☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
NORWOOD FINANCIAL CORP.
|
||||||
(Exact Name of Registrant as Specified in its Charter)
|
Pennsylvania
|
23-2828306
|
|||||
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification No.)
|
717 Main Street, Honesdale, Pennsylvania
|
18431
|
|||||
(Address of Principal Executive Offices)
|
(Zip Code)
|
Title of Each Class
|
Name of Each Exchange on Which Registered
|
|
Common Stock, $.10 par value
|
The Nasdaq Stock Market LLC
|
Large accelerated filer ☐
|
Accelerated filer ☒
|
||
Non-accelerated filer ☐
|
Smaller reporting company ☒
Emerging growth company ☐
|
1.
|
Portions of the Annual Report to Stockholders for the Fiscal Year Ended December 31, 2018. (Parts I, II, and IV) |
2.
|
Portions of the definitive Proxy Statement for the 2019 Annual Meeting of Shareholders. (Part III)
|
23
|
||
Part I
|
Page
|
|
Item 1.
|
Business.
|
2
|
Item 1A.
|
Risk Factors.
|
24
|
Item 1B.
|
Unresolved Staff Comments.
|
33
|
Item 2.
|
Properties.
|
33
|
Item 3.
|
Legal Proceedings.
|
33
|
Item 4.
|
Mine Safety Disclosures.
|
33
|
Part II
|
||
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
34
|
Item 6.
|
Selected Financial Data.
|
34
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
35
|
Item 7A.
|
Quantitative and Qualitative Disclosure about Market Risk.
|
35
|
Item 8.
|
Financial Statements and Supplementary Data.
|
35
|
Item 9
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
35
|
Item 9A.
|
Controls and Procedures.
|
35
|
Item 9B.
|
Other Information.
|
35
|
Part III
|
||
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
35
|
Item 11.
|
Executive Compensation.
|
36
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
36
|
Item 13.
|
Certain Relationships and Related Transactions and Director Independence.
|
37
|
Item 14.
|
Principal Accounting Fees and Services.
|
37
|
Part IV
|
||
Item 15.
|
Exhibits, Financial Statement Schedules.
|
37
|
Item 16.
|
Form 10-K Summary.
|
39
|
SIGNATURES
|
40
|
|
•
|
possible future impairment of intangible assets;
|
|
•
|
our ability to effectively manage future growth;
|
|
•
|
loan losses in excess of our allowance;
|
|
•
|
risks inherent in commercial lending;
|
|
•
|
real estate collateral which may be subject to declines in value;
|
|
•
|
potential other-than-temporary impairments;
|
|
•
|
soundness of other financial institutions;
|
|
•
|
interest rate risks;
|
|
•
|
potential liquidity risks;
|
|
•
|
rate sensitivity of municipal deposits;
|
|
•
|
availability of capital;
|
|
•
|
geographical concentration of business;
|
|
•
|
loss of senior officers;
|
|
•
|
comparatively low legal lending limits;
|
|
•
|
risks of new capital requirements;
|
|
•
|
potential impact of Tax Cuts and Jobs Act;
|
|
•
|
limited market for the Company’s common stock;
|
|
•
|
restrictions on ability to pay dividends;
|
|
•
|
common stock may lose value;
|
|
•
|
insider ownership;
|
|
•
|
issuing additional shares may dilute ownership;
|
|
•
|
certain anti-takeover provisions;
|
|
•
|
competitive environment;
|
|
•
|
extensive and complex governmental regulation and associated cost; and
|
|
•
|
cybersecurity
|
As of December 31,
|
||||||||||||||||||||||||||||||||||||||||
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||||||||||||||||||||||
$ |
%
|
$ |
%
|
$ |
%
|
$ |
%
|
$ |
%
|
|||||||||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||||||||||
Commercial loans
|
$
|
110,542
|
13.0
|
$
|
97,461
|
12.7
|
$
|
85,508
|
12.0
|
$
|
71,090
|
12.7
|
$
|
42,514
|
8.5
|
|||||||||||||||||||||||||
Real Estate-Construction
|
17,445
|
2.0
|
17,228
|
2.3
|
19,709
|
2.8
|
18,987
|
3.4
|
19,221
|
3.9
|
||||||||||||||||||||||||||||||
Real Estate-Residential
|
235,523
|
27.7
|
235,759
|
30.8
|
237,177
|
33.2
|
161,820
|
28.9
|
158,139
|
31.5
|
||||||||||||||||||||||||||||||
Real Estate-Commercial
|
374,790
|
44.1
|
342,934
|
44.9
|
320,187
|
44.8
|
279,123
|
49.8
|
261,956
|
52.2
|
||||||||||||||||||||||||||||||
Consumer loans
|
112,002
|
13.2
|
70,953
|
9.3
|
51,524
|
7.2
|
29,231
|
5.2
|
19,704
|
3.9
|
||||||||||||||||||||||||||||||
850,302
|
100.0
|
764,335
|
100.0
|
714,105
|
100.0
|
560,251
|
100.0
|
501,534
|
100.0
|
|||||||||||||||||||||||||||||||
Deferred fees, net
|
(120
|
)
|
(243
|
)
|
(216
|
)
|
(326
|
)
|
(399
|
)
|
||||||||||||||||||||||||||||||
Allowance for loan losses
|
(8,452
|
)
|
(7,634
|
)
|
(6,463
|
)
|
(7,298
|
)
|
(5,875
|
)
|
||||||||||||||||||||||||||||||
Loans receivable, net
|
$
|
841,730
|
$
|
756,458
|
$
|
707,426
|
$
|
552,627
|
$
|
495,260
|
One Year
or Less |
After One to
Five Years |
Over
Five Years |
Total
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Commercial loans
|
$
|
12,210
|
$
|
27,532
|
$
|
70,811
|
$
|
110,553
|
||||||||
Real Estate – Construction
|
6,710
|
2,835
|
7,900
|
17,445
|
||||||||||||
Total
|
$
|
18,920
|
$
|
30,367
|
$
|
78,711
|
$
|
127,998
|
||||||||
Loans with fixed rates
|
$
|
7,955
|
$
|
19,310
|
$
|
46,253
|
$
|
73,518
|
||||||||
Loans with floating rates
|
14,025
|
12,321
|
28,134
|
54,480
|
||||||||||||
Total
|
$
|
21,980
|
$
|
31,631
|
$
|
74,387
|
$
|
127,998
|
||||||||
As of December 31,
|
||||||||||||||||||||
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
Non-accrual loans:
Real Estate loans
|
||||||||||||||||||||
Residential
|
$
|
798
|
$
|
1,706
|
$
|
1,136
|
$
|
440
|
$
|
1,675
|
||||||||||
Commercial
|
342
|
277
|
762
|
6,649
|
3,921
|
|||||||||||||||
Construction
|
—
|
—
|
28
|
—
|
—
|
|||||||||||||||
Commercial
|
—
|
—
|
—
|
43
|
—
|
|||||||||||||||
Consumer loans
|
—
|
—
|
—-
|
—-
|
4
|
|||||||||||||||
Total non-accrual loans*
|
1,140
|
1,983
|
1,926
|
7,132
|
5,600
|
|||||||||||||||
Accruing loans which are contractually past-due 90 days or more
|
—
|
496
|
1
|
—
|
—
|
|||||||||||||||
Total non-performing loans
|
1,140
|
2,479
|
1,927
|
7,132
|
5,600
|
|||||||||||||||
Foreclosed real estate
|
1,115
|
1,661
|
5,302
|
2,847
|
3,726
|
|||||||||||||||
Total non-performing assets
|
$
|
2,255
|
$
|
4,140
|
$
|
7,229
|
$
|
9,979
|
$
|
9,326
|
||||||||||
Total non-performing loans to total loans
|
0.13
|
%
|
0.32
|
%
|
0.27
|
%
|
1.27
|
%
|
1.12
|
%
|
||||||||||
Total non-performing loans to total assets
|
0.10
|
%
|
0.22
|
%
|
0.17
|
%
|
0.95
|
%
|
0.79
|
%
|
||||||||||
Total non-performing assets to total assets
|
0.19
|
%
|
0.37
|
%
|
0.65
|
%
|
1.33
|
%
|
1.31
|
%
|
As of December 31,
|
||||||||||||||||||||
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Special mention
|
$
|
8,000
|
$
|
9,696
|
$
|
6,317
|
$
|
1,837
|
$
|
1,983
|
||||||||||
Substandard
|
6,620
|
5,536
|
4,346
|
9,437
|
13,344
|
|||||||||||||||
Doubtful
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Loss
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Total
|
$
|
14,620
|
$
|
15,232
|
$
|
10,663
|
$
|
11,274
|
$
|
15,327
|
As of December 31,
|
||||||||||||||||||||
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
Total loans receivable net of deferred fees
|
$
|
850,182
|
$
|
764,092
|
$
|
713,889
|
$
|
559,925
|
$
|
501,135
|
||||||||||
Average loans receivable
|
800,957
|
737,765
|
626,907
|
529,989
|
500,960
|
|||||||||||||||
Allowance balance at beginning of period
|
$
|
7,634
|
$
|
6,463
|
$
|
7,298
|
$
|
5,875
|
$
|
5,708
|
||||||||||
Charge-offs:
|
||||||||||||||||||||
Commercial
|
(246
|
)
|
—
|
(15
|
)
|
—
|
—
|
|||||||||||||
Real Estate – residential, commercial and construction
|
(480
|
)
|
(1,013
|
)
|
(2,834
|
)
|
(3,107
|
)
|
(1,466
|
)
|
||||||||||
Consumer
|
(263
|
)
|
(207
|
)
|
(102
|
)
|
(91
|
)
|
(80
|
)
|
||||||||||
Total
|
(989
|
)
|
(1,220
|
)
|
(2,951
|
)
|
(3,198
|
)
|
(1,546
|
)
|
||||||||||
Recoveries:
|
||||||||||||||||||||
Commercial
|
8
|
—
|
—
|
—
|
—
|
|||||||||||||||
Real Estate – residential, commercial and construction
|
42
|
165
|
21
|
20
|
2
|
|||||||||||||||
Consumer
|
32
|
26
|
45
|
21
|
31
|
|||||||||||||||
Total
|
82
|
191
|
66
|
41
|
33
|
|||||||||||||||
Net Charge-offs
|
(907
|
)
|
(1,029
|
)
|
(2,885
|
)
|
(3,157
|
)
|
(1,513
|
)
|
||||||||||
Provision Expense
|
1,725
|
2,200
|
2,050
|
4,580
|
1,680
|
|||||||||||||||
Allowance balance at end of period
|
$
|
8,452
|
$
|
7,634
|
$
|
6,463
|
$
|
7,298
|
$
|
5,875
|
||||||||||
Allowance for loan losses as a percent of total loans outstanding
|
0.99
|
%
|
1.00
|
%
|
0.91
|
%
|
1.30
|
%
|
1.17
|
%
|
||||||||||
Net loans charged off as a percent of average loans outstanding
|
0.11
|
%
|
0.14
|
%
|
0.46
|
%
|
0.60
|
%
|
0.30
|
%
|
As of December 31,
|
||||||||||||||||||||||||||||||||||||||||
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||||||||||||||||||||||
% of
|
% of
|
% of
|
% of
|
% of
|
||||||||||||||||||||||||||||||||||||
Loans
|
Loans
|
Loans
|
Loans
|
Loans
|
||||||||||||||||||||||||||||||||||||
to Total
|
to Total
|
to Total
|
to Total
|
to Total
|
||||||||||||||||||||||||||||||||||||
Amount
|
Loans
|
Amount
|
Loans
|
Amount
|
Loans
|
Amount
|
Loans
|
Amount
|
Loans
|
|||||||||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||||||||||
Commercial
|
$
|
712
|
13.0
|
%
|
$
|
463
|
12.7
|
%
|
$
|
307
|
12.0
|
%
|
$
|
397
|
12.7
|
%
|
$
|
256
|
8.5
|
%
|
||||||||||||||||||||
Real estate – construction
|
93
|
2.0
|
90
|
2.3
|
78
|
2.8
|
90
|
3.4
|
222
|
3.9
|
||||||||||||||||||||||||||||||
Real estate – residential
|
1,328
|
27.7
|
1,272
|
30.8
|
1,092
|
33.2
|
1,069
|
28.9
|
1,323
|
31.5
|
||||||||||||||||||||||||||||||
Real estate – commercial
|
5,455
|
44.1
|
5,265
|
44.9
|
4,623
|
44.8
|
5,506
|
49.8
|
3,890
|
52.2
|
||||||||||||||||||||||||||||||
Consumer
|
864
|
13.2
|
544
|
9.3
|
363
|
7.2
|
236
|
5.2
|
184
|
3.9
|
||||||||||||||||||||||||||||||
Unallocated
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||||||||
Total
|
$
|
8,452
|
100.0
|
%
|
$
|
7,634
|
100.0
|
%
|
$
|
6,463
|
100.0
|
%
|
$
|
7,298
|
100.0
|
%
|
$
|
5,708
|
100.0
|
%
|
As of December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
(in thousands)
|
||||||||||||
U.S. Treasury securities
|
$
|
—
|
$
|
1,998
|
$
|
1,997
|
||||||
State and political subdivisions
|
97,613
|
120,478
|
125,101
|
|||||||||
Corporate obligations
|
8,640
|
9,989
|
10,112
|
|||||||||
Mortgage-backed securities –
government sponsored entities
|
137,024
|
148,656
|
164,930
|
|||||||||
Equity securities-financial services
|
—
|
—
|
424
|
|||||||||
Total Securities
|
$
|
243,277
|
$
|
281,121
|
$
|
302,564
|
||||||
Fair Value of Securities
|
$
|
243,277
|
$
|
281,121
|
$
|
302,564
|
After One
|
After Five
|
Total Investment
|
||||||||||||||||||||||||||||||||||||||
One Year or Less
|
Through Five Years
|
Through Ten Years
|
After Ten Years
|
Securities
|
||||||||||||||||||||||||||||||||||||
Carrying
|
Average
|
Carrying
|
Average
|
Carrying
|
Average
|
Carrying
|
Average
|
Carrying
|
Average
|
|||||||||||||||||||||||||||||||
Value
|
Yield
|
Value
|
Yield
|
Value
|
Yield
|
Value
|
Yield
|
Value
|
Yield
|
|||||||||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||||||||||
State and political subdivision
|
$
|
1,671
|
3.75
|
%
|
$
|
13,489
|
2.10
|
%
|
$
|
43,454
|
2.49
|
%
|
$
|
38,999
|
3.75
|
%
|
$
|
97,613
|
2.96
|
%
|
||||||||||||||||||||
Corporate obligations
|
—
|
—
|
8,640
|
2.35
|
—
|
—
|
—
|
—
|
8,640
|
2.35
|
||||||||||||||||||||||||||||||
Mortgage-backed securities-government sponsored entities
|
—
|
—
|
—
|
—
|
—
|
—
|
137,024
|
2.15
|
137,024
|
2.15
|
||||||||||||||||||||||||||||||
Total Investment Securities
|
$
|
1,671
|
3.75
|
%
|
$
|
22,129
|
2.20
|
%
|
$
|
43,454
|
2.49
|
%
|
$
|
176,023
|
2.50
|
%
|
$
|
243,277
|
2.48
|
%
|
||||||||||||||||||||
Years Ended December 31,
|
||||||||||||||||||||||||
2018
|
2017
|
2016
|
||||||||||||||||||||||
Average
|
Average
|
Average
|
||||||||||||||||||||||
Balance
|
Rate Paid
|
Balance
|
Rate Paid
|
Balance
|
Rate Paid | |||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Non-interest bearing demand
|
$
|
208,222
|
—
|
%
|
$
|
200,368
|
—
|
%
|
$
|
146,578
|
—
|
% | ||||||||||||
Interest-bearing demand
|
91,782
|
0.10
|
89,881
|
0.07
|
71,107
|
0.05
|
||||||||||||||||||
Money Market
|
142,147
|
0.26
|
155,836
|
0.22
|
137,266
|
0.22
|
||||||||||||||||||
Savings
|
178,203
|
0.05
|
189,548
|
0.05
|
125,904
|
0.05
|
||||||||||||||||||
Time
|
322,768
|
1.27
|
293,641
|
0.98
|
234,026
|
0.94
|
||||||||||||||||||
Total
|
$
|
943,122
|
$
|
929,274
|
$
|
714,881
|
||||||||||||||||||
Amount
|
||||
Maturity Period
|
(in thousands)
|
|||
Within three months
|
$
|
57,382
|
||
Over three through six months
|
27,782
|
|||
Over six through twelve months
|
61,158
|
|||
Over twelve months
|
53,598
|
|||
$
|
199,920
|
Years Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
(dollars in thousands)
|
||||||||||||
Short-term borrowings:
|
||||||||||||
Average balance during the year
|
$
|
41,963
|
$
|
39,170
|
$
|
41,593
|
||||||
Maximum month-end balance during the year
|
$
|
53,046
|
$
|
54,286
|
$
|
52,672
|
||||||
Average interest rate during the year
|
0.77
|
%
|
0.51
|
%
|
0.31
|
%
|
||||||
Total short-term borrowings at end of the year
|
$
|
53,046
|
$
|
42,530
|
$
|
32,811
|
||||||
Weighted average interest rate at the end of the year
|
1.27
|
%
|
0.87
|
%
|
0.32
|
%
|
(a)
|
Market
Information. Information relating to the market for Registrant’s common equity and related stockholder matters appears under “Capital and Dividends” in the Registrant’s Annual Report to Stockholders for the fiscal year ended
December 31, 2018 (the “Annual Report”) and is incorporated herein by reference.
|
(b)
|
Use of
Proceeds. Not applicable.
|
(c)
|
Issuer
Purchases of Equity Securities. Set forth below is information regarding the Company’s stock repurchases during the fourth
quarter of the fiscal year ended December 31, 2018.
|
Issuer Purchases of Equity Securities
|
||||||||||||||||
Total Number
of Shares (or Units)
purchased
|
Average Price Paid
Per Share (or Unit) |
Total Number of Shares (or Units) Purchased as Part of Publicly
Announced Plans or Programs * |
Maximum Number
(or Approximate Dollar Value) of Shares (or Units)
that May Yet be Purchased Under the Plans or Programs |
|||||||||||||
October 1 – 31, 2018
|
-
|
$
|
-
|
-
|
129,500
|
|||||||||||
November 1 – 30, 2018
|
-
|
-
|
-
|
129,500
|
||||||||||||
December 1 – 31, 2018
|
475
|
30.30
|
475
|
129,025
|
||||||||||||
Total
|
475
|
$
|
30.30
|
475
|
129,025
|
|||||||||||
(a) |
Security Ownership of Certain Beneficial
Owners
|
(b) | Security Ownership of Management |
(c) |
Changes in Control
|
(d) |
Equity Compensation Plan Information
|
(a)
|
(b)
|
(c)
|
||||||||||
Number of Securities to be issued upon exercise of outstanding options, warrants and rights*
|
Weighted-average exercise price of outstanding options, warrants and rights *
|
Number of securities remaining available for future issuance under equity compensation plans,(excluding securities
reflected in column (a)) *
|
||||||||||
Equity compensation plans
approved by security holders |
||||||||||||
2006 Stock Option Plan
|
127,185
|
$
|
17.84
|
-
|
||||||||
2014 Equity Incentive Plan
|
116,130
|
29.26
|
230,735
|
|||||||||
Equity compensation plans
not approved by security holders |
_
|
_
|
_
|
|||||||||
TOTAL
|
243,315
|
$
|
23.29
|
230,735
|
(a) |
Listed below are all financial statements, schedules and exhibits filed as part of this report, and are incorporated by reference.
|
1. |
The consolidated balance sheets of Norwood Financial Corp. and subsidiary as of December 31, 2018 and 2017, and the related consolidated statements of income,
comprehensive income, stockholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2018, together with the related notes and the independent registered public accounting firm reports of S.R.
Snodgrass, P.C., independent registered public accounting firm.
|
2. |
Schedules omitted as they are not applicable.
|
P
|
|
No.
|
Description
|
3(i)
|
Articles of Incorporation of Norwood Financial Corp.(1)
|
3(ii)
|
Bylaws of Norwood Financial Corp. (2)
|
4.0
|
Specimen Stock Certificate of Norwood Financial Corp. (1)
|
10.1†
|
Employment Agreement with Lewis J. Critelli (3)
|
10.2†
|
Change in Control Severance Agreement with William S. Lance (3)
|
10.3†
|
Change in Control Severance Agreement with Robert J. Mancuso (5)
|
10.4†
|
Salary Continuation Agreement between the Bank and William W. Davis, Jr. (6)
|
10.5†
|
Amended and Restated Salary Continuation Agreement, dated September 1, 2017, between the Bank and Lewis J. Critelli (6)
|
10.6†
|
Salary Continuation Agreement between the Bank and John H. Sanders (7)
|
10.7†
|
2006 Stock Option Plan (8)
|
10.8†
|
First and Second Amendments to Salary Continuation Agreement with William W. Davis, Jr. (9)
|
10.9†
|
First and Second Amendments to Salary Continuation Agreement with John H. Sanders (9)
|
Change in Control Severance Agreement with James F. Burke (10)
|
|
2014 Equity Incentive Plan, as amended (11)
|
|
Addendum to Change in Control Severance Agreement with William S. Lance (12)
|
|
Salary Continuation Agreement, dated September 1, 2017, between Wayne Bank and William S. Lance (6)
|
|
Salary Continuation Agreement, dated September 1, 2017, between Wayne Bank and Robert J. Mancuso (6)
|
|
Salary Continuation Agreement, dated September 1, 2017, between Wayne Bank and James F. Burke (6)
|
|
Change-In-Control Severance Agreement, dated January 16, 2018, by and among Norwood Financial Corp., Wayne Bank, and John F. Carmody(13)
|
|
Addendum, dated January 16, 2018, to Change-In-Control Severance Agreement, dated March 2, 2010, by and among Norwood Financial
Corp., Wayne Bank and William S. Lance(13)
|
|
Addendum, dated January 16, 2018, to Change-In-Control Severance Agreement, dated January 3, 2013, by and among Norwood Financial
Corp., Wayne Bank and Robert J. Mancuso(13)
|
|
Annual Report to Stockholders for the fiscal year ended December 31, 2018
|
|
Subsidiaries of Norwood Financial Corp.
|
|
Consent of S.R. Snodgrass, P.C.
|
|
Rule 13a-14(a)/15d-14(a) Certification of CEO
|
|
Rule 13a-14(a)/15d-14(a) Certification of CFO
|
|
Certification pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of Sarbanes Oxley Act of 2002
|
|
101
|
Interactive Data Files consisting of the following financial information from the Company’s Annual Report on Form 10-K for the year
ended December 31, 2018 formatted in XBRL: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Changes in Stockholders’ Equity;
(v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements
|
†
|
Management contract or compensatory plan or arrangement.
|
|
(1)
|
Incorporated herein by reference into this document from the identically numbered Exhibits to the Registrant’s Form 10, Registration
Statement initially filed in paper with the Commission on April 29, 1996, Registration No. 0-28364.
|
|
(2)
|
Incorporated by reference into this document from the identically numbered exhibit to the Registrant’s Form 10-Q filed with the
Commission on August 8, 2014.
|
|
(3)
|
Incorporated herein by reference from the identically numbered exhibits to the Registrant’s Form 10-K filed with the Commission on
March 15, 2010.
|
|
(4)
|
Incorporated by reference into this document from Exhibit 10.4 to the Registrant’s Form 10-K filed with the Commission on March 14,
2013. File No 0-28364.
|
|
(5)
|
Incorporated herein by reference into this document from Exhibit 10.1 to the Registrant’s Form 10-K filed with the Commission on
March 23, 2000, File No. 0-28364.
|
|
(6)
|
Incorporated by reference from the exhibits to the Current Report on Form 8-K filed with the Commission on September 5, 2017.
|
|
(7)
|
Incorporated by reference into this document from Exhibit 10.11 to the Registrant’s Form 10-K filed with the Commission on March 22,
2004, File No. 0-28364.
|
|
(8)
|
Incorporated herein by reference from Exhibit 4.1 to Registrant’s Registration Statement on Form S-8 (File No. 333-134831) filed with
the Commission on June 8, 2006.
|
|
(9)
|
Incorporated herein by reference from the Exhibits to the Registrant’s Current Report on Form 8-K filed April 4, 2006.
|
|
(10)
|
Incorporated herein by reference from the identically numbered exhibit to the Registrant’s Form 10-Q filed with the Commission on
November 7, 2013.
|
|
(11)
|
Incorporated by reference to Exhibit 10.1 to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-8
(File No. 333-195643) filed with the Commission on May 4, 2018.
|
|
(12)
|
Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed February 18, 2015.
|
|
(13)
|
Incorporated by reference into this document from the exhibits to the Registrant’s Current Report on Form 8-K filed with the
Commission on January 16, 2018
|
|
SIGNATURES
|
||||
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
||||
NORWOOD FINANCIAL CORP.
|
||||
Dated: March 14, 2019
|
By:
|
/s/ Lewis J. Critelli | ||
Lewis J. Critelli
President and Chief Executive Officer
(Duly Authorized Representative)
|
||||
Pursuant to the requirement of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on March 14, 2019 on behalf of the Registrant and in the capacities indicated.
|
||||
/s/ Lewis J. Critelli | /s/ William W. Davis, Jr. | |||
Lewis J. Critelli
President, Chief Executive Officer and Director
(Principal Executive Officer )
|
William W. Davis, Jr.
Director
|
|||
/s/ Dr. Andrew A. Forte | /s/ Susan Campfield | |||
Dr. Andrew A. Forte
Director
|
Susan Campfield
Director
|
|||
/s/ Joseph W. Adams | /s/ Kevin M. Lamont | |||
Joseph W. Adams
Director
|
Kevin M. Lamont
Director
|
|||
/s/ Ralph A. Matergia | /s/ Dr. Kenneth A. Phillips | |||
Ralph A. Matergia
Director
|
Dr. Kenneth A. Phillips
Director
|
|||
/s/ William S. Lance | /s/ Meg L. Hungerford | |||
William S. Lance
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Meg L. Hungerford
Director
|
|||
2018 CONSOLIDATED FINANCIAL REPORT
|
|
Page
|
|
Management's Discussion & Analysis
|
2
|
Management's Report On Internal Control Over Financial Reporting
|
21
|
Reports of Independent Registered Public Accounting Firm
|
22 |
Consolidated Balance Sheets |
24
|
Consolidated Statements Of Income |
25
|
Consolidated Statements Of Comprehensive Income |
26
|
Consolidated Statements Of Stockholders' Equity |
27
|
Consolidated Statements Of Cash Flows |
28
|
Notes To Consolidated Financial Statements |
30 |
Investor Information |
76
|
Net income 2017
|
$
|
8,198
|
||
Net interest income
|
1,931
|
|||
Provision for loan losses
|
475
|
|||
Net gains on sales of loans and securities
|
(187
|
)
|
||
Other income
|
341
|
|||
Salaries and employee benefits
|
(1,170
|
)
|
||
Occupancy, furniture and equipment
|
(334
|
)
|
||
Foreclosed real estate owned
|
992
|
|||
Other expenses
|
(593
|
)
|
||
Income tax expense - before prior year net deferred tax revaluation
|
938
|
|||
Income tax expense - net deferred tax asset revaluation
|
3,060
|
|||
Net income 2018
|
$
|
13,651
|
Year ended December 31,
|
||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||
Allowance balance at beginning of period
|
$
|
7,634
|
$
|
6,463
|
$
|
7,298
|
$
|
5,875
|
$
|
5,708
|
||||||||||
Charge-offs:
|
||||||||||||||||||||
Real Estate loans
|
||||||||||||||||||||
Residential
|
(197
|
)
|
(83
|
)
|
(123
|
)
|
(224
|
)
|
(270
|
)
|
||||||||||
Commercial
|
(283
|
)
|
(902
|
)
|
(2,711
|
)
|
(2,883
|
)
|
(1,196
|
)
|
||||||||||
Construction
|
-
|
(28
|
)
|
-
|
-
|
-
|
||||||||||||||
Commercial loans
|
(246
|
)
|
-
|
(15
|
)
|
-
|
-
|
|||||||||||||
Consumer loans
|
(263
|
)
|
(207
|
)
|
(102
|
)
|
(91
|
)
|
(80
|
)
|
||||||||||
Total
|
(989
|
)
|
(1,220
|
)
|
(2,951
|
)
|
(3,198
|
)
|
(1,546
|
)
|
||||||||||
Recoveries:
|
||||||||||||||||||||
Real Estate loans
|
||||||||||||||||||||
Residential
|
9
|
6
|
6
|
20
|
-
|
|||||||||||||||
Commercial
|
33
|
159
|
15
|
-
|
2
|
|||||||||||||||
Construction
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Commercial loans
|
8
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer loans
|
32
|
26
|
45
|
21
|
31
|
|||||||||||||||
Total
|
82
|
191
|
66
|
41
|
33
|
|||||||||||||||
Provision expense
|
1,725
|
2,200
|
2,050
|
4,580
|
1,680
|
|||||||||||||||
Allowance balance at end of period
|
$
|
8,452
|
$
|
7,634
|
$
|
6,463
|
$
|
7,298
|
$
|
5,875
|
||||||||||
Allowance for loan losses as a percent
|
||||||||||||||||||||
of total loans outstanding
|
0.99
|
%
|
1.00
|
%
|
0.91
|
%
|
1.30
|
%
|
1.17
|
%
|
||||||||||
Net loans charged off as a percent of
|
||||||||||||||||||||
average loans outstanding
|
0.11
|
%
|
0.14
|
%
|
0.46
|
%
|
0.60
|
%
|
0.30
|
%
|
||||||||||
Allowance coverage of non-performing loans
|
7.4
|
x |
3.1
|
x |
3.4
|
x |
1.0
|
x |
1.1
|
x |
December 31,
|
||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||
Non-accrual loans:
|
||||||||||||||||||||
Real Estate loans
|
||||||||||||||||||||
Residential
|
$
|
798
|
$
|
1,706
|
$
|
1,136
|
$
|
440
|
$
|
1,675
|
||||||||||
Commercial
|
342
|
277
|
762
|
6,649
|
3,921
|
|||||||||||||||
Construction
|
—
|
—
|
28
|
—
|
—
|
|||||||||||||||
Commercial loans
|
—
|
—
|
—
|
43
|
—
|
|||||||||||||||
Consumer loans
|
—
|
—
|
—
|
—
|
4
|
|||||||||||||||
Total
|
1,140
|
1,983
|
1,926
|
7,132
|
5,600
|
|||||||||||||||
Accruing loans which are contractually
|
||||||||||||||||||||
past due 90 days or more
|
—
|
496
|
1
|
—
|
—
|
|||||||||||||||
Total non-performing loans
|
1,140
|
2,479
|
1,927
|
7,132
|
5,600
|
|||||||||||||||
Foreclosed real estate
|
1,115
|
1,661
|
5,302
|
2,847
|
3,726
|
|||||||||||||||
Total non-performing assets
|
$
|
2,255
|
$
|
4,140
|
$
|
7,229
|
$
|
9,979
|
$
|
9,326
|
||||||||||
Non-performing loans to total loans
|
0.13
|
%
|
0.32
|
%
|
0.27
|
%
|
1.27
|
%
|
1.12
|
%
|
||||||||||
Non-performing loans to total assets
|
0.10
|
%
|
0.22
|
%
|
0.17
|
%
|
0.95
|
%
|
0.79
|
%
|
||||||||||
Non-performing assets to total assets
|
0.19
|
%
|
0.37
|
%
|
0.65
|
%
|
1.33
|
%
|
1.31
|
%
|
2018
|
2017
|
|||||||||||||||
(dollars in thousands)
|
||||||||||||||||
Carrying
|
% of
|
Carrying
|
% of
|
|||||||||||||
Value
|
portfolio
|
Value
|
portfolio
|
|||||||||||||
U.S. Treasury securities
|
$
|
—
|
—
|
%
|
$
|
1,998
|
0.7
|
%
|
||||||||
States and political subdivisions
|
97,613
|
40.1
|
%
|
120,478
|
42.9
|
%
|
||||||||||
Corporate obligations
|
8,640
|
3.6
|
%
|
9,989
|
3.5
|
%
|
||||||||||
Mortgage-backed securities – government sponsored entities
|
137,024
|
56.3
|
%
|
148,656
|
52.9
|
%
|
||||||||||
Total
|
$
|
243,277
|
100.0
|
%
|
$
|
281,121
|
100.0
|
%
|
3 Months
|
3-12
|
Over
|
||||||||||||||||||
Or Less
|
Months
|
1-3 Years
|
3 Years
|
Total
|
||||||||||||||||
Federal funds sold and
|
||||||||||||||||||||
interest-bearing deposits
|
$
|
309
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
309
|
||||||||||
Securities
|
6,783
|
16,782
|
53,209
|
166,503
|
243,277
|
|||||||||||||||
Loans Receivable
|
135,274
|
155,243
|
256,479
|
303,186
|
850,182
|
|||||||||||||||
Total Rate Sensitive Assets (RSA)
|
$
|
142,366
|
$
|
172,025
|
$
|
309,688
|
$
|
469,689
|
$
|
1,093,768
|
||||||||||
Non-maturity interest-bearing deposits
|
$
|
59,548
|
$
|
59,173
|
$
|
156,683
|
$
|
124,741
|
$
|
400,145
|
||||||||||
Time Deposits
|
73,679
|
139,107
|
98,699
|
33,692
|
345,177
|
|||||||||||||||
Borrowings
|
27,888
|
34,536
|
35,454
|
7,452
|
105,330
|
|||||||||||||||
Total Rate Sensitive Liabilities (RSL)
|
$
|
161,115
|
$
|
232,816
|
$
|
290,836
|
$
|
165,885
|
$
|
850,652
|
||||||||||
Interest sensitivity gap
|
$
|
(18,749
|
)
|
$
|
(60,791
|
)
|
$
|
18,852
|
$
|
303,804
|
$
|
243,116
|
||||||||
Cumulative gap
|
(18,749
|
)
|
(79,540
|
)
|
(60,688
|
)
|
243,116
|
|||||||||||||
RSA/RSL-cumulative
|
88.4
|
%
|
79.8
|
%
|
91.1
|
%
|
128.6
|
%
|
||||||||||||
As of December 31, 2017
|
||||||||||||||||||||
Interest sensitivity gap
|
$
|
20,327
|
$
|
(34,969
|
)
|
$
|
(6,925
|
)
|
$
|
264,544
|
$
|
242,977
|
||||||||
Cumulative gap
|
20,327
|
(14,642
|
)
|
(21,567
|
)
|
242,977
|
||||||||||||||
RSA/RSL-cumulative
|
115.9
|
%
|
95.8
|
%
|
96.6
|
%
|
130.3
|
%
|
2018
|
2017
|
|||||||
Service charges on deposit accounts
|
$
|
263
|
$
|
255
|
||||
ATM Fees
|
398
|
362
|
||||||
Overdraft Fees
|
1,505
|
1,639
|
||||||
Safe deposit box rental
|
96
|
100
|
||||||
Loan related service fees
|
563
|
445
|
||||||
Debit card
|
1,330
|
1,186
|
||||||
Fiduciary activities
|
589
|
510
|
||||||
Commissions on mutual funds & annuities
|
185
|
146
|
||||||
Gain on sales of loans
|
15
|
67
|
||||||
Earnings on and proceeds from bank-owned life insurance
|
1,126
|
1,133
|
||||||
Other income
|
782
|
720
|
||||||
6,852
|
6,563
|
|||||||
Net realized gains on sales of securities
|
213
|
348
|
||||||
Total
|
$
|
7,065
|
$
|
6,911
|
2018
|
2017
|
|||||||
Salaries
|
$
|
8,695
|
$
|
8,317
|
||||
Employee benefits
|
5,325
|
4,533
|
||||||
Occupancy
|
2,889
|
2,662
|
||||||
Furniture and equipment
|
806
|
699
|
||||||
Data processing and related operations
|
1,427
|
1,353
|
||||||
Federal Deposit Insurance Corporation insurance assessment
|
347
|
377
|
||||||
Advertising
|
257
|
268
|
||||||
Professional fees
|
993
|
949
|
||||||
Postage and telephone
|
705
|
664
|
||||||
Office supplies
|
413
|
426
|
||||||
Taxes, other than income
|
572
|
661
|
||||||
Foreclosed real estate
|
172
|
1,164
|
||||||
Amortization of intangible assets
|
126
|
150
|
||||||
Other
|
3,248
|
2,647
|
||||||
Total
|
$
|
25,975
|
$
|
24,870
|
Closing Price Range
|
Cash dividends | |||||||||||
High
|
Low
|
Declared per share | ||||||||||
Year 2018
|
||||||||||||
First Quarter
|
$
|
33.00
|
$
|
28.85
|
$
|
0.220
|
||||||
Second Quarter
|
38.86
|
29.02
|
0.220
|
|||||||||
Third Quarter
|
40.41
|
34.51
|
0.220
|
|||||||||
Fourth Quarter
|
39.06
|
30.30
|
0.240
|
|||||||||
Year 2017
|
||||||||||||
First Quarter
|
$
|
27.93
|
$
|
21.24
|
$
|
0.213
|
||||||
Second Quarter
|
28.34
|
24.65
|
0.213
|
|||||||||
Third Quarter
|
29.52
|
26.71
|
0.220
|
|||||||||
Fourth Quarter
|
34.91
|
28.00
|
0.220
|
(dollars in thousands) |
Year ended December 31, |
|||||||
2018
|
2017
|
|||||||
Net income |
$
|
13,651 |
$
|
8,198 |
||||
Add: net deferred tax asset revaluation charge |
-
|
3,060 |
||||||
Core operating results |
$
|
13,651
|
$
|
11,258 |
Year ended December 31, |
||||||||
2018
|
2017
|
|||||||
Diluted earnings per share |
$
|
2.17 |
$
|
1.31 |
||||
Add: net deferred tax asset revaluation charge |
-
|
0.49 |
||||||
Core operating results pr diluted share |
$
|
2.17
|
$
|
1.80 |
Year ended December 31, |
||||||||
2018
|
2017
|
|||||||
Return on average assets |
1.19 |
% |
0.73 |
% |
||||
Add: net deferred tax asset revaluation charge |
-
|
0.29 |
||||||
Core operating results on average assets |
1.19 |
% |
1.02 |
% |
Year ended December 31, |
||||||||
2018
|
2017
|
|||||||
Return on average equity |
11.71 |
% |
7.04 |
% |
||||
Add: net deferred tax asset revaluation charge |
-
|
3.35 |
||||||
Core operating results return on average equity |
11.71
|
% |
10.39 |
% |
8
|
|||||||
Symbol
|
CRSP Total Returns Index for:
|
12/31/13
|
12/31/14
|
12/31/15
|
12/31/16
|
12/31/17
|
12/31/18
|
♦
|
Norwood Financial Corp
|
$100.00
|
$112.61
|
$116.31
|
$140.10
|
$216.30
|
$222.05
|
■
|
CRSP Nasdaq U.S. Index
|
100.00
|
115.31
|
124.20
|
136.36
|
145.76
|
143.37
|
▲
|
Nasdaq Bank Index
|
100.00
|
105.08 |
114.45
|
154.96
|
165.09
|
137.08
|
Year Ended December 31
|
2018
|
2017
|
||||||||||||||||||||||
Average
|
Average
|
Average
|
Average
|
|||||||||||||||||||||
Balance(2)
|
Interest(1)
|
Rate
|
Balance(2)
|
Interest(1)
|
Rate
|
|||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Interest-bearing deposits with banks
|
$
|
3,978
|
$
|
73
|
1.84
|
%
|
$
|
4,742
|
$
|
48
|
1.01
|
%
|
||||||||||||
Securities available for sale:
|
||||||||||||||||||||||||
Taxable
|
167,443
|
3,573
|
2.13
|
180,087
|
3,548
|
1.97
|
||||||||||||||||||
Tax-exempt
|
101,525
|
3,096
|
3.05
|
119,991
|
4,345
|
3.62
|
||||||||||||||||||
Total securities available for sale
|
268,968
|
6,669
|
2.48
|
300,078
|
7,893
|
2.63
|
||||||||||||||||||
Loans receivable (3)(4)
|
800,957
|
36,814
|
4.60
|
737,765
|
33,229
|
4.50
|
||||||||||||||||||
Total interest-earning assets
|
1,073,903
|
43,556
|
4.06
|
1,042,585
|
41,170
|
3.95
|
||||||||||||||||||
Noninterest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
14,583
|
14,193
|
||||||||||||||||||||||
Allowance for loan losses
|
(8,259
|
)
|
(7,416
|
)
|
||||||||||||||||||||
Other assets
|
67,441
|
76,427
|
||||||||||||||||||||||
Total noninterest-earning assets
|
73,765
|
83,204
|
||||||||||||||||||||||
TOTAL ASSETS
|
$
|
1,147,668
|
$
|
1,125,789
|
||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing demand and money market
|
$
|
233,929
|
466
|
0.20
|
$
|
245,717
|
406
|
0.17
|
||||||||||||||||
Savings
|
178,203
|
90
|
0.05
|
189,548
|
95
|
0.05
|
||||||||||||||||||
Time
|
322,768
|
4,088
|
1.27
|
293,641
|
2,876
|
0.98
|
||||||||||||||||||
Total interest-bearing deposits
|
734,900
|
4,644
|
0.63
|
728,906
|
3,377
|
0.46
|
||||||||||||||||||
Short-term borrowings
|
41,963
|
323
|
0.77
|
39,170
|
199
|
0.51
|
||||||||||||||||||
Other borrowings
|
36,606
|
690
|
1.88
|
31,276
|
504
|
1.61
|
||||||||||||||||||
Total interest-bearing liabilities
|
813,469
|
5,657
|
0.70
|
799,352
|
4,080
|
0.51
|
||||||||||||||||||
Noninterest-bearing liabilities:
|
||||||||||||||||||||||||
Noninterest-bearing demand deposits
|
208,222
|
200,368
|
||||||||||||||||||||||
Other liabilities
|
9,439
|
9,662
|
||||||||||||||||||||||
Total noninterest-bearing liabilities
|
217,661
|
210,030
|
||||||||||||||||||||||
Stockholders’ equity
|
116,538
|
116,407
|
||||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
1,147,668
|
$
|
1,125,789
|
||||||||||||||||||||
Net Interest Income/spread
|
||||||||||||||||||||||||
(tax equivalent basis)
|
37,899
|
3.36
|
%
|
37,090
|
3.44
|
%
|
||||||||||||||||||
Tax-equivalent basis adjustment
|
(1,060
|
)
|
(2,182
|
)
|
||||||||||||||||||||
Net Interest Income
|
$
|
36,839
|
$
|
34,908
|
||||||||||||||||||||
Net interest margin
|
||||||||||||||||||||||||
(tax equivalent basis)
|
3.53
|
%
|
3.56
|
%
|
(1)
|
Interest and yields are presented on a tax-equivalent basis using a marginal tax rate of 21% for 2018 and 34% for 2017.
|
(2)
|
Average balances have been calculated based on daily balances.
|
(3)
|
Loan balances include non-accrual loans and are net of unearned income.
|
(4)
|
Loan yields include the effect of amortization of purchased credit marks and deferred fees net of costs.
|
Increase/(Decrease)
|
||||||||||||||||||||||||
(dollars in thousands)
|
2018 compared to 2017
|
2017 compared to 2016
|
||||||||||||||||||||||
Variance due to
|
Variance due to
|
|||||||||||||||||||||||
Volume
|
Rate
|
Net
|
Volume
|
Rate
|
Net
|
|||||||||||||||||||
INTEREST-EARNING ASSETS:
|
||||||||||||||||||||||||
Interest-bearing deposits
|
$
|
(12
|
)
|
$
|
37
|
$
|
25
|
$
|
(25
|
)
|
$
|
31
|
$
|
6
|
||||||||||
Securities available for sale:
|
||||||||||||||||||||||||
Taxable
|
(256
|
)
|
281
|
25
|
1,102
|
71
|
1,173
|
|||||||||||||||||
Tax-exempt securities
|
(616
|
)
|
(633
|
)
|
(1,249
|
)
|
1,346
|
(359
|
)
|
987
|
||||||||||||||
Total securities available for sale
|
(872
|
)
|
(352
|
)
|
(1,224
|
)
|
2,448
|
(288
|
)
|
2,160
|
||||||||||||||
Loans receivable
|
2,811
|
774
|
3,585
|
5,011
|
-
|
5,011
|
||||||||||||||||||
Total interest-earning assets
|
1,927
|
459
|
2,386
|
7,434
|
(257
|
)
|
7,177
|
|||||||||||||||||
INTEREST-BEARING LIABILITIES
|
||||||||||||||||||||||||
Interest-bearing demand and money market
|
(21
|
)
|
81
|
60
|
50
|
20
|
70
|
|||||||||||||||||
Savings
|
(5
|
)
|
-
|
(5
|
)
|
29
|
-
|
29
|
||||||||||||||||
Time
|
343
|
869
|
1,212
|
563
|
112
|
675
|
||||||||||||||||||
Total interest-bearing deposits
|
317
|
950
|
1,267
|
642
|
132
|
774
|
||||||||||||||||||
Short-term borrowings
|
21
|
103
|
124
|
(11
|
)
|
36
|
25
|
|||||||||||||||||
Other borrowings
|
93
|
93
|
186
|
(95
|
)
|
(278
|
)
|
(373
|
)
|
|||||||||||||||
Total interest-bearing liabilities
|
431
|
1,146
|
1,577
|
536
|
(110
|
)
|
426
|
|||||||||||||||||
Net interest income (tax-equivalent basis)
|
$
|
1,496
|
$
|
(687
|
)
|
$
|
809
|
$
|
6,898
|
$
|
(147
|
)
|
$
|
6,751
|
/s/ Lewis J. Critelli
|
/s/ William S. Lance
|
|
Lewis J. Critelli
|
William S. Lance
|
|
President and
|
Executive Vice President and
|
|
Chief Executive Officer
|
Chief Financial Officer
|
|
December 31, |
||||||||
2018
|
2017
|
|||||||
(In Thousands, Except Share and Per Share Data)
|
||||||||
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 (net of allowance for loan losses 2018: $8,452; 2017: $7,634)
|
841,730
|
756,458
|
||||||
Regulatory stock, at cost
|
3,926
|
3,505
|
||||||
Premises and equipment, net
|
13,846
|
13,864
|
||||||
Bank owned life insurance
|
37,932
|
37,060
|
||||||
Accrued interest receivable
|
3,776
|
3,716
|
||||||
Foreclosed real estate owned
|
1,115
|
1,661
|
||||||
Goodwill
|
11,331
|
11,331
|
||||||
Other intangibles
|
336
|
462
|
||||||
Other assets
|
8,942
|
7,041
|
||||||
Total Assets
|
$
|
1,184,559
|
$
|
1,132,916
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
LIABILITIES
|
||||||||
Deposits:
|
||||||||
Noninterest-bearing demand
|
$
|
201,457
|
$
|
205,138
|
||||
Interest-bearing demand
|
88,917
|
91,479
|
||||||
Money market deposit accounts
|
137,636
|
146,362
|
||||||
Savings
|
173,593
|
166,111
|
||||||
Time
|
345,177
|
320,294
|
||||||
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
|
Years Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
(In Thousands, Except Share and Per Share Data)
|
||||||||
INTEREST INCOME
|
||||||||
Loans receivable, including fees
|
$
|
36,404
|
$
|
32,524
|
||||
Securities
|
||||||||
Taxable
|
3,573
|
3,548
|
||||||
Tax exempt
|
2,446
|
2,868
|
||||||
Other
|
73
|
48
|
||||||
Total Interest Income
|
42,496
|
38,988
|
||||||
INTEREST EXPENSE
|
||||||||
Deposits
|
4,644
|
3,377
|
||||||
Short-term borrowings
|
323
|
199
|
||||||
Other borrowings
|
690
|
504
|
||||||
Total Interest Expense
|
5,657
|
4,080
|
||||||
Net Interest Income
|
36,839
|
34,908
|
||||||
PROVISION FOR LOAN LOSSES
|
1,725
|
2,200
|
||||||
Net Interest Income After
|
||||||||
Provision for Loan Losses
|
35,114
|
32,708
|
||||||
OTHER INCOME
|
||||||||
Service charges and fees
|
4,295
|
4,079
|
||||||
Income from fiduciary activities
|
589
|
510
|
||||||
Net realized gains on sales of securities
|
213
|
348
|
||||||
Net gain on sale of loans
|
15
|
67
|
||||||
Earnings and proceeds on life insurance policies
|
1,126
|
1,133
|
||||||
Other
|
827
|
774
|
||||||
Total Other Income
|
7,065
|
6,911
|
||||||
OTHER EXPENSES
|
||||||||
Salaries and employee benefits
|
14,020
|
12,850
|
||||||
Occupancy
|
2,889
|
2,662
|
||||||
Furniture and equipment
|
806
|
699
|
||||||
Data processing and related operations
|
1,427
|
1,353
|
||||||
Federal Deposit Insurance Corporation insurance assessment
|
347
|
377
|
||||||
Advertising
|
257
|
268
|
||||||
Professional fees
|
993
|
949
|
||||||
Postage and telephone
|
705
|
664
|
||||||
Taxes, other than income
|
572
|
661
|
||||||
Foreclosed real estate
|
172
|
1,164
|
||||||
Amortization of intangible assets
|
126
|
150
|
||||||
Other
|
3,661
|
3,073
|
||||||
Total Other Expenses
|
25,975
|
24,870
|
||||||
Income before Income Taxes
|
16,204
|
14,749
|
||||||
INCOME TAX EXPENSE
|
2,553
|
6,551
|
||||||
Net income
|
$
|
13,651
|
$
|
8,198
|
||||
EARNINGS PER SHARE
|
||||||||
BASIC
|
$
|
2.19
|
$
|
1.32
|
||||
DILUTED
|
$
|
2.17
|
$
|
1.31
|
(in thousands) |
Years Ended December 31,
|
|||||||
2018
|
2017
|
|||||||
NET INCOME
|
$
|
13,651
|
$
|
8,198
|
||||
Other comprehensive (loss) income:
|
||||||||
Unrealized gain (loss) on pension liability
|
207
|
(17
|
)
|
|||||
Tax Effect
|
(43
|
)
|
6
|
|||||
Investment securities available for sale:
|
||||||||
Unrealized holding (losses) gains
|
(2,973
|
)
|
3,224
|
|||||
Tax Effect
|
624
|
(1,097
|
)
|
|||||
Reclassification of gains from sale of securities
|
(213
|
)
|
(348
|
)
|
||||
Tax Effect
|
45
|
118
|
||||||
Other comprehensive (loss) income
|
(2,353
|
)
|
1,886
|
|||||
COMPREHENSIVE INCOME
|
$
|
11,298
|
$
|
10,084
|
Years Ended December 31, 2018 and 2017
|
||||||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||||||||||
Common Stock
|
Retained
|
Treasury Stock
|
Comprehensive
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Surplus
|
Earnings
|
Shares
|
Amount
|
Loss
|
Total
|
|||||||||||||||||||||||||
(Dollars in Thousands, Except Per Share Data)
|
||||||||||||||||||||||||||||||||
BALANCE - DECEMBER 31, 2016
|
4,164,723
|
$
|
416
|
$
|
47,682
|
$
|
67,225
|
4,509
|
$
|
(125
|
)
|
$
|
(4,119
|
)
|
$
|
111,079
|
||||||||||||||||
Net Income
|
-
|
-
|
-
|
8,198
|
-
|
-
|
-
|
8,198
|
||||||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
1,886
|
1,886
|
||||||||||||||||||||||||
Reclassification of certain income tax
|
||||||||||||||||||||||||||||||||
effects from accumulated other
|
||||||||||||||||||||||||||||||||
comprehensive income
|
434
|
(434
|
)
|
-
|
||||||||||||||||||||||||||||
Cash dividends declared ($0.87
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
per share)
|
- |
- |
- |
(5,412 ) |
- |
- |
- |
5.412 ) |
||||||||||||||||||||||||
Acquisition of treasury stock
|
-
|
-
|
-
|
-
|
42,257
|
(1,587
|
)
|
-
|
(1,587
|
)
|
||||||||||||||||||||||
Stock options exercised
|
-
|
-
|
(291
|
)
|
-
|
(44,219
|
)
|
1,522
|
-
|
1,231
|
||||||||||||||||||||||
Sale of treasury stock for ESOP
|
-
|
-
|
14
|
-
|
(3,847
|
)
|
113
|
-
|
127
|
|||||||||||||||||||||||
Compensation expense related to
|
||||||||||||||||||||||||||||||||
stock options
|
-
|
-
|
93
|
-
|
-
|
-
|
-
|
93
|
||||||||||||||||||||||||
Restricted stock awards
|
9,400
|
1
|
142
|
-
|
-
|
-
|
-
|
143
|
||||||||||||||||||||||||
50% stock dividend
|
2,082,362
|
209
|
(209
|
)
|
3,908
|
|||||||||||||||||||||||||||
Cash-in-lieu stock dividend adjustment
|
(422
|
)
|
-
|
-
|
(19
|
)
|
-
|
-
|
(19
|
)
|
||||||||||||||||||||||
BALANCE - DECEMBER 31, 2017
|
6,256,063
|
626
|
47,431
|
70,426
|
2,608
|
(77
|
)
|
(2,667
|
)
|
115,739
|
||||||||||||||||||||||
Net Income
|
-
|
-
|
-
|
13,651
|
-
|
-
|
-
|
13,651
|
||||||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,353
|
)
|
(2,353
|
)
|
||||||||||||||||||||||
Cash dividends declared ($0.90
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
per share)
|
-
|
- |
- | (5,643 |
) |
- | - |
- |
(5,643 |
) |
||||||||||||||||||||||
Acquisition of treasury stock
|
-
|
-
|
-
|
-
|
5,921
|
(194
|
)
|
-
|
(194
|
)
|
||||||||||||||||||||||
Stock options exercised
|
25,950
|
3
|
449
|
-
|
(2,325
|
)
|
68
|
-
|
520
|
|||||||||||||||||||||||
Sale of treasury stock for ESOP
|
-
|
-
|
1
|
-
|
(3,734
|
)
|
122
|
-
|
123
|
|||||||||||||||||||||||
Compensation expense related to
|
||||||||||||||||||||||||||||||||
stock options
|
-
|
-
|
237
|
-
|
-
|
-
|
-
|
237
|
||||||||||||||||||||||||
Restricted stock awards
|
13,100
|
1
|
204
|
-
|
-
|
-
|
-
|
205
|
||||||||||||||||||||||||
BALANCE - DECEMBER 31, 2018
|
6,295,113
|
$
|
630
|
$
|
48,322
|
$
|
78,434
|
2,470
|
$
|
(81
|
)
|
$
|
(5,020
|
)
|
$
|
122,285
|
Years Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
(In Thousands)
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net income
|
$
|
13,651
|
$
|
8,198
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Provision for loan losses
|
1,725
|
2,200
|
||||||
Depreciation
|
895
|
922
|
||||||
Amortization of intangible assets
|
126
|
150
|
||||||
Deferred income taxes
|
24
|
(331
|
)
|
|||||
Revaluation of deferred tax assets, net
|
-
|
3,060
|
||||||
Net amortization of securities premiums and discounts
|
1,711
|
2,115
|
||||||
Net realized gains on sales of securities
|
(213
|
)
|
(348
|
)
|
||||
Gain on sales of deposits
|
-
|
(209
|
)
|
|||||
Earnings and proceeds on life insurance policies
|
(1,126
|
)
|
(1,133
|
)
|
||||
Loss on sales of fixed assets and foreclosed real estate owned
|
26
|
774
|
||||||
Net gain on sale of loans
|
(15
|
)
|
(67
|
)
|
||||
Mortgage loans originated for sale
|
(752
|
)
|
-
|
|||||
Proceeds from sale of loans originated for sale
|
767
|
-
|
||||||
Compensation expense related to stock options
|
237
|
93
|
||||||
Compensation expense related to restricted stock
|
205
|
142
|
||||||
Increase in accrued interest receivable
|
(60
|
)
|
(73
|
)
|
||||
Increase in accrued interest payable
|
372
|
365
|
||||||
Other, net
|
(275
|
)
|
193
|
|||||
Net Cash Provided by Operating Activities
|
17,298
|
16,051
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Securities available for sale:
|
||||||||
Proceeds from sales
|
17,745
|
15,612
|
||||||
Proceeds from maturities and principal reductions on mortgage-backed securities
|
30,873
|
26,893
|
||||||
Purchases
|
(15,458
|
)
|
(19,955
|
)
|
||||
Purchase of regulatory stock
|
(6,155
|
)
|
(5,842
|
)
|
||||
Redemption of regulatory stock
|
5,734
|
4,456
|
||||||
Net increase in loans
|
(87,480
|
)
|
(51,980
|
)
|
||||
Purchase of premises and equipment
|
(873
|
)
|
(1,633
|
)
|
||||
Proceeds from sales of foreclosed real estate owned
|
776
|
3,341
|
||||||
Proceeds from sales of bank premises and fixed assets
|
-
|
515
|
||||||
Net Cash Used for Investing Activities
|
(54,838
|
)
|
(28,593
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Net increase in deposits
|
17,396
|
17,867
|
||||||
Deposits sold
|
-
|
(13,659
|
)
|
|||||
Net increase in short-term borrowings
|
10,516
|
9,719
|
||||||
Repayments of other borrowings
|
(13,661
|
)
|
(24,056
|
)
|
||||
Proceeds from other borrowings
|
30,000
|
28,000
|
||||||
Stock options exercised
|
520
|
1,040
|
||||||
Sale of treasury stock for ESOP
|
123
|
127
|
||||||
Acquisition of treasury stock
|
(194
|
)
|
(1,587
|
)
|
||||
Cash dividends paid
|
(5,509
|
)
|
(5,386
|
)
|
||||
Net Cash Provided by Financing Activities
|
39,191
|
12,065
|
||||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
1,651
|
(477
|
)
|
|||||
CASH AND CASH EQUIVALENTS - BEGINNING
|
16,697
|
17,174
|
||||||
CASH AND CASH EQUIVALENTS - ENDING
|
$
|
18,348
|
$
|
16,697
|
||||
Years Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
(In Thousands)
|
||||||||
Supplemental Disclosures of Cash Flow Information
|
||||||||
Cash payments for:
|
||||||||
Interest paid
|
$
|
5,285
|
$
|
3,715
|
||||
Income taxes paid, net of refunds
|
$
|
2,239
|
$
|
3,040
|
||||
Supplemental Schedule of Noncash Investing Activities
|
||||||||
Transfers of loans to foreclosed real estate owned and repossession of other assets
|
$
|
553
|
$
|
750
|
||||
Dividends payable
|
$
|
1,510
|
$
|
1,375
|
|
2018
|
|||
Noninterest Income
|
||||
In-scope of Topic 606:
|
||||
Service charges on deposit accounts
|
$
|
263
|
||
ATM Fees
|
398
|
|||
Overdraft Fees
|
1,505
|
|||
Safe deposit box rental
|
96
|
|||
Loan related service fees
|
515
|
|||
Debit card
|
1,330
|
|||
Fiduciary activities
|
589
|
|||
Commissions on mutual funds & annuities
|
185
|
|||
Other income
|
782
|
|||
Noninterest Income (in-scope of Topic 606)
|
5,663
|
|||
Out-of-scope of Topic 606:
|
||||
Net realized gains on sales of securities
|
213
|
|||
Loan servicing fees
|
48
|
|||
Gain on sales of loans
|
15
|
|||
Earnings on and proceeds from bank-owned life insurance
|
1,126
|
|||
Noninterest Income (out-of-scope of Topic 606)
|
1,402
|
|||
Total Noninterest Income
|
$
|
7,065
|
Years
|
||||
Buildings and improvements
|
10 - 40
|
|||
Furniture and equipment
|
3 - 10
|
2019
|
$
|
101
|
||
2020
|
77
|
|||
2021
|
52
|
|||
2022
|
38
|
|||
2023
|
29
|
|||
Thereafter
|
39
|
|||
$
|
336
|
|||
December 31, 2018
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
|||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
AVAILABLE FOR SALE:
|
||||||||||||||||
States and political subdivisions
|
$
|
99,218
|
$
|
385
|
$
|
(1,990
|
)
|
$
|
97,613
|
|||||||
Corporate obligations
|
8,896
|
-
|
(256
|
)
|
8,640
|
|||||||||||
Mortgage-backed securities-
|
||||||||||||||||
government sponsored entities
|
142,197
|
25
|
(5,198
|
)
|
137,024
|
|||||||||||
Total debt securities
|
$
|
250,311
|
$
|
410
|
$
|
(7,444
|
)
|
$
|
243,277
|
|||||||
December 31, 2017
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
|||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
AVAILABLE FOR SALE:
|
||||||||||||||||
U.S. Treasury securities
|
$
|
2,001
|
$
|
-
|
$
|
(3
|
)
|
$
|
1,998
|
|||||||
States and political subdivisions
|
120,000
|
1,535
|
(1,057
|
)
|
120,478
|
|||||||||||
Corporate obligations
|
10,068
|
16
|
(95
|
)
|
9,989
|
|||||||||||
Mortgage-backed securities-
|
||||||||||||||||
government sponsored entities
|
152,901
|
17
|
(4,262
|
)
|
148,656
|
|||||||||||
Total debt securities
|
$
|
284,970
|
$
|
1,568
|
$
|
(5,417
|
)
|
$
|
281,121
|
|||||||
December 31, 2018
|
||||||||||||||||||||||||
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
|||||||||||||||||||
States and political subdivisions
|
$
|
19,140
|
$
|
(390
|
)
|
$
|
56,740
|
$
|
(1,600
|
)
|
$
|
75,880
|
$
|
(1,990
|
)
|
|||||||||
Corporate obligations
|
2,045
|
(21
|
)
|
6,595
|
(235
|
)
|
8,640
|
(256
|
)
|
|||||||||||||||
Mortgage-backed securities-government sponsored entities
|
8,444
|
(22
|
)
|
122,950
|
(5,176
|
)
|
131,394
|
(5,198
|
)
|
|||||||||||||||
$
|
29,629
|
$
|
(433
|
)
|
$
|
186,285
|
$
|
(7,011
|
)
|
$
|
215,914
|
$
|
(7,444
|
)
|
December 31, 2017
|
||||||||||||||||||||||||
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
|||||||||||||||||||
U.S. Treasury securities
|
$
|
-
|
$
|
-
|
$
|
1,998
|
$
|
(3
|
)
|
$
|
1,998
|
$
|
(3
|
)
|
||||||||||
States and political subdivisions
|
17,310
|
(228
|
)
|
44,948
|
(829
|
)
|
62,258
|
(1,057
|
)
|
|||||||||||||||
Corporate obligations
|
-
|
-
|
6,859
|
(95
|
)
|
6,859
|
(95
|
)
|
||||||||||||||||
Mortgage-backed securities-government sponsored entities
|
22,250
|
(320
|
)
|
125,846
|
(3,942
|
)
|
148,096
|
(4,262
|
)
|
|||||||||||||||
$
|
39,560
|
$
|
(548
|
)
|
$
|
179,651
|
$
|
(4,869
|
)
|
$
|
219,211
|
$
|
(5,417
|
)
|
Amortized
|
Fair
|
|||||||
Cost
|
Value
|
|||||||
(In Thousands)
|
||||||||
Due in one year or less
|
$
|
1,666
|
$
|
1,671
|
||||
Due after one year through five years
|
22,532
|
22,130
|
||||||
Due after five years through ten years
|
44,638
|
43,454
|
||||||
Due after ten years
|
39,278
|
38,998
|
||||||
108,114
|
106,253
|
|||||||
Mortgage-backed securities - government sponsored entities
|
142,197
|
137,024
|
||||||
$
|
250,311
|
$
|
243,277
|
December 31, 2018
|
December 31, 2017
|
|||||||||||||||
Real Estate:
|
||||||||||||||||
Residential
|
$
|
235,523
|
27.7
|
%
|
$
|
235,759
|
30.8
|
%
|
||||||||
Commercial
|
374,790
|
44.1
|
342,934
|
44.9
|
||||||||||||
Construction
|
17,445
|
2.0
|
17,228
|
2.3
|
||||||||||||
Commercial, financial and agricultural
|
110,542
|
13.0
|
97,461
|
12.7
|
||||||||||||
Consumer loans to individuals
|
112,002
|
13.2
|
70,953
|
9.3
|
||||||||||||
Total loans
|
850,302
|
100.0
|
%
|
764,335
|
100.0
|
%
|
||||||||||
Deferred fees, net
|
(120
|
)
|
(243
|
)
|
||||||||||||
Total loans receivable
|
850,182
|
764,092
|
||||||||||||||
Allowance for loan losses
|
(8,452
|
)
|
(7,634
|
)
|
||||||||||||
Net loans receivable
|
$
|
841,730
|
$
|
756,458
|
2018
|
2017
|
|||||||
Balance at beginning of period
|
$
|
108
|
$
|
208
|
||||
Additions
|
-
|
-
|
||||||
Accretion
|
(56
|
)
|
(73
|
)
|
||||
Reclassification and other
|
(23
|
)
|
(27
|
)
|
||||
Balance at end of period
|
$
|
29
|
$
|
108
|
December 31, 2018
|
December 31, 2017
|
|||||||
Outstanding Balance
|
$
|
1,055
|
$
|
1,444
|
||||
Carrying Amount
|
$
|
886
|
$
|
1,174
|
Real Estate Loans
|
Commercial |
Consumer | ||||||||||||||||||||||
Residential
|
Commercial
|
Construction
|
Loans
|
Loans
|
Total
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
December 31, 2018
|
||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
-
|
$
|
1,319
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,319
|
||||||||||||
Loans acquired with deteriorated credit quality
|
630
|
256
|
-
|
-
|
-
|
886
|
||||||||||||||||||
Collectively evaluated for impairment
|
234,893
|
373,215
|
17,445
|
110,542
|
112,002
|
848,097
|
||||||||||||||||||
Total Loans
|
$
|
235,523
|
$
|
374,790
|
$
|
17,445
|
$
|
110,542
|
$
|
112,002
|
$
|
850,302
|
Real Estate Loans
|
Commercial |
Consumer |
||||||||||||||||||||||
Residential
|
Commercial
|
Construction
|
Loans
|
Loans
|
Total
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
December 31, 2017
|
||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
23
|
$
|
1,224
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,247
|
||||||||||||
Loans acquired with deteriorated credit quality
|
833
|
341
|
-
|
-
|
-
|
1,174
|
||||||||||||||||||
Collectively evaluated for impairment
|
234,903
|
341,369
|
17,228
|
97,461
|
70,953
|
761,914
|
||||||||||||||||||
Total Loans
|
$
|
235,759
|
$
|
342,934
|
$
|
17,228
|
$
|
97,461
|
$
|
70,953
|
$
|
764,335
|
Unpaid
|
||||||||||||
Recorded
|
Principal
|
Associated
|
||||||||||
Investment
|
Balance
|
Allowance
|
||||||||||
December 31, 2018
|
(In thousands)
|
|||||||||||
With no related allowance recorded:
|
||||||||||||
Real Estate Loans
|
||||||||||||
Commercial
|
$
|
1,319
|
$
|
1,747
|
$
|
-
|
||||||
Subtotal
|
1,319
|
1,747
|
-
|
|||||||||
Total:
|
||||||||||||
Real Estate Loans
|
||||||||||||
Commercial
|
1,319
|
1,747
|
-
|
|||||||||
Total Impaired Loans
|
$
|
1,319
|
$
|
1,747
|
$
|
-
|
Unpaid
|
||||||||||||
Recorded
|
Principal
|
Associated
|
||||||||||
Investment
|
Balance
|
Allowance
|
||||||||||
December 31, 2017
|
(In thousands)
|
|||||||||||
With no related allowance recorded:
|
||||||||||||
Real Estate Loans
|
||||||||||||
Residential
|
$
|
23
|
$
|
28
|
$
|
-
|
||||||
Commercial
|
1,224
|
1,496
|
-
|
|||||||||
Subtotal
|
1,247
|
1,524
|
-
|
|||||||||
Total:
|
||||||||||||
Real Estate Loans
|
||||||||||||
Residential
|
23
|
28
|
-
|
|||||||||
Commercial
|
1,224
|
1,496
|
-
|
|||||||||
Total Impaired Loans
|
$
|
1,247
|
$
|
1,524
|
$
|
-
|
||||||
|
Average Recorded
|
Interest Income
|
||||||||||||||
Investment
|
Recognized
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Total:
|
||||||||||||||||
Real Estate Loans
|
||||||||||||||||
Residential
|
$
|
-
|
$
|
23
|
$
|
-
|
$
|
-
|
||||||||
Commercial
|
1,220
|
1,209
|
67
|
56
|
||||||||||||
Total Loans
|
$
|
1,220
|
$
|
1,232
|
$
|
67
|
$
|
56
|
Special
|
||||||||||||||||||||||||
Pass
|
Mention
|
Substandard
|
Doubtful
|
Loss
|
Total
|
|||||||||||||||||||
December 31, 2018
|
||||||||||||||||||||||||
Commercial real estate loans
|
$
|
360,838
|
$
|
7,918
|
$
|
6,034
|
$
|
-
|
$
|
-
|
$
|
374,790
|
||||||||||||
Commercial
|
109,966
|
82
|
494
|
-
|
-
|
110,542
|
||||||||||||||||||
Total
|
$
|
470,804
|
$
|
8,000
|
$
|
6,528
|
$
|
-
|
$
|
-
|
$
|
485,332
|
Special
|
||||||||||||||||||||||||
Pass
|
Mention
|
Substandard
|
Doubtful
|
Loss
|
Total
|
|||||||||||||||||||
December 31, 2017
|
||||||||||||||||||||||||
Commercial real estate loans
|
$
|
329,617
|
$
|
9,680
|
$
|
3,637
|
$
|
-
|
$
|
-
|
$
|
342,934
|
||||||||||||
Commercial
|
97,389
|
16
|
56
|
-
|
-
|
97,461
|
||||||||||||||||||
Total
|
$
|
427,006
|
$
|
9,696
|
$
|
3,693
|
$
|
-
|
$
|
-
|
$
|
440,395
|
Performing
|
Nonperforming
|
Total
|
||||||||||
December 31, 2018
|
||||||||||||
Residential real estate loans
|
$
|
234,725
|
$
|
798
|
$
|
235,523
|
||||||
Construction
|
17,445
|
-
|
17,445
|
|||||||||
Consumer loans to individuals
|
112,002
|
-
|
112,002
|
|||||||||
Total
|
$
|
364,172
|
$
|
798
|
$
|
364,970
|
Performing
|
Nonperforming
|
Total
|
||||||||||
December 31, 2017
|
||||||||||||
Residential real estate loans
|
$
|
233,966
|
$
|
1,793
|
$
|
235,759
|
||||||
Construction
|
17,228
|
-
|
17,228
|
|||||||||
Consumer loans to individuals
|
70,953
|
-
|
70,953
|
|||||||||
Total
|
$
|
322,147
|
$
|
1,793
|
$
|
323,940
|
Current
|
31-60 Days
Past Due
|
61-90 Days
Past Due
|
Greater than
90 Days Past
Due and still
accruing
|
Non-Accrual
|
Total Past
Due and
Non-Accrual
|
Total Loans
|
||||||||||||||||||||||
December 31, 2018
|
||||||||||||||||||||||||||||
Real Estate loans
|
||||||||||||||||||||||||||||
Residential
|
$
|
234,201
|
$
|
373
|
$
|
151
|
$
|
-
|
$
|
798
|
$
|
1,322
|
$
|
235,523
|
||||||||||||||
Commercial
|
372,617
|
1,043
|
788
|
-
|
342
|
2,173
|
374,790
|
|||||||||||||||||||||
Construction
|
17,445
|
-
|
-
|
-
|
-
|
-
|
17,445
|
|||||||||||||||||||||
Commercial loans
|
110,191
|
320
|
31
|
-
|
-
|
351
|
110,542
|
|||||||||||||||||||||
Consumer loans
|
111,796
|
171
|
35
|
-
|
-
|
206
|
112,002
|
|||||||||||||||||||||
Total
|
$
|
846,250
|
$
|
1,907
|
$
|
1,005
|
$
|
-
|
$
|
1,140
|
$
|
4,052
|
$
|
850,302
|
Current
|
31-60 Days
Past Due
|
61-90 Days
Past Due
|
Greater than
90 Days Past
Due and still
accruing
|
Non-Accrual
|
Total Past
Due and
Non-Accrual
|
Total Loans
|
||||||||||||||||||||||
December 31, 2017
|
||||||||||||||||||||||||||||
Real Estate loans
|
||||||||||||||||||||||||||||
Residential
|
$
|
233,291
|
$
|
594
|
$
|
81
|
$
|
87
|
$
|
1,706
|
$
|
2,468
|
$
|
235,759
|
||||||||||||||
Commercial
|
341,602
|
646
|
-
|
409
|
277
|
1,332
|
342,934
|
|||||||||||||||||||||
Construction
|
17,228
|
-
|
-
|
-
|
-
|
-
|
17,228
|
|||||||||||||||||||||
Commercial loans
|
97,424
|
10
|
27
|
-
|
-
|
37
|
97,461
|
|||||||||||||||||||||
Consumer loans
|
70,869
|
60
|
24
|
-
|
-
|
84
|
70,953
|
|||||||||||||||||||||
Total
|
$
|
760,414
|
$
|
1,310
|
$
|
132
|
$
|
496
|
$
|
1,983
|
$
|
3,921
|
$
|
764,335
|
(In thousands)
|
Residential Real Estate
|
Commercial Real Estate
|
Construction
|
Commercial
|
Consumer
|
Total
|
||||||||||||||||||
Beginning balance, December 31, 2017
|
$
|
1,272
|
$
|
5,265
|
$
|
90
|
$
|
463
|
$
|
544
|
$
|
7,634
|
||||||||||||
Charge Offs
|
(197
|
)
|
(283
|
)
|
-
|
(246
|
)
|
(263
|
)
|
(989
|
)
|
|||||||||||||
Recoveries
|
9
|
33
|
-
|
8
|
32
|
82
|
||||||||||||||||||
Provision for loan losses
|
244
|
440
|
3
|
487
|
551
|
1,725
|
||||||||||||||||||
Ending balance, December 31, 2018
|
$
|
1,328
|
$
|
5,455
|
$
|
93
|
$
|
712
|
$
|
864
|
$
|
8,452
|
||||||||||||
Ending balance individually evaluated
for impairment |
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||
Ending balance collectively evaluated
for impairment |
$
|
1,328
|
$
|
5,455
|
$
|
93
|
$
|
712
|
$
|
864
|
$
|
8,452
|
(In thousands)
|
Residential Real Estate
|
Commercial Real Estate
|
Construction
|
Commercial
|
Consumer
|
Total
|
||||||||||||||||||
Beginning balance, December 31, 2016
|
$
|
1,092
|
$
|
4,623
|
$
|
78
|
$
|
307
|
$
|
363
|
$
|
6,463
|
||||||||||||
Charge Offs
|
(83
|
)
|
(902
|
)
|
(28
|
)
|
-
|
(207
|
)
|
(1,220
|
)
|
|||||||||||||
Recoveries
|
6
|
159
|
-
|
-
|
26
|
191
|
||||||||||||||||||
Provision for loan losses
|
257
|
1,385
|
40
|
156
|
362
|
2,200
|
||||||||||||||||||
Ending balance, December 31, 2017
|
$
|
1,272
|
$
|
5,265
|
$
|
90
|
$
|
463
|
$
|
544
|
$
|
7,634
|
||||||||||||
Ending balance individually evaluated
for impairment |
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||
Ending balance collectively evaluated
for impairment |
$
|
1,272
|
$
|
5,265
|
$
|
90
|
$
|
463
|
$
|
544
|
$
|
7,634
|
2018
|
2017
|
|||||||
(In Thousands)
|
||||||||
Land and improvements
|
$
|
2,832
|
$
|
2,771
|
||||
Buildings and improvements
|
17,788
|
17,613
|
||||||
Furniture and equipment
|
7,171
|
6,636
|
||||||
27,791
|
27,020
|
|||||||
Accumulated depreciation
|
(13,945
|
)
|
(13,156
|
)
|
||||
$
|
13,846
|
$
|
13,864
|
2019
|
$
|
454
|
||
2020
|
452
|
|||
2021
|
452
|
|||
2022
|
452
|
|||
2023
|
452
|
|||
Thereafter
|
4,202
|
|||
$
|
6,464
|
2019
|
$
|
212,786
|
||
2020
|
81,453
|
|||
2021
|
17,246
|
|||
2022
|
17,374
|
|||
2023
|
16,318
|
|||
$
|
345,177
|
2018
|
2017
|
|||||||
(In Thousands)
|
||||||||
Securities sold under agreements to repurchase
|
$
|
37,457
|
$
|
24,286
|
||||
Federal Home Loan Bank short-term borrowings
|
15,589
|
18,244
|
||||||
$
|
53,046
|
$
|
42,530
|
Years Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
(Dollars In Thousands)
|
||||||||
Average balance during the year
|
$
|
41,963
|
$
|
39,170
|
||||
Average interest rate during the year
|
0.77
|
%
|
0.51
|
%
|
||||
Maximum month-end balance during the year
|
$
|
53,046
|
$
|
54,286
|
||||
Weighted average interest rate at the end of the year
|
1.27
|
%
|
0.87
|
%
|
As of December 31, 2018
|
||||||||||||||||||||
Remaining Contractual Maturity of the Agreements
|
||||||||||||||||||||
Overnight and continuous
|
Up to 30 days
|
30-90 days
|
Greater than 90 days
|
Total
|
||||||||||||||||
Repurchase Agreements:
|
||||||||||||||||||||
Mortgage-backed securities - government sponsored entities
|
$
|
40,161
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
40,161
|
||||||||||
Total liability recognized for repurchase agreements
|
$
|
37,457
|
As of December 31, 2017
|
||||||||||||||||||||
Remaining Contractual Maturity of the Agreements
|
||||||||||||||||||||
Overnight and continuous
|
Up to 30 days
|
30-90 days
|
Greater than 90 days
|
Total
|
||||||||||||||||
Repurchase Agreements:
|
||||||||||||||||||||
Mortgage-backed securities - government sponsored entities
|
$
|
26,626
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
26,626
|
||||||||||
Total liability recognized for repurchase agreements
|
$
|
24,286
|
2018
|
2017
|
|||||||
(In Thousands)
|
||||||||
Amortizing fixed rate borrowing due January 2018 at 0.91%
|
$
|
-
|
$
|
51
|
||||
Amortizing fixed rate borrowing due December 2018 at 1.42%
|
-
|
823
|
||||||
Amortizing fixed rate borrowing due January 2019 at 1.39%
|
423
|
5,451
|
||||||
Fixed rate term borrowing due August 2019 at 1.61%
|
10,000
|
10,000
|
||||||
Amortizing fixed rate borrowing due June 2020 at 1.49%
|
3,079
|
5,093
|
||||||
Amortizing fixed rate borrowing due July 2020 at 2.77%
|
7,962
|
-
|
||||||
Amortizing fixed rate borrowing due December 2020 at 1.71%
|
5,000
|
3,051
|
||||||
Amortizing fixed rate borrowing due December 2020 at 3.06%
|
2,051
|
-
|
||||||
Amortizing fixed rate borrowing due March 2022 at 1.75%
|
2,877
|
3,730
|
||||||
Amortizing fixed rate borrowing due October 2022 at 1.88%
|
6,200
|
7,746
|
||||||
Amortizing fixed rate borrowing due October 2023 at 3.24%
|
9,692
|
-
|
||||||
Amortizing fixed rate borrowing due December 2023 at 3.22%
|
5,000
|
-
|
||||||
$
|
52,284
|
$
|
35,945
|
2019
|
$
|
26,234
|
||
2020
|
13,018
|
|||
2021
|
5,581
|
|||
2022
|
4,760
|
|||
2023
|
2,691
|
|||
$
|
52,284
|
(in Thousands of Dollars)
|
2018
|
2017
|
||||||
Change in projected benefit obligation:
|
||||||||
Projected benefit obligation at beginning of year
|
$
|
(8,465
|
)
|
$
|
(8,084
|
)
|
||
Service cost
|
(64
|
)
|
(68
|
)
|
||||
Interest cost
|
(279
|
)
|
(303
|
)
|
||||
Actuarial gain (loss)
|
1,040
|
(587
|
)
|
|||||
Benefits paid
|
582
|
577
|
||||||
Benefit obligation at end of year
|
$
|
(7,186
|
)
|
$
|
(8,465
|
)
|
||
Change in plan assets:
|
||||||||
Fair value of plan assets at beginning of year
|
$
|
7,110
|
$
|
6,702
|
||||
Actual return on plan assets
|
(401
|
)
|
981
|
|||||
Benefits paid
|
(573
|
)
|
(573
|
)
|
||||
Fair value of assets at end of year
|
6,136
|
7,110
|
||||||
Funded status at end of year
|
$
|
(1,050
|
)
|
$
|
(1,355
|
)
|
2018
|
2017
|
|||||||
Transition asset
|
$
|
-
|
$
|
-
|
||||
Prior service credit
|
-
|
-
|
||||||
Gain
|
207
|
473
|
||||||
Total
|
$
|
207
|
$
|
473
|
|
2018
|
2017
|
||||||
Service cost benefits earned during the period
|
$
|
64
|
$
|
68
|
||||
Interest cost on projected benefit obligation
|
279
|
303
|
||||||
Actual return on assets
|
(441
|
)
|
(416
|
)
|
||||
Net amortization and deferral
|
-
|
-
|
||||||
NET PERIODIC PENSION COST
|
$
|
(98
|
)
|
$
|
(45
|
)
|
2018
|
2017
|
|||||||
Discount rate
|
4.54
|
%
|
3.43
|
%
|
2018
|
2017
|
|||||||
Discount rate
|
3.43
|
%
|
3.90
|
%
|
||||
Expected long-term return on plan assets
|
6.50
|
%
|
6.50
|
%
|
||||
Rate of compensation increase
|
0.00
|
%
|
0.00
|
%
|
2018
|
2017
|
|||||||
Cash equivalents
|
4.2
|
%
|
6.4
|
%
|
||||
Equity securities
|
46.1
|
%
|
50.2
|
%
|
||||
Fixed income securities
|
45.8
|
%
|
40.2
|
%
|
||||
Other
|
3.9
|
%
|
3.2
|
%
|
||||
100.0
|
%
|
100.0
|
%
|
December 31, 2018
|
||||||||||||||||
Quoted Market
|
Other
|
|||||||||||||||
Price in
|
Observable
|
Unobservable
|
||||||||||||||
Active Markets
|
Inputs
|
Inputs
|
||||||||||||||
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
(in thousands of dollars)
|
||||||||||||||||
Cash equivalents:
|
||||||||||||||||
Cash (including foreign currencies)
|
$
|
6
|
$
|
6
|
$
|
-
|
$
|
-
|
||||||||
Equity securities:
|
||||||||||||||||
Common stock
|
2,475
|
2,475
|
-
|
-
|
||||||||||||
Depository receipts
|
42
|
42
|
-
|
-
|
||||||||||||
Preferred stock
|
20
|
20
|
-
|
-
|
||||||||||||
Fixed income securities:
|
||||||||||||||||
Corporate bonds
|
608
|
-
|
608
|
-
|
||||||||||||
Government issue
|
2,228
|
-
|
2,228
|
-
|
||||||||||||
Collateralized mortgage obligations
|
156
|
-
|
156
|
-
|
||||||||||||
Other
|
601
|
-
|
-
|
601
|
||||||||||||
Total
|
$
|
6,136
|
$
|
2,543
|
$
|
2,992
|
$
|
601
|
December 31, 2017
|
||||||||||||||||
Quoted Market
|
Other
|
|||||||||||||||
Price in
|
Observable
|
Unobservable
|
||||||||||||||
Active Markets
|
Inputs
|
Inputs
|
||||||||||||||
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
(in thousands of dollars)
|
||||||||||||||||
Cash equivalents:
|
||||||||||||||||
Cash (including foreign currencies)
|
$
|
70
|
$
|
70
|
$
|
-
|
$
|
-
|
||||||||
Short-term investment funds
|
19
|
-
|
19
|
-
|
||||||||||||
Equity securities:
|
||||||||||||||||
Common stock
|
1,401
|
1,401
|
-
|
-
|
||||||||||||
Depository receipts
|
35
|
35
|
-
|
-
|
||||||||||||
Commingled Pension Trust Fund
|
2,203
|
-
|
2,203
|
-
|
||||||||||||
Preferred stock
|
31
|
31
|
-
|
-
|
||||||||||||
Fixed income securities:
|
||||||||||||||||
Corporate bonds
|
296
|
-
|
296
|
-
|
||||||||||||
Government issue
|
992
|
-
|
992
|
-
|
||||||||||||
Mortgage-backed securities
|
6
|
-
|
6
|
-
|
||||||||||||
Collateralized mortgage obligations
|
56
|
-
|
56
|
-
|
||||||||||||
Commingled Pension Trust Fund
|
1,746
|
-
|
1,746
|
-
|
||||||||||||
Other
|
255
|
-
|
-
|
255
|
||||||||||||
Total
|
$
|
7,110
|
$
|
1,537
|
$
|
5,318
|
$
|
255
|
2018
|
2017
|
|||||||
Balance, January 1
|
$
|
255
|
$
|
283
|
||||
Purchase
|
-
|
-
|
||||||
Unrealized gain (loss)
|
346
|
(28
|
)
|
|||||
Balance, December 31
|
$
|
601
|
$
|
255
|
Years Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
(In Thousands)
|
||||||||
Current
|
$
|
2,529
|
$
|
3,822
|
||||
Change in corporate tax rate
|
-
|
3,060
|
||||||
Deferred
|
24
|
(331
|
)
|
|||||
$
|
2,553
|
$
|
6,551
|
Percentage of Income
|
||||||||
before Income Taxes
|
||||||||
Years Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Tax at statutory rates
|
21.0
|
%
|
35.0
|
%
|
||||
Tax exempt interest income, net of interest expense disallowance
|
(4.9
|
)
|
(9.6
|
)
|
||||
Incentive stock options
|
0.2
|
0.2
|
||||||
Earnings and proceeds on life insurance
|
(1.1
|
)
|
(2.7
|
)
|
||||
Change in corporate tax rate
|
-
|
20.8
|
||||||
Other
|
0.6
|
0.7
|
||||||
15.8
|
%
|
44.4
|
%
|
2018
|
2017
|
|||||||
(In Thousands)
|
||||||||
Deferred tax assets:
|
||||||||
Allowance for loan losses
|
$
|
1,775
|
$
|
1,603
|
||||
Deferred compensation
|
766
|
775
|
||||||
Core deposit intangible
|
278
|
232
|
||||||
Prepaid expenses
|
90
|
125
|
||||||
Pension liability
|
263
|
384
|
||||||
Foreclosed real estate valuation allowance
|
20
|
7
|
||||||
AMT tax credit carryforward
|
260
|
260
|
||||||
Net operating loss carryforward
|
1,173
|
1,249
|
||||||
Net unrealized loss on securities
|
1,477
|
808
|
||||||
Other
|
95
|
92
|
||||||
Total Deferred Tax Assets
|
6,197
|
5,535
|
||||||
Deferred tax liabilities:
|
||||||||
Premises and equipment
|
223
|
210
|
||||||
Deferred loan fees
|
186
|
142
|
||||||
Net unrealized gain on pension liability
|
43
|
99
|
||||||
Purchase price adjustment
|
321
|
303
|
||||||
Total Deferred Tax Liabilities
|
773
|
754
|
||||||
Net Deferred Tax Asset
|
$
|
5,424
|
$
|
4,781
|
To be Well Capitalized
|
|||||||||||||||
under Prompt
|
|||||||||||||||
For Capital Adequacy
|
Corrective Action
|
||||||||||||||
Actual
|
Purposes
|
Provision
|
|||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||
(Dollars in Thousands)
|
|||||||||||||||
As of December 31, 2018:
|
|
||||||||||||||
Total capital (to risk-weighted assets)
|
$
|
122,917
|
14.00
|
%
|
≥$70,248
|
≥8.00
|
%
|
≥$87,810
|
≥10.00
|
%
|
|||||
Tier 1 capital (to risk-weighted assets)
|
114,465
|
13.04
|
≥52,686
|
≥6.00
|
≥70,248
|
≥8.00
|
|||||||||
Common Equity Tier 1 capital (to risk-weighted assets)
|
114,465
|
13.04
|
≥39,515
|
≥4.50
|
≥57,077
|
≥6.50
|
|||||||||
Tier 1 capital (to average assets)
|
114,465
|
9.82
|
≥46,619
|
≥4.00
|
≥58,273
|
≥5.00
|
|||||||||
As of December 31, 2017:
|
|||||||||||||||
Total capital (to risk-weighted assets)
|
$
|
113,091
|
14.11
|
%
|
≥$64,126
|
≥8.00
|
%
|
≥$80,158
|
≥10.00
|
%
|
|||||
Tier 1 capital (to risk-weighted assets)
|
105,457
|
13.16
|
≥48,095
|
≥6.00
|
≥64,126
|
≥8.00
|
|||||||||
Common Equity Tier 1 capital (to risk-weighted assets)
|
105,457
|
13.16
|
≥36,071
|
≥4.50
|
≥52,103
|
≥6.50
|
|||||||||
Tier 1 capital (to average assets)
|
105,457
|
9.36
|
≥45,075
|
≥4.00
|
≥56,343
|
≥5.00
|
2018
|
2017
|
|||||||||||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||||||||||
Average
|
Average
|
Average
|
Average
|
|||||||||||||||||||||
Exercise
|
Intrinsic
|
Exercise
|
Intrinsic
|
|||||||||||||||||||||
Options
|
Price
|
Value
|
Options
|
Price
|
Value
|
|||||||||||||||||||
Outstanding, beginning of year
|
212,725
|
$
|
20.76
|
225,669
|
$
|
19.46
|
||||||||||||||||||
Granted
|
28,900
|
32.34
|
34,750
|
32.81
|
||||||||||||||||||||
Exercised
|
(28,275
|
)
|
18.39
|
(44,219
|
)
|
23.53
|
||||||||||||||||||
Forfeited
|
(4,650
|
)
|
27.08
|
(3,475
|
)
|
21.71
|
||||||||||||||||||
Outstanding, end of year
|
208,700
|
$
|
22.54
|
$
|
2,182,537
|
212,725
|
$
|
20.76
|
$
|
2,604,097
|
||||||||||||||
Exercisable, end of year
|
179,800
|
$
|
20.97
|
$
|
2,163,463
|
177,975
|
$
|
18.41
|
$
|
2,597,494
|
Years Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Dividend yield
|
3.72
|
%
|
3.89
|
%
|
||||
Expected life
|
10 years
|
10 years
|
||||||
Expected volatility
|
29.10
|
%
|
29.11
|
%
|
||||
Risk-free interest rate
|
2.68
|
%
|
2.41
|
%
|
||||
Weighted average fair value of options granted
|
$
|
7.18
|
$
|
6.83
|
Average
|
Average
|
|||||||||||||||||||
Options
|
Exercise
|
Remaining
|
Options
|
Exercise
|
||||||||||||||||
Outstanding
|
Price
|
Life, Years
|
Exercisable
|
Price
|
||||||||||||||||
14,775
|
$
|
17.33
|
1.0
|
14,775
|
$
|
17.33
|
||||||||||||||
14,025
|
16.83
|
2.0
|
14,025
|
16.83
|
||||||||||||||||
18,825
|
16.65
|
3.0
|
18,825
|
16.65
|
||||||||||||||||
26,400
|
18.03
|
4.0
|
26,400
|
18.03
|
||||||||||||||||
1,650
|
18.36
|
4.0
|
1,650
|
18.36
|
||||||||||||||||
3,000
|
19.30
|
4.8
|
3,000
|
19.30
|
||||||||||||||||
25,375
|
17.93
|
5.0
|
25,375
|
17.93
|
||||||||||||||||
12,000
|
19.39
|
5.9
|
12,000
|
19.39
|
||||||||||||||||
13,500
|
19.03
|
6.9
|
13,500
|
19.03
|
||||||||||||||||
18,500
|
22.37
|
8.0
|
18,500
|
22.37
|
||||||||||||||||
31,750
|
32.81
|
9.0
|
31,750
|
32.81
|
||||||||||||||||
28,900
|
32.34
|
10.0
|
-
|
-
|
||||||||||||||||
Total
|
208,700
|
179,800
|
2018
|
2017
|
|||||||||||||||
Weighted-Average
|
Weighted-Average
|
|||||||||||||||
Number of
|
Grant Date
|
Number of
|
Grant Date
|
|||||||||||||
Shares
|
Fair Value
|
Shares
|
Fair Value
|
|||||||||||||
Non-vested, beginning of year
|
30,415
|
$
|
24.46
|
28,035
|
$
|
20.64
|
||||||||||
Granted
|
13,100
|
32.34
|
9,400
|
32.81
|
||||||||||||
Vested
|
(8,900
|
)
|
23.00
|
(7,020
|
)
|
20.37
|
||||||||||
Forfeited
|
-
|
-
|
-
|
-
|
||||||||||||
Non-vested at December 31
|
34,615
|
$
|
27.82
|
30,415
|
$
|
24.46
|
Years Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
(In Thousands, Except Per Share Data)
|
||||||||
Numerator, net income
|
$
|
13,651
|
$
|
8,198
|
||||
Denominator:
|
||||||||
Weighted average shares outstanding
|
6,263
|
6,238
|
||||||
Less: Weighted average unvested restricted shares
|
(31
|
)
|
(28
|
)
|
||||
Denominator: Basic earnings per share
|
6,232
|
6,210
|
||||||
Weighted average shares outstanding, basic
|
6,232
|
6,210
|
||||||
Add: Dilutive effect of stock options
|
58
|
61
|
||||||
Denominator: Diluted earnings per share
|
6,290
|
6,271
|
||||||
Basic earnings per common share
|
$
|
2.19
|
$
|
1.32
|
||||
Diluted earnings per common share
|
$
|
2.17
|
$
|
1.31
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
(In Thousands)
|
||||||||
Commitments to grant loans
|
$
|
45,246
|
$
|
44,970
|
||||
Unfunded commitments under lines of credit
|
71,906
|
62,228
|
||||||
Standby letters of credit
|
4,269
|
5,919
|
||||||
$
|
121,421
|
$
|
113,117
|
Fair Value Measurement Reporting Date using
|
||||||||||||||||
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
December 31, 2018
|
||||||||||||||||
Available for Sale:
|
||||||||||||||||
States and political subdivisions
|
$
|
97,613
|
$
|
-
|
$
|
97,613
|
$
|
-
|
||||||||
Corporate obligations
|
8,640
|
-
|
8,640
|
-
|
||||||||||||
Mortgage-backed securities-government
|
||||||||||||||||
sponsored entities
|
137,024
|
-
|
137,024
|
-
|
||||||||||||
Total available for sale
|
$
|
243,277
|
$
|
-
|
$
|
243,277
|
$
|
-
|
||||||||
December 31, 2017
|
||||||||||||||||
Available for Sale:
|
||||||||||||||||
U.S. Treasury securities
|
$
|
1,998
|
$
|
-
|
$
|
1,998
|
$
|
-
|
||||||||
States and political subdivisions
|
120,478
|
-
|
120,478
|
-
|
||||||||||||
Corporate obligations
|
9,989
|
-
|
9,989
|
-
|
||||||||||||
Mortgage-backed securities-government
|
||||||||||||||||
sponsored entities
|
148,656
|
-
|
148,656
|
-
|
||||||||||||
Total available for sale
|
$
|
281,121
|
$
|
-
|
$
|
281,121
|
$
|
-
|
Fair Value Measurement Reporting Date using
|
||||||||||||||||
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
December 31, 2018
|
||||||||||||||||
Impaired Loans
|
$
|
1,319
|
$
|
-
|
$
|
-
|
$
|
1,319
|
||||||||
Foreclosed real estate
|
1,115
|
-
|
-
|
1,115
|
||||||||||||
December 31, 2017
|
||||||||||||||||
Impaired Loans
|
$
|
1,247
|
$
|
-
|
$
|
-
|
$
|
1,247
|
||||||||
Foreclosed real estate
|
1,661
|
-
|
-
|
1,661
|
Quantitative Information about Level 3 Fair Value Measurements
|
|||||||
(dollars in thousands)
|
Fair Value Estimate
|
Valuation Techniques
|
Unobservable Input
|
Range (Weighted Average)
|
|||
December 31, 2018
|
|||||||
Impaired loans
|
$
|
232
|
Appraisal of collateral(1)
|
Appraisal adjustments(2)
|
10.00-81.54% (56.06%)
|
||
Impaired loans
|
$
|
1,087
|
Present value of future cash flows
|
Loan discount rate
|
4.00-6.00% (5.80%)
|
||
Probability of default
|
0%
|
||||||
Foreclosed real estate owned
|
$
|
1,115
|
Appraisal of collateral(1)
|
Liquidation Expenses(2)
|
7.00-85.71% (7.80%)
|
Quantitative Information about Level 3 Fair Value Measurements
|
|||||||
(dollars in thousands)
|
Fair Value Estimate
|
Valuation Techniques
|
Unobservable Input
|
Range (Weighted Average)
|
|||
December 31, 2017
|
|||||||
Impaired loans
|
$
|
131
|
Appraisal of collateral(1)
|
Appraisal adjustments(2)
|
10% (10%)
|
||
Impaired loans
|
$
|
1,116
|
Present value of future cash flows
|
Loan discount rate
|
4-5.25% (5.11%)
|
||
Probability of default
|
0%
|
||||||
Foreclosed real estate owned
|
$
|
1,661
|
Appraisal of collateral(1)
|
Liquidation Expenses(2)
|
0-42.60% (14.68%)
|
Fair Value Measurements at December 31, 2018
|
||||||||||||||||||||
Carrying
|
Fair
|
|||||||||||||||||||
Amount
|
Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
Financial assets:
|
||||||||||||||||||||
Cash and cash equivalents (1)
|
$
|
18,348
|
$
|
18,348
|
$
|
18,348
|
$
|
-
|
$
|
-
|
||||||||||
Loans receivable, net
|
841,730
|
840,134
|
-
|
-
|
840,134
|
|||||||||||||||
Mortgage servicing rights
|
178
|
220
|
-
|
-
|
220
|
|||||||||||||||
Regulatory stock (1)
|
3,926
|
3,926
|
3,926
|
-
|
-
|
|||||||||||||||
Bank owned life insurance (1)
|
37,932
|
37,932
|
37,932
|
-
|
-
|
|||||||||||||||
Accrued interest receivable (1)
|
3,776
|
3,776
|
3,776
|
-
|
-
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
946,780
|
945,773
|
601,604
|
-
|
344,169
|
|||||||||||||||
Short-term borrowings (1)
|
53,046
|
53,046
|
53,046
|
-
|
-
|
|||||||||||||||
Other borrowings
|
52,284
|
52,043
|
-
|
-
|
52,043
|
|||||||||||||||
Accrued interest payable (1)
|
1,806
|
1,806
|
1,806
|
-
|
-
|
|||||||||||||||
Off-balance sheet financial instruments:
|
||||||||||||||||||||
Commitments to extend credit and
outstanding letters of credit |
-
|
-
|
-
|
-
|
-
|
Fair Value Measurements at December 31, 2017
|
||||||||||||||||||||
Carrying
|
Fair
|
|||||||||||||||||||
Amount
|
Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
Financial assets:
|
||||||||||||||||||||
Cash and cash equivalents (1)
|
$
|
16,697
|
$
|
16,697
|
$
|
16,697
|
$
|
-
|
$
|
-
|
||||||||||
Loans receivable, net
|
756,458
|
756,092
|
-
|
-
|
756,092
|
|||||||||||||||
Mortgage servicing rights
|
200
|
223
|
-
|
-
|
223
|
|||||||||||||||
Regulatory stock (1)
|
3,505
|
3,505
|
3,505
|
-
|
-
|
|||||||||||||||
Bank owned life insurance (1)
|
37,060
|
37,060
|
37,060
|
-
|
-
|
|||||||||||||||
Accrued interest receivable (1)
|
3,716
|
3,716
|
3,716
|
-
|
-
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
929,384
|
929,709
|
609,090
|
-
|
320,619
|
|||||||||||||||
Short-term borrowings (1)
|
42,530
|
42,530
|
42,530
|
-
|
-
|
|||||||||||||||
Other borrowings
|
35,945
|
35,514
|
-
|
-
|
35,514
|
|||||||||||||||
Accrued interest payable (1)
|
1,434
|
1,434
|
1,434
|
-
|
-
|
|||||||||||||||
Off-balance sheet financial instruments:
|
||||||||||||||||||||
Commitments to extend credit and
outstanding letters of credit |
-
|
-
|
-
|
-
|
-
|
(1)
|
This financial instrument is carried at cost, which approximates the fair value of the instrument.
|
Unrealized
gains(losses)
on available
for sale
securities (a)
|
Unrealized gain
(loss) on
pension
liability (a)
|
Total (a)
|
||||||||||
Balance as of December 31, 2017
|
$
|
(3,041
|
)
|
$
|
374
|
$
|
(2,667
|
)
|
||||
Other comprehensive income (loss) before reclassification
|
(2,349
|
)
|
164
|
(2,185
|
)
|
|||||||
Amount reclassified from accumulated other comprehensive loss
|
(168
|
)
|
-
|
(168
|
)
|
|||||||
Total other comprehensive loss
|
(2,517
|
)
|
164
|
(2,353
|
)
|
|||||||
Balance as of December 31, 2018
|
$
|
(5,558
|
)
|
$
|
538
|
$
|
(5,020
|
)
|
||||
Unrealized
gains (losses)
on available
for sale
securities (a)
|
Unrealized gain
(loss) on
pension
liability (a)
|
Total (a)
|
||||||||||
Balance as of December 31, 2016
|
$
|
(4,437
|
)
|
$
|
318
|
$
|
(4,119
|
)
|
||||
Other comprehensive income (loss) before reclassification
|
2,127
|
(11
|
)
|
2,116
|
||||||||
Amount reclassified from accumulated other comprehensive loss
|
(230
|
)
|
-
|
(230
|
)
|
|||||||
Total other comprehensive income
|
1,897
|
(11
|
)
|
1,886
|
||||||||
Reclassification of certain income tax effects from accumulated
|
||||||||||||
other comprehensive loss
|
(501
|
)
|
67
|
(434
|
)
|
|||||||
Balance as of December 31, 2017
|
$
|
(3,041
|
)
|
$
|
374
|
$
|
(2,667
|
)
|
Amount Reclassified
|
||||||||
From Accumulated
|
Affected Line Item in
|
|||||||
Other
|
Consolidated
|
|||||||
Comprehensive
|
Statement of
|
|||||||
Details about other comprehensive income
|
Income (Loss) (a)
|
Income
|
||||||
Twelve months
|
Twelve months
|
|||||||
ended
|
ended
|
|||||||
December 31,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Unrealized gains on available for sale securities
|
$
|
213
|
$
|
348
|
Net realized gains on sales of securities
|
|||
(45)
|
(118)
|
Income tax expense
|
||||||
$
|
168
|
$
|
230
|
(a)
|
Amounts in parentheses indicate debits to net income.
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
(In Thousands)
|
||||||||
ASSETS
|
||||||||
Cash on deposit in bank subsidiary
|
$
|
2,509
|
$
|
4,782
|
||||
Investment in bank subsidiary
|
120,511
|
110,218
|
||||||
Other assets
|
1,739
|
2,858
|
||||||
Total assets
|
$
|
124,759
|
$
|
117,858
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Liabilities
|
$
|
2,474
|
$
|
2,119
|
||||
Stockholders’ equity
|
122,285
|
115,739
|
||||||
Total liabilities and stockholders' equity
|
$
|
124,759
|
$
|
117,858
|
Years Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Income:
|
(In Thousands)
|
|||||||
Dividends from bank subsidiary
|
$
|
5,643
|
$
|
5,412
|
||||
Net realized gain on sales of securities
|
-
|
130
|
||||||
Other interest income
|
-
|
8
|
||||||
5,643
|
5,550
|
|||||||
Expenses
|
618
|
511
|
||||||
5,025
|
5,039
|
|||||||
Income tax benefit
|
(217
|
)
|
(127
|
)
|
||||
5,242
|
5,166
|
|||||||
Equity in undistributed earnings of subsidiary
|
8,409
|
3,032
|
||||||
Net Income
|
$
|
13,651
|
$
|
8,198
|
||||
Comprehensive Income
|
$
|
11,298
|
$
|
10,084
|
Years Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
(In Thousands)
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net income
|
$
|
13,651
|
$
|
8,198
|
||||
Adjustments to reconcile net income to
|
||||||||
net cash provided by operating activities:
|
||||||||
Undistributed earnings of bank subsidiary
|
(8,409
|
)
|
(3,032
|
)
|
||||
Net gains on sales of securities
|
-
|
(130
|
)
|
|||||
Decrease in deferred income tax
|
1,158
|
1,736
|
||||||
Other, net
|
387
|
389
|
||||||
Net Cash Provided by Operating Activities
|
6,787
|
7,161
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Investment in bank subsidiary
|
(4,000
|
)
|
-
|
|||||
Proceeds from sales of securities
|
-
|
422
|
||||||
Net Cash (Used in) Provided by Investing Activities
|
(4,000
|
)
|
422
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Stock options exercised
|
520
|
1,040
|
||||||
Sale of treasury stock for ESOP
|
123
|
127
|
||||||
Acquisition of treasury stock
|
(194
|
)
|
(1,587
|
)
|
||||
Cash dividends paid
|
(5,509
|
)
|
(5,386
|
)
|
||||
Net Cash Used in Financing Activities
|
(5,060
|
)
|
(5,806
|
)
|
||||
Net (Decrease) Increase in Cash and Cash Equivalents
|
(2,273
|
)
|
1,777
|
|||||
CASH AND CASH EQUIVALENTS - BEGINNING
|
4,782
|
3,005
|
||||||
CASH AND CASH EQUIVALENTS - ENDING
|
$
|
2,509
|
$
|
4,782
|
Boenning & Scattergood, Inc.
West Conshohocken, PA 19428 800-883-1212 |
RBC Capital Markets
Philadelphia, PA 19103
888-848-4677
|
|
Janney Montgomery Scott, LLC
Scranton, PA 18503 800-638-4417
|
Stifel Nicolaus
St,. Louis, MO 63102
314-342-2000
|
Subsidiaries
|
State or Other
Jurisdiction of Incorporation
|
Legal Entity Identifier
|
Percentage
Ownership
|
|||
Wayne Bank
|
Pennsylvania
|
549300XZGHPTWOJPDI31
|
100%
|
|||
Subsidiaries of Wayne Bank
|
||||||
Norwood Investment Corp.
|
Pennsylvania
|
NONE
|
100%
|
|||
WCB Realty Corp.
|
Pennsylvania
|
NONE
|
100%
|
|||
WTRO Properties, Inc.
|
Pennsylvania
|
NONE
|
100%
|
1. |
I have reviewed this annual report on Form 10-K of Norwood Financial Corp.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
|
Date: March 14, 2019
|
By:
|
/s/ Lewis J. Critelli | |
Lewis J. Critelli
President and Chief Executive Officer
|
1. |
I have reviewed this annual report on Form 10-K of Norwood Financial Corp.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
|
Date: March 14, 2019
|
By:
|
/s/ William S. Lance | |
William S. Lance
Executive Vice President &
Chief Financial Officer
|
/s/ Lewis J. Critelli | /s/ William S. Lance | |
Lewis J. Critelli
|
William S. Lance
|
|
President and Chief Executive Officer
|
Executive Vice President and Chief Financial Officer
|
|
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