• Norwood Financial Corp Announces Third Quarter 2024 Results

    Source: Nasdaq GlobeNewswire / 28 Oct 2024 07:15:00   America/Chicago

    Quarterly Highlights:

    • Net interest margin increased 19 basis points vs. the prior quarter and 7 basis points over the prior year.
    • Loans grew at an 8% annualized rate during the 3rd quarter.
    • Capital continues to improve as the negative mark-to-market effect lessens 42% since last year.

    HONESDALE, Pa., Oct. 28, 2024 (GLOBE NEWSWIRE) -- Norwood Financial Corp (Nasdaq Global Market-NWFL) and its subsidiary, Wayne Bank, announced earnings for the three months ended September 30, 2024 of $3.8 million, which was $275 thousand lower than the same three-month period of last year. Net interest income was up by $892 thousand which was offset by increases in operating expense and the provision for credit losses. Earnings per share (fully diluted) were $0.48 in the three months ended September 30, 2024, compared to $0.51 in the same period of last year. The annualized return on average assets for the three months ended September 30, 2024, was 0.68%, while the annualized return on average tangible equity was 9.58%.

    Net income for the nine months ended September 30, 2024, was $12.5 million, which is $3.9 million lower than the same nine-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 nine months ended September 30, 2024, were $1.55, compared to $2.03 for the nine months ended September 30, 2023. The annualized return on average assets for the nine months ended September 30, 2024 was 0.75%. The annualized return on average tangible equity for the nine months ended September 30, 2024 was 10.82%.

    Total assets as of September 30, 2024 were $2.280 billion, compared to $2.180 billion at September 30, 2023. At September 30, 2024, loans receivable were $1.675 billion, total deposits were $1.855 billion and stockholders’ equity was $195.7 million.

    For the three months ended September 30, 2024, net interest income, on a fully-taxable equivalent basis (fte), totaled $16.1 million, an increase of $914 thousand compared to the same period in 2023. A $77.5 million increase in average interest-earning assets, generated an increase in interest income of $4.0 million. Interest expense increased $3.1 million mainly due to higher deposit balances and higher rates on those deposits. Net interest margin (fte) for the three months ended September 30, 2024 was 2.99%, compared to 2.92% in the same period of 2023. The tax-equivalent yield on interest-earning assets increased 58 basis points to 5.31% during the three months ended September 30, 2024, compared to the same prior year period, while the cost of interest-bearing liabilities increased 62 basis points to 3.09%.

    Net interest income (fte) for the nine-months ended September 30, 2024 totaled $45.6 million, which was $1.2 million lower than the same period in 2023, due primarily to a $14.8 million increase in the cost of interest-bearing liabilities. The net interest margin (fte) was 2.87% for the nine-months ended September 30, 2024, as compared to 3.10% for the nine-months ended September 30, 2023.

    Other income for the three months ended September 30, 2024, totaled $2.3 million, compared to $2.3 million for the same period in 2023. For the nine-months ended September 30, 2024, other income totaled $6.5 million, compared to $6.0 million for the nine-months ended September 30, 2023.

    Other expenses totaled $12.0 million for the three months ended September 30, 2024, an increase of $755 thousand, compared to the $11.3 million for the same period of 2023. For the nine-months ended September 30, 2024, other expenses totaled $35.2 million, compared to $32.6 million for the same period in 2023, due primarily to an increase in salaries and benefits, professional fees, data processing costs and FDIC insurance.

    Jim Donnelly President and CEO of Norwood Financial Corp and Wayne Bank, stated, “We are pleased to present our result of operations for the third quarter. Although strong loan growth caused an increase in our provision for credit losses we welcome the ongoing opportunity to serve our customers. Net interest margin (fte) for this quarter eclipsed the margin for last year, something that hasn’t happened since the Federal Reserve began raising interest rates. Our capital base remains above “Well-Capitalized” targets and we continue to show less impact from the market value of our bond portfolio. Additionally, our credit quality metrics remained strong during the third 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:

       
    (dollars in thousands)

    		Three months endedNine months ended
    September 30September 30
      2024  2023  2024  2023
    Net Interest Income
    		$
    		        15,931
    		 $
    		        15,039
    		 $
    		        45,566
    		 $
    		        46,774
    Taxable equivalent basis
    adjustment using 21% marginal
    tax rate    		 207  185  601  554
    Net interest income on a fully
    taxable equivalent basis    		$16,138 $15,224 $46,167 $47,328
                

    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 Nine months ended
    (dollars in thousands)September 30 September 30
      2024   2023  2024  2023
    Average equity
    		$189,135 $175,224 $183,593  $174,943
    Average goodwill and other
    intangibles    		  (29,440)  (29,514)   (29,457)  (29,536)
    Average tangible equity$159,695 $145,710 $154,136 $145,407
                

    Contact: John M. McCaffery
    Executive Vice President &
    Chief Financial Officer
    NORWOOD FINANCIAL CORP
    272-304-3003
    www.waynebank.com

     
    NORWOOD FINANCIAL CORP
    Consolidated Balance Sheets
    (dollars in thousands, except share and per share data)
    (unaudited)
     September 30
      2024
    		 2023
    		 
    ASSETS       
    Cash and due from banks$ 47,072  $41,141 
    Interest-bearing deposits with banks 35,808   13,005 
    Cash and cash equivalents 82,880   54,146 
            
    Securities available for sale 396,891   380,499 
    Loans receivable 1,675,139   1,611,069 
    Less: Allowance for credit losses 18,699   16,086 
    Net loans receivable 1,656,440   1,594,983 
    Regulatory stock, at cost 6,329   8,843 
    Bank premises and equipment, net 18,503   17,254 
    Bank owned life insurance 46,382   46,197 
    Foreclosed real estate owned 0   290 
    Accrued interest receivable 8,062   7,759 
    Deferred tax assets, net 18,818   25,610 
    Goodwill 29,266   29,266 
    Other intangible assets 167   240 
    Other assets 16,013   14,911 
    TOTAL ASSETS$        2,279,751  $        2,179,998 


          
    LIABILITIES
    		     
    Deposits:     
    Non-interest bearing demand$420,967  $430,242 
    Interest-bearing 1,434,284   1,316,582 
    Total deposits 1,855,251   1,746,824 
    Short-term borrowings 52,453   103,881 
    Other borrowings 144,959   137,447 
    Accrued interest payable 12,688   8,605 
    Other liabilities 18,746   18,539 
    TOTAL LIABILITIES 2,084,097   2,015,296 
            
    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 98,330   97,449 
    Retained earnings 140,489   137,363 
    Treasury stock, at cost: 2024: 221,140 shares, 2023: 222,051 shares (5,969)  (5,957)
    Accumulated other comprehensive loss (38,027)  (64,982)
    TOTAL STOCKHOLDERS' EQUITY 195,654   164,702 
    TOTAL LIABILITIES AND
    STOCKHOLDERS' EQUITY    		$2,279,751  $2,179,998 


         
    NORWOOD FINANCIAL CORP
    Consolidated Statements of Income
    (dollars in thousands, except per share data)
    (unaudited)    		    
      Three Months Ended September 30, Nine Months Ended September 30,
      2024 2023  2024    2023 
    INTEREST INCOME           
    Loans receivable, including fees$25,464 $ 22,021 $73,266 $61,881 
    Securities 2,526  2,433  7,635  7,418 
    Other 497  54  2,194  156 
    Total Interest income 28,487  24,508  83,095  69,455 
               
    INTEREST EXPENSE          
    Deposits 10,553  7,017  31,349  17,119 
    Short-term borrowings 323  1,126  1,015  2,702 
    Other borrowings 1,680  1,326  5,165  2,860 
    Total Interest expense 12,556  9,469  37,529  22,681 
    NET INTEREST INCOME 15,931  15,039  45,566  46,774 
    PROVISION FOR CREDIT LOSSES 1,345 $882 $        1,069 $(568)
    NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 14,586  14,157  44,497  47,342 
               
    OTHER INCOME          
    Service charges and fees 1,517  1,527  4,364  4,192 
    Income from fiduciary activities 256  246  719  688 
    Net realized (losses) gains on sales of securities -  -  -  (209)
    Gains on sales of loans, net 103  18  145  27 
    Gains on sales of foreclosed real estate owned -  13  32  13 
    Earnings and proceeds on life insurance policies 261  328  781  770 
    Other 158  174  467  520 
    Total other income 2,295  2,306  6,508  6,001 
               
    OTHER EXPENSES          
    Salaries and employee benefits 6,239  6,083  18,328  17,893 
    Occupancy, furniture and equipment 1,269  1,242  3,758  3,818 
    Data processing and related operations 1,162  876  3,208  2,465 
    Taxes, other than income 179  167  452  490 
    Professional fees 576  524  1,669  1,132 
    FDIC Insurance assessment 339  254  1,009  699 
    Foreclosed real estate 9  9  45  112 
    Amortization of intangibles 16  20  54  66 
    Other 2,242  2,101  6,683  5,974 
    Total other expenses 12,031  11,276  35,206  32,649 
                 
    INCOME BEFORE TAX 4,850  5,187  15,799  20,694 
    INCOME TAX EXPENSE 1,006  1,068  3,308  4,289 
    NET INCOME$3,844 $4,119 $12,491 $16,405 
                 
    Basic earnings per share$0.48 $0.51 $1.55 $2.03 
                 
    Diluted earnings per share$0.48 $0.51 $1.55 $2.03 


            
    NORWOOD FINANCIAL CORP
    Financial Highlights (Unaudited)
    (dollars in thousands, except per share data)    		       
    For the Three Months Ended September 30 2024   2023 
    Net interest income$        15,931  $        15,039 
    Net income 3,844   4,119 
            
    Net interest spread (fully taxable equivalent) 2.23%  2.26%
    Net interest margin (fully taxable equivalent) 2.99%  2.92%
    Return on average assets 0.68%  0.76%
    Return on average equity 8.09%  9.33%
    Return on average tangible equity 9.58%  11.22%
    Basic earnings per share$        0.48  $        0.51 
    Diluted earnings per share$        0.48  $        0.51 
            
    For the Nine Months Ended September 30 2024   2023 
    Net interest income$        45,566  $        46,774 
    Net income 12,491   16,405 
            
    Net interest spread (fully taxable equivalent) 2.12%  2.56%
    Net interest margin (fully taxable equivalent) 2.87%  3.10%
    Return on average assets 0.75%  1.04%
    Return on average equity 9.09%  12.54%
    Return on average tangible equity 10.82%  15.08%
    Basic earnings per share$        1.55  $        2.03 
    Diluted earnings per share$        1.55  $        2.03 
            
    As of September 30 2024   2023 
    Total assets$        2,279,751  $        2,179,998 
    Total loans receivable 1,675,139   1,611,069 
    Allowance for credit losses 18,699   16,086 
    Total deposits 1,855,251   1,746,824 
    Stockholders' equity 195,654   164,702 
    Trust assets under management 209,857   185,913 
            
    Book value per share$        24.92  $        21.15 
    Tangible book value per share$        21.28  $        17.49 
    Equity to total assets 8.58%  7.56%
    Allowance to total loans receivable 1.12%  1.00%
    Nonperforming loans to total loans 0.47%  0.65%
    Nonperforming assets to total assets 0.35%  0.50%


     
    NORWOOD FINANCIAL CORP
    Consolidated Balance Sheets (unaudited)
    (dollars in thousands)
     September 30
    2024    		June 30
    2024    		March 31
    2024    		December 31
    2023    		September 30
    2023
    ASSETS     
    Cash and due from banks$
    		        47,072
    		 $
    		        29,903
    		 $
    		        19,519
    		 $
    		        28,533
    		 $
    		        41,141
    		 
    Interest-bearing deposits with banks  35,808  39,492  92,444  37,587  13,005 
    Cash and cash equivalents 82,880  69,395  111,963  66,120  54,146 
                    
    Securities available for sale 396,891  397,578  398,374  406,259  380,499 
    Loans receivable 1,675,139  1,641,356  1,621,448  1,603,618  1,611,069 
    Less: Allowance for credit losses 18,699  17,807  18,020  18,968  16,086 
    Net loans receivable 1,656,440  1,623,549  1,603,428  1,584,650  1,594,983 
    Regulatory stock, at cost 6,329  6,443  6,545  7,318  8,843 
    Bank owned life insurance 46,382  46,121  45,869  46,439  46,197 
    Bank premises and equipment, net 18,503  18,264  18,057  17,838  17,254 
    Foreclosed real estate owned 0  0  97  97  290 
    Goodwill and other intangibles 29,433  29,449  29,468  29,487  29,506 
    Other assets 42,893  44,517  46,622  42,871  48,280 
    TOTAL ASSETS$        2,279,751 $        2,235,316 $        2,260,423 $        2,201,079 $        2,179,998 
          
    LIABILITIES
    		     
    Deposits       
    Non-interest bearing demand$        420,967 $        391,849 $        383,362 $        399,545 $        430,242 
    Interest-bearing deposits 1,434,284  1,419,323  1,455,636  1,395,614  1,316,582 
    Total deposits 1,855,251  1,811,172  1,838,998  1,795,159  1,746,824 
    Borrowings 197,412  210,422  211,234  198,312  241,328 
    Other liabilities 31,434  31,534  28,978  26,538  27,144 
    TOTAL LIABILITIES 2,084,097  2,053,128  2,079,210  2,020,009  2,015,296 
                    
    STOCKHOLDERS' EQUITY 195,654  182,188  181,213  181,070  164,702 
                    
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$        2,279,751 $        2,235,316 $        2,260,423 $        2,201,079 $        2,179,998 


           
    NORWOOD FINANCIAL CORP
    Consolidated Statements of Income (unaudited)
    (dollars in thousands, except per share data)    		    
           
      September 30
    2024    		June 30
    2024    		March 31
    2024    		December 31
    2023    		September 30
    2023
    Three months ended 
    INTEREST INCOME      
    Loans receivable, including fees$25,464 $24,121 $23,681 $23,328 $22,021 
    Securities 2,526  2,584  2,526  2,504  2,433 
    Other 497  966  731  253  54 
    Total interest income 28,487  27,671  26,938  26,085  24,508 
                    
    INTEREST EXPENSE      
    Deposits 10,553  10,687  10,110  8,910  7,017 
    Borrowings 2,003  2,059  2,118  1,882  2,452 
    Total interest expense 12,556  12,746  12,228  10,792  9,469 
    NET INTEREST INCOME 15,931  14,925  14,710  15,293  15,039 
    (RELEASE OF) PROVISION FOR CREDIT LOSSES 1,345  347  (624)  6,116  882 
    NET INTEREST INCOME AFTER (RELEASE OF)
    PROVISION FOR CREDIT LOSSES
    		      
    14,586  14,578  15,334  9,177  14,157 
           
    OTHER INCOME               
    Service charges and fees 1,517  1,504  1,343  1,421  1,527 
    Income from fiduciary activities 256  225  238  210  246 
    Net realized (losses) gains on sales of securities -  -  -  -  - 
    Gains on sales of loans, net 103  36  6  36  18 
    Gains on sales of foreclosed real estate owned -  32  -  66  13 
    Earnings and proceeds on life insurance policies 261  253  268  242  328 
    Other 158  157  151  148  174 
    Total other income 2,295  2,207  2,006  2,123  2,306 
                    
    OTHER EXPENSES      
    Salaries and employee benefits 6,239  5,954  6,135  5,672  6,083 
    Occupancy, furniture and equipment, net 1,269  1,229  1,261  1,265  1,242 
    Foreclosed real estate 9  15  21  17  9 
    FDIC insurance assessment 339  309  361  287  254 
    Other 4,175  3,937  3,954  3,608  3,688 
    Total other expenses 12,031  11,444  11,732  10,849  11,276 
                    
    INCOME BEFORE TAX 4,850  5,341  5,608  451  5,187 
    INCOME TAX EXPENSE 1,006  1,128  1,175  96  1,068 
    NET INCOME$3,844 $4,213 $4,433 $355 $4,119 
                    
    Basic earnings per share$0.48 $0.52 $0.55 $0.04 $0.51 
                    
    Diluted earnings per share$0.48 $0.52 $0.55 $0.04 $0.51 
                    
    Book Value per share$24.92 $23.26 $23.01 $22.99 $21.15 
    Tangible Book Value per share 21.28  19.62  19.38  19.36  17.49 
                    
    Return on average assets (annualized) 0.68% 0.75% 0.80% 0.06%  0.76%
    Return on average equity (annualized) 8.09% 9.41%  9.79%  0.84%  9.33%
    Return on average tangible equity (annualized) 9.58% 11.26%  11.68%  1.01%  11.22%
                    
    Net interest spread (fte) 2.23% 2.05%  2.07%  2.24%  2.28%
    Net interest margin (fte) 2.99% 2.79%  2.79%  2.95%  2.94%
                    
    Allowance for credit losses to total loans 1.12% 1.08%  1.11%  1.18%  1.00%
    Net charge-offs to average loans (annualized) 0.08% 0.13%  0.08%  0.79%  0.59%
    Nonperforming loans to total loans 0.47% 0.47%  0.23%  0.48%  0.65%
    Nonperforming assets to total assets 0.35% 0.34%  0.17%  0.35%  0.50%


    NORWOOD FINANCIAL CORP
    NET INTEREST MARGIN ANALYSIS
    (dollars in thousands)
     For the Quarter Ended
     September 30, 2024For the Quarter Ended June 30, 2024September 30, 2023
    Average
    Balance
    (2)    		Interest
    (1) 
    		Average
    Rate
    (3)    		Average
    Balance
    (2)    		Interest
    (1)    		Average
    Rate
    (3)    		Average
    Balance
    (2)    		Interest
    (1) 
    		Average
    Rate
     (3)
    Assets           
    Interest-earning assets:           
    Interest-bearing deposits with banks$36,221 $497 5.46%$69,173 $967 5.62%$3,675 $54 5.83%
    Securities available for sale:           
    Taxable 392,168  2,161 2.19  401,014  2,206 2.21  406,962  2,052 2.00 
    Tax-exempt (1) 67,563  461 2.71  69,126  477 2.78  70,219  483 2.73 
    Total securities available for sale (1) 459,731  2,622 2.27  470,140  2,683 2.30  477,181  2,535 2.11 
    Loans receivable (1) (4) (5) 1,651,921  25,575 6.16  1,629,283  24,220 5.98  1,589,474  22,104 5.52 
    Total interest-earning assets 2,147,873  28,694 5.31  2,168,596  27,870 5.17  2,070,330  24,693 4.73 
    Non-interest earning assets:           
    Cash and due from banks 28,193     26,422     27,910   
    Allowance for credit losses (17,944)    (18,023)    (17,262)  
    Other assets 78,344     69,718     65,863   
    Total non-interest earning assets 88,593     78,117     76,511   
    Total Assets$2,236,466    $2,246,713    $2,146,841   
    Liabilities and Stockholders' Equity           
    Interest-bearing liabilities:           
                
    Interest-bearing demand and money market$461,897 $2,782 2.40 $450,918 $2,397 2.14 $439,255 $1,647 1.49 
    Savings 221,366  13 0.02  233,676  286 0.49  238,493  77 0.13 
    Time 734,235  7,758 4.20  755,224  8,004 4.26  611,607  5,293 3.43 
    Total interest-bearing deposits 1,417,498  10,553 2.96  1,439,818  10,687 2.99  1,289,355  7,017 2.16 
    Short-term borrowings 53,622  323 2.40  61,689  356 2.32  116,470  1,126 3.84 
    Other borrowings 146,357  1,680 4.57  149,442  1,703 4.58  116,700  1,326 4.51 
    Total interest-bearing liabilities 1,617,477  12,556 3.09  1,650,949  12,746 3.11  1,522,525  9,469 2.47 
    Non-interest bearing liabilities:           
    Demand deposits 400,314     387,962     425,216   
    Other liabilities 29,540     28,308     23,876   
    Total non-interest bearing liabilities 429,854     416,270     449,092   
    Stockholders' equity 189,135     179,494     175,224   
    Total Liabilities and Stockholders' Equity$2,236,466    $2,246,713    $2,146,841   
    Net interest income/spread (tax equivalent basis)  16,138 2.23%  15,124 2.06%  15,224 2.26%
    Tax-equivalent basis adjustment  (207)    (199)    (185) 
    Net interest income $15,931    $14,925    $15,039  
    Net interest margin (tax equivalent basis)  2.99%  2.80%  2.92%
                 

    (1) Interest and yields are presented on a tax-equivalent basis using a marginal tax rate of 21%.
    (2) Average balances have been calculated based on daily balances.
    (3) Annualized
    (4) Loan balances include non-accrual loans and are net of unearned income.
    (5) Loan yields include the effect of amortization of deferred fees, net of costs.



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