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

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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