NWFL Norwood Financial Corporation

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.bank

NORWOOD 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
						.				.			.