Company Announcements

Norwood Financial Corp Announces Second Quarter Earnings

Source: GlobeNewswire
Norwood Financial Corp Announces Second Quarter Earnings

HONESDALE, Pa., July 26, 2024 (GLOBE NEWSWIRE) -- James O. Donnelly, President and Chief Executive Officer of Norwood Financial Corp (Nasdaq Global Market-NWFL) and its subsidiary, Wayne Bank, announced earnings for the three months ended June 30, 2024 of $4,213,000, which was $2,290,000 lower than the same three-month period of last year. The decrease includes a $717,000 decrease in net interest income, a $424,000 increase in total other income, a $506,000 increase in total other expense, and a $2,097,000 increase in the provision for credit losses. Earnings per share (fully diluted) were $0.52 in the three months ended June 30, 2024, compared to $0.81 in the same period of last year. The annualized return on average assets for the three months ended June 30, 2024, was 0.75%, while the annualized return on average tangible equity was 11.26%.

Net income for the six months ended June 30, 2024, was $8,646,000, which is $3,639,000 lower than the same six-month period of 2023, due to a decrease in net interest income an increase in the provision for credit losses and an increase in operating expenses, partially offset by an increase in total other income. Earnings per share (fully diluted) for the six months ended June 30, 2024, were $1.07, compared to $1.51 for the six months ended June 30, 2023. The annualized return on average assets for the six months ended June 30, 2024 was 0.78%. The annualized return on average tangible equity for the six months ended June 30, 2024 was 11.46%.

Total assets as of June 30, 2024 were $2.235 billion, compared to $2.142 billion at June 30, 2023. At June 30, 2024, loans receivable were $1.623 billion, total deposits were $1.811 billion and stockholders’ equity was $182.2 million.

For the three months ended June 30, 2024, net interest income, on a fully-taxable equivalent basis (fte), totaled $15,124,000, a decrease of $705,000 compared to the same period in 2023. A $150.8 million increase in average time deposits, combined with a 126 basis points increase in the cost of time deposits, contributed to the decreased net interest income. Borrowing costs also increased, offsetting a $4,447,000 increase in total interest income. Net interest margin (fte) for the three months ended June 30, 2024 was 2.79%, compared to 3.09% in the same period of 2023. The tax-equivalent yield on interest-earning assets increased 57 basis points to 5.14% during the three months ended June 30, 2024, compared to the same prior year period, while the cost of interest-bearing liabilities increased 108 basis points to 3.09%.

Net interest income (fte) for the six months ended June 30, 2024 totaled $30,029,000, which was $2,075,000 lower than the same period in 2023, due primarily to a $11,762,000 increase in the cost of interest-bearing liabilities. The net interest margin (fte) was 2.79% for the six months ended June 30, 2024, as compared to 3.17% for the six months ended June 30, 2023. The decrease in the net interest margin (fte) was due to a 127 basis points increase in the cost of interest-bearing liabilities, which offset the 64 basis points increase in the yield on interest-earning assets.

Other income for the three months ended June 30, 2024, totaled $2,207,000, compared to $1,783,000 for the same period in 2023. The increase is due primarily to a $151,000 increase in service charges on deposit accounts, and a $212,000 loss on the sale of investment securities in 2023. For the six months ended June 30, 2024, other income totaled $4,213,000, compared to $3,695,000 for the six months ended June 30, 2023.

Other expenses totaled $11,444,000 for the three months ended June 30, 2024, an increase of $506,000, compared to the $10,938,000 for the same period of 2023. For the six months ended June 30, 2024, other expenses totaled $23,175,000, compared to $21,374,000 for the same period in 2023, due primarily to an increase in professional fees, data processing costs and FDIC insurance.

Mr. Donnelly stated, “Our second quarter income decreased from the 2023 level due to a release of provision for credit losses in the three months ended June 30, 2023 and the rising cost of deposits and borrowed funds. These decreases were partially offset by a $424,000 increase in non-interest income. On a linked-quarter basis loan growth was an annualized 4.9%. Total deposits decreased $28 million compared to the first quarter of 2024. This was due to a seasonal outflow of municipal deposits of $53 million offset by inflows of $25 million of other customer funds, a 7.3% annualized increase. The net interest margin was stable at 2.79% for the first and second quarter. Our core operating expenses remain well-controlled at 2% of average assets during the quarter. Our capital base remains above “Well-Capitalized” targets. Additionally, our credit quality metrics remained strong during the second quarter, which we believe should benefit future performance. We appreciate the opportunity to serve our Wayne Bank customers and our customers at the Bank of the Finger Lakes and Bank of Cooperstown locations. We continue to look for opportunities available to us as we service our growing base of stockholders and customers.”

Norwood Financial Corp is the parent company of Wayne Bank, which operates from fourteen offices throughout Northeastern Pennsylvania and fifteen offices in 4 Delaware, Sullivan, Ontario, Otsego and Yates Counties, 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”, “bode”, “future performance” 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, among other things, changes in federal and state laws, changes in interest rates, our ability to maintain strong credit quality metrics, our ability to have future performance, our ability to control core operating expenses and costs, 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 net interest income on a fully taxable-equivalent basis (fte), which is a non-GAAP (Generally Accepted Accounting Principles) financial measure. Fully taxable-equivalent net interest income was derived from GAAP interest income and net interest income using an assumed tax rate of 21%. We believe the presentation of net interest income on a fully taxable-equivalent basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice.

 
The following table reconciles net interest income to net interest income on a fully taxable-equivalent basis:
     
  Three months ended  Six months ended
(dollars in thousands) June 30 June 30
   2024  2023   2024  2023 
       
Net Interest Income $14,925 $15,642  $29,635 $31,735 
Taxable equivalent basis adjustment using 21% marginal tax rate  199  187   394  369 
Net interest income on a fully taxable equivalent basis $15,124 $15,829  $30,029 $32,104 
       
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 table reconciles average equity to average tangible equity:
       
  Three months ended  Six months ended
(dollars in thousands) June 30 June 30
   2024  2023   2024  2023 
       
Average equity $179,494 $186,111  $180,791 $180,952 
Average goodwill and other intangibles  (29,457) (29,536)  (29,466) (29,547)
Average tangible equity $150,037 $156,575  $151,325 $151,405 
       

Contact:
John M. McCaffery
Executive Vice President &
Chief Financial Officer
272-304-3003
wayne.bank

            
            
NORWOOD FINANCIAL CORP 
Consolidated Balance Sheets    
(dollars in thousands, except share and per share data) 
(unaudited)   
   June 30      
   2024   2023       
ASSETS           
Cash and due from banks $29,903 $ 30,053       
Interest-bearing deposits with banks  39,492   3,036       
Cash and cash equivalents  69,395   33,089       
            
Securities available for sale  397,578   403,621       
Loans receivable  1,641,355   1,577,699       
Less: Allowance for credit losses  17,806   17,483       
Net loans receivable  1,623,549   1,560,216       
Regulatory stock, at cost  6,443   7,924       
Bank premises and equipment, net  18,265   17,363       
Bank owned life insurance  46,121   45,806       
Foreclosed real estate owned  -   387       
Accrued interest receivable  8,329   7,276       
Deferred tax assets, net  21,707   23,301       
Goodwill  29,266   29,266       
Other intangible assets  183   260       
Other assets  14,480   13,256       
  TOTAL ASSETS $2,235,316 $ 2,141,765       
            
LIABILITIES           
Deposits:           
Non-interest bearing demand $391,849 $ 425,757       
Interest-bearing  1,419,323   1,306,240       
Total deposits  1,811,172   1,731,997       
Short-term borrowings  62,335   112,290       
Other borrowings  148,087   99,687       
Accrued interest payable  13,329   7,101       
Other liabilities  18,206   17,266       
  TOTAL LIABILITIES  2,053,129   1,968,341       
            
STOCKHOLDERS' EQUITY           
Preferred Stock, no par value per share, authorized 5,000,000 shares  -   -       
Common Stock, $.10 par value per share, authorized: 20,000,000 shares, issued: 2024: 8,311,851 shares, 2023: 8,291,401 shares  831   829       
Surplus  98,082   97,268       
Retained earnings  139,070   135,583       
Treasury stock, at cost: 2024: 221,540 shares, 2023: 223,926 shares  (5,977)  (6,007)      
Accumulated other comprehensive loss  (49,819)  (54,249)      
  TOTAL STOCKHOLDERS' EQUITY  182,187   173,424       
            
  TOTAL LIABILITIES AND           
       STOCKHOLDERS' EQUITY $2,235,316 $ 2,141,765       
            
            
            
            
NORWOOD FINANCIAL CORP
Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
    Three Months Ended June 30,    Six Months Ended June 30,
   2024   2023     2024   2023 
INTEREST INCOME           
Loans receivable, including fees $24,121 $ 20,702   $ 47,802 $ 39,860 
Securities  2,584   2,481     5,109   4,986 
Other  966   53     1,697   101 
Total Interest income  27,671   23,236     54,608   44,947 
            
INTEREST EXPENSE           
Deposits  10,687   5,740     20,796   10,102 
Short-term borrowings  356   943     692   1,722 
Other borrowings  1,703   911     3,485   1,388 
Total Interest expense  12,746   7,594     24,973   13,212 
NET INTEREST INCOME  14,925   15,642     29,635   31,735 
(RELEASE OF) PROVISION FOR CREDIT LOSSES  347 $ (1,750)  $ (276)$ (1,450)
NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES  14,578   17,392     29,911   33,185 
            
            
OTHER INCOME           
Service charges and fees  1,504   1,353     2,847   2,665 
Income from fiduciary activities  225   229     463   441 
Net realized (losses) gains on sales of securities  -   (212)    -   (209)
Gains on sales of loans, net  36   10     42   10 
Earnings and proceeds on life insurance policies  253   229     520   442 
Other  189   174     341   346 
Total other income  2,207   1,783     4,213   3,695 
            
OTHER EXPENSES           
Salaries and employee benefits  5,954   5,842     12,090   11,810 
Occupancy, furniture and equipment  1,229   1,314     2,489   2,576 
Data processing and related operations  1,024   822     2,046   1,590 
Taxes, other than income  179   162     272   323 
Professional fees  508   323     1,092   608 
FDIC Insurance assessment  309   244     670   445 
Foreclosed real estate  15   74     36   103 
Amortization of intangibles  19   23     38   46 
Other  2,207   2,134     4,442   3,873 
Total other expenses  11,444   10,938     23,175   21,374 
            
INCOME BEFORE TAX  5,341   8,237     10,949   15,506 
INCOME TAX EXPENSE  1,128   1,734     2,303   3,221 
NET INCOME $4,213 $ 6,503   $ 8,646 $ 12,285 
            
Basic earnings per share $0.52 $ 0.81   $ 1.07 $ 1.52 
            
Diluted earnings per share $0.52 $ 0.81   $ 1.07 $ 1.51 
            
            
            
NORWOOD FINANCIAL CORP
Financial Highlights (Unaudited)
(dollars in thousands, except per share data)
            
For the Three Months Ended June 30  2024   2023       
            
Net interest income $14,925 $ 15,642       
Net income  4,213   6,503       
            
Net interest spread (fully taxable equivalent)  2.05%  2.56%      
Net interest margin (fully taxable equivalent)  2.79%  3.09%      
Return on average assets  0.75%  1.23%      
Return on average equity  9.41%  14.72%      
Return on average tangible equity  11.26%  17.66%      
Basic earnings per share $0.52 $ 0.81       
Diluted earnings per share $0.52 $ 0.81       
            
For the Six Months Ended June 30  2024
 2023
      
            
Net interest income $29,635 $ 31,735       
Net income  8,646   12,285       
            
Net interest spread (fully taxable equivalent)  2.06%  2.69%      
Net interest margin (fully taxable equivalent)  2.79%  3.17%      
Return on average assets  0.78%  1.18%      
Return on average equity  9.59%  14.17%      
Return on average tangible equity  11.46%  17.06%      
Basic earnings per share $1.07 $ 1.52       
Diluted earnings per share $1.07 $ 1.51       
            
As of June 30  2024
 2023
      
            
Total assets $2,235,316 $ 2,141,765       
Total loans receivable  1,641,355   1,577,699       
Allowance for credit losses  17,806   17,483       
Total deposits  1,811,172   1,731,997       
Stockholders' equity  182,187   173,424       
Trust assets under management  201,079   193,392       
            
Book value per share $23.26 $ 22.24       
Tangible book value per share $19.62 $ 18.58       
Equity to total assets  8.15%  8.10%      
Allowance to total loans receivable  1.08%  1.11%      
Nonperforming loans to total loans  0.47%  0.20%      
Nonperforming assets to total assets  0.34%  0.17%      
            
            
            
NORWOOD FINANCIAL CORP           
Consolidated Balance Sheets (unaudited)           
(dollars in thousands)           
   June 30 March 31 December 31 September 30June 30
   2024   2024  2023   2023   2023 
ASSETS           
Cash and due from banks $29,903 $ 19,519 $28,533 $ 41,141 $ 30,053 
Interest-bearing deposits with banks  39,492   92,444  37,587   13,005   3,036 
Cash and cash equivalents  69,395   111,963  66,120   54,146   33,089 
            
Securities available for sale  397,578   398,374  406,259   380,499   403,621 
Loans receivable  1,641,356   1,621,448  1,603,618   1,611,069   1,577,699 
Less: Allowance for credit losses  17,807   18,020  18,968   16,086   17,483 
Net loans receivable  1,623,549   1,603,428  1,584,650   1,594,983   1,560,216 
Regulatory stock, at cost  6,443   6,545  7,318   8,843   7,924 
Bank owned life insurance  46,121   45,869  46,439   46,197   45,806 
Bank premises and equipment, net  18,264   18,057  17,838   17,254   17,363 
Foreclosed real estate owned  0   97  97   290   387 
Goodwill and other intangibles  29,449   29,468  29,487   29,506   29,526 
Other assets  44,517   46,622  42,871   48,280   43,833 
TOTAL ASSETS $2,235,316 $ 2,260,423 $2,201,079 $ 2,179,998 $ 2,141,765 
            
LIABILITIES           
Deposits:           
Non-interest bearing demand $391,849 $ 383,362 $399,545 $ 430,242 $ 425,757 
Interest-bearing deposits  1,419,323   1,455,636  1,395,614   1,316,582   1,306,240 
Total deposits  1,811,172   1,838,998  1,795,159   1,746,824   1,731,997 
Borrowings  210,422   211,234  198,312   241,328   211,978 
Other liabilities  31,534   28,978  26,538   27,144   24,366 
TOTAL LIABILITIES  2,053,128   2,079,210  2,020,009   2,015,296   1,968,341 
            
STOCKHOLDERS' EQUITY  182,188   181,213  181,070   164,702   173,424 
            
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,235,316 $ 2,260,423 $2,201,079 $ 2,179,998 $ 2,141,765 
            
            
            
NORWOOD FINANCIAL CORP
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)           
   June 30 March 31 December 31 September 30June 30
Three months ended  2024   2024  2023   2023   2023 
INTEREST INCOME           
Loans receivable, including fees $24,121 $ 23,681 $23,328 $ 22,021 $ 20,702 
Securities  2,584   2,526  2,504   2,433   2,481 
Other  966   731  253   54   53 
Total interest income  27,671   26,938  26,085   24,508   23,236 
            
INTEREST EXPENSE           
Deposits  10,687   10,110  8,910   7,017   5,740 
Borrowings  2,059   2,118  1,882   2,452   1,854 
Total interest expense  12,746   12,228  10,792   9,469   7,594 
NET INTEREST INCOME  14,925   14,710  15,293   15,039   15,642 
(RELEASE OF) PROVISION FOR CREDIT LOSSES  347   (624) 6,116   882   (1,750)
NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES  14,578   15,334  9,177   14,157   17,392 
            
OTHER INCOME           
Service charges and fees  1,504   1,343  1,421   1,527   1,353 
Income from fiduciary activities  225   238  210   246   229 
Net realized (losses) gains on sales of securities  -   -  -   -   (212)
Gains on sales of loans, net  36   6  36   18   10 
Gains on sales of foreclosed real estate owned  32   -  66   13   - 
Earnings and proceeds on life insurance policies  253   268  242   328   229 
Other  157   151  148   174   174 
Total other income  2,207   2,006  2,123   2,306   1,783 
            
OTHER EXPENSES           
Salaries and employee benefits  5,954   6,135  5,672   6,083   5,842 
Occupancy, furniture and equipment, net  1,229   1,261  1,265   1,242   1,314 
Foreclosed real estate  15   21  17   9   74 
FDIC insurance assessment  309   361  287   254   244 
Other  3,937   3,954  3,608   3,688   3,464 
Total other expenses  11,444   11,732  10,849   11,276   10,938 
            
INCOME BEFORE TAX  5,341   5,608  451   5,187   8,237 
INCOME TAX EXPENSE  1,128   1,175  96   1,068   1,734 
NET INCOME $4,213 $ 4,433 $355 $ 4,119 $ 6,503 
            
Basic earnings per share $0.52 $ 0.55 $0.04 $ 0.51 $ 0.81 
            
Diluted earnings per share $0.52 $ 0.55 $0.04 $ 0.51 $ 0.81 
            
Book Value per share $23.26 $ 23.01 $22.99 $ 21.15 $ 22.24 
Tangible Book Value per share  19.62   19.38  19.36   17.49   18.58 
            
Return on average assets (annualized)  0.75%  0.80% 0.06%  0.76%  1.23%
Return on average equity (annualized)  9.41%  9.79% 0.84%  9.33%  14.72%
Return on average tangible equity (annualized)  11.26%  11.68% 1.01%  11.22%  17.66%
            
Net interest spread (fte)  2.05%  2.07% 2.24%  2.28%  2.56%
Net interest margin (fte)  2.79%  2.79% 2.95%  2.94%  3.09%
            
Allowance for credit losses to total loans  1.08%  1.11% 1.18%  1.00%  1.11%
Net charge-offs to average loans (annualized)  0.13%  0.08% 0.79%  0.59%  0.06%
Nonperforming loans to total loans  0.47%  0.23% 0.48%  0.65%  0.20%
Nonperforming assets to total assets  0.34%  0.17% 0.35%  0.50%  0.17%
            
            
            
            
total NAL  7,641,239   3,726,895  7,620,882   10,535,803   3,223,297 
past due 90+  -   7,668  -   -   - 
total non performing loans  7,641,239   3,734,563  7,620,882   10,535,803   3,223,297 
OREO  -   97,101  97,101   290,000   387,500 
total Non performing assets  7,641,239   3,831,664  7,717,983   10,825,803   3,610,797 
total loans  1,641,355,515   1,621,447,970  1,603,617,932   1,611,068,445   1,577,699,580 
total assets  2,235,315,800   2,260,423,152  2,201,056,938   2,179,998,000   2,141,765,238 
net charge off's, this quarter  510,985   322,892  3,181,233   2,349,697   227,110 
average loans, this quarter  1,629,282,567   1,612,105,511  1,605,495,855   1,589,473,633   1,559,251,963 
Loan loss reserve  17,806,505   18,019,715  18,967,991   16,085,641   17,483,489 
     . . .