Norwood Financial Corp Announces Third Quarter 2024 Results

GlobeNewswire Inc.

October 28, 2024 12:15PM GMT

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 3^rd 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 ended	Nine months ended
September 30	September 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 CORPConsolidated 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 CORPConsolidated 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 CORPConsolidated 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, 2024	For the Quarter Ended June 30, 2024	September 30, 2023
AverageBalance (2)	Interest (1)	Average Rate (3)	AverageBalance (2)	Interest (1)	Average Rate (3)	AverageBalance (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.