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Norwood Financial Corp Announces Earnings for the Fourth Quarter And 2022 Fiscal Year

/EIN News/ -- HONESDALE, Pa., Jan. 27, 2023 (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 for the three months ended December 31, 2022 of $7,140,000 compared to the net income of $6,638,000 earned in the three months ended December 31, 2021. The increase in net income was due primarily to a $736,000 increase in net interest income. For the year ended December 31, 2022, net income totaled $29,233,000, an increase of $4,318,000 from net income of $24,915,000 earned in year ended December 31, 2021. The increase includes a $3,084,000 increase in net interest income and a $3,300,000 reduction in the provision for loan losses.

Earnings per share (fully diluted) were $0.88 and $0.81 for the three-month periods ended December 31, 2022 and 2021, respectively. For the year ended December 31, 2022, earnings per share on a fully diluted basis were $3.58, compared to $3.05 for the year ended December 31, 2021. For the year ended December 31, 2022, the return on average assets was 1.43%, and the return on average equity was 16.11%, compared to 1.24% and 12.35%, respectively, for the year ended December 31, 2021.         

Total assets were $2.047 billion as of December 31, 2022. As of December 31, 2022, loans receivable were $1.474 billion, total deposits were $1.728 billion and stockholders’ equity was $167.1 million. The $38.2 million decrease in stockholders’ equity compared to December 31, 2021, includes a $57.1 million decrease in accumulated other comprehensive income due to a decrease in the market value of available for sale securities related to the significant increase in interest rates during 2022.

Loans receivable increased $119.0 million from the year-ended December 31, 2021, including a $90.0 million increase in retail loans and a $28.4 million increase in commercial loans. For the three months and year ended December 31, 2022, net charge-offs totaled $232,000 and $344,000, respectively, compared to $111,000 and $907,000, respectively, for the corresponding periods in 2021.

Net interest income, on a fully taxable equivalent basis (fte), totaled $17,429,000 for the three months ended December 31, 2022, an increase of $758,000 compared to the same period in 2021. For the year ended December 31, 2022, net interest income (fte) totaled $69,164,000, an increase of $3,064,000 compared to 2021, due primarily to the higher volume of earning assets, including a $160.1 million increase in average securities available for sale.

Other income for the three months ended December 31, 2022, totaled $1,926,000 compared to $2,021,000 for the similar period in 2021. Gains on the sale of loans and securities decreased $32,000, while service charges and fees decreased $55,000. All other items of other income decreased $8,000, net. Other income for the year ended December 31, 2022, totaled $9,932,000 compared to $8,361,000 in 2021, an increase of $1,571,000 due primarily to income recognized on previously acquired purchased impaired loans that were carried at a discount. Gains on the sale of loans and investment securities decreased $263,000 in the aggregate, while gains on sales of foreclosed real estate owned increased $391,000.

Other expenses totaled $10,275,000 for the three months ended December 31, 2022, compared to $10,042,000 in the similar period of 2021. For the year ended December 31, 2022, other expenses totaled $41,044,000 compared to $38,614,000 for 2021, an increase of $2,430,000, or 6.3%.

Mr. Donnelly commented, “In 2022, our earnings increased $4.3 million over our previous record year of 2021. Our Return on Average Assets was 1.43%, and our Return on Average Equity was 16.11%. Earnings per share (fully diluted) also improved to $3.58 per share in 2022 from $3.04 per share in 2021. We have continued to grow our core business lines, including an 8.8% increase in loans outstanding, and maintain our strong credit quality metrics, which should bode well for future performance. Our cash dividend of $0.29 per share declared in the fourth quarter of 2022, represents a 3.6% increase over the same period of last year. 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 Delaware, Sullivan, Ontario, Otsego and Yates Counties, New York. The Company’s stock is traded 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, the risks and uncertainty posed by, and the continued effect and impact of, the COVID-19 pandemic on the economy and the Company’s results of operation and financial condition, our ability to maintain strong credit quality metrics, our ability to have future performance, our 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 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 
December 31
  Year ended
December 31
    2022   2021   2022   2021
Net interest income $ 17,232 $ 16,496 $ 68,397 $ 65,313
Tax equivalent basis adjustment
using 21% marginal tax rate
  197   175  
767
  787
Net interest income on a fully
taxable equivalent basis

$

17,429

$

16,671

$

69,164
$ 66,100
                 

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
December 31,  
  Year ended
December 31,
    2022   2021   2022    2021
                 
Average equity $ 162,762 $ 205,053 $ 181,499 $ 201,681
Average goodwill and other Intangibles   (29,582)   (29,683)   (29,618)   (29,738)
Average tangible equity $ 133,180 $ 175,370 $ 151,881 $ 171,943
                 


                       
NORWOOD FINANCIAL CORP.                      
Consolidated Balance Sheets                      
(dollars in thousands, except share and per share data)                      
 (unaudited)                      
    December 31              
      2022     2021                
ASSETS                      
   Cash and due from banks  $   28,847    $ 21,073                
   Interest-bearing deposits with banks     3,019     185,608                
          Cash and cash equivalents     31,866     206,681                
                       
  Securities available for sale     418,927     406,782                
  Loans receivable     1,473,945     1,354,931                
  Less: Allowance for loan losses     16,999     16,442                
     Net loans receivable     1,456,946     1,338,489                
  Regulatory stock, at cost     5,418     3,927                
  Bank premises and equipment, net     17,924     17,289                
  Bank owned life insurance     43,364     40,038                
  Foreclosed real estate owned     346     1,742                
  Accrued interest receivable     6,917     5,889                
  Deferred tax assets, net     23,549     8,791                
  Goodwill     29,266     29,266                
  Other intangible assets     306     407                
  Other assets     12,241     9,203                
          TOTAL ASSETS  $   2,047,070    $ 2,068,504                
                       
LIABILITIES                      
   Deposits:                      
     Non-interest bearing demand  $   434,529    $ 440,652                
     Interest-bearing     1,293,198     1,316,141                
          Total deposits     1,727,727     1,756,793                
  Short-term borrowings     93,215     60,822                
  Other borrowings     40,000     29,998                
  Accrued interest payable     2,653     1,203                
  Other liabilities     16,390     14,426                
            TOTAL LIABILITIES     1,879,985     1,863,242                
                       
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: 2022: 8,291,401 shares, 2021: 8,266,751 shares     829     827                
  Surplus     96,897     96,443                
  Retained earnings     130,020     110,015                
  Treasury stock, at cost: 2022: 124,650 shares, 2021: 65,328 shares   (3,308 )   (1,767 )              
  Accumulated other comprehensive (loss) income     (57,353 )   (256 )              
           TOTAL STOCKHOLDERS' EQUITY     167,085     205,262                
                       
          TOTAL LIABILITIES AND                      
                 STOCKHOLDERS' EQUITY  $   2,047,070    $ 2,068,504                
                       
                       
                       
                       
NORWOOD FINANCIAL CORP.                      
Consolidated Statements of Income                      
(dollars in thousands, except per share data)                      
  (unaudited)                      
    Three Months Ended
December 31,
      Twelve Months Ended
December 31,
 
      2022     2021         2022     2021    
INTEREST INCOME                      
    Loans receivable, including fees $   17,810   $ 16,149       $ 66,013   $ 65,257    
    Securities     2,487     1,612         9,051     5,547    
    Other     98     92         602     266    
         Total Interest income     20,395     17,853         75,666     71,070    
                       
INTEREST EXPENSE                      
   Deposits     2,772     1,130         6,471     4,757    
   Short-term borrowings     329     71         524     284    
   Other borrowings     62     156         274     716    
        Total Interest expense     3,163     1,357         7,269     5,757    
NET INTEREST INCOME     17,232     16,496         68,397     65,313    
PROVISION FOR LOAN LOSSES   $ 300     450         900     4,200    
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   16,932     16,046         67,497     61,113    
                       
OTHER INCOME                      
    Service charges and fees     1,370     1,425         5,661     5,693    
    Income from fiduciary activities     210     198         845     748    
    Net realized gains on sales of securities     3     36         3     92    
    Gains on sales of loans, net     1     -         3     177    
    Gains on sales of foreclosed real estate owned     -     -         427     36    
    Earnings and proceeds on life insurance policies     195     174         1,087     941    
    Other     147     188         1,906     674    
           Total other income     1,926     2,021         9,932     8,361    
                       
OTHER EXPENSES                      
      Salaries and employee benefits     5,246     4,992         22,071     20,608    
      Occupancy, furniture and equipment     1,263     1,254         4,967     4,822    
      Data processing and related operations     917     655         2,948     2,415    
      Taxes, other than income     239     358         1,013     1,122    
      Professional fees     383     510         1,719     1,582    
      FDIC Insurance assessment     144     169         612     681    
      Foreclosed real estate     7     88         73     151    
      Amortization of intangibles     23     27         101     123    
      Other     2,053     1,989         7,540     7,110    
             Total other expenses     10,275     10,042         41,044     38,614    
                       
INCOME BEFORE TAX     8,583     8,025         36,385     30,860    
INCOME TAX EXPENSE     1,443     1,387         7,152     5,945    
NET INCOME  $   7,140    $ 6,638        $ 29,233    $ 24,915    
                       
Basic earnings per share $   0.88   $ 0.81       $ 3.59   $ 3.05    
                       
Diluted earnings per share $   0.88   $ 0.81       $ 3.58   $ 3.05    
                       
                       
                       
NORWOOD FINANCIAL CORP.                      
Financial Highlights (Unaudited)                      
(dollars in thousands, except per share data)                      
                       
For the Three Months Ended December 31     2022     2021                
                       
Net interest income  $   17,232    $ 16,496                
Net income     7,140     6,638                
                       
Net interest spread (fully taxable equivalent)     3.30 %   3.29 %              
Net interest margin (fully taxable equivalent)     3.55 %   3.39 %              
Return on average assets     1.40 %   1.26 %              
Return on average equity     17.40 %   12.84 %              
Return on average tangible equity     21.27 %   15.02 %              
Basic earnings per share  $   0.88    $ 0.81                
Diluted earnings per share  $   0.88    $ 0.81                
                       
For the Twelve Months Ended December 31     2022     2021                
                       
Net interest income  $   68,397    $ 65,313                
Net income     29,233     24,915                
                       
Net interest spread (fully taxable equivalent)     3.38 %   3.39 %              
Net interest margin (fully taxable equivalent)     3.53 %   3.50 %              
Return on average assets     1.43 %   1.24 %              
Return on average equity     16.11 %   12.35 %              
Return on average tangible equity     19.25 %   14.49 %              
Basic earnings per share  $   3.59    $ 3.05                
Diluted earnings per share  $   3.58    $ 3.04                
                       
As of December 31     2022     2021                
                       
Total assets  $   2,047,070    $ 2,068,504                
Total loans receivable     1,473,945     1,354,931                
Allowance for loan losses     16,999     16,442                
Total deposits     1,727,727     1,756,793                
Stockholders' equity     167,085     205,262                
Trust assets under management     184,855     195,958                
                       
Book value per share  $   20.86    $ 25.24                
Tangible book value per share  $   17.24    $ 21.63                
Equity to total assets     8.16 %   9.92 %              
Allowance to total loans receivable     1.15 %   1.21 %              
Nonperforming loans to total loans     0.08 %   0.05 %              
Nonperforming assets to total assets     0.07 %   0.12 %              
                       
                       
                       
NORWOOD FINANCIAL CORP.                      
Consolidated Balance Sheets (unaudited)                      
(dollars in thousands)                      
    December 31   September 30
  June 30   March 31   December 31  
      2022   2022   2022   2022   2021  
ASSETS                      
   Cash and due from banks  $   28,847    $ 23,092    $ 29,931    $ 22,394    $ 21,073    
   Interest-bearing deposits with banks     3,019     17,785     79,735     143,632     185,608    
        Cash and cash equivalents     31,866     40,877     109,666     166,026     206,681    
                       
  Securities available for sale     418,927     427,287     440,877     434,924     406,782    
  Loans receivable     1,473,945     1,432,288     1,404,317     1,371,645     1,354,931    
   Less: Allowance for loan losses     16,999     16,931     17,017     16,660     16,442    
     Net loans receivable     1,456,946     1,415,357     1,387,300     1,354,985     1,338,489    
  Regulatory stock, at cost     5,418     2,220     2,396     3,423     3,927    
  Bank owned life insurance     43,364     43,169     43,167     40,215     40,038    
  Bank premises and equipment, net     17,924     17,427     17,032     17,022     17,289    
  Foreclosed real estate owned     346     346     346     590     1,742    
  Goodwill and other intangibles     29,572     29,595     29,619     29,646     29,673    
  Other assets     42,707     42,592     35,981     30,867     23,883    
          TOTAL ASSETS  $   2,047,070    $ 2,018,870    $ 2,066,384    $ 2,077,698    $ 2,068,504    
                       
LIABILITIES                      
   Deposits:                      
     Non-interest bearing demand  $   434,529    $ 453,560    $ 442,991    $ 438,979    $ 440,652    
     Interest-bearing deposits     1,293,198     1,315,236     1,356,839     1,342,798     1,316,141    
          Total deposits     1,727,727     1,768,796     1,799,830     1,781,777     1,756,793    
   Borrowings     133,215     71,754     74,839     90,466     90,820    
   Other liabilities     19,043     19,471     17,884     18,649     15,629    
            TOTAL LIABILITIES     1,879,985     1,860,021     1,892,553     1,890,892     1,863,242    
                       
STOCKHOLDERS' EQUITY     167,085     158,849     173,831     186,806     205,262    
                       
          TOTAL LIABILITIES AND                      
                 STOCKHOLDERS' EQUITY  $   2,047,070    $ 2,018,870    $ 2,066,384    $ 2,077,698    $ 2,068,504    
                       
                       
                       
NORWOOD FINANCIAL CORP.                      
Consolidated Statements of Income (unaudited)                      
(dollars in thousands, except per share data)                      
    December 31   September 30 June 30   March 31   December 31  
Three months ended     2022   2022   2022   2022   2021  
INTEREST INCOME                      
    Loans receivable, including fees  $   17,810    $ 17,114    $ 15,714    $ 15,375    $ 16,149    
    Securities     2,487     2,473     2,197     1,894     1,612    
    Other     98     245     182     78     92    
         Total interest income     20,395     19,832     18,093     17,347     17,853    
                       
INTEREST EXPENSE                      
    Deposits     2,772     1,557     1,083     1,059     1,130    
    Borrowings     391     105     116     187     227    
        Total interest expense     3,163     1,662     1,199     1,246     1,357    
NET INTEREST INCOME     17,232     18,170     16,894     16,101     16,496    
PROVISION FOR LOAN LOSSES     300     -     300     300     450    
NET INTEREST INCOME AFTER PROVISION                      
     FOR LOAN LOSSES     16,932     18,170     16,594     15,801     16,046    
                       
OTHER INCOME                      
    Service charges and fees     1,370     1,346     1,475     1,470     1,425    
    Income from fiduciary activities     210     219     214     202     198    
    Net realized gains on sales of securities     3     -     -     -     36    
    Gains on sales of loans, net     1     1     -     -     -    
    Gains on sales of foreclosed real estate owned     -     -     -     427     -    
    Earnings and proceeds on life insurance policies     195     267     449     176     174    
    Other     147     345     351     1,063     188    
           Total other income     1,926     2,178     2,489     3,338     2,021    
                       
OTHER EXPENSES                      
    Salaries and employee benefits     5,246     5,553     5,840     5,431     4,992    
    Occupancy, furniture and equipment, net     1,263     1,191     1,206     1,307     1,254    
    Foreclosed real estate     7     4     10     53     88    
    FDIC insurance assessment     144     143     142     183     169    
    Other     3,615     3,248     3,274     3,183     3,539    
             Total other expenses     10,275     10,139     10,472     10,157     10,042    
                       
INCOME BEFORE TAX     8,583     10,209     8,611     8,982     8,025    
INCOME TAX EXPENSE     1,443     2,100     1,756     1,854     1,387    
NET INCOME  $   7,140    $ 8,109    $ 6,855    $ 7,128    $ 6,638    
                       
Basic earnings per share  $   0.88    $ 1.00    $ 0.84    $ 0.87    $ 0.81    
                       
Diluted earnings per share  $   0.88    $ 1.00    $ 0.84    $ 0.87    $ 0.81    
                       
Book Value per share $   20.86   $ 19.92   $ 21.65   $ 22.99   $ 25.24    
Tangible Book Value per share     17.24     16.29     18.02     19.37     21.63    
                       
Return on average assets (annualized)     1.40 %   1.57 %   1.35 %   1.39 %   1.26 %  
Return on average equity (annualized)     17.40 %   17.93 %   15.19 %   14.22 %   12.84 %  
Return on average tangible equity (annualized)     21.27 %   21.48 %   18.16 %   16.65 %   15.02 %  
                       
Net interest spread (fte)     3.30 %   3.61 %   3.40 %   3.22 %   3.29 %  
Net interest margin (fte)     3.55 %   3.74 %   3.49 %   3.32 %   3.39 %  
                       
Allowance for loan losses to total loans     1.15 %   1.18 %   1.21 %   1.21 %   1.21 %  
Net charge-offs to average loans (annualized)     0.06 %   0.02 %   -0.02 %   0.02 %   0.03 %  
Nonperforming loans to total loans     0.08 %   0.04 %   0.04 %   0.05 %   0.05 %  
Nonperforming assets to total assets     0.07 %   0.05 %   0.05 %   0.06 %   0.12 %  
                       

 

Contact:
William S. Lance
Executive Vice President & Chief Financial Officer
NORWOOD FINANCIAL CORP
570-253-8505
www.waynebank.com

 


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