Norwood Financial Corp Announces Third Quarter Earnings

HONESDALE, Pa., Oct. 26, 2023 (GLOBE NEWSWIRE) — Lewis J. Critelli, 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 September 30, 2023 of $6,981,000 which represents an increase of $1,982,000, or 39.6%, over the $4,999,000 earned in the same three-month period of 2020. The increase in earnings was due to a $1.7 million increase in net interest income, including fee income recognized on Paycheck Protection Program (“PPP”) loans forgiven, and a $1.1 million reduction in the provision for loan losses. Earnings per share (fully diluted) were $0.85 in the three-months ended September 30, 2023, which represents an increase from the $0.62 earned in the same period of 2020. The annualized returns on average assets and average tangible equity for the current three-month period were 1.36% and 15.72%, respectively, compared to 1.11% and 11.72% for the three-month period ended September 30, 2020. Net income for the nine months ended September 30, 2023, totaled $18,277,000, which is $8,710,000, or 91.1%, higher than the same period of 2020, primarily due to the benefits derived from the Company’s acquisition of UpState New York Bancorp, Inc. (“UpState”), which closed on July 7, 2020. Earnings per share (fully diluted) for the nine months ended September 30, 2023, totaled $2.23 per share compared to $1.39 per share in the 2020 period.

Total assets as of September 30, 2023 were $2.054 billion, with loans receivable of $1.371 billion, deposits of $1.723 billion and stockholders’ equity of $202.6 million. Total assets have increased $211.6 million during the past twelve months while loans have decreased $43.7 million and deposits have increased $206.6 million. The increases in assets and deposits reflect growth due to significant stimulus funds received as a result of PPP loans that have been forgiven and the Coronavirus Aid, Relief, and Economic Security Act, (“CARES Act”), while the decrease in loans includes a $59.2 million reduction in PPP loans due to forgiveness.

For the three months ended September 30, 2023, net interest income, on a fully taxable equivalent basis (fte), totaled $17,186,000, which represents an increase of $1,639,000, compared to the same period in 2020. A $150.5 million increase in average securities contributed to the increased income. Net interest margin (fte) for the 2023 period was 3.61%, compared to 3.73% for the similar period in 2020. Net interest income (fte) for the nine months ended September 30, 2023 totaled $49,429,000, an increase of $13,891,000, compared to the similar period in 2020 due primarily to a higher volume of earning assets. The net interest margin (fte) year-to-date for the 2023 period was 3.54%, which exceeded the 3.51% recorded in the same period of 2020. All increases include the benefits derived from the acquisition of UpState.

Total other income for the three months ended September 30, 2023 was $2,128,000, compared to $2,072,000 for the same period in 2020. The increase in total other income is primarily due to a higher level of service charges and fees. For the nine months ended September 30, 2023, total other income was $6,304,000, compared to $5,119,000 in the same period of 2020.

Total other expenses were $9,592,000 for the three months ended September 30, 2023, compared to $9,380,000 in the same period of 2020. The higher level of expense during the three months ended September 30, 2023, was due primarily to a $679,000 increase in salaries and benefits costs. For the nine months ended September 30, 2023, other expenses totaled $28,536,000, compared to $24,531,000 for the same period in 2020. The increase includes costs related to the operation of four additional community offices acquired from UpState in 2020.

Mr. Critelli commented, “Our results for the first nine months of 2023 reflect the positive impact of, and earnings accretion resulting from, our acquisition of UpState, as well as the continued impact of economic stimulus on our earnings and balance sheet. We recently broke ground on our new facility in Penn Yan, New York, and we look forward to serving the community from our new location. We appreciate the opportunity to serve our expanded base of stockholders and customers.”

Norwood Financial Corp is the parent company of Wayne Bank, which operates from fourteen offices throughout Northeastern Pennsylvania and sixteen 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”, 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 effect and impact of, the COVID-19 pandemic on the economy and the Company’s results of operation and financial condition, the ability to control costs and expenses, 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 fully taxable equivalent net interest income, 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 reconciles net interest income to net interest income on a taxable equivalent basis:

(dollars in thousands) Three months ended September 30 Nine months ended September 30
    2021     2020     2021     2020  
Net interest income $ 16,989   $ 15,330   $ 48,817   $ 34,862  
Tax equivalent basis adjustment using 21% marginal tax rate   197     217     612     676  
Net interest income on a fully taxable equivalent basis $ 17,186   $ 15,547   $ 49,429   $ 35,538  
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 reconciles average equity to average tangible equity:
  Three months ended September 30 Nine months ended September 30
(dollars in thousands)   2021     2020     2021     2020  
         
Average equity $ 205,848   $ 187,478   $ 201,102   $ 157,695  
         
Average goodwill and other intangibles   (29,712 )   (17,800 )   (29,757 )   (13,643 )
Average tangible equity $ 176,136   $ 169,678   $ 171,345   $ 144,052  
         
NORWOOD FINANCIAL CORP.        
Consolidated Balance Sheets        
(dollars in thousands, except share and per share data)        
(unaudited)        
    September 30
    2021     2020  
ASSETS        
Cash and due from banks $ 28,353   $ 23,874  
Interest-bearing deposits with banks   191,580     100,566  
Cash and cash equivalents   219,933     124,440  
         
Securities available for sale   361,988     197,436  
Loans receivable   1,371,002     1,414,662  
Less: Allowance for loan losses   16,103     11,674  
Net loans receivable   1,354,899     1,402,988  
Regulatory stock, at cost   3,898     3,876  
Bank premises and equipment, net   17,364     18,124  
Bank owned life insurance   39,864     39,400  
Foreclosed real estate owned   1,876     965  
Accrued interest receivable   6,049     6,104  
Goodwill   29,266     30,213  
Other intangible assets   434     565  
Other assets   18,120     17,996  
TOTAL ASSETS $ 2,053,691   $ 1,842,107  
         
LIABILITIES        
Deposits:        
Non-interest bearing demand $ 442,534   $ 372,237  
Interest-bearing   1,279,988     1,143,685  
Total deposits   1,722,522     1,515,922  
Short-term borrowings   78,246     69,294  
Other borrowings   33,136     46,438  
Accrued interest payable   1,341     2,194  
Other liabilities   15,838     17,712  
TOTAL LIABILITIES   1,851,083     1,651,560  
         
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: 8,245,951 shares, 2020: 8,210,982 shares   825     821  
Surplus   96,100     95,108  
Retained earnings   105,668     90,422  
Treasury stock, at cost: 2023: 51,568 shares, 2020: 13,778 shares   (1,423 )   (469 )
Accumulated other comprehensive income   1,438     4,665  
TOTAL STOCKHOLDERS’ EQUITY   202,608     190,547  
         
TOTAL LIABILITIES AND        
STOCKHOLDERS’ EQUITY $ 2,053,691   $ 1,842,107  
         
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,
    2021     2020       2021   2020
INTEREST INCOME                    
Loans receivable, including fees $ 16,859   $ 16,260     $ 49,107 $ 37,711
Securities   1,468     1,031       3,936   3,272
Other   72     18       174   43
Total Interest income   18,399     17,309       53,217   41,026
                     
INTEREST EXPENSE                    
Deposits   1,167     1,676       3,627   5,096
Short-term borrowings   71     61       214   244
Other borrowings   172     242       559   824
Total Interest expense   1,410     1,979       4,400   6,164
NET INTEREST INCOME   16,989     15,330       48,817   34,862
PROVISION FOR LOAN LOSSES   750     1,850       3,750   3,850
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   16,239     13,480       45,067   31,012
                     
OTHER INCOME                    
Service charges and fees   1,485     1,301       4,268   3,201
Income from fiduciary activities   209     205       550   533
Net realized gains on sales of securities   35     33       56   71
Gains on sales of loans, net   39     164       177   285
Earnings and proceeds on life insurance policies   200     217       767   638
Other   160     152       486   391
Total other income   2,128     2,072       6,304   5,119
                     
OTHER EXPENSES                    
Salaries and employee benefits   5,491     4,812       15,616   11,878
Occupancy, furniture and equipment   1,163     1,109       3,568   2,983
Data processing and related operations   594     746       1,760   1,649
Taxes, other than income   229     214       763   641
Professional fees   189     292       1,072   735
FDIC Insurance assessment   177     144       512   186
Foreclosed real estate   (15 )   31       27   44
Amortization of intangibles   28     35       96   79
Merger related   –     386       0   1,983
Other   1,736     1,611       5,122   4,353
Total other expenses   9,592     9,380       28,536   24,531
                     
INCOME BEFORE TAX   8,775     6,172       22,835   11,600
INCOME TAX EXPENSE   1,794     1,173       4,558   2,033
NET INCOME $ 6,981   $ 4,999     $ 18,277 $ 9,567
                     
Basic earnings per share $ 0.85   $ 0.62     $ 2.23 $ 1.39
                     
Diluted earnings per share $ 0.85   $ 0.62     $ 2.23 $ 1.39
                     

  

NORWOOD FINANCIAL CORP.        
Financial Highlights (Unaudited)        
(dollars in thousands, except per share data)        
         
For the Three Months Ended September 30   2021     2020  
         
Net interest income $ 16,989   $ 15,330  
Net income   6,981     4,999  
         
Net interest spread (fully taxable equivalent)   3.49%     3.55%  
Net interest margin (fully taxable equivalent)   3.61%     3.73%  
Return on average assets   1.36%     1.11%  
Return on average equity   13.50%     10.64%  
Return on average tangible equity   15.72%     11.72%  
Basic earnings per share $ 0.85   $ 0.62  
Diluted earnings per share $ 0.85   $ 0.62  
         
         
For the Nine Months Ended September 30   2021     2020  
         
Net interest income $ 48,817   $ 34,862  
Net income   18,277     9,567  
         
Net interest spread (fully taxable equivalent)   3.43%     3.30%  
Net interest margin (fully taxable equivalent)   3.54%     3.51%  
Return on average assets   1.23%     0.88%  
Return on average equity   12.19%     8.13%  
Return on average tangible equity   14.26%     8.87%  
Basic earnings per share $ 2.23   $ 1.39  
Diluted earnings per share $ 2.23   $ 1.39  
         
As of September 30   2021     2020  
         
Total assets $ 2,053,691   $ 1,842,107  
Total loans receivable   1,371,002     1,414,662  
Allowance for loan losses   16,103     11,674  
Total deposits   1,722,522     1,515,922  
Stockholders’ equity   202,608     190,547  
Trust assets under management   187,689     155,166  
         
Book value per share $ 24.90   $ 23.30  
Tangible book value per share $ 21.27   $ 19.55  
Equity to total assets   9.87%     10.34%  
Allowance to total loans receivable   1.17%     0.83%  
Nonperforming loans to total loans   0.14%     0.29%  
Nonperforming assets to total assets   0.18%     0.27%  
         
NORWOOD FINANCIAL CORP.                      
Consolidated Balance Sheets (unaudited)                      
(dollars in thousands)                      
    September 30   June 30   March   December 31   September 30  
    2021     2021     2021     2020     2020    
ASSETS                      
Cash and due from banks $ 28,353   $ 34,831   $ 20,364   $ 19,445   $ 23,874    
Interest-bearing deposits with banks   191,580     170,342     190,135     92,248     100,566    
Cash and cash equivalents   219,933     205,173     210,499     111,693     124,440    
                       
Securities available for sale   361,988     333,636     275,224     226,586     197,436    
Loans receivable   1,371,002     1,386,654     1,421,568     1,410,732     1,414,662    
Less: Allowance for loan losses   16,103     15,340     14,509     13,150     11,674    
Net loans receivable   1,354,899     1,371,314     1,407,059     1,397,582     1,402,988    
Regulatory stock, at cost   3,898     4,084     4,043     3,981     3,876    
Bank owned life insurance   39,864     39,665     39,471     39,608     39,400    
Bank premises and equipment, net   17,364     17,298     17,648     17,814     18,124    
Foreclosed real estate owned   1,876     844     844     965     965    
Goodwill and other intangibles   29,700     29,727     29,785     29,820     30,778    
Other assets   24,169     23,823     25,263     23,815     24,100    
TOTAL ASSETS $ 2,053,691   $ 2,025,564   $ 2,009,836   $ 1,851,864   $ 1,842,107    
                       
LIABILITIES                      
Deposits:                      
Non-interest bearing demand $ 442,534   $ 435,824   $ 415,395   $ 359,559   $ 372,237    
Interest-bearing deposits   1,279,988     1,253,117     1,269,793     1,175,826     1,143,685    
Total deposits   1,722,522     1,688,941     1,685,188     1,535,385     1,515,922    
Borrowings   111,382     119,858     112,283     105,762     115,732    
Other liabilities   17,179     16,266     17,258     15,932     19,906    
TOTAL LIABILITIES   1,851,083     1,825,065     1,814,729     1,657,079     1,651,560    
                       
STOCKHOLDERS’ EQUITY   202,608     200,499     195,107     194,785     190,547    
                       
TOTAL LIABILITIES AND                      
STOCKHOLDERS’ EQUITY $ 2,053,691   $ 2,025,564   $ 2,009,836   $ 1,851,864   $ 1,842,107    
                       
                       
                       
NORWOOD FINANCIAL CORP.                      
Consolidated Statements of Income (unaudited)                      
(dollars in thousands, except per share data)                      
    September 30   June 30   March 31   December 31   September 30  
Three months ended   2021     2021     2021     2020     2020    
INTEREST INCOME                      
Loans receivable, including fees $ 16,859   $ 16,102   $ 16,146   $ 16,336   $ 16,260    
Securities   1,468     1,356     1,112     1,064     1,031    
Other   72     59     43     29     18    
Total interest income   18,399     17,517     17,301     17,429     17,309    
                       
INTEREST EXPENSE                      
Deposits   1,167     1,205     1,255     1,514     1,676    
Borrowings   243     259     270     301     303    
Total interest expense   1,410     1,464     1,525     1,815     1,979    
NET INTEREST INCOME   16,989     16,053     15,776     15,614     15,330    
PROVISION FOR LOAN LOSSES   750     1,500     1,500     1,600     1,850    
NET INTEREST INCOME AFTER PROVISION                      
FOR LOAN LOSSES   16,239     14,553     14,276     14,014     13,480    
                       
OTHER INCOME                      
Service charges and fees   1,485     1,532     1,247     1,913     1,301    
Income from fiduciary activities   209     181     160     150     205    
Net realized gains on sales of securities   35     –     21     –     33    
Gains on sales of loans, net   39     109     29     241     164    
Earnings and proceeds on life insurance policies   200     194     374     208     217    
Other   160     171     158     149     152    
Total other income   2,128     2,187     1,989     2,661     2,072    
                       
OTHER EXPENSES                      
Salaries and employee benefits   5,491     5,171     4,953     5,243     4,812    
Occupancy, furniture and equipment, net   1,163     1,186     1,220     1,165     1,109    
Foreclosed real estate   (15 )   13     30     8     31    
FDIC insurance assessment   177     154     181     213     144    
Merger related   –     –     –     66     386    
Other   2,776     2,968     3,068     3,214     2,898    
Total other expenses   9,592     9,492     9,452     9,909     9,380    
                       
INCOME BEFORE TAX   8,775     7,248     6,813     6,766     6,172    
INCOME TAX EXPENSE   1,794     1,493     1,271     1,253     1,173    
NET INCOME $ 6,981   $ 5,755   $ 5,542   $ 5,513   $ 4,999    
                       
Basic earnings per share $ 0.85   $ 0.70   $ 0.68   $ 0.67   $ 0.62    
                       
Diluted earnings per share $ 0.85   $ 0.70   $ 0.67   $ 0.67   $ 0.62    
                       
Book Value per share $ 24.90   $ 24.47   $ 23.82   $ 23.72   $ 23.30    
Tangible Book Value per share   21.27     20.85     20.20     20.10     19.55    
                       
Return on average assets (annualized)   1.36 %   1.15 %   1.18 %   1.18 %   1.11 %  
Return on average equity (annualized)   13.50 %   11.59 %   11.39 %   11.32 %   10.64 %  
Return on average tangible equity (annualized)   15.78 %   13.63 %   13.42 %   13.46 %   11.75 %  
                       
Net interest spread (fte)   3.49 %   3.32 %   3.46 %   3.50 %   3.55 %  
Net interest margin (fte)   3.61 %   3.44 %   3.59 %   3.65 %   3.73 %  
                       
Allowance for loan losses to total loans   1.17 %   1.11 %   1.02 %   0.93 %   0.83 %  
Net charge-offs to average loans (annualized)   0.00 %   0.19 %   0.04 %   0.04 %   0.14 %  
Nonperforming loans to total loans   0.20 %   0.28 %   0.22 %   0.24 %   0.29 %  
Nonperforming assets to total assets   0.22 %   0.24 %   0.20 %   0.24 %   0.27 %  
                       

Norwood Financial Corp

Related Posts:

Related Posts