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, 2024 2023
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 %