452
|
7,634
|
||||||
Net loans receivable
|
841,730
|
756,458
|
||||||
Regulatory stock, at cost
|
3,926
|
3,505
|
||||||
Bank premises and equipment, net
|
13,846
|
13,864
|
||||||
Bank owned life insurance
|
37,932
|
37,060
|
||||||
Foreclosed real estate owned
|
1,115
|
1,661
|
||||||
Accrued interest receivable
|
3,776
|
3,716
|
||||||
Goodwill
|
11,331
|
11,331
|
||||||
Other intangible assets
|
336
|
462
|
||||||
Deferred tax asset
|
5,594
|
4,781
|
||||||
Other assets
|
3,348
|
2,260
|
||||||
TOTAL ASSETS
|
$
|
1,184,559
|
$
|
1,132,916
|
||||
LIABILITIES
|
||||||||
Deposits:
|
||||||||
Non-interest bearing demand
|
$
|
201,457
|
$
|
205,138
|
||||
Interest-bearing
|
745,323
|
724,246
|
||||||
Total deposits
|
946,780
|
929,384
|
||||||
Short-term borrowings
|
53,046
|
42,530
|
||||||
Other borrowings
|
52,284
|
35,945
|
||||||
Accrued interest payable
|
1,806
|
1,434
|
||||||
Other liabilities
|
8,358
|
7,884
|
||||||
TOTAL LIABILITIES
|
1,062,274
|
1,017,177
|
||||||
STOCKHOLDERS' EQUITY
|
||||||||
Common Stock, $.10 par value, authorized 10,000,000 shares
|
||||||||
issued: 2018: 6,295,113 shares, 2017: 6,256,063 shares
|
630
|
626
|
||||||
Surplus
|
48,322
|
47,431
|
||||||
Retained earnings
|
78,434
|
70,426
|
||||||
Treasury stock, at cost: 2018: 2,470 shares, 2017: 2,608 shares
|
(81
|
)
|
(77
|
)
|
||||
Accumulated other comprehensive loss
|
(5,020
|
)
|
(2,667
|
)
|
||||
TOTAL STOCKHOLDERS' EQUITY
|
122,285
|
115,739
|
||||||
TOTAL LIABILITIES AND
|
||||||||
STOCKHOLDERS' EQUITY
|
$
|
1,184,559
|
$
|
1,132,916
|
||||
NORWOOD FINANCIAL CORP.
|
||||||||||||||||
Consolidated Statements of Income
|
||||||||||||||||
(dollars in thousands, except per share data)
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
Three Months Ended December 31,
|
Twelve Months Ended December 31,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
INTEREST INCOME
|
||||||||||||||||
Loans receivable, including fees
|
$
|
9,759
|
$
|
8,503
|
$
|
36,404
|
$
|
32,524
|
||||||||
Securities
|
1,476
|
1,560
|
6,019
|
6,416
|
||||||||||||
Other
|
10
|
12
|
73
|
48
|
||||||||||||
Total Interest income
|
11,245
|
10,075
|
42,496
|
38,988
|
||||||||||||
INTEREST EXPENSE
|
||||||||||||||||
Deposits
|
1,446
|
985
|
4,644
|
3,377
|
||||||||||||
Short-term borrowings
|
122
|
61
|
323
|
199
|
||||||||||||
Other borrowings
|
248
|
145
|
690
|
504
|
||||||||||||
Total Interest expense
|
1,816
|
1,191
|
5,657
|
4,080
|
||||||||||||
NET INTEREST INCOME
|
9,429
|
8,884
|
36,839
|
34,908
|
||||||||||||
PROVISION FOR LOAN LOSSES
|
375
|
400
|
1,725
|
2,200
|
||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
|
9,054
|
8,484
|
35,114
|
32,708
|
||||||||||||
OTHER INCOME
|
||||||||||||||||
Service charges and fees
|
1,085
|
1,023
|
4,295
|
4,079
|
||||||||||||
Income from fiduciary activities
|
126
|
116
|
589
|
510
|
||||||||||||
Net realized gains on sales of securities
|
-
|
181
|
213
|
348
|
||||||||||||
Gains on sales of loans, net
|
-
|
-
|
15
|
67
|
||||||||||||
Gains on sale of deposits
|
-
|
-
|
-
|
209
|
||||||||||||
Earnings and proceeds on life insurance policies
|
277
|
283
|
1,126
|
1,133
|
||||||||||||
Other
|
112
|
151
|
827
|
565
|
||||||||||||
Total other income
|
1,600
|
1,754
|
7,065
|
6,911
|
||||||||||||
OTHER EXPENSES
|
||||||||||||||||
Salaries and employee benefits
|
3,575
|
3,211
|
14,020
|
12,850
|
||||||||||||
Occupancy, furniture and equipment
|
1,036
|
841
|
3,695
|
3,361
|
||||||||||||
Data processing and related operations
|
400
|
332
|
1,427
|
1,353
|
||||||||||||
Taxes, other than income
|
92
|
(32
|
)
|
572
|
661
|
|||||||||||
Professional fees
|
232
|
243
|
993
|
949
|
||||||||||||
FDIC Insurance assessment
|
83
|
94
|
347
|
377
|
||||||||||||
Foreclosed real estate
|
104
|
136
|
172
|
1,164
|
||||||||||||
Amortization of intangibles
|
29
|
35
|
126
|
150
|
||||||||||||
Other
|
1,252
|
1,026
|
4,623
|
4,005
|
||||||||||||
Total other expenses
|
6,803
|
5,886
|
25,975
|
24,870
|
||||||||||||
INCOME BEFORE TAX
|
3,851
|
4,352
|
16,204
|
14,749
|
||||||||||||
INCOME TAX EXPENSE
|
552
|
4,195
|
2,553
|
6,551
|
||||||||||||
NET INCOME
|
$
|
3,299
|
$
|
157
|
$
|
13,651
|
$
|
8,198
|
||||||||
Basic earnings per share
|
$
|
0.53
|
$
|
0.03
|
$
|
2.19
|
$
|
1.32
|
||||||||
Diluted earnings per share
|
$
|
0.53
|
$
|
0.03
|
$
|
2.17
|
$
|
1.31
|
||||||||
NORWOOD FINANCIAL CORP.
|
||||||||
Financial Highlights (Unaudited)
|
||||||||
(dollars in thousands, except per share data)
|
||||||||
For the Three Months Ended December 31
|
2018
|
2017
|
||||||
Net interest income
|
$
|
9,429
|
$
|
8,884
|
||||
Net income
|
3,299
|
157
|
||||||
Net interest spread (fully taxable equivalent)
|
3.33
|
%
|
3.43
|
%
|
||||
Net interest margin (fully taxable equivalent)
|
3.54
|
%
|
3.58
|
%
|
||||
Return on average assets
|
1.12
|
%
|
0.05
|
%
|
||||
Return on average equity
|
11.05
|
%
|
0.52
|
%
|
||||
Return on average tangible equity
|
12.26
|
%
|
0.58
|
%
|
||||
Basic earnings per share
|
$
|
0.53
|
$
|
0.03
|
||||
Diluted earnings per share
|
$
|
0.53
|
$
|
0.03
|
||||
For the Twelve Months Ended December 31
|
2018
|
2017
|
||||||
Net interest income
|
$
|
36,839
|
$
|
34,908
|
||||
Net income
|
13,651
|
8,198
|
||||||
Net interest spread (fully taxable equivalent)
|
3.36
|
%
|
3.44
|
%
|
||||
Net interest margin (fully taxable equivalent)
|
3.53
|
%
|
3.56
|
%
|
||||
Return on average assets
|
1.19
|
%
|
0.73
|
%
|
||||
Return on average equity
|
11.71
|
%
|
7.04
|
%
|
||||
Return on average tangible equity
|
13.02
|
%
|
7.85
|
%
|
||||
Basic earnings per share
|
$
|
2.19
|
$
|
1.32
|
||||
Diluted earnings per share
|
$
|
2.17
|
$
|
1.31
|
||||
As of December 31
|
||||||||
Total assets
|
$
|
1,184,559
|
$
|
1,132,916
|
||||
Total loans receivable
|
850,182
|
764,092
|
||||||
Allowance for loan losses
|
8,452
|
7,634
|
||||||
Total deposits
|
946,780
|
929,384
|
||||||
Stockholders' equity
|
122,285
|
115,739
|
||||||
Trust assets under management
|
151,224
|
157,838
|
||||||
Book value per share
|
$
|
19.43
|
$
|
18.61
|
||||
Tangible book value per share
|
$
|
17.58
|
$
|
16.71
|
||||
Equity to total assets
|
10.32
|
%
|
10.22
|
%
|
||||
Allowance to total loans receivable
|
0.99
|
%
|
1.00
|
%
|
||||
Nonperforming loans to total loans
|
0.13
|
%
|
0.32
|
%
|
||||
Nonperforming assets to total assets
|
0.19
|
%
|
0.37
|
%
|
||||
NORWOOD FINANCIAL CORP.
|
||||||||||||||||||||
Consolidated Balance Sheets (unaudited)
|
||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
December 31
|
September 30
|
June 30
|
March 31
|
December 31
|
||||||||||||||||
2018
|
2018
|
2018
|
2018
|
2017
|
||||||||||||||||
ASSETS
|
||||||||||||||||||||
Cash and due from banks
|
$
|
18,039
|
$
|
17,073
|
$
|
15,193
|
$
|
10,103
|
$
|
16,212
|
||||||||||
Interest-bearing deposits with banks
|
309
|
295
|
914
|
2,039
|
485
|
|||||||||||||||
Cash and cash equivalents
|
18,348
|
17,368
|
16,107
|
12,142
|
16,697
|
|||||||||||||||
Securities available for sale
|
243,277
|
247,517
|
259,442
|
265,862
|
281,121
|
|||||||||||||||
Loans receivable
|
850,182
|
819,197
|
803,773
|
775,681
|
764,092
|
|||||||||||||||
Less: Allowance for loan losses
|
8,452
|
8,280
|
8,326
|
8,099
|
7,634
|
|||||||||||||||
Net loans receivable
|
841,730
|
810,917
|
795,447
|
767,582
|
756,458
|
|||||||||||||||
Regulatory stock, at cost
|
3,926
|
3,261
|
2,313
|
2,545
|
3,505
|
|||||||||||||||
Bank owned life insurance
|
37,932
|
37,718
|
37,485
|
37,270
|
37,060
|
|||||||||||||||
Bank premises and equipment, net
|
13,846
|
13,797
|
13,894
|
13,808
|
13,864
|
|||||||||||||||
Foreclosed real estate owned
|
1,115
|
1,209
|
1,386
|
1,436
|
1,661
|
|||||||||||||||
Goodwill and other intangibles
|
11,667
|
11,695
|
11,725
|
11,758
|
11,793
|
|||||||||||||||
Other assets
|
12,718
|
13,266
|
12,794
|
14,634
|
10,757
|
|||||||||||||||
TOTAL ASSETS
|
$
|
1,184,559
|
$
|
1,156,748
|
$
|
1,150,593
|
$
|
1,127,037
|
$
|
1,132,916
|
||||||||||
LIABILITIES
|
||||||||||||||||||||
Deposits:
|
||||||||||||||||||||
Non-interest bearing demand
|
$
|
201,457
|
$
|
218,979
|
$
|
216,472
|
$
|
204,027
|
$
|
205,138
|
||||||||||
Interest-bearing deposits
|
745,323
|
720,735
|
734,417
|
736,122
|
724,246
|
|||||||||||||||
Total deposits
|
946,780
|
939,714
|
950,889
|
940,149
|
929,384
|
|||||||||||||||
Borrowings
|
105,330
|
89,469
|
73,608
|
62,998
|
78,475
|
|||||||||||||||
Other liabilities
|
10,164
|
10,885
|
10,563
|
10,052
|
9,318
|
|||||||||||||||
TOTAL LIABILITIES
|
1,062,274
|
1,040,068
|
1,035,060
|
1,013,199
|
1,017,177
|
|||||||||||||||
STOCKHOLDERS' EQUITY
|
122,285
|
116,680
|
115,533
|
113,838
|
115,739
|
|||||||||||||||
TOTAL LIABILITIES AND
|
||||||||||||||||||||
STOCKHOLDERS' EQUITY
|
$
|
1,184,559
|
$
|
1,156,748
|
$
|
1,150,593
|
$
|
1,127,037
|
$
|
1,132,916
|
||||||||||
NORWOOD FINANCIAL CORP.
|
||||||||||||||||||||
Consolidated Statements of Income (unaudited)
|
||||||||||||||||||||
(dollars in thousands, except per share data)
|
||||||||||||||||||||
December 31
|
September 30
|
June 30
|
March 31
|
December 31
|
||||||||||||||||
Three months ended
|
2018
|
2018
|
2018
|
2018
|
2017
|
|||||||||||||||
INTEREST INCOME
|
||||||||||||||||||||
Loans receivable, including fees
|
$
|
9,759
|
$
|
9,301
|
$
|
8,857
|
$
|
8,487
|
$
|
8,503
|
||||||||||
Securities
|
1,476
|
1,483
|
1,536
|
1,524
|
1,560
|
|||||||||||||||
Other
|
10
|
2
|
43
|
18
|
12
|
|||||||||||||||
Total interest income
|
11,245
|
10,786
|
10,436
|
10,029
|
10,075
|
|||||||||||||||
INTEREST EXPENSE
|
||||||||||||||||||||
Deposits
|
1,446
|
1,116
|
1,052
|
1,029
|
985
|
|||||||||||||||
Borrowings
|
370
|
282
|
169
|
193
|
206
|
|||||||||||||||
Total interest expense
|
1,816
|
1,398
|
1,221
|
1,222
|
1,191
|
|||||||||||||||
NET INTEREST INCOME
|
9,429
|
9,388
|
9,215
|
8,807
|
8,884
|
|||||||||||||||
PROVISION FOR LOAN LOSSES
|
375
|
375
|
425
|
550
|
400
|
|||||||||||||||
NET INTEREST INCOME AFTER PROVISION
|
||||||||||||||||||||
FOR LOAN LOSSES
|
9,054
|
9,013
|
8,790
|
8,257
|
8,484
|
|||||||||||||||
OTHER INCOME
|
||||||||||||||||||||
Service charges and fees
|
1,085
|
1,129
|
1,101
|
980
|
1,023
|
|||||||||||||||
Income from fiduciary activities
|
126
|
151
|
175
|
137
|
116
|
|||||||||||||||
Net realized gains on sales of securities
|
-
|
13
|
58
|
142
|
181
|
|||||||||||||||
Gains on sales of loans, net
|
-
|
15
|
-
|
-
|
-
|
|||||||||||||||
Earnings and proceeds on life insurance policies
|
277
|
297
|
279
|
273
|
283
|
|||||||||||||||
Other
|
112
|
392
|
161
|
162
|
151
|
|||||||||||||||
Total other income
|
1,600
|
1,997
|
1,774
|
1,694
|
1,754
|
|||||||||||||||
OTHER EXPENSES
|
||||||||||||||||||||
Salaries and employee benefits
|
3,575
|
3,577
|
3,406
|
3,462
|
3,211
|
|||||||||||||||
Occupancy, furniture and equipment, net
|
1,036
|
910
|
857
|
892
|
841
|
|||||||||||||||
Foreclosed real estate
|
104
|
(26
|
)
|
114
|
(19
|
)
|
136
|
|||||||||||||
FDIC insurance assessment
|
83
|
87
|
86
|
92
|
94
|
|||||||||||||||
Other
|
2,005
|
2,024
|
1,890
|
1,821
|
1,604
|
|||||||||||||||
Total other expenses
|
6,803
|
6,572
|
6,353
|
6,248
|
5,886
|
|||||||||||||||
INCOME BEFORE TAX
|
3,851
|
4,438
|
4,211
|
3,703
|
4,352
|
|||||||||||||||
INCOME TAX EXPENSE
|
552
|
728
|
698
|
574
|
4,195
|
|||||||||||||||
NET INCOME
|
$
|
3,299
|
$
|
3,710
|
$
|
3,513
|
$
|
3,129
|
$
|
157
|
||||||||||
Basic earnings per share
|
$
|
0.53
|
$
|
0.59
|
$
|
0.57
|
$
|
0.50
|
$
|
0.03
|
||||||||||
Diluted earnings per share
|
$
|
0.53
|
$
|
0.58
|
$
|
0.56
|
$
|
0.50
|
$
|
0.03
|
||||||||||
Book Value per share
|
$
|
19.43
|
$
|
18.49
|
$
|
18.35
|
$
|
18.45
|
$
|
18.61
|
||||||||||
Tangible Book Value per share
|
17.58
|
16.62
|
16.47
|
16.56
|
16.71
|
|||||||||||||||
Return on average assets (annualized)
|
1.12
|
%
|
1.28
|
%
|
1.23
|
%
|
1.13
|
%
|
0.05
|
%
|
||||||||||
Return on average equity (annualized)
|
11.02
|
%
|
12.55
|
%
|
12.25
|
%
|
11.00
|
%
|
0.52
|
%
|
||||||||||
Return on average tangible equity (annualized)
|
12.23
|
%
|
13.94
|
%
|
13.64
|
%
|
12.25
|
%
|
0.58
|
%
|
||||||||||
Net interest spread (fte)
|
3.33
|
%
|
3.40
|
%
|
3.40
|
%
|
3.31
|
%
|
3.44
|
%
|
||||||||||
Net interest margin (fte)
|
3.54
|
%
|
3.57
|
%
|
3.54
|
%
|
3.46
|
%
|
3.56
|
%
|
||||||||||
Allowance for loan losses to total loans
|
0.99
|
%
|
1.01
|
%
|
1.04
|
%
|
1.04
|
%
|
1.00
|
%
|
||||||||||
Net charge-offs to average loans (annualized)
|
0.10
|
%
|
0.21
|
%
|
0.10
|
%
|
0.04
|
%
|
0.28
|
%
|
||||||||||
Nonperforming loans to total loans
|
0.13
|
%
|
0.14
|
%
|
0.16
|
%
|
0.22
|
%
|
0.32
|
%
|
||||||||||
Nonperforming assets to total assets
|
0.19
|
%
|
0.20
|
%
|
0.23
|
%
|
0.28
|
%
|
0.37
|
%
|
||||||||||