8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8‑K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) April 19, 2019

Norwood Financial Corp.

(Exact name of registrant as specified in its charter)

Pennsylvania	0-28364	23-2828306
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

717 Main Street, Honesdale, Pennsylvania	18431
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (570) 253-1455

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company □

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □

NORWOOD FINANCIAL CORP.

INFORMATION TO BE INCLUDED IN THE REPORT

Item 2.02. Results of Operations and Financial Condition

On April 19, 2019, the Registrant issued a press release announcing its earnings for the quarter ended March 31, 2019.  A copy of the press release is furnished with this report as exhibit 99.1.

Item 9.01.  Financial Statements and Exhibits

(d) Exhibits.The following exhibit is being furnished with this report.

No.Description

99.1Press Release, dated April 19, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NORWOOD FINANCIAL CORP.
Date:April 19 , 2019	By:	/s/ Lewis J. Critelli
		Lewis J. Critelli President and Chief Executive Officer (Duly Authorized Representative)

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

NORWOOD FINANCIAL CORP. ANNOUNCES FIRST QUARTER EARNINGS

Honesdale, Pennsylvania - April 19, 2019

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”.

Forward-Looking Statements.

The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements.  When used in this discussion, the words “believes”, “anticipates”, “contemplates”, “expects”, and similar expressions are intended to identify forward-looking statements.  Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected.  Those risks and uncertainties include changes in federal and state laws, changes in interest rates, the ability to control costs and expenses, demand for real estate, government fiscal and trade policies, cybersecurity and general economic conditions.  The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Measures

This release references tax-equivalent net interest income, which is a non-GAAP (Generally Accepted Accounting Principles) financial measure.  Tax-equivalent net interest income is derived from GAAP using an assumed tax rate of 21%.  We believe the presentation of net interest income on a tax–equivalent basis ensures comparability

of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice.  The following reconciles net interest income to net interest income on a fully taxable-equivalent basis:

(dollars in thousands)	Three months ended March 31,
	2019		2018
Net interest income	$	9,271	$	8,807
Tax equivalent basis adjustment		265		276
Net interest income on a fully taxable equivalent basis	$	9,536	$	9,083

This release also references average tangible equity, which is also a non-GAAP financial measure.  Average tangible equity is calculated by deducting average goodwill and other intangible assets from average stockholders’ equity.  The Company believes that disclosure of tangible equity ratios enhances investor understanding of our financial position and improves the comparability of our financial data. The following reconciles average equity to average tangible equity:

(dollars in thousands)	Three months ended March 31,
	2019			2018
Average equity	$	124,746		$	115,320
Goodwill and other intangibles		(11,650	)		(11,772	)
Average tangible equity	$	113,096		$	103,548

Contact:  William S. Lance

                 Executive Vice President &

                 Chief Financial Officer

                 Norwood Financial Corp

                 570-253-8505

                 www.waynebank.com

NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets
(dollars in thousands, except share and per share data)
(unaudited)
	March 31
	2019			2018
ASSETS
Cash and due from banks	$	13,583		$	10,103
Interest-bearing deposits with banks		6,291			2,039
Cash and cash equivalents		19,874			12,142
Securities available for sale		240,621			265,862
Loans receivable		864,198			775,681
Less: Allowance for loan losses		8,349			8,099
Net loans receivable		855,849			767,582
Regulatory stock, at cost		3,132			2,545
Bank premises and equipment, net		14,165			13,808
Bank owned life insurance		38,134			37,270
Foreclosed real estate owned		1,792			1,436
Accrued interest receivable		4,089			3,687
Goodwill		11,331			11,331
Other intangible assets		307			427
Other assets		14,301			10,947
TOTAL ASSETS	$	1,203,595		$	1,127,037
LIABILITIES
Deposits:
Non-interest bearing demand	$	206,806		$	204,027
Interest-bearing		767,609			736,122
Total deposits		974,415			940,149
Short-term borrowings		37,824			29,905
Other borrowings		47,955			33,093
Accrued interest payable		2,457			1,456
Other liabilities		14,172			8,596
TOTAL LIABILITIES		1,076,823			1,013,199
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value, authorized 10,000,000 shares
issued:  2019: 6,301,263 shares, 2018:  6,257,563 shares		630			626
Surplus		48,559			47,548
Retained earnings		80,115			72,179
Treasury stock, at cost: 2019: 13,807 shares, 2018: 5,729 shares		(455	)		(188	)
Accumulated other comprehensive loss		(2,077	)		(6,327	)
TOTAL STOCKHOLDERS' EQUITY		126,772			113,838
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	1,203,595		$	1,127,037

NORWOOD FINANCIAL CORP.
Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
	Three Months Ended March 31,
	2019		2018
INTEREST INCOME
Loans receivable, including fees	$	9,970	$	8,487
Securities		1,441		1,524
Other		15		18
Total Interest income		11,426		10,029
INTEREST EXPENSE
Deposits		1,729		1,029
Short-term borrowings		123		52
Other borrowings		303		141
Total Interest expense		2,155		1,222
NET INTEREST INCOME		9,271		8,807
PROVISION FOR LOAN LOSSES		450		550
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		8,821		8,257
OTHER INCOME
Service charges and fees		1,031		980
Income from fiduciary activities		142		137
Net realized gains on sales of securities		-		142
Gains on sales of loans, net		42		-
Earnings and proceeds on life insurance policies		202		273
Other		143		162
Total other income		1,560		1,694
OTHER EXPENSES
Salaries and  employee benefits		3,649		3,462
Occupancy, furniture and equipment		924		892
Data processing  and related operations		448		319
Taxes, other than income		161		175
Professional fees		250		230
FDIC Insurance assessment		71		92
Foreclosed real estate		23		(19	)
Amortization of intangibles		29		34
Other		1,093		1,063
Total other expenses		6,648		6,248
INCOME BEFORE TAX		3,733		3,703
INCOME TAX EXPENSE		543		574
NET INCOME	$	3,190	$	3,129
Basic earnings per share	$	0.51	$	0.50
Diluted earnings per share	$	0.51	$	0.50

NORWOOD FINANCIAL CORP.
Financial Highlights (Unaudited)
(dollars in thousands, except per share data)
For the Three Months Ended March 31	2019			2018
Net interest income	$	9,271		$	8,807
Net income		3,190			3,129
Net interest spread (fully taxable equivalent)		3.20	%		3.31	%
Net interest margin (fully taxable equivalent)		3.43	%		3.46	%
Return on average assets		1.09	%		1.13	%
Return on average equity		10.37	%		11.00	%
Return on average tangible equity		11.44	%		12.25	%
Basic earnings per share	$	0.51		$	0.50
Diluted earnings per share	$	0.51		$	0.50
As of March 31
Total assets	$	1,203,595		$	1,127,037
Total loans receivable		864,198			775,681
Allowance for loan losses		8,349			8,099
Total deposits		974,415			940,149
Stockholders' equity		126,772			113,838
Trust assets under management		159,339			153,190
Book value per share	$	20.16		$	18.45
Tangible book value per share	$	18.31		$	16.56
Equity to total assets		10.53	%		10.10	%
Allowance to total loans receivable		0.97	%		1.04	%
Nonperforming loans to total loans		0.13	%		0.22	%
Nonperforming assets to total assets		0.24	%		0.28	%

NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets (unaudited)
(dollars in thousands)
	March 31		December 31		September 30		June 30		March 31
	2019		2018		2018		2018		2018
ASSETS
Cash and due from banks	$	13,583	$	18,039	$	17,073	$	15,193	$	10,103
Interest-bearing deposits with banks		6,291		309		295		914		2,039
Cash and cash equivalents		19,874		18,348		17,368		16,107		12,142
Securities available for sale		240,621		243,277		247,517		259,442		265,862
Loans receivable		864,198		850,182		819,197		803,773		775,681
Less: Allowance for loan losses		8,349		8,452		8,280		8,326		8,099
Net loans receivable		855,849		841,730		810,917		795,447		767,582
Regulatory stock, at cost		3,132		3,926		3,261		2,313		2,545
Bank owned life insurance		38,134		37,932		37,718		37,485		37,270
Bank premises and equipment, net		14,165		13,846		13,797		13,894		13,808
Foreclosed real estate owned		1,792		1,115		1,209		1,386		1,436
Goodwill and other intangibles		11,638		11,667		11,695		11,725		11,758
Other assets		18,390		12,718		13,266		12,794		14,634
TOTAL ASSETS	$	1,203,595	$	1,184,559	$	1,156,748	$	1,150,593	$	1,127,037
LIABILITIES
Deposits:
Non-interest bearing demand	$	206,806	$	201,457	$	218,979	$	216,472	$	204,027
Interest-bearing deposits		767,609		745,323		720,735		734,417		736,122
Total deposits		974,415		946,780		939,714		950,889		940,149
Borrowings		85,779		105,330		89,469		73,608		62,998
Other liabilities		16,629		10,164		10,885		10,563		10,052
TOTAL LIABILITIES		1,076,823		1,062,274		1,040,068		1,035,060		1,013,199
STOCKHOLDERS' EQUITY		126,772		122,285		116,680		115,533		113,838
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	1,203,595	$	1,184,559	$	1,156,748	$	1,150,593	$	1,127,037

NORWOOD FINANCIAL CORP.
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
	March 31		December 31		September 30			June 30		March 31
Three months ended	2019		2018		2018			2018		2018
INTEREST INCOME
Loans receivable, including fees	$	9,970	$	9,759	$	9,301		$	8,857	$	8,487
Securities		1,441		1,476		1,483			1,536		1,524
Other		15		10		2			43		18
Total interest income		11,426		11,245		10,786			10,436		10,029
INTEREST EXPENSE
Deposits		1,729		1,446		1,116			1,052		1,029
Borrowings		426		370		282			169		193
Total interest expense		2,155		1,816		1,398			1,221		1,222
NET INTEREST INCOME		9,271		9,429		9,388			9,215		8,807
PROVISION FOR LOAN LOSSES		450		375		375			425		550
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES		8,821		9,054		9,013			8,790		8,257
OTHER INCOME
Service charges and fees		1,031		1,085		1,129			1,101		980
Income from fiduciary activities		142		126		151			175		137
Net realized gains on sales of securities		-		-		13			58		142
Gains on sales of loans, net		42		-		15			-		-
Earnings and proceeds on life insurance policies		202		277		297			279		273
Other		143		112		392			161		162
Total other income		1,560		1,600		1,997			1,774		1,694
OTHER EXPENSES
Salaries and  employee benefits		3,649		3,575		3,577			3,406		3,462
Occupancy, furniture and equipment, net		924		1,036		910			857		892
Foreclosed real estate		23		104		(26	)		114		(19	)
FDIC insurance assessment		71		83		87			86		92
Other		1,981		2,005		2,024			1,890		1,821
Total other expenses		6,648		6,803		6,572			6,353		6,248
INCOME BEFORE TAX		3,733		3,851		4,438			4,211		3,703
INCOME TAX EXPENSE		543		552		728			698		574
NET INCOME	$	3,190	$	3,299	$	3,710		$	3,513	$	3,129
Basic earnings per share	$	0.51	$	0.53	$	0.59		$	0.57	$	0.50
Diluted earnings per share	$	0.51	$	0.53	$	0.58		$	0.56	$	0.50