• Norwood Financial Corp Announces Earnings for the Fourth Quarter and 2023 Fiscal Year

    Source: Nasdaq GlobeNewswire / 29 Jan 2024 07:15:01   America/Chicago

    HONESDALE, Pa., Jan. 29, 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 for the three months ended December 31, 2023 of $355,000 compared to the net income of $7,140,000 earned in the three months ended December 31, 2022. The decrease in net income was due primarily to a $1,939,000 decrease in net interest income, and a $5,816,000 increase in the provision for credit losses. For the year ended December 31, 2023, net income totaled $16,759,000, a decrease of $12,474,000 from net income of $29,233,000 earned in year ended December 31, 2022. The decrease includes a $6,330,000 decrease in net interest income and a $4,648,000 increase in the provision for credit losses.

    Earnings per share (fully diluted) were $0.04 and $0.88 for the three-month periods ended December 31, 2023 and 2022, respectively. For the year ended December 31, 2023, earnings per share on a fully diluted basis were $2.07, compared to $3.58 for the year ended December 31, 2022. For the year ended December 31, 2023, the return on average assets was 0.79%, and the return on average equity was 9.67%, compared to 1.43% and 16.11%, respectively, for the year ended December 31, 2022.

    Total assets were $2.201 billion as of December 31, 2023. As of December 31, 2023, loans receivable were $1.604 billion, total deposits were $1.795 billion and stockholders’ equity was $181.1 million.

    Loans receivable increased $129.7 million to $1.604 billion at December 31, 2023, from $1.474 billion at December 31, 2022. The increase in loans receivable in 2023 included an $83.9 million increase in retail loans and a $45.8 million increase in commercial loans. For the three months and year ended December 31, 2023, net charge-offs totaled $3,181,000 and $6,078,000, respectively, compared to $232,000 and $344,000, respectively, for the corresponding periods in 2022. The increase in net charge-offs for the three months and year ended December 31, 2023 was due primarily to losses on one credit relationship in the amount of $2,806,000 and $4,806,000, respectively.

    Net interest income, on a fully taxable equivalent basis (fte), totaled $15,488,000 for the three months ended December 31, 2023, a decrease of $1,941,000 compared to the same period in 2022. For the year ended December 31, 2023, net interest income (fte) totaled $62,816,000, a decrease of $6,348,000 compared to 2022, due primarily to the increase in funding costs on interest-bearing liabilities in excess of the increase in the yield earned on interest earning assets.

    The provision for credit losses totaled $6,116,000 for the three months ended December 31, 2023, compared to $300,000 for the three months ended December 31, 2022. The increase was required to maintain the allowance for credit losses at an adequate level based on the quarterly analysis and was due primarily to replenish the allowance for credit losses for charge-offs recorded during the period. For the year ended December 31, 2023, the provision for credit losses totaled $5,548,000 compared to $900,000 for the year ended December 31, 2022. The $4,648,000 increase in the provision for credit losses was required to replenish the allowance for credit losses for charge-offs incurred during the year ended December 31, 2023.

    Other income for the three months ended December 31, 2023, totaled $2,123,000 compared to $1,926,000 for the similar period in 2022. Gains on the sale of loans, securities and foreclosed real estate increased $98,000, while service charges and fees increased $51,000. All other items of other income increased $48,000, net. Other income for the year ended December 31, 2023, totaled $8,124,000 compared to $9,932,000 in 2022, a decrease of $1,808,000 due primarily to income recognized in 2022 on previously acquired purchased impaired loans that were carried at a discount. For the year ended December 31, 2023, gains on the sale of loans and investment securities decreased $152,000 in the aggregate, compared to the year ended December 31, 2022. Gains on sales of foreclosed real estate owned decreased $347,000 during the year ended December 31, 2023, compared to the year ended December 31, 2022.

    Other expenses totaled $10,849,000 for the three months ended December 31, 2023, compared to $10,275,000 in the similar period of 2022. For the year ended December 31, 2023, other expenses totaled $43,497,000 compared to $41,044,000 for 2022, an increase of $2,453,000, or 6.0%.

    Mr. Donnelly commented, “Our results in 2023 reflect decreasing net interest spreads due to rising interest rates, which have impacted our cost of interest-bearing liabilities more than the increase in yield earned on interest-earning assets. Our Return on Average Assets was 0.79%, and our Return on Average Equity was 9.67%. We have continued to grow our core business lines, including an 8.8% increase in loans outstanding and a 3.90% increase in total deposits. Our cash dividend of $0.30 per share declared in the fourth quarter of 2023, represents a 3.5% increase over the same period of last year. 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 our 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 is traded 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
    December 31    		Year ended
    December 31
      2023  2022  2023  2022
    Net interest income$15,293  $17,232  $62,067  $68,397 
    Tax equivalent basis adjustment using 21% marginal tax rate 195   197   749   767 
    Net interest income on a fully taxable equivalent basis$15,488  $17,429  $62,816  $69,164 


    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
    December 31    		Year ended
    December 31
      2023  2022  2023  2022
    Average equity
    		$168,320  $162,762  $173,274  $181,499 
    Average goodwill and other Intangibles (29,495
    		)  (29,582
    		)  (29,526
    		)  (29,618
    		)
    Average tangible equity$138,825
    		  $133,180
    		  $143,748
    		  $151,881 


    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)          
      December 31      
      2023 2022      
    ASSETS          
    Cash and due from banks$28,533 $28,847       
    Interest-bearing deposits with banks 37,587  3,019       
    Cash and cash equivalents 66,120  31,866       
               
    Securities available for sale 406,259  418,927       
    Loans receivable 1,603,618  1,473,945       
    Less: Allowance for credit losses 18,968  16,999       
    Net loans receivable 1,584,650  1,456,946       
    Regulatory stock, at cost 7,318  5,418       
    Bank premises and equipment, net 17,838  17,924       
    Bank owned life insurance 46,439  43,364       
    Foreclosed real estate owned 97  346       
    Accrued interest receivable 8,123  6,917       
    Deferred tax assets, net 21,353  23,549       
    Goodwill 29,266  29,266       
    Other intangible assets 221  306       
    Other assets 13,395  12,241       
    TOTAL ASSETS$2,201,079 $2,047,070       
               
    LIABILITIES          
    Deposits:          
    Non-interest bearing demand$399,545 $434,529       
    Interest-bearing 1,395,614  1,293,198       
    Total deposits 1,795,159  1,727,727       
    Short-term borrowings 74,076  93,215       
    Other borrowings 124,236  40,000       
    Accrued interest payable 10,510  2,653       
    Other liabilities 16,028  16,390       
    TOTAL LIABILITIES 2,020,009  1,879,985       
               
    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: 2023: 8,310,847 shares, 2022: 8,291,401 shares 831  829       
    Surplus 97,700  96,897       
    Retained earnings 135,284  130,020       
    Treasury stock, at cost: 2023: 200,690 shares, 2022: 124,650 shares(5,397) (3,308)      
    Accumulated other comprehensive loss (47,348) (57,353)      
    TOTAL STOCKHOLDERS' EQUITY 181,070  167,085       
               
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$2,201,079 $2,047,070       
               
               
               
               
    NORWOOD FINANCIAL CORP
    Consolidated Statements of Income
    (dollars in thousands, except per share data)
     (unaudited)          
     Three Months Ended December 31,  Twelve Months Ended December 31,
      2023 2022   2023 2022
    INTEREST INCOME          
    Loans receivable, including fees$23,328 $17,810   $85,209 $66,013 
    Securities 2,504  2,487    9,922  9,051 
    Other 253  98    409  602 
    Total Interest income 26,085  20,395    95,540  75,666 
               
    INTEREST EXPENSE          
    Deposits 8,910  2,772    26,029  6,471 
    Short-term borrowings 346  329    3,048  524 
    Other borrowings 1,536  62    4,396  274 
    Total Interest expense 10,792  3,163    33,473  7,269 
    NET INTEREST INCOME 15,293  17,232    62,067  68,397 
    PROVISION FOR CREDIT LOSSES 6,116  300    5,548  900 
    NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES 9,177  16,932    56,519  67,497 
               
               
    OTHER INCOME          
    Service charges and fees 1,421  1,370    5,613  5,661 
    Income from fiduciary activities 210  210    898  845 
    Net realized (losses) gains on sales of securities -  3    (209) 3 
    Gains on sales of loans, net 36  1    63  3 
    Gains on sales of foreclosed real estate owned 66  -    80  427 
    Earnings and proceeds on life insurance policies 242  195    1,012  1,087 
    Other 148  147    667  1,906 
    Total other income 2,123  1,926    8,124  9,932 
               
    OTHER EXPENSES          
    Salaries and employee benefits 5,672  5,246    23,565  22,071 
    Occupancy, furniture and equipment 1,265  1,263    5,083  4,967 
    Data processing and related operations 877  917    3,342  2,948 
    Taxes, other than income 77  239    566  1,013 
    Professional fees 544  383    1,676  1,719 
    FDIC Insurance assessment 287  144    985  612 
    Foreclosed real estate 17  7    129  73 
    Amortization of intangibles 19  23    85  101 
    Other 2,091  2,053    8,066  7,540 
    Total other expenses 10,849  10,275    43,497  41,044 
               
    INCOME BEFORE TAX 451  8,583    21,146  36,385 
    INCOME TAX EXPENSE 96  1,443    4,387  7,152 
    NET INCOME$355 $7,140   $16,759 $29,233 
               
    Basic earnings per share$0.04 $0.88   $2.08 $3.59 
               
    Diluted earnings per share$0.04 $0.88   $2.07 $3.58 
               
               
               
    NORWOOD FINANCIAL CORP
    Financial Highlights (Unaudited)
    (dollars in thousands, except per share data)
               
    For the Three Months Ended December 31 2023 2022      
               
    Net interest income$15,293 $17,232       
    Net income 355  7,140       
               
    Net interest spread (fully taxable equivalent) 2.24% 3.30%      
    Net interest margin (fully taxable equivalent) 2.95% 3.55%      
    Return on average assets 0.06% 1.40%      
    Return on average equity 0.84% 17.40%      
    Return on average tangible equity 1.01% 21.27%      
    Basic earnings per share$0.04 $0.88       
    Diluted earnings per share$0.04 $0.88       
               
    For the Twelve Months Ended December 31 2023  2022       
               
    Net interest income$62,067 $68,397       
    Net income 16,759  29,233       
               
    Net interest spread (fully taxable equivalent) 2.47% 3.38%      
    Net interest margin (fully taxable equivalent) 3.06% 3.53%      
    Return on average assets 0.79% 1.43%      
    Return on average equity 9.67% 16.11%      
    Return on average tangible equity 11.66% 19.25%      
    Basic earnings per share$2.08 $3.59       
    Diluted earnings per share$2.07 $3.58       
               
    As of December 31 2023 2022      
               
    Total assets$2,201,079 $2,047,070       
    Total loans receivable 1,603,618  1,473,945       
    Allowance for credit losses 18,968  16,999       
    Total deposits 1,795,159  1,727,727       
    Stockholders' equity 181,070  167,085       
    Trust assets under management 192,374  184,855       
               
    Book value per share$22.99 $20.86       
    Tangible book value per share$19.36 $17.24       
    Equity to total assets 8.23% 8.16%      
    Allowance to total loans receivable 1.18% 1.15%      
    Nonperforming loans to total loans 0.48% 0.08%      
    Nonperforming assets to total assets 0.35% 0.07%      
               
               
               
    NORWOOD FINANCIAL CORP
    Consolidated Balance Sheets (unaudited)
    (dollars in thousands)
      December 31 September 30June 30 March 31 December 31
      2023 2023 2023 2023 2022
    ASSETS          
    Cash and due from banks$28,533 $41,141 $30,053 $25,701 $28,847 
    Interest-bearing deposits with banks 37,587  13,005  3,036  3,314  3,019 
    Cash and cash equivalents 66,120  54,146  33,089  29,015  31,866 
               
    Securities available for sale 406,259  380,499  403,621  418,245  418,927 
    Loans receivable 1,603,618  1,611,069  1,577,699  1,535,643  1,473,945 
    Less: Allowance for credit losses 18,968  16,086  17,483  19,445  16,999 
    Net loans receivable 1,584,650  1,594,983  1,560,216  1,516,198  1,456,946 
    Regulatory stock, at cost 7,318  8,843  7,924  5,963  5,418 
    Bank owned life insurance 46,439  46,197  45,806  45,577  43,364 
    Bank premises and equipment, net 17,838  17,254  17,363  17,660  17,924 
    Foreclosed real estate owned 97  290  387  346  346 
    Goodwill and other intangibles 29,487  29,506  29,526  29,549  29,572 
    Other assets 42,871  48,280  43,833  41,810  42,707 
    TOTAL ASSETS$2,201,079 $2,179,998 $2,141,765 $2,104,363 $2,047,070 
               
    LIABILITIES          
    Deposits:          
    Non-interest bearing demand$399,545 $430,242 $425,757 $419,615 $434,529 
    Interest-bearing deposits 1,395,614  1,316,582  1,306,240  1,336,320  1,293,198 
    Total deposits 1,795,159  1,746,824  1,731,997  1,755,935  1,727,727 
    Borrowings 198,312  241,328  211,978  148,744  133,215 
    Other liabilities 26,538  27,144  24,366  23,269  19,043 
    TOTAL LIABILITIES 2,020,009  2,015,296  1,968,341  1,927,948  1,879,985 
               
    STOCKHOLDERS' EQUITY 181,070  164,702  173,424  176,415  167,085 
               
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$2,201,079 $2,179,998 $2,141,765 $2,104,363 $2,047,070 
               
               
               
    NORWOOD FINANCIAL CORP
    Consolidated Statements of Income (unaudited)
    (dollars in thousands, except per share data)
      December 31 September 30June 30 March 31 December 31
               
    Three months ended 2023 2023 2023 2023 2022
    INTEREST INCOME          
    Loans receivable, including fees$23,328 $22,021 $20,702 $19,158 $17,810 
    Securities 2,504  2,433  2,481  2,505  2,487 
    Other 253  54  53  48  98 
    Total interest income 26,085  24,508  23,236  21,711  20,395 
               
    INTEREST EXPENSE          
    Deposits 8,910  7,017  5,740  4,362  2,772 
    Borrowings 1,882  2,452  1,854  1,256  391 
    Total interest expense 10,792  9,469  7,594  5,618  3,163 
    NET INTEREST INCOME 15,293  15,039  15,642  16,093  17,232 
    PROVISION FOR (RELEASE OF) CREDIT LOSSES 6,116  882  (1,750) 300  300 
    NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES 9,177  14,157  17,392  15,793  16,932 
               
    OTHER INCOME          
    Service charges and fees 1,421  1,527  1,353  1,313  1,370 
    Income from fiduciary activities 210  246  229  212  210 
    Net realized (losses) gains on sales of securities -  -  (212) 2  3 
    Gains on sales of loans, net 36  18  10  -  1 
    Gains on sales of foreclosed real estate owned 66  13  -  -  - 
    Earnings and proceeds on life insurance policies 242  328  229  213  195 
    Other 148  174  174  172  147 
    Total other income 2,123  2,306  1,783  1,912  1,926 
               
    OTHER EXPENSES          
    Salaries and employee benefits 5,672  6,083  5,842  5,969  5,246 
    Occupancy, furniture and equipment, net 1,265  1,242  1,314  1,262  1,263 
    Foreclosed real estate 17  9  74  29  7 
    FDIC insurance assessment 287  254  244  200  144 
    Other 3,608  3,688  3,464  2,976  3,615 
    Total other expenses 10,849  11,276  10,938  10,436  10,275 
               
    INCOME BEFORE TAX 451  5,187  8,237  7,269  8,583 
    INCOME TAX EXPENSE 96  1,068  1,734  1,487  1,443 
    NET INCOME$355 $4,119 $6,503 $5,782 $7,140 
               
    Basic earnings per share$0.04 $0.51 $0.81 $0.71 $0.88 
               
    Diluted earnings per share$0.04 $0.51 $0.81 $0.71 $0.88 
               
    Book Value per share$22.99 $21.15 $22.24 $21.92 $20.86 
    Tangible Book Value per share 19.36  17.49  18.58  18.31  17.24 
               
    Return on average assets (annualized) 0.06% 0.76% 1.23% 1.13% 1.40%
    Return on average equity (annualized) 0.84% 9.33% 14.72% 13.61% 17.40%
    Return on average tangible equity (annualized) 1.01% 11.22% 17.66% 16.42% 21.27%
               
    Net interest spread (fte) 2.24% 2.28% 2.56% 2.83% 3.30%
    Net interest margin (fte) 2.95% 2.94% 3.09% 3.25% 3.55%
               
    Allowance for credit losses to total loans 1.18% 1.00% 1.11% 1.27% 1.15%
    Net charge-offs to average loans (annualized) 0.79% 0.59% 0.06% 0.08% 0.06%
    Nonperforming loans to total loans 0.48% 0.65% 0.20% 0.18% 0.08%
    Nonperforming assets to total assets 0.35% 0.50% 0.17% 0.15% 0.07%

     


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