Company Announcements

Norwood Financial Corp Announces First Quarter 2024 Earnings

Source: GlobeNewswire
Norwood Financial Corp Announces First Quarter 2024 Earnings

HONESDALE, Pa., April 22, 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 net income of $4,433,000 for the three months ended March 31, 2024, a decrease of $1,349,000, from net income of $5,782,000 for the three months ended March 31, 2023. The decrease was due primarily to a $1,383,000 decrease in net interest income and a $1,296,000 increase in total other expenses. Earnings per share on a fully diluted basis were $0.55 for the three-month period ended March 31, 2024, compared to $0.71 in the three-month period ended March 31, 2023. The annualized return on average assets was 0.80% in the first quarter of 2024 and the annualized return on average equity was 9.79%, compared to 1.13% and 13.61%, respectively, in the first quarter of 2023.

Total assets were $2.260 billion as of March 31, 2024, an increase of $156.1 million, compared to March 31, 2023. As of March 31, 2024, loans receivable were $1.621 billion, total deposits were $1.839 billion and total stockholders’ equity was $181.2 million.

Net interest income on a fully taxable equivalent basis (fte), was $14,905,000 during the three months ended March 31, 2024, compared to $16,275,000 in the comparable three-month period of 2023. During the three-months ended March 31, 2024, the fte yield on interest-earning assets increased 71 basis points compared to the three months ended March 31, 2023, while the cost of funds increased 147 basis points. As a result, the annualized net interest spread (fte) decreased to 2.07% from 2.83% in the quarter ended March 31, 2024 compared to the corresponding three-month period in 2023.

Total other income was $2,006,000 for the three months ended March 31, 2024, compared to $1,912,000 during the corresponding three-month period in 2023. The increase in other income was due primarily to a $55,000 increase in earnings and proceeds on bank-owned life insurance. All other categories of other income increased $39,000, net.

During the three months ended March 31, 2024, operating expenses increased $1,296,000 to $11,732,000 as compared to operating expenses of $10,436,000 during the comparable three-month period of 2023.

During the three months ended March 31, 2024, the provision for credit losses decreased $924,000 compared to the corresponding three-month period of 2023 based on the Company’s analysis of the allowance for credit losses. A lower level of non-performing loans and reduced charge-offs contributed to the decreased provision for credit losses.

Mr. Donnelly stated, “Our first quarter income decreased from the 2023 level due to the continued pressure on net interest income caused by the rising cost of deposits. We have continued to grow our core business lines, including a 4.5% annualized increase in loans during the quarter, while total deposits increased 9.8% annually during the first quarter of 2024. Our capital base remains above “Well-Capitalized” targets, and our credit quality metrics improved during the first quarter. 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 customers and enhance shareholder value in the Company”.

Norwood Financial Corp is the parent company of Wayne Bank, which operates from fourteen offices throughout Northeastern Pennsylvania and fifteen offices in 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 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:

(dollars in thousands)Three months ended March 31,
 20242023
Net interest income$14,710$16,093
Tax equivalent basis adjustment using 21% marginal tax rate 195  182
Net interest income on a fully taxable equivalent basis$14,905$

16,275


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:

(dollars in thousands)Three months ended March 31,
  2024  2023 
Average equity$182,088 $172,334 
Average goodwill and other intangibles (29,476) (29,559)
Average tangible equity$152,612 $

142,775

 


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
      
  2024  2023       
ASSETS          
Cash and due from banks $19,519  $25,701       
Interest-bearing deposits with banks 92,444  3,314       
Cash and cash equivalents 111,963  29,015       
           
Securities available for sale 398,374  418,245       
Loans receivable 1,621,448  1,535,643       
Less: Allowance for credit losses 18,020  19,445       
Net loans receivable 1,603,428  1,516,198       
Regulatory stock, at cost 6,545  5,963       
Bank premises and equipment, net 18,057  17,660       
Bank owned life insurance 45,869  45,577       
Foreclosed real estate owned 97  346       
Accrued interest receivable 8,135  6,633       
Deferred tax assets, net 21,642  22,164       
Goodwill 29,266  29,266       
Other intangible assets 202  283       
Other assets 16,845  13,013       
TOTAL ASSETS $2,260,423  $2,104,363       
           
LIABILITIES          
Deposits:          
Non-interest bearing demand $383,362  $419,615       
Interest-bearing 1,455,636  1,336,320       
Total deposits 1,838,998  1,755,935       
Short-term borrowings 60,055  108,555       
Other borrowings 151,179  40,189       
Accrued interest payable 11,737  4,703       
Other liabilities 17,241  18,566       
TOTAL LIABILITIES 2,079,210  1,927,948       
           
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: 8,310,847 shares, 2023: 8,291,401 shares 831  829       
Surplus 97,893  95,052       
Retained earnings 137,285  133,427       
Treasury stock, at cost: 2024: 200,690 shares, 2023: 110,400 shares(5,397) (2,930)      
Accumulated other comprehensive loss (49,399) (49,963)      
TOTAL STOCKHOLDERS' EQUITY 181,213  176,415       
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,260,423  $2,104,363       
           
NORWOOD FINANCIAL CORP          
Consolidated Statements of Income           
(dollars in thousands, except per share data)          
(unaudited)          
 Three Months Ended March 31,   
  2024  2023       
INTEREST INCOME          
Loans receivable, including fees$23,681 $19,158       
Securities 2,526  2,505       
Other 731  48       
Total Interest income 26,938  21,711       
           
INTEREST EXPENSE          
Deposits 10,110  4,362       
Short-term borrowings 336  779       
Other borrowings 1,782  477       
Total Interest expense 12,228  5,618       
NET INTEREST INCOME 14,710  16,093       
(RELEASE OF) PROVISION FOR CREDIT LOSSES (624) 300       
NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES 15,334  15,793       
           
           
OTHER INCOME          
Service charges and fees 1,343  1,313       
Income from fiduciary activities 238  212       
Net realized (losses) gains on sales of securities -  2       
Gains on sales of loans, net 6  -       
Earnings and proceeds on life insurance policies 268  213       
Other 151  172       
Total other income 2,006  1,912       
           
OTHER EXPENSES          
Salaries and employee benefits 6,135  5,969       
Occupancy, furniture and equipment 1,261  1,262       
Data processing and related operations 1,022  768       
Taxes, other than income 93  161       
Professional fees 585  285       
FDIC Insurance assessment 361  200       
Foreclosed real estate 21  29       
Amortization of intangibles 19  23       
Other 2,235  1,739       
Total other expenses 11,732  10,436       
           
INCOME BEFORE TAX 5,608  7,269       
INCOME TAX EXPENSE 1,175  1,487       
NET INCOME $4,433  $5,782       
           
Basic earnings per share$0.55 $0.71       
           
Diluted earnings per share$0.55 $0.71       
           
NORWOOD FINANCIAL CORP          
Financial Highlights (Unaudited)          
(dollars in thousands, except per share data)          
           
For the Three Months Ended March 31 2024  2023       
           
Net interest income $14,710  $16,093       
Net income 4,433  5,782       
           
Net interest spread (fully taxable equivalent) 2.07% 2.83%      
Net interest margin (fully taxable equivalent) 2.79% 3.25%      
Return on average assets 0.80% 1.13%      
Return on average equity 9.79% 13.61%      
Return on average tangible equity 11.68% 16.42%      
Basic earnings per share $0.55  $0.71       
Diluted earnings per share $0.55  $0.71       
           
As of March 31 2024  2023       
           
Total assets $2,260,423  $2,104,363       
Total loans receivable 1,621,448  1,535,643       
Allowance for credit losses 18,020  19,445       
Total deposits 1,838,998  1,755,935       
Stockholders' equity 181,213  176,415       
Trust assets under management 202,020  187,345       
           
Book value per share $23.01  $21.92       
Tangible book value per share $19.38  $18.31       
Equity to total assets 8.02% 8.38%      
Allowance to total loans receivable 1.11% 1.27%      
Nonperforming loans to total loans 0.23% 0.07%      
Nonperforming assets to total assets 0.17% 0.06%      
           
NORWOOD FINANCIAL CORP          
Consolidated Balance Sheets (unaudited)          
(dollars in thousands)          
  March 31 December 31 September 30 June 30 March 31
  2024 2023 2023 2023 2023
ASSETS          
Cash and due from banks $19,519  $28,533  $41,141  $30,053  $25,701 
Interest-bearing deposits with banks 92,444  37,587  13,005  3,036  3,314 
Cash and cash equivalents 111,963  66,120  54,146  33,089  29,015 
           
Securities available for sale 398,374  406,259  380,499  403,621  418,245 
Loans receivable 1,621,448  1,603,618  1,611,069  1,577,699  1,535,643 
Less: Allowance for credit losses 18,020  18,968  16,086  17,483  19,445 
Net loans receivable 1,603,428  1,584,650  1,594,983  1,560,216  1,516,198 
Regulatory stock, at cost 6,545  7,318  8,843  7,924  5,963 
Bank owned life insurance 45,869  46,439  46,197  45,806  45,577 
Bank premises and equipment, net 18,057  17,838  17,254  17,363  17,660 
Foreclosed real estate owned 97  97  290  387  346 
Goodwill and other intangibles 29,468  29,487  29,506  29,526  29,549 
Other assets 46,622  42,871  48,280  43,833  41,810 
TOTAL ASSETS $2,260,423  $2,201,079  $2,179,998  $2,141,765  $2,104,363 
           
LIABILITIES          
Deposits:          
Non-interest bearing demand $383,362  $399,545  $430,242  $425,757  $419,615 
Interest-bearing deposits 1,455,636  1,395,614  1,316,582  1,306,240  1,336,320 
Total deposits
 1,838,998  1,795,159  1,746,824  1,731,997  1,755,935 
Borrowings 211,234  198,312  241,328  211,978  148,744 
Other liabilities 28,978  26,538  27,144  24,366  23,269 
TOTAL LIABILITIES 2,079,210  2,020,009  2,015,296  1,968,341  1,927,948 
           
STOCKHOLDERS' EQUITY 181,213  181,070  164,702  173,424  176,415 
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,260,423  $2,201,079  $2,179,998  $2,141,765  $2,104,363 
           
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 2024 2023 2023 2023 2023
INTEREST INCOME          
Loans receivable, including fees $23,681  $23,328  $22,021  $20,702  $19,158 
Securities 2,526  2,504  2,433  2,481  2,505 
Other 731  253  54  53  48 
Total interest income 26,938  26,085  24,508  23,236  21,711 
           
INTEREST EXPENSE          
Deposits 10,110  8,910  7,017  5,740  4,362 
Borrowings 2,118  1,882  2,452  1,854  1,256 
Total interest expense 12,228  10,792  9,469  7,594  5,618 
NET INTEREST INCOME 14,710  15,293  15,039  15,642  16,093 
(RELEASE OF) PROVISION FOR CREDIT LOSSES (624) 6,116  882  (1,750) 300 
NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES 15,334  9,177  14,157  17,392  15,793 
           
OTHER INCOME          
Service charges and fees 1,343  1,421  1,527  1,353  1,313 
Income from fiduciary activities 238  210  246  229  212 
Net realized (losses) gains on sales of securities -  -  -  (212) 2 
Gains on sales of loans, net 6  36  18  10  - 
Gains on sales of foreclosed real estate owned -  66  13  -  - 
Earnings and proceeds on life insurance policies 268  242  328  229  213 
Other 151  148  174  174  172 
Total other income 2,006  2,123  2,306  1,783  1,912 
           
OTHER EXPENSES          
Salaries and employee benefits 6,135  5,672  6,083  5,842  5,969 
Occupancy, furniture and equipment, net 1,261  1,265  1,242  1,314  1,262 
Foreclosed real estate 21  17  9  74  29 
FDIC insurance assessment 361  287  254  244  200 
Other 3,954  3,608  3,688  3,464  2,976 
Total other expenses 11,732  10,849  11,276  10,938  10,436 
           
INCOME BEFORE TAX 5,608  451  5,187  8,237  7,269 
INCOME TAX EXPENSE 1,175  96  1,068  1,734  1,487 
NET INCOME $4,433  $355  $4,119  $6,503  $5,782 
           
Basic earnings per share $0.55  $0.04  $0.51  $0.81  $0.71 
           
Diluted earnings per share $0.55  $0.04  $0.51  $0.81  $0.71 
           
Book Value per share$23.01 $22.99 $21.15 $22.24 $21.92 
Tangible Book Value per share 19.38  19.36  17.49  18.58  18.31 
           
Return on average assets (annualized) 0.80% 0.06% 0.76% 1.23% 1.13%
Return on average equity (annualized) 9.79% 0.84% 9.33% 14.72% 13.61%
Return on average tangible equity (annualized) 11.68% 1.01% 11.22% 17.66% 16.42%
           
Net interest spread (fte) 2.07% 2.24% 2.28% 2.56% 2.83%
Net interest margin (fte) 2.79% 2.95% 2.94% 3.09% 3.25%
           
Allowance for credit losses to total loans 1.11% 1.18% 1.00% 1.11% 1.27%
Net charge-offs to average loans (annualized) 0.08% 0.79% 0.59% 0.06% 0.08%
Nonperforming loans to total loans 0.23% 0.48% 0.65% 0.20% 0.07%
Nonperforming assets to total assets 0.17% 0.35% 0.50% 0.17% 0.06%