HONESDALE — Lewis J. Critelli, President and Chief Executive Officer of Norwood Financial Corp. (Nasdaq Global Market – NWFL) and its subsidiary, Wayne Bank, announced earnings of $3,190,000 for the three months ended March 31, 2019, increasing from the $3,129,000 recorded during the same three-month period of last year.
The increase was principally due to a higher level of net interest income, which was partially offset by increased operating expenses.
Earnings per share on a fully diluted basis were $0.51 in the first quarter of this year compared to $0.50 in the first quarter of 2018.
The annualized return on average assets was 1.09% in the first quarter of 2019 and the annualized return on average equity was 10.37%, compared to 1.13% and 11.00%, respectively, in the first quarter of 2018.
Total assets were $1.204 billion as of March 31, 2019, an increase of $76.6 million compared to the prior year total.
Total loans increased $88.5 million compared to March 31, 2018, total deposits increased $34.3 million over the past twelve months, and stockholders’ equity increased $12.9 million during the past year.
Non-performing assets totaled $2.9 million or 0.24% of total assets at March 31, 2019 comprised of $1.1 million of non-performing loans and $1.8 million of foreclosed real estate owned, compared to non-performing assets of $3.1 million, or 0.28% of total assets as of March 31, 2018.
Net charge-offs for the three-month period ending March 31, 2019 were $553,000 compared to $84,000 of net charge-offs in the first quarter of last year.
The increase in net charge-offs was due to one credit, which was transferred to foreclosed real estate during the first quarter of 2019. The allowance for loan losses totaled $8,349,000 as of March 31, 2019 compared to $8,099,000 as of March 31, 2018. As of March 31, 2019, the allowance for loan losses was 761% of nonperforming loans, compared to 482% on March 31, 2018.
Net interest income (fully taxable equivalent, or fte) was $9,536,000 during the first quarter of 2019, which is $453,000 higher than the comparable three-month period of last year. A $90.0 million increase in average loans outstanding contributed to the increased interest income. The fte yield on interest-earning assets improved 29 basis points compared to the prior year while the cost of funds increased 40 basis points due primarily to a 64 basis point increase in the average rate paid on certificates of deposit. As a result, the annualized net interest margin (fte) decreased to 3.43% from 3.46% in the quarter ended March 31, 2018.
Other income totaled $1,560,000 in the first quarter of 2019 compared to $1,694,000 during the same period of last year. The decrease is attributable to a $142,000 reduction in net gains on sales of securities due to the absence of sales in 2019. All other categories of other income increased $8,000, net.
Operating expenses totaled $6,648,000 in the first quarter and were $400,000 higher than the $6,248,000 recorded in the same period of last year. Salaries and benefits costs rose $187,000 and data processing costs increased $129,000.
All other operating expenses increased $84,000, or 3.4%, net.
Mr. Critelli stated, “Our first quarter results provide a good start for 2019 and are in-line with our budget.
“Our loans have increased 11.4% over the past twelve months, our core operating expenses remain well controlled, and our capital base remains above regulatory “Well Capitalized” targets.
“We are looking forward to expanding our markets into Luzerne County, Pennsylvania with the upcoming opening of our Hanover Township Office.
“We will 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 thirteen offices throughout Northeastern Pennsylvania and twelve offices in the Southern Tier of New York. The Company’s stock trades on the Nasdaq Global Market under the symbol “NWFL”.