Norwood Financial Corp Announces Third Quarter 2024 Results
Quarterly Highlights:
Net interest margin increased 19 basis points vs. the prior quarter and 7 basis points over the prior year.
Loans grew at an 8% annualized rate during the 3rd quarter.
Capital continues to improve as the negative mark-to-market effect lessens 42% since last year.
HONESDALE, Pa., Oct. 28, 2024 (GLOBE NEWSWIRE) -- Norwood Financial Corp (Nasdaq Global Market-NWFL) and its subsidiary, Wayne Bank, announced earnings for the three months ended September 30, 2024 of $3.8 million, which was $275 thousand lower than the same three-month period of last year. Net interest income was up by $892 thousand which was offset by increases in operating expense and the provision for credit losses. Earnings per share (fully diluted) were $0.48 in the three months ended September 30, 2024, compared to $0.51 in the same period of last year. The annualized return on average assets for the three months ended September 30, 2024, was 0.68%, while the annualized return on average tangible equity was 9.58%.
Net income for the nine months ended September 30, 2024, was $12.5 million, which is $3.9 million lower than the same nine-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 nine months ended September 30, 2024, were $1.55, compared to $2.03 for the nine months ended September 30, 2023. The annualized return on average assets for the nine months ended September 30, 2024 was 0.75%. The annualized return on average tangible equity for the nine months ended September 30, 2024 was 10.82%.
Total assets as of September 30, 2024 were $2.280 billion, compared to $2.180 billion at September 30, 2023. At September 30, 2024, loans receivable were $1.675 billion, total deposits were $1.855 billion and stockholders' equity was $195.7 million.
For the three months ended September 30, 2024, net interest income, on a fully-taxable equivalent basis (fte), totaled $16.1 million, an increase of $914 thousand compared to the same period in 2023. A $77.5 million increase in average interest-earning assets, generated an increase in interest income of $4.0 million. Interest expense increased $3.1 million mainly due to higher deposit balances and higher rates on those deposits. Net interest margin (fte) for the three months ended September 30, 2024 was 2.99%, compared to 2.92% in the same period of 2023. The tax-equivalent yield on interest-earning assets increased 58 basis points to 5.31% during the three months ended September 30, 2024, compared to the same prior year period, while the cost of interest-bearing liabilities increased 62 basis points to 3.09%.
Net interest income (fte) for the nine-months ended September 30, 2024 totaled $45.6 million, which was $1.2 million lower than the same period in 2023, due primarily to a $14.8 million increase in the cost of interest-bearing liabilities. The net interest margin (fte) was 2.87% for the nine-months ended September 30, 2024, as compared to 3.10% for the nine-months ended September 30, 2023.
Other income for the three months ended September 30, 2024, totaled $2.3 million, compared to $2.3 million for the same period in 2023. For the nine-months ended September 30, 2024, other income totaled $6.5 million, compared to $6.0 million for the nine-months ended September 30, 2023.
Other expenses totaled $12.0 million for the three months ended September 30, 2024, an increase of $755 thousand, compared to the $11.3 million for the same period of 2023. For the nine-months ended September 30, 2024, other expenses totaled $35.2 million, compared to $32.6 million for the same period in 2023, due primarily to an increase in salaries and benefits, professional fees, data processing costs and FDIC insurance.
Jim Donnelly President and CEO of Norwood Financial Corp and Wayne Bank, stated, "We are pleased to present our result of operations for the third quarter. Although strong loan growth caused an increase in our provision for credit losses we welcome the ongoing opportunity to serve our customers. Net interest margin (fte) for this quarter eclipsed the margin for last year, something that hasn't happened since the Federal Reserve began raising interest rates. Our capital base remains above "Well-Capitalized" targets and we continue to show less impact from the market value of our bond portfolio. Additionally, our credit quality metrics remained strong during the third 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:
(dollars in thousands)
Three months ended
Nine months ended
September 30
September 30
2024
2023
2024
2023
Net Interest Income
$
15,931
$
15,039
$
45,566
$
46,774
Taxable equivalent basis adjustment using 21% marginal tax rate
207
185
601
554
Net interest income on a fully taxable equivalent basis
$
16,138
$
15,224
$
46,167
$
47,328
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
Nine months ended
(dollars in thousands)
September 30
September 30
2024
2023
2024
2023
Average equity
$
189,135
$
175,224
$
183,593
$
174,943
Average goodwill and otherintangibles
(29,440)
(29,514)
(29,457)
(29,536)
Average tangible equity
$
159,695
$
145,710
$
154,136
$
145,407
Contact: John M. McCafferyExecutive Vice President & Chief Financial Officer NORWOOD FINANCIAL CORP 272-304-3003 www.waynebank.com
NORWOOD FINANCIAL CORPConsolidated Balance Sheets(dollars in thousands, except share and per share data)(unaudited)
September 30
2024
2023
ASSETS
Cash and due from banks
$
47,072
$
41,141
Interest-bearing deposits with banks
35,808
13,005
Cash and cash equivalents
82,880
54,146
Securities available for sale
396,891
380,499
Loans receivable
1,675,139
1,611,069
Less: Allowance for credit losses
18,699
16,086
Net loans receivable
1,656,440
1,594,983
Regulatory stock, at cost
6,329
8,843
Bank premises and equipment, net
18,503
17,254
Bank owned life insurance
46,382
46,197
Foreclosed real estate owned
0
290
Accrued interest receivable
8,062
7,759
Deferred tax assets, net
18,818
25,610
Goodwill
29,266
29,266
Other intangible assets
167
240
Other assets
16,013
14,911
TOTAL ASSETS
$
2,279,751
$
2,179,998
LIABILITIES
Deposits:
Non-interest bearing demand
$
420,967
$
430,242
Interest-bearing
1,434,284
1,316,582
Total deposits
1,855,251
1,746,824
Short-term borrowings
52,453
103,881
Other borrowings
144,959
137,447
Accrued interest payable
12,688
8,605
Other liabilities
18,746
18,539
TOTAL LIABILITIES
2,084,097
2,015,296
STOCKHOLDERS' EQUITYPreferred 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
98,330
97,449
Retained earnings
140,489
137,363
Treasury stock, at cost: 2024: 221,140 shares, 2023: 222,051 shares
(5,969
)
(5,957
)
Accumulated other comprehensive loss
(38,027
)
(64,982
)
TOTAL STOCKHOLDERS' EQUITY
195,654
164,702
TOTAL LIABILITIES ANDSTOCKHOLDERS' EQUITY
$
2,279,751
$
2,179,998
NORWOOD FINANCIAL CORPConsolidated Statements of Income(dollars in thousands, except per share data) (unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
INTEREST INCOME
Loans receivable, including fees
$
25,464
$
22,021
$
73,266
$
61,881
Securities
2,526
2,433
7,635
7,418
Other
497
54
2,194
156
Total Interest income
28,487
24,508
83,095
69,455
INTEREST EXPENSE
Deposits
10,553
7,017
31,349
17,119
Short-term borrowings
323
1,126
1,015
2,702
Other borrowings
1,680
1,326
5,165
2,860
Total Interest expense
12,556
9,469
37,529
22,681
NET INTEREST INCOME
15,931
15,039
45,566
46,774
PROVISION FOR CREDIT LOSSES
1,345
$
882
$
1,069
$
(568
)
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
14,586
14,157
44,497
47,342
OTHER INCOME
Service charges and fees
1,517
1,527
4,364
4,192
Income from fiduciary activities
256
246
719
688
Net realized (losses) gains on sales of securities
-
-
-
(209
)
Gains on sales of loans, net
103
18
145
27
Gains on sales of foreclosed real estate owned
-
13
32
13
Earnings and proceeds on life insurance policies
261
328
781
770
Other
158
174
467
520
Total other income
2,295
2,306
6,508
6,001
OTHER EXPENSES
Salaries and employee benefits
6,239
6,083
18,328
17,893
Occupancy, furniture and equipment
1,269
1,242
3,758
3,818
Data processing and related operations
1,162
876
3,208
2,465
Taxes, other than income
179
167
452
490
Professional fees
576
524
1,669
1,132
FDIC Insurance assessment
339
254
1,009
699
Foreclosed real estate
9
9
45
112
Amortization of intangibles
16
20
54
66
Other
2,242
2,101
6,683
5,974
Total other expenses
12,031
11,276
35,206
32,649
INCOME BEFORE TAX
4,850
5,187
15,799
20,694
INCOME TAX EXPENSE
1,006
1,068
3,308
4,289
NET INCOME
$
3,844
$
4,119
$
12,491
$
16,405
Basic earnings per share
$
0.48
$
0.51
$
1.55
$
2.03
Diluted earnings per share
$
0.48
$
0.51
$
1.55
$
2.03
NORWOOD FINANCIAL CORPFinancial Highlights (Unaudited)(dollars in thousands, except per share data)
For the Three Months Ended September 30
2024
2023
Net interest income
$
15,931
$
15,039
