NWFL Norwood Financial Corporation

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
Net income		3,844				4,119
Net interest spread (fully taxable equivalent)		2.23	%			2.26	%
Net interest margin (fully taxable equivalent)		2.99	%			2.92	%
Return on average assets		0.68	%			0.76	%
Return on average equity		8.09	%			9.33	%
Return on average tangible equity		9.58	%			11.22	%
Basic earnings per share	$	0.48			$	0.51
Diluted earnings per share	$	0.48			$	0.51
For the Nine Months Ended September 30		2024				2023
Net interest income	$	45,566			$	46,774
Net income		12,491				16,405
Net interest spread (fully taxable equivalent)		2.12	%			2.56	%
Net interest margin (fully taxable equivalent)		2.87	%			3.10	%
Return on average assets		0.75	%			1.04	%
Return on average equity		9.09	%			12.54	%
Return on average tangible equity		10.82	%			15.08	%
Basic earnings per share	$	1.55			$	2.03
Diluted earnings per share	$	1.55			$	2.03
As of September 30		2024				2023
Total assets	$	2,279,751			$	2,179,998
Total loans receivable		1,675,139				1,611,069
Allowance for credit losses		18,699				16,086
Total deposits		1,855,251				1,746,824
Stockholders' equity		195,654				164,702
Trust assets under management		209,857				185,913
Book value per share	$	24.92			$	21.15
Tangible book value per share	$	21.28			$	17.49
Equity to total assets		8.58	%			7.56	%
Allowance to total loans receivable		1.12	%			1.00	%
Nonperforming loans to total loans		0.47	%			0.65	%
Nonperforming assets to total assets		0.35	%			0.50	%

NORWOOD FINANCIAL CORPConsolidated Balance Sheets (unaudited) (dollars in thousands)
	September 302024			June 302024			March 312024			December 312023			September 302023
ASSETS
Cash and due from banks	$	47,072		$	29,903		$	19,519		$	28,533		$	41,141
Interest-bearing deposits with banks		35,808			39,492			92,444			37,587			13,005
Cash and cash equivalents		82,880			69,395			111,963			66,120			54,146
Securities available for sale		396,891			397,578			398,374			406,259			380,499
Loans receivable		1,675,139			1,641,356			1,621,448			1,603,618			1,611,069
Less: Allowance for credit losses		18,699			17,807			18,020			18,968			16,086
Net loans receivable		1,656,440			1,623,549			1,603,428			1,584,650			1,594,983
Regulatory stock, at cost		6,329			6,443			6,545			7,318			8,843
Bank owned life insurance		46,382			46,121			45,869			46,439			46,197
Bank premises and equipment, net		18,503			18,264			18,057			17,838			17,254
Foreclosed real estate owned		0			0			97			97			290
Goodwill and other intangibles		29,433			29,449			29,468			29,487			29,506
Other assets		42,893			44,517			46,622			42,871			48,280
TOTAL ASSETS	$	2,279,751		$	2,235,316		$	2,260,423		$	2,201,079		$	2,179,998
LIABILITIES
Deposits
Non-interest bearing demand	$	420,967		$	391,849		$	383,362		$	399,545		$	430,242
Interest-bearing deposits		1,434,284			1,419,323			1,455,636			1,395,614			1,316,582
Total deposits		1,855,251			1,811,172			1,838,998			1,795,159			1,746,824
Borrowings		197,412			210,422			211,234			198,312			241,328
Other liabilities		31,434			31,534			28,978			26,538			27,144
TOTAL LIABILITIES		2,084,097			2,053,128			2,079,210			2,020,009			2,015,296
STOCKHOLDERS' EQUITY		195,654			182,188			181,213			181,070			164,702
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,279,751		$	2,235,316		$	2,260,423		$	2,201,079		$	2,179,998

NORWOOD FINANCIAL CORPConsolidated Statements of Income (unaudited)(dollars in thousands, except per share data)
		September 302024		June 302024				March 312024			December 312023			September 302023
Three months ended
INTEREST INCOME
Loans receivable, including fees	$	25,464		$	24,121		$	23,681		$	23,328		$	22,021
Securities		2,526			2,584			2,526			2,504			2,433
Other		497			966			731			253			54
Total interest income		28,487			27,671			26,938			26,085			24,508
INTEREST EXPENSE
Deposits		10,553			10,687			10,110			8,910			7,017
Borrowings		2,003			2,059			2,118			1,882			2,452
Total interest expense		12,556			12,746			12,228			10,792			9,469
NET INTEREST INCOME		15,931			14,925			14,710			15,293			15,039
(RELEASE OF) PROVISION FOR CREDIT LOSSES		1,345			347			(624	)		6,116			882
NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES
		14,586			14,578			15,334			9,177			14,157
OTHER INCOME
Service charges and fees		1,517			1,504			1,343			1,421			1,527
Income from fiduciary activities		256			225			238			210			246
Net realized (losses) gains on sales of securities		-			-			-			-			-
Gains on sales of loans, net		103			36			6			36			18
Gains on sales of foreclosed real estate owned		-			32			-			66			13
Earnings and proceeds on life insurance policies		261			253			268			242			328
Other		158			157			151			148			174
Total other income		2,295			2,207			2,006			2,123			2,306
OTHER EXPENSES
Salaries and employee benefits		6,239			5,954			6,135			5,672			6,083
Occupancy, furniture and equipment, net		1,269			1,229			1,261			1,265			1,242
Foreclosed real estate		9			15			21			17			9
FDIC insurance assessment		339			309			361			287			254
Other		4,175			3,937			3,954			3,608			3,688
Total other expenses		12,031			11,444			11,732			10,849			11,276
INCOME BEFORE TAX		4,850			5,341			5,608			451			5,187
INCOME TAX EXPENSE		1,006			1,128			1,175			96			1,068
NET INCOME	$	3,844		$	4,213		$	4,433		$	355		$	4,119
Basic earnings per share	$	0.48		$	0.52		$	0.55		$	0.04		$	0.51
Diluted earnings per share	$	0.48		$	0.52		$	0.55		$	0.04		$	0.51
Book Value per share	$	24.92		$	23.26		$	23.01		$	22.99		$	21.15
Tangible Book Value per share		21.28			19.62			19.38			19.36			17.49
Return on average assets (annualized)		0.68	%		0.75	%		0.80	%		0.06	%		0.76	%
Return on average equity (annualized)		8.09	%		9.41	%		9.79	%		0.84	%		9.33	%
Return on average tangible equity (annualized)		9.58	%		11.26	%		11.68	%		1.01	%		11.22	%
Net interest spread (fte)		2.23	%		2.05	%		2.07	%		2.24	%		2.28	%
Net interest margin (fte)		2.99	%		2.79	%		2.79	%		2.95	%		2.94	%
Allowance for credit losses to total loans		1.12	%		1.08	%		1.11	%		1.18	%		1.00	%
Net charge-offs to average loans (annualized)		0.08	%		0.13	%		0.08	%		0.79	%		0.59	%
Nonperforming loans to total loans		0.47	%		0.47	%		0.23	%		0.48	%		0.65	%
Nonperforming assets to total assets		0.35	%		0.34	%		0.17	%		0.35	%		0.50	%

NORWOOD FINANCIAL CORPNET INTEREST MARGIN ANALYSIS (dollars in thousands)
	For the Quarter Ended
	September 30, 2024							For the Quarter Ended June 30, 2024								September 30, 2023
	Average Balance(2)			Interest(1)			AverageRate(3)	Average Balance(2)				Interest(1)			Average Rate(3)	Average Balance(2)				Interest(1)			AverageRate (3)
Assets
Interest-earning assets:
Interest-bearing deposits with banks	$	36,221		$	497		5.46	%	$	69,173		$	967		5.62	%	$	3,675		$	54		5.83	%
Securities available for sale:
Taxable		392,168			2,161		2.19			401,014			2,206		2.21			406,962			2,052		2.00
Tax-exempt (1)		67,563			461		2.71			69,126			477		2.78			70,219			483		2.73
Total securities available for sale (1)		459,731			2,622		2.27			470,140			2,683		2.30			477,181			2,535		2.11
Loans receivable (1) (4) (5)		1,651,921			25,575		6.16			1,629,283			24,220		5.98			1,589,474			22,104		5.52
Total interest-earning assets		2,147,873			28,694		5.31			2,168,596			27,870		5.17			2,070,330			24,693		4.73
Non-interest earning assets:
Cash and due from banks		28,193								26,422								27,910
Allowance for credit losses		(17,944	)							(18,023	)							(17,262	)
Other assets		78,344								69,718								65,863
Total non-interest earning assets		88,593								78,117								76,511
Total Assets	$	2,236,466							$	2,246,713							$	2,146,841
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand and money market	$	461,897		$	2,782		2.40		$	450,918		$	2,397		2.14		$	439,255		$	1,647		1.49
Savings		221,366			13		0.02			233,676			286		0.49			238,493			77		0.13
Time		734,235			7,758		4.20			755,224			8,004		4.26			611,607			5,293		3.43
Total interest-bearing deposits		1,417,498			10,553		2.96			1,439,818			10,687		2.99			1,289,355			7,017		2.16
Short-term borrowings		53,622			323		2.40			61,689			356		2.32			116,470			1,126		3.84
Other borrowings		146,357			1,680		4.57			149,442			1,703		4.58			116,700			1,326		4.51
Total interest-bearing liabilities		1,617,477			12,556		3.09			1,650,949			12,746		3.11			1,522,525			9,469		2.47
Non-interest bearing liabilities:
Demand deposits		400,314								387,962								425,216
Other liabilities		29,540								28,308								23,876
Total non-interest bearing liabilities		429,854								416,270								449,092
Stockholders' equity		189,135								179,494								175,224
Total Liabilities and Stockholders' Equity	$	2,236,466							$	2,246,713							$	2,146,841
Net interest income/spread (tax equivalent basis)					16,138		2.23	%					15,124		2.06	%					15,224		2.26	%
Tax-equivalent basis adjustment					(207	)							(199	)							(185	)
Net interest income				$	15,931							$	14,925							$	15,039
Net interest margin (tax equivalent basis)							2.99	%							2.80	%							2.92	%

(1) Interest and yields are presented on a tax-equivalent basis using a marginal tax rate of 21%.(2) Average balances have been calculated based on daily balances.(3) Annualized(4) Loan balances include non-accrual loans and are net of unearned income.(5) Loan yields include the effect of amortization of deferred fees, net of costs.