• Norwood Financial Corp Announces Second Quarter Earnings

    Source: Nasdaq GlobeNewswire / 26 Jul 2023 08:15:01   America/New_York

    HONESDALE, Pa., July 26, 2023 (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, 2023 of $6,503,000, which was $352,000 lower than the same three-month period of last year. The decrease includes a $1,252,000 decrease in net interest income, a $706,000 decrease in total other income, and a $466,000 increase in total other expense, which was partially offset by a $2,050,000 decrease in the provision for credit losses. Earnings per share (fully diluted) were $0.81 in the three months ended June 30, 2023, compared to $0.84 in the same period of last year. The annualized return on average assets for the three months ended June 30, 2023, was 1.23%, while the annualized return on average tangible equity was 17.66%. Net income for the six months ended June 30, 2023, was $12,285,000, which is $1,698,000 lower than the same six-month period of 2022, due to decreases in net interest income and total other income, and an increase in operating expenses, partially offset by a decrease in the provision for credit losses of $2,050,000.   Earnings per share (fully diluted) for the six months ended June 30, 2023, were $1.51, compared to $1.71 for the six months ended June 30, 2022. The annualized return on average assets for the six months ended June 30, 2023 was 1.18%. The annualized return on average tangible equity for the six months ended June 30, 2023 was 17.06%.

    Total assets as of June 30, 2023 were $2.142 billion, compared to $2.066 billion at June 30, 2022. At June 30, 2023, loans receivable were $1.578 billion, total deposits were $1.732 billion and stockholders’ equity was $173.4 million.

    For the three months ended June 30, 2023, net interest income, on a fully-taxable equivalent basis (fte), totaled $15,829,000, a decrease of $1,253,000 compared to the same period in 2022. A $122.5 million increase in average time deposits, combined with a 231 basis points increase in the cost of time deposits, contributed to the decreased net interest income. Borrowing costs also increased, offsetting a $5,143,000 increase in total interest income. Net interest margin (fte) for the three months ended June 30, 2023 was 3.09%, compared to 3.49% in the same period of 2022. The tax-equivalent yield on interest-earning assets increased 83 basis points to 4.57% during the three months ended June 30, 2023, compared to the same prior year period, while the cost of interest-bearing liabilities increased 167 basis points to 2.01%. Net interest income (fte) for the six months ended June 30, 2023 totaled $32,104,000, which was $1,261,000 lower than the same period in 2022, due primarily to a $10,767,000 increase in the cost of interest-bearing liabilities. The net interest margin (fte) was 3.17% for the six months ended June 30, 2023, as compared to 3.41% for the six months ended June 30, 2022. The decrease in the net interest margin (fte) was due to a 143 basis points increase in the cost of interest-bearing liabilities, which offset the 82 basis points increase in the yield on interest-earning assets.

    Other income for the three months ended June 30, 2023, totaled $1,783,000, compared to $2,489,000 for the same period in 2022. The decrease is due primarily to a $220,000 decrease in earnings and proceeds on bank-owned life insurance policies, and a $212,000 loss on the sale of investment securities.   For the six months ended June 30, 2023, other income totaled $3,695,000, compared to $5,828,000 for the six months ended June 30, 2022.   The decrease includes the reduced earnings and proceeds on bank-owned life insurance, losses recognized on sales of securities, and income recognized in 2022 on previously acquired purchased impaired loans that were carried at a discount.

    Other expenses totaled $10,938,000 for the three months ended June 30, 2023, an increase of $466,000, compared to the $10,472,000 for the same period of 2022.   For the six months ended June 30, 2023, other expenses totaled $21,374,000, compared to $20,630,000 for the same period in 2022, due primarily to a $539,000 increase in salaries and employee benefits costs.

    Mr. Donnelly stated, “Our second quarter income decreased from the 2022 level due to one-time gains recognized in 2022 and the rising cost of deposits and borrowed funds. These decreases were partially offset by a $2,050,000 reduction in our provision for credit losses as a result of our June 30, 2023 current expected credit losses (“CECL”) methodology, due to a reduce level of credit losses within the measurement period. Loan growth was 10.9% annually during the quarter, while total deposits decreased $27.2 million during the second quarter of 2023 due primarily to significant decreases in municipal account balances. Our core operating expenses remain well-controlled, and 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 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, the risks and uncertainty posed by, and the continued effect, and impact of, the COVID-19 pandemic on the economy and the Company’s results of operation and financial condition, 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 June 30 Six months ended June 30
    (dollars in thousands) 2023 2022 2023 2022
          
    Net Interest Income $15,642  $16,894  $31,735  $32,995 
    Taxable equivalent basis adjustment   using 21% marginal tax rate  187   188   369   370 
    Net interest income on a fully taxable equivalent basis $15,829  $17,082  $32,104  $33,365 
          

    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 June 30 Six months ended June 30
    (dollars in thousands) 2023 2022 2023 2022
          
    Average equity $186,111  $181,044  $180,952  $192,090 
          
    Average goodwill and other intangibles  (29,536
    )
      (29,629
    )
      (29,547)  (29,643)
    Average tangible equity
     $156,575  $151,415  $151,405  $162,447 
          


    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)
      June 30      
      2023 2022      
    ASSETS          
    Cash and due from banks$30,053 $29,931       
    Interest-bearing deposits with banks 3,036  79,735       
    Cash and cash equivalents 33,089  109,666       
               
    Securities available for sale 403,621  440,877       
    Loans receivable 1,577,699  1,404,317       
    Less: Allowance for credit losses 17,483  17,017       
    Net loans receivable 1,560,216  1,387,300       
    Regulatory stock, at cost 7,924  2,396       
    Bank premises and equipment, net 17,363  17,032       
    Bank owned life insurance 45,806  43,167       
    Foreclosed real estate owned 387  346       
    Accrued interest receivable 7,276  6,085       
    Deferred tax assets, net 23,301  19,134       
    Goodwill 29,266  29,266       
    Other intangible assets 260  353       
    Other assets 13,256  10,762       
    TOTAL ASSETS$2,141,765 $2,066,384       
               
    LIABILITIES          
    Deposits:          
    Non-interest bearing demand$425,757 $442,991       
    Interest-bearing 1,306,240  1,356,839       
    Total deposits 1,731,997  1,799,830       
    Short-term borrowings 112,290  70,427       
    Other borrowings 99,687  4,412       
    Accrued interest payable 7,101  1,138       
    Other liabilities 17,266  16,746       
    TOTAL LIABILITIES 1,968,341  1,892,553       
               
    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: 8,291,401 shares, 2022: 8,275,901 shares 829  828       
    Surplus 97,268  96,752       
    Retained earnings 135,583  119,414       
    Treasury stock, at cost: 2023: 223,926 shares, 2022: 110,084 shares(6,007) (2,933)      
    Accumulated other comprehensive loss (54,249) (40,230)      
    TOTAL STOCKHOLDERS' EQUITY 173,424  173,831       
               
    TOTAL LIABILITIES AND          
    STOCKHOLDERS' EQUITY$2,141,765 $2,066,384       
               
               
               
               
    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,
      2023 2022   2023 2022
    INTEREST INCOME          
    Loans receivable, including fees$20,702 $15,714   $39,860 $31,089 
    Securities 2,481  2,197    4,986  4,091 
    Other 53  182    101  260 
    Total Interest income 23,236  18,093    44,947  35,440 
               
    INTEREST EXPENSE          
    Deposits 5,740  1,083    10,102  2,142 
    Short-term borrowings 943  60    1,722  108 
    Other borrowings 911  56    1,388  195 
    Total Interest expense 7,594  1,199    13,212  2,445 
    NET INTEREST INCOME 15,642  16,894    31,735  32,995 
    (RELEASE OF) PROVISION FOR CREDIT LOSSES$(1,750) 300   $(1,450) 600 
    NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES 17,392  16,594    33,185  32,395 
               
               
    OTHER INCOME          
    Service charges and fees 1,353  1,475    2,665  2,946 
    Income from fiduciary activities 229  214    441  416 
    Net realized gains on sales of securities (212) -    (209) - 
    Gains on sales of loans, net 10  -    10  - 
    Gains on sales of foreclosed real estate owned -  -    -  427 
    Earnings and proceeds on life insurance policies 229  449    442  625 
    Other 174  351    346  1,414 
    Total other income 1,783  2,489    3,695  5,828 
               
    OTHER EXPENSES          
    Salaries and employee benefits 5,842  5,840    11,810  11,271 
    Occupancy, furniture and equipment 1,314  1,206    2,576  2,513 
    Data processing and related operations 822  666    1,590  1,295 
    Taxes, other than income 162  240    323  533 
    Professional fees 323  406    608  981 
    FDIC Insurance assessment 244  142    445  326 
    Foreclosed real estate 74  10    103  63 
    Amortization of intangibles 23  27    46  54 
    Other 2,134  1,935    3,873  3,594 
    Total other expenses 10,938  10,472    21,374  20,630 
               
    INCOME BEFORE TAX 8,237  8,611    15,506  17,593 
    INCOME TAX EXPENSE 1,734  1,756    3,221  3,610 
    NET INCOME$6,503 $6,855   $12,285 $13,983 
               
    Basic earnings per share$0.81 $0.84   $1.52 $1.71 
               
    Diluted earnings per share$0.81 $0.84   $1.51 $1.71 
               
               
               
    NORWOOD FINANCIAL CORP
    Financial Highlights (Unaudited)
    (dollars in thousands, except per share data)
               
    For the Three Months Ended June 30 2023 2022      
               
    Net interest income$15,642 $16,894       
    Net income 6,503  6,855       
               
    Net interest spread (fully taxable equivalent) 2.56% 3.40%      
    Net interest margin (fully taxable equivalent) 3.09% 3.49%      
    Return on average assets 1.23% 1.35%      
    Return on average equity 14.72% 15.19%      
    Return on average tangible equity 17.66% 18.16%      
    Basic earnings per share$0.81 $0.84       
    Diluted earnings per share$0.81 $0.84       
               
    For the Six Months Ended June 30 2023
     2022
          
               
    Net interest income$31,735 $32,995       
    Net income 12,285  13,983       
               
    Net interest spread (fully taxable equivalent) 2.69% 3.30%      
    Net interest margin (fully taxable equivalent) 3.17% 3.41%      
    Return on average assets 1.18% 1.37%      
    Return on average equity 14.17% 14.68%      
    Return on average tangible equity 17.06% 17.36%      
    Basic earnings per share$1.52 $1.71       
    Diluted earnings per share$1.51 $1.71       
               
    As of June 30 2023
     2022
          
               
    Total assets$2,141,765 $2,066,384       
    Total loans receivable 1,577,699  1,404,317       
    Allowance for credit losses 17,483  17,017       
    Total deposits 1,731,997  1,799,830       
    Stockholders' equity 173,424  173,831       
    Trust assets under management 193,392  174,193       
               
    Book value per share$22.24 $21.65       
    Tangible book value per share$18.58 $18.02       
    Equity to total assets 8.10% 8.41%      
    Allowance to total loans receivable 1.11% 1.21%      
    Nonperforming loans to total loans 0.20% 0.04%      
    Nonperforming assets to total assets 0.17% 0.05%      
               
               
               
    NORWOOD FINANCIAL CORP
    Consolidated Balance Sheets (unaudited)
    (dollars in thousands)
      June 30 March 31 December 31 September 30 June 30
      2023 2023 2022 2022 2022
    ASSETS          
    Cash and due from banks$30,053 $25,701 $28,847 $23,092 $29,931 
    Interest-bearing deposits with banks 3,036  3,314  3,019  17,785  79,735 
    Cash and cash equivalents 33,089  29,015  31,866  40,877  109,666 
               
    Securities available for sale 403,621  418,245  418,927  427,287  440,877 
    Loans receivable 1,577,699  1,535,643  1,473,945  1,432,288  1,404,317 
    Less: Allowance for credit losses 17,483  19,445  16,999  16,931  17,017 
    Net loans receivable 1,560,216  1,516,198  1,456,946  1,415,357  1,387,300 
    Regulatory stock, at cost 7,924  5,963  5,418  2,220  2,396 
    Bank owned life insurance 45,806  45,577  43,364  43,169  43,167 
    Bank premises and equipment, net 17,363  17,660  17,924  17,427  17,032 
    Foreclosed real estate owned 387  346  346  346  346 
    Goodwill and other intangibles 29,526  29,549  29,572  29,595  29,619 
    Other assets 43,833  41,810  42,707  42,592  35,981 
    TOTAL ASSETS$2,141,765 $2,104,363 $2,047,070 $2,018,870 $2,066,384 
               
    LIABILITIES          
    Deposits:          
    Non-interest bearing demand$425,757 $419,615 $434,529 $453,560 $442,991 
    Interest-bearing deposits 1,306,240  1,336,320  1,293,198  1,315,236  1,356,839 
    Total deposits 1,731,997  1,755,935  1,727,727  1,768,796  1,799,830 
    Borrowings 211,978  148,744  133,215  71,754  74,839 
    Other liabilities 24,366  23,269  19,043  19,471  17,884 
    TOTAL LIABILITIES 1,968,341  1,927,948  1,879,985  1,860,021  1,892,553 
               
    STOCKHOLDERS' EQUITY 173,424  176,415  167,085  158,849  173,831 
               
    TOTAL LIABILITIES AND          
    STOCKHOLDERS' EQUITY$2,141,765 $2,104,363 $2,047,070 $2,018,870 $2,066,384 
               
               
               
    NORWOOD FINANCIAL CORP
    Consolidated Statements of Income (unaudited)
    (dollars in thousands, except per share data)
      June 30 March 31 December 31 September 30 June 30
    Three months ended 2023 2023 2022 2022 2022
    INTEREST INCOME          
    Loans receivable, including fees$20,702 $19,158 $17,810 $17,114 $15,714 
    Securities 2,481  2,505  2,487  2,473  2,197 
    Other 53  48  98  245  182 
    Total interest income 23,236  21,711  20,395  19,832  18,093 
               
    INTEREST EXPENSE          
    Deposits 5,740  4,362  2,772  1,557  1,083 
    Borrowings 1,854  1,256  391  105  116 
    Total interest expense 7,594  5,618  3,163  1,662  1,199 
    NET INTEREST INCOME 15,642  16,093  17,232  18,170  16,894 
    (RELEASE OF) PROVISION FOR CREDIT LOSSES (1,750) 300  300  -  300 
    NET INTEREST INCOME AFTER (RELEASE OF) PROVISION          
    FOR CREDIT LOSSES 17,392  15,793  16,932  18,170  16,594 
               
    OTHER INCOME          
    Service charges and fees 1,353  1,313  1,370  1,346  1,475 
    Income from fiduciary activities 229  212  210  219  214 
    Net realized (losses) gains on sales of securities (212) 2  3  -  - 
    Gains on sales of loans, net 10  -  1  1  - 
    Gains on sales of foreclosed real estate owned -  -  -  -  - 
    Earnings and proceeds on life insurance policies 229  213  195  267  449 
    Other 174  172  147  345  351 
    Total other income 1,783  1,912  1,926  2,178  2,489 
               
    OTHER EXPENSES          
    Salaries and employee benefits 5,842  5,969  5,246  5,553  5,840 
    Occupancy, furniture and equipment, net 1,314  1,262  1,263  1,191  1,206 
    Foreclosed real estate 74  29  7  4  10 
    FDIC insurance assessment 244  200  144  143  142 
    Other 3,464  2,976  3,615  3,248  3,274 
    Total other expenses 10,938  10,436  10,275  10,139  10,472 
               
    INCOME BEFORE TAX 8,237  7,269  8,583  10,209  8,611 
    INCOME TAX EXPENSE 1,734  1,487  1,443  2,100  1,756 
    NET INCOME$6,503 $5,782 $7,140 $8,109 $6,855 
               
    Basic earnings per share$0.81 $0.71 $0.88 $1.00 $0.84 
               
    Diluted earnings per share$0.81 $0.71 $0.88 $1.00 $0.84 
               
    Book Value per share$22.24 $21.92 $20.86 $19.92 $21.65 
    Tangible Book Value per share 18.58  18.31  17.24  16.29  18.02 
               
    Return on average assets (annualized) 1.23% 1.13% 1.40% 1.57% 1.35%
    Return on average equity (annualized) 14.72% 13.61% 17.40% 17.93% 15.19%
    Return on average tangible equity (annualized) 17.66% 16.42% 21.27% 21.48% 18.16%
               
    Net interest spread (fte) 2.56% 2.83% 3.30% 3.61% 3.40%
    Net interest margin (fte) 3.09% 3.25% 3.55% 3.74% 3.49%
               
    Allowance for credit losses to total loans 1.11% 1.27% 1.15% 1.18% 1.21%
    Net charge-offs to average loans (annualized) 0.06% 0.08% 0.06% 0.02% -0.02%
    Nonperforming loans to total loans 0.20% 0.18% 0.08% 0.04% 0.04%
    Nonperforming assets to total assets 0.17% 0.15% 0.07% 0.05% 0.05%
               

    Primary Logo

Share on,