Norwood Financial Corp Announces First Quarter Earnings

| Source: Norwood Financial Corp. Norwood Financial Corp.

HONESDALE, Pa., April 18, 2022 (GLOBE NEWSWIRE) --

Lewis J. Critelli, President and Chief Executive Officer of Norwood Financial Corp (Nasdaq Global Market – NWFL) and its subsidiary, Wayne Bank, announced record earnings of $7,128,000 for the three months ended March 31, 2022, an increase of 28.6% from the $5,542,000 earned during the corresponding period of 2021. The increase includes a $1,200,000 decrease in the provision for loan losses and a $1,349,000 increase in other income. Earnings per share on a fully diluted basis were $0.87 for the three-month period ended March 31, 2022, compared to $0.67 in the three-month period ended March 31, 2021. The annualized return on average assets was 1.39% in the first quarter of 2022 and the annualized return on average equity was 14.22%, compared to 1.18% and 11.39%, respectively, in the first quarter of 2021.

Total assets were $2.078 billion as of March 31, 2022, an increase of $67.9 million compared to March 31, 2021. As of March 31, 2022, loans totaled $1.372 billion, with deposits of $1.782 billion and stockholders’ equity of $186.8 million.

Net interest income on a fully taxable equivalent basis (fte), was $16,283,000 during the three months ended March 31, 2022, which is $302,000 higher than the comparable three-month period of 2021. A $193.4 million increase in average securities available for sale over the corresponding period in 2021 contributed to the increased interest income. During the three-months ended March 31, 2022, the fte yield on interest-earning assets decreased thirty-six basis points compared to the three months ended March 31, 2021, while the cost of funds decreased twelve basis points. As a result, the annualized net interest spread (fte) decreased to 3.22% from 3.46% in the quarter ended March 31, 2022 compared to the corresponding three-month period in 2021. A $378,000 reduction in loan origination fees recognized on Paycheck Protection Program (“PPP”) loans compared to the three months ended March 31, 2021, contributed to the reduced net interest spread (fte).

Other income totaled $3,338,000 for the three months ended March 31, 2022, compared to $1,992,000 during the corresponding period of last year. The increase is due primarily to $875,000 of income recognized on previously acquired purchased impaired loans that were carried at a discount, and a $427,000 gain on the sale of a property carried in Foreclosed Real Estate Owned. All other categories of other income increased $44,000, net.

Operating expenses totaled $10,157,000 in the three months ended March 31, 2022, and were $705,000, or 7.5%, higher than the $9,452,000 recorded in the same period of last year.

Mr. Critelli stated, “Our first quarter results provide a good start for 2022 and exceed our budget level. Total loans increased 7.7% annually during the quarter after excluding the impact of loan forgiveness related to PPP loans. Our total deposits increased 5.7% annually during the quarter, our core operating expenses remain well-controlled, and our capital base remains above “Well-Capitalized” targets. Additionally, our credit quality metrics continued to improve during the first quarter, which we believe should benefit future results. 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 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 operations and financial condition, the ability to continue to grow our core business, the ability to have success in the future, the ability to improve our credit quality metrics and benefit future results, 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 interest income and net interest income on a fully taxable equivalent basis (fte), which are non-GAAP (Generally Accepted Accounting Principles) financial measures. Fully tax-equivalent net interest income is derived from GAAP interest income and net interest income using an assumed tax rate of 21%. We believe the presentation of interest income and net interest income on a fully taxable equivalent basis ensures comparability of 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 March 31,
  2022  2021 
Net interest income $16,101  $15,776 
Tax equivalent basis adjustment using 21% marginal tax rate 182   205 
Net interest income on a fully taxable equivalent basis $16,283  $15,981
 
       

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:

  
(dollars in thousands)Three months ended March 31,
  2022  2021 
Average equity$203,260 $197,243 
Average goodwill and other intangibles (29,656) (29,798)
Average tangible equity $173,604  $167,445
 
     


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


               
NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets
(dollars in thousands, except share and per share data)
 (unaudited)
  March 31         
  2022   2021          
ASSETS              
Cash and due from banks $22,394  $20,364          
Interest-bearing deposits with banks 143,632   190,135          
Cash and cash equivalents 166,026   210,499          
               
Securities available for sale 434,924   275,224          
Loans receivable 1,371,645   1,421,568          
Less: Allowance for loan losses 16,660   14,509          
Net loans receivable 1,354,985   1,407,059          
Regulatory stock, at cost 3,423   4,043          
Bank premises and equipment, net 17,022   17,648          
Bank owned life insurance 40,215   39,471          
Foreclosed real estate owned 590   844          
Accrued interest receivable 5,876   6,317          
Goodwill 29,266   29,290          
Other intangible assets 380   495          
Other assets 24,991   18,946          
TOTAL ASSETS $2,077,698  $2,009,836          
               
LIABILITIES              
Deposits:              
Non-interest bearing demand $438,979  $415,395          
Interest-bearing 1,342,798   1,269,793          
Total deposits 1,781,777   1,685,188          
Short-term borrowings 63,622   72,917          
Other borrowings 26,844   39,366          
Accrued interest payable 1,160   1,370          
Other liabilities 17,489   15,888          
TOTAL LIABILITIES 1,890,892   1,814,729          
               
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: 8,268,401 shares, 2021: 8,240,081 shares 827   824          
Surplus 96,619   95,717          
Retained earnings 114,845   97,201          
Treasury stock, at cost: 2022: 65,089 shares, 2021: 21,568 shares (1,760)  (656)         
Accumulated other comprehensive (loss) income (23,725)  2,021          
TOTAL STOCKHOLDERS' EQUITY 186,806   195,107          
               
TOTAL LIABILITIES AND              
STOCKHOLDERS' EQUITY $2,077,698  $2,009,836          
               
               
               
               
NORWOOD FINANCIAL CORP.
Consolidated Statements of Income
(dollars in thousands, except per share data)
  (unaudited)
 Three Months Ended March 31,    
  2022   2021          
INTEREST INCOME              
Loans receivable, including fees$15,375  $16,146          
Securities 1,894   1,112          
Other 78   43          
Total Interest income 17,347   17,301          
               
INTEREST EXPENSE              
Deposits 1,059   1,255          
Short-term borrowings 48   69          
Other borrowings 139   201          
Total Interest expense 1,246   1,525          
NET INTEREST INCOME 16,101   15,776          
PROVISION FOR LOAN LOSSES 300   1,500          
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES15,801   14,276          
               
OTHER INCOME              
Service charges and fees 1,470   1,247          
Income from fiduciary activities 202   160          
Net realized gains on sales of securities -   21          
Gains on sales of loans, net -   29          
Gains on sales of foreclosed real estate owned 427   3          
Earnings and proceeds on life insurance policies 176   374          
Other 1,063   158          
Total other income 3,338   1,992          
               
OTHER EXPENSES              
Salaries and employee benefits 5,431   4,953          
Occupancy, furniture and equipment 1,307   1,220          
Data processing and related operations 628   603          
Taxes, other than income 294   305          
Professional fees 575   540          
FDIC Insurance assessment 183   181          
Foreclosed real estate 53   33          
Amortization of intangibles 27   35          
Other 1,659   1,585          
Total other expenses 10,157   9,455          
               
INCOME BEFORE TAX 8,982   6,813          
INCOME TAX EXPENSE 1,854   1,271          
NET INCOME $7,128  $5,542          
               
Basic earnings per share$0.87  $0.68          
               
Diluted earnings per share$0.87  $0.67          
               
               
               
NORWOOD FINANCIAL CORP.              
Financial Highlights (Unaudited)              
(dollars in thousands, except per share data)              
               
For the Three Months Ended March 31 2022   2021          
               
Net interest income$16,101  $15,776          
Net income 7,128   5,542          
               
Net interest spread (fully taxable equivalent) 3.22%  3.46%         
Net interest margin (fully taxable equivalent) 3.32%  3.59%         
Return on average assets 1.39%  1.18%         
Return on average equity 14.22%  11.39%         
Return on average tangible equity 16.65%  13.42%         
Basic earnings per share$0.87  $0.68          
Diluted earnings per share$0.87  $0.67          
               
               
As of March 31 2022   2021          
               
Total assets$2,077,698  $2,009,836          
Total loans receivable 1,371,645   1,421,568          
Allowance for loan losses 16,660   14,509          
Total deposits 1,781,777   1,685,188          
Stockholders' equity 186,806   195,107          
Trust assets under management 190,144   173,263          
               
Book value per share$22.99  $23.82          
Tangible book value per share$19.37  $20.20          
Equity to total assets 8.99%  9.71%         
Allowance to total loans receivable 1.21%  1.02%         
Nonperforming loans to total loans 0.05%  0.22%         
Nonperforming assets to total assets 0.06%  0.20%         
               
               
               
NORWOOD FINANCIAL CORP.              
Consolidated Balance Sheets (unaudited)              
(dollars in thousands)              
  March 31  December 31  September 30  June 30  March 31
  2022  2021  2021  2021  2021
ASSETS              
Cash and due from banks$22,394  $21,073  $28,353  $34,831  $20,364 
Interest-bearing deposits with banks 143,632   185,608   191,580   170,342   190,135 
Cash and cash equivalents 166,026   206,681   219,933   205,173   210,499 
               
Securities available for sale 434,924   406,782   361,988   333,636   275,224 
Loans receivable 1,371,645   1,354,931   1,371,002   1,386,654   1,421,568 
Less: Allowance for loan losses 16,660   16,442   16,103   15,340   14,509 
Net loans receivable 1,354,985   1,338,489   1,354,899   1,371,314   1,407,059 
Regulatory stock, at cost 3,423   3,927   3,898   4,084   4,043 
Bank owned life insurance 40,215   40,038   39,864   39,665   39,471 
Bank premises and equipment, net 17,022   17,289   17,364   17,298   17,648 
Foreclosed real estate owned 590   1,742   1,876   844   844 
Goodwill and other intangibles 29,646   29,673   29,700   29,727   29,785 
Other assets 30,867   23,883   24,169   23,823   25,263 
TOTAL ASSETS$2,077,698  $2,068,504  $2,053,691  $2,025,564  $2,009,836 
               
LIABILITIES              
Deposits:              
Non-interest bearing demand$438,979  $440,652  $442,534  $435,824  $415,395 
Interest-bearing deposits 1,342,798   1,316,141   1,279,988   1,253,117   1,269,793 
Total deposits 1,781,777   1,756,793   1,722,522   1,688,941   1,685,188 
Borrowings 90,466   90,820   111,382   119,858   112,283 
Other liabilities 18,649   15,629   17,179   16,266   17,258 
TOTAL LIABILITIES 1,890,892   1,863,242   1,851,083   1,825,065   1,814,729 
               
STOCKHOLDERS' EQUITY 186,806   205,262   202,608   200,499   195,107 
               
TOTAL LIABILITIES AND              
STOCKHOLDERS' EQUITY$2,077,698  $2,068,504  $2,053,691  $2,025,564  $2,009,836 
               
               
               
NORWOOD FINANCIAL CORP.
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
  March 31  December 31  September 30  June 30  March 31
Three months ended 2022  2021  2021  2021  2021
INTEREST INCOME              
Loans receivable, including fees$15,375  $16,149  $16,859  $16,102  $16,146 
Securities 1,894   1,612   1,468   1,356   1,112 
Other 78   92   72   59   43 
Total interest income 17,347   17,853   18,399   17,517   17,301 
               
INTEREST EXPENSE              
Deposits 1,059   1,130   1,167   1,205   1,255 
Borrowings 187   227   243   259   270 
Total interest expense 1,246   1,357   1,410   1,464   1,525 
NET INTEREST INCOME 16,101   16,496   16,989   16,053   15,776 
PROVISION FOR LOAN LOSSES 300   450   750   1,500   1,500 
NET INTEREST INCOME AFTER PROVISION              
FOR LOAN LOSSES 15,801   16,046   16,239   14,553   14,276 
               
OTHER INCOME              
Service charges and fees 1,470   1,425   1,485   1,532   1,247 
Income from fiduciary activities 202   198   209   181   160 
Net realized gains on sales of securities -   36   35   -   21 
Gains on sales of loans, net -   -   39   109   29 
Gains on sales of foreclosed real estate owned 427   -   31   2   3 
Earnings and proceeds on life insurance policies 176   174   200   194   374 
Other 1,063   188   160   171   158 
Total other income 3,338   2,021   2,159   2,189   1,992 
               
OTHER EXPENSES              
Salaries and employee benefits 5,431   4,992   5,491   5,171   4,953 
Occupancy, furniture and equipment, net 1,307   1,254   1,163   1,186   1,220 
Foreclosed real estate 53   88   16   15   33 
FDIC insurance assessment 183   169   177   154   181 
Other 3,183   3,539   2,776   2,968   3,068 
Total other expenses 10,157   10,042   9,623   9,494   9,455 
               
INCOME BEFORE TAX 8,982   8,025   8,775   7,248   6,813 
INCOME TAX EXPENSE 1,854   1,387   1,794   1,493   1,271 
NET INCOME$7,128  $6,638  $6,981  $5,755  $5,542 
               
Basic earnings per share$0.87  $0.81  $0.85  $0.70  $0.68 
               
Diluted earnings per share$0.87  $0.81  $0.85  $0.70  $0.67 
               
Book Value per share$22.99  $25.24  $24.90  $24.47  $23.82 
Tangible Book Value per share 19.37   21.63   21.27   20.85   20.20 
               
Return on average assets (annualized) 1.39%  1.26%  1.36%  1.15%  1.18%
Return on average equity (annualized) 14.22%  12.84%  13.50%  11.59%  11.39%
Return on average tangible equity (annualized) 16.65%  15.02%  15.78%  13.63%  13.42%
               
Net interest spread (fte) 3.22%  3.29%  3.49%  3.32%  3.46%
Net interest margin (fte) 3.32%  3.39%  3.61%  3.44%  3.59%
               
Allowance for loan losses to total loans 1.21%  1.21%  1.17%  1.11%  1.02%
Net charge-offs to average loans (annualized) 0.02%  0.03%  -0.00%  0.19%  0.04%
Nonperforming loans to total loans 0.05%  0.05%  0.20%  0.28%  0.22%
Nonperforming assets to total assets 0.06%  0.12%  0.22%  0.24%  0.20%