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Norwood Financial Corp Announces Second Quarter Earnings
Source: Nasdaq GlobeNewswire / 26 Jul 2024 08:15:01 America/New_York
HONESDALE, Pa., July 26, 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 earnings for the three months ended June 30, 2024 of $4,213,000, which was $2,290,000 lower than the same three-month period of last year. The decrease includes a $717,000 decrease in net interest income, a $424,000 increase in total other income, a $506,000 increase in total other expense, and a $2,097,000 increase in the provision for credit losses. Earnings per share (fully diluted) were $0.52 in the three months ended June 30, 2024, compared to $0.81 in the same period of last year. The annualized return on average assets for the three months ended June 30, 2024, was 0.75%, while the annualized return on average tangible equity was 11.26%.
Net income for the six months ended June 30, 2024, was $8,646,000, which is $3,639,000 lower than the same six-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 six months ended June 30, 2024, were $1.07, compared to $1.51 for the six months ended June 30, 2023. The annualized return on average assets for the six months ended June 30, 2024 was 0.78%. The annualized return on average tangible equity for the six months ended June 30, 2024 was 11.46%.
Total assets as of June 30, 2024 were $2.235 billion, compared to $2.142 billion at June 30, 2023. At June 30, 2024, loans receivable were $1.623 billion, total deposits were $1.811 billion and stockholders’ equity was $182.2 million.
For the three months ended June 30, 2024, net interest income, on a fully-taxable equivalent basis (fte), totaled $15,124,000, a decrease of $705,000 compared to the same period in 2023. A $150.8 million increase in average time deposits, combined with a 126 basis points increase in the cost of time deposits, contributed to the decreased net interest income. Borrowing costs also increased, offsetting a $4,447,000 increase in total interest income. Net interest margin (fte) for the three months ended June 30, 2024 was 2.79%, compared to 3.09% in the same period of 2023. The tax-equivalent yield on interest-earning assets increased 57 basis points to 5.14% during the three months ended June 30, 2024, compared to the same prior year period, while the cost of interest-bearing liabilities increased 108 basis points to 3.09%.
Net interest income (fte) for the six months ended June 30, 2024 totaled $30,029,000, which was $2,075,000 lower than the same period in 2023, due primarily to a $11,762,000 increase in the cost of interest-bearing liabilities. The net interest margin (fte) was 2.79% for the six months ended June 30, 2024, as compared to 3.17% for the six months ended June 30, 2023. The decrease in the net interest margin (fte) was due to a 127 basis points increase in the cost of interest-bearing liabilities, which offset the 64 basis points increase in the yield on interest-earning assets.
Other income for the three months ended June 30, 2024, totaled $2,207,000, compared to $1,783,000 for the same period in 2023. The increase is due primarily to a $151,000 increase in service charges on deposit accounts, and a $212,000 loss on the sale of investment securities in 2023. For the six months ended June 30, 2024, other income totaled $4,213,000, compared to $3,695,000 for the six months ended June 30, 2023.
Other expenses totaled $11,444,000 for the three months ended June 30, 2024, an increase of $506,000, compared to the $10,938,000 for the same period of 2023. For the six months ended June 30, 2024, other expenses totaled $23,175,000, compared to $21,374,000 for the same period in 2023, due primarily to an increase in professional fees, data processing costs and FDIC insurance.
Mr. Donnelly stated, “Our second quarter income decreased from the 2023 level due to a release of provision for credit losses in the three months ended June 30, 2023 and the rising cost of deposits and borrowed funds. These decreases were partially offset by a $424,000 increase in non-interest income. On a linked-quarter basis loan growth was an annualized 4.9%. Total deposits decreased $28 million compared to the first quarter of 2024. This was due to a seasonal outflow of municipal deposits of $53 million offset by inflows of $25 million of other customer funds, a 7.3% annualized increase. The net interest margin was stable at 2.79% for the first and second quarter. Our core operating expenses remain well-controlled at 2% of average assets during the quarter. 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 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: Three months ended Six months ended (dollars in thousands) June 30 June 30 2024 2023 2024 2023 Net Interest Income $ 14,925 $ 15,642 $ 29,635 $ 31,735 Taxable equivalent basis adjustment using 21% marginal tax rate 199 187 394 369 Net interest income on a fully taxable equivalent basis $ 15,124 $ 15,829 $ 30,029 $ 32,104 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 Six months ended (dollars in thousands) June 30 June 30 2024 2023 2024 2023 Average equity $ 179,494 $ 186,111 $ 180,791 $ 180,952 Average goodwill and other intangibles (29,457 ) (29,536 ) (29,466 ) (29,547 ) Average tangible equity $ 150,037 $ 156,575 $ 151,325 $ 151,405 Contact:
John M. McCaffery
Executive Vice President &
Chief Financial Officer
272-304-3003
wayne.bankNORWOOD FINANCIAL CORP Consolidated Balance Sheets (dollars in thousands, except share and per share data) (unaudited) June 30 2024 2023 ASSETS Cash and due from banks $ 29,903 $ 30,053 Interest-bearing deposits with banks 39,492 3,036 Cash and cash equivalents 69,395 33,089 Securities available for sale 397,578 403,621 Loans receivable 1,641,355 1,577,699 Less: Allowance for credit losses 17,806 17,483 Net loans receivable 1,623,549 1,560,216 Regulatory stock, at cost 6,443 7,924 Bank premises and equipment, net 18,265 17,363 Bank owned life insurance 46,121 45,806 Foreclosed real estate owned - 387 Accrued interest receivable 8,329 7,276 Deferred tax assets, net 21,707 23,301 Goodwill 29,266 29,266 Other intangible assets 183 260 Other assets 14,480 13,256 TOTAL ASSETS $ 2,235,316 $ 2,141,765 LIABILITIES Deposits: Non-interest bearing demand $ 391,849 $ 425,757 Interest-bearing 1,419,323 1,306,240 Total deposits 1,811,172 1,731,997 Short-term borrowings 62,335 112,290 Other borrowings 148,087 99,687 Accrued interest payable 13,329 7,101 Other liabilities 18,206 17,266 TOTAL LIABILITIES 2,053,129 1,968,341 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 98,082 97,268 Retained earnings 139,070 135,583 Treasury stock, at cost: 2024: 221,540 shares, 2023: 223,926 shares (5,977 ) (6,007 ) Accumulated other comprehensive loss (49,819 ) (54,249 ) TOTAL STOCKHOLDERS' EQUITY 182,187 173,424 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,235,316 $ 2,141,765 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, 2024 2023 2024 2023 INTEREST INCOME Loans receivable, including fees $ 24,121 $ 20,702 $ 47,802 $ 39,860 Securities 2,584 2,481 5,109 4,986 Other 966 53 1,697 101 Total Interest income 27,671 23,236 54,608 44,947 INTEREST EXPENSE Deposits 10,687 5,740 20,796 10,102 Short-term borrowings 356 943 692 1,722 Other borrowings 1,703 911 3,485 1,388 Total Interest expense 12,746 7,594 24,973 13,212 NET INTEREST INCOME 14,925 15,642 29,635 31,735 (RELEASE OF) PROVISION FOR CREDIT LOSSES 347 $ (1,750 ) $ (276 ) $ (1,450 ) NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES 14,578 17,392 29,911 33,185 OTHER INCOME Service charges and fees 1,504 1,353 2,847 2,665 Income from fiduciary activities 225 229 463 441 Net realized (losses) gains on sales of securities - (212 ) - (209 ) Gains on sales of loans, net 36 10 42 10 Earnings and proceeds on life insurance policies 253 229 520 442 Other 189 174 341 346 Total other income 2,207 1,783 4,213 3,695 OTHER EXPENSES Salaries and employee benefits 5,954 5,842 12,090 11,810 Occupancy, furniture and equipment 1,229 1,314 2,489 2,576 Data processing and related operations 1,024 822 2,046 1,590 Taxes, other than income 179 162 272 323 Professional fees 508 323 1,092 608 FDIC Insurance assessment 309 244 670 445 Foreclosed real estate 15 74 36 103 Amortization of intangibles 19 23 38 46 Other 2,207 2,134 4,442 3,873 Total other expenses 11,444 10,938 23,175 21,374 INCOME BEFORE TAX 5,341 8,237 10,949 15,506 INCOME TAX EXPENSE 1,128 1,734 2,303 3,221 NET INCOME $ 4,213 $ 6,503 $ 8,646 $ 12,285 Basic earnings per share $ 0.52 $ 0.81 $ 1.07 $ 1.52 Diluted earnings per share $ 0.52 $ 0.81 $ 1.07 $ 1.51 NORWOOD FINANCIAL CORP Financial Highlights (Unaudited) (dollars in thousands, except per share data) For the Three Months Ended June 30 2024 2023 Net interest income $ 14,925 $ 15,642 Net income 4,213 6,503 Net interest spread (fully taxable equivalent) 2.05 % 2.56 % Net interest margin (fully taxable equivalent) 2.79 % 3.09 % Return on average assets 0.75 % 1.23 % Return on average equity 9.41 % 14.72 % Return on average tangible equity 11.26 % 17.66 % Basic earnings per share $ 0.52 $ 0.81 Diluted earnings per share $ 0.52 $ 0.81 For the Six Months Ended June 30 2024 2023 Net interest income $ 29,635 $ 31,735 Net income 8,646 12,285 Net interest spread (fully taxable equivalent) 2.06 % 2.69 % Net interest margin (fully taxable equivalent) 2.79 % 3.17 % Return on average assets 0.78 % 1.18 % Return on average equity 9.59 % 14.17 % Return on average tangible equity 11.46 % 17.06 % Basic earnings per share $ 1.07 $ 1.52 Diluted earnings per share $ 1.07 $ 1.51 As of June 30 2024 2023 Total assets $ 2,235,316 $ 2,141,765 Total loans receivable 1,641,355 1,577,699 Allowance for credit losses 17,806 17,483 Total deposits 1,811,172 1,731,997 Stockholders' equity 182,187 173,424 Trust assets under management 201,079 193,392 Book value per share $ 23.26 $ 22.24 Tangible book value per share $ 19.62 $ 18.58 Equity to total assets 8.15 % 8.10 % Allowance to total loans receivable 1.08 % 1.11 % Nonperforming loans to total loans 0.47 % 0.20 % Nonperforming assets to total assets 0.34 % 0.17 % NORWOOD FINANCIAL CORP Consolidated Balance Sheets (unaudited) (dollars in thousands) June 30 March 31 December 31 September 30 June 30 2024 2024 2023 2023 2023 ASSETS Cash and due from banks $ 29,903 $ 19,519 $ 28,533 $ 41,141 $ 30,053 Interest-bearing deposits with banks 39,492 92,444 37,587 13,005 3,036 Cash and cash equivalents 69,395 111,963 66,120 54,146 33,089 Securities available for sale 397,578 398,374 406,259 380,499 403,621 Loans receivable 1,641,356 1,621,448 1,603,618 1,611,069 1,577,699 Less: Allowance for credit losses 17,807 18,020 18,968 16,086 17,483 Net loans receivable 1,623,549 1,603,428 1,584,650 1,594,983 1,560,216 Regulatory stock, at cost 6,443 6,545 7,318 8,843 7,924 Bank owned life insurance 46,121 45,869 46,439 46,197 45,806 Bank premises and equipment, net 18,264 18,057 17,838 17,254 17,363 Foreclosed real estate owned 0 97 97 290 387 Goodwill and other intangibles 29,449 29,468 29,487 29,506 29,526 Other assets 44,517 46,622 42,871 48,280 43,833 TOTAL ASSETS $ 2,235,316 $ 2,260,423 $ 2,201,079 $ 2,179,998 $ 2,141,765 LIABILITIES Deposits: Non-interest bearing demand $ 391,849 $ 383,362 $ 399,545 $ 430,242 $ 425,757 Interest-bearing deposits 1,419,323 1,455,636 1,395,614 1,316,582 1,306,240 Total deposits 1,811,172 1,838,998 1,795,159 1,746,824 1,731,997 Borrowings 210,422 211,234 198,312 241,328 211,978 Other liabilities 31,534 28,978 26,538 27,144 24,366 TOTAL LIABILITIES 2,053,128 2,079,210 2,020,009 2,015,296 1,968,341 STOCKHOLDERS' EQUITY 182,188 181,213 181,070 164,702 173,424 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,235,316 $ 2,260,423 $ 2,201,079 $ 2,179,998 $ 2,141,765 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 2024 2024 2023 2023 2023 INTEREST INCOME Loans receivable, including fees $ 24,121 $ 23,681 $ 23,328 $ 22,021 $ 20,702 Securities 2,584 2,526 2,504 2,433 2,481 Other 966 731 253 54 53 Total interest income 27,671 26,938 26,085 24,508 23,236 INTEREST EXPENSE Deposits 10,687 10,110 8,910 7,017 5,740 Borrowings 2,059 2,118 1,882 2,452 1,854 Total interest expense 12,746 12,228 10,792 9,469 7,594 NET INTEREST INCOME 14,925 14,710 15,293 15,039 15,642 (RELEASE OF) PROVISION FOR CREDIT LOSSES 347 (624 ) 6,116 882 (1,750 ) NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES 14,578 15,334 9,177 14,157 17,392 OTHER INCOME Service charges and fees 1,504 1,343 1,421 1,527 1,353 Income from fiduciary activities 225 238 210 246 229 Net realized (losses) gains on sales of securities - - - - (212 ) Gains on sales of loans, net 36 6 36 18 10 Gains on sales of foreclosed real estate owned 32 - 66 13 - Earnings and proceeds on life insurance policies 253 268 242 328 229 Other 157 151 148 174 174 Total other income 2,207 2,006 2,123 2,306 1,783 OTHER EXPENSES Salaries and employee benefits 5,954 6,135 5,672 6,083 5,842 Occupancy, furniture and equipment, net 1,229 1,261 1,265 1,242 1,314 Foreclosed real estate 15 21 17 9 74 FDIC insurance assessment 309 361 287 254 244 Other 3,937 3,954 3,608 3,688 3,464 Total other expenses 11,444 11,732 10,849 11,276 10,938 INCOME BEFORE TAX 5,341 5,608 451 5,187 8,237 INCOME TAX EXPENSE 1,128 1,175 96 1,068 1,734 NET INCOME $ 4,213 $ 4,433 $ 355 $ 4,119 $ 6,503 Basic earnings per share $ 0.52 $ 0.55 $ 0.04 $ 0.51 $ 0.81 Diluted earnings per share $ 0.52 $ 0.55 $ 0.04 $ 0.51 $ 0.81 Book Value per share $ 23.26 $ 23.01 $ 22.99 $ 21.15 $ 22.24 Tangible Book Value per share 19.62 19.38 19.36 17.49 18.58 Return on average assets (annualized) 0.75 % 0.80 % 0.06 % 0.76 % 1.23 % Return on average equity (annualized) 9.41 % 9.79 % 0.84 % 9.33 % 14.72 % Return on average tangible equity (annualized) 11.26 % 11.68 % 1.01 % 11.22 % 17.66 % Net interest spread (fte) 2.05 % 2.07 % 2.24 % 2.28 % 2.56 % Net interest margin (fte) 2.79 % 2.79 % 2.95 % 2.94 % 3.09 % Allowance for credit losses to total loans 1.08 % 1.11 % 1.18 % 1.00 % 1.11 % Net charge-offs to average loans (annualized) 0.13 % 0.08 % 0.79 % 0.59 % 0.06 % Nonperforming loans to total loans 0.47 % 0.23 % 0.48 % 0.65 % 0.20 % Nonperforming assets to total assets 0.34 % 0.17 % 0.35 % 0.50 % 0.17 % total NAL 7,641,239 3,726,895 7,620,882 10,535,803 3,223,297 past due 90+ - 7,668 - - - total non performing loans 7,641,239 3,734,563 7,620,882 10,535,803 3,223,297 OREO - 97,101 97,101 290,000 387,500 total Non performing assets 7,641,239 3,831,664 7,717,983 10,825,803 3,610,797 total loans 1,641,355,515 1,621,447,970 1,603,617,932 1,611,068,445 1,577,699,580 total assets 2,235,315,800 2,260,423,152 2,201,056,938 2,179,998,000 2,141,765,238 net charge off's, this quarter 510,985 322,892 3,181,233 2,349,697 227,110 average loans, this quarter 1,629,282,567 1,612,105,511 1,605,495,855 1,589,473,633 1,559,251,963 Loan loss reserve 17,806,505 18,019,715 18,967,991 16,085,641 17,483,489 . . . 
