Form 8-K - Current report

NWFL Norwood Financial Corporation

NWFL Norwood Financial Corporation

Notizie Norwood Financial Corporation - NWFL

Notizie Norwood Financial Corporation - NWFL

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) October 24, 2023

NORWOOD FINANCIAL CORP

(Exact name of registrant as specified in its charter)

Pennsylvania

0-28364

23-2828306

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)


717 Main Street, Honesdale, Pennsylvania				18431
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code: (570) 253-1455

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

symbol(s)

Name of each exchange

on which registered

Common Stock, par value $0.10 per share

NWFL

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

NORWOOD FINANCIAL CORP

INFORMATION TO BE INCLUDED IN THE REPORT

Item 2.02. Results of Operations and Financial Condition

On October 24, 2023, Norwood Financial Corp (the “Company”) issued a press release announcing its earnings for the three and nine months ended September 30, 2023. A copy of the press release is furnished with this report as exhibit 99.1 hereto and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits

(d)

Exhibits:

The following exhibits are being furnished with this report.


No.		Description

99.1		Press Release dated October 24, 2023.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 99.1

FOR IMMEDIATE RELEASE

NORWOOD FINANCIAL CORP

ANNOUNCES THIRD QUARTER EARNINGS

October 24, 2023 - Honesdale, Pennsylvania

James O. Donnelly, President and Chief Executive Officer of Norwood Financial Corp. (Nasdaq Global Market-NWFL) and its subsidiary, Wayne Bank, announced earnings for the three months ended September 30, 2023 of $4,119,000, which represents a decrease of $3,990,000, from the $8,109,000 earned in the same three-month period of 2022. The decrease in earnings was due to a $3.1 million decrease in net interest income, an $882,000 increase in the provision for credit losses, and a $1.1 million increase in total other expenses during the three-months ended September 30, 2023. For the three months ended September 30, 2023, earnings per share (fully diluted) were $0.51, which represents a decrease from the $1.00 earned in the three months ended September 30, 2022. The annualized returns on average assets and average tangible equity for the three-month period ended September 30, 2023, were 0.76% and 11.22%, respectively, compared to 1.57% and 21.48% for the three-month period ended September 30, 2022. Net income for the nine months ended September 30, 2023, totaled $16,405,000, which is $5,688,000 lower than the same period of 2022. The decrease in net income includes a $4,390,000 decrease in net interest income, a $2.0 million decrease in total other income, and a $1.9 million increase in total other expenses during the nine months ended September 30, 2023. Earnings per share (fully diluted) for the nine months ended September 30, 2023, totaled $2.03 per share compared to $2.71 per share for the nine months ended September 30, 2022.

As of September 30, 2023, total assets were $2.179 billion, loans receivable were $1.611 billion, total deposits were $1.747 billion and stockholders’ equity was $164.7 million.

For the three months ended September 30, 2023, net interest income, on a fully taxable equivalent basis (fte), totaled $15,224,000, which represents a decrease of $3,145,000, compared to the three months ended September 30, 2022. Net interest margin (fte) for the three months ended September 30, 2023 was 2.94%, compared to 3.74% for the three months ended September 30, 2022. Net interest income (fte) for the nine months ended September 30, 2023 totaled $47,328,000, a decrease of $4,406,000, compared to the nine months ended September 30,2022, due primarily to the increased cost of interest-bearing liabilities in excess of the increase in the yield earned on interest-earning assets. The net interest margin (fte) for the nine months ended September 30, 2023 was 3.09%, compared to 3.52% for the nine months ended September 30, 2022.

For the three months ended September 30, 2023, the Company recorded a provision for credit losses in the amount of $882,000 compared to $0 in the three-month period ended September 30, 2022. The increase in the provision for credit losses was required to replenish the allowance for credit losses to a level deemed appropriate after recognizing $2.3 million of credit losses during the current period. The current period losses include a $2.0 million charge-off resulting from deterioration in one large commercial relationship. The remaining balance of the relationship was transferred to nonperforming status, resulting in an increase in nonperforming loans and nonperforming assets. For the nine-month period ended September 30, 2023, the Company recorded a release of provision for credit losses in the amount of $568,000, compared to a provision of $600,000 in the nine-month period ended September 30, 2022.

Total other income for the three months ended September 30, 2023 was $2,306,000, compared to $2,178,000 for the three months ended September 30, 2022. For the nine months ended September 30, 2023, total other income was $6,001,000, compared to $8,006,000 in the same period of 2022. The decrease was due primarily to income recognized in 2022 on previously acquired purchased impaired loans that were carried at a discount.

Total other expenses were $11,276,000 for the three months ended September 30, 2023, compared to $10,139,000 for the three months ended September 30, 2022. For the nine months ended September 30, 2023, total other expenses were $32,649,000, compared to $30,768,000 for the nine months ended September 30, 2022. The increase was due primarily to a $1,069,000 increase in salaries and employee benefit costs during the nine months ended September 30, 2023.

Mr. Donnelly commented, “Our results for the first nine months of 2023 reflect decreasing net interest spreads due to rising interest rates, which have impacted our cost of interest-bearing liabilities more than the increase in yield earned on interest-earning assets. We continue to compare favorably to peer banks who have also reported a reduction in their financial performance. We will continue to search out opportunities to maintain our position as a premier community bank, and to serve our local communities with their financial needs. We appreciate the opportunity to serve our expanded 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 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 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 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:


	Three months ended September 30				Nine months ended September 30
(dollars in thousands)	2023		2022		2023		2022
Net interest income	$	15,039	$	18,170	$	46,774	$	51,164
Tax equivalent basis adjustment using 21% marginal tax rate		185		199		554		570

Net interest income on a fully taxable equivalent basis	$	15,224	$	18,369	$	47,328	$	51,734

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 September 30						Nine months ended September 30
(dollars in thousands)	2023			2022			2023			2022
Average equity	$	175,224		$	179,398		$	174,944		$	187,183
Average goodwill and other intangibles		(29,514	)		(29,605	)		(29,536	)		(29,630	)

Average tangible equity	$	145,710		$	149,793		$	145,408		$	157,553

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)


	September 30
	2023			2022
ASSETS
Cash and due from banks	$	41,141		$	23,092
Interest-bearing deposits with banks		13,005			17,785

Cash and cash equivalents		54,146			40,877
Securities available for sale		380,499			427,287
Loans receivable		1,611,069			1,432,288
Less: Allowance for credit losses		16,086			16,931

Net loans receivable		1,594,983			1,415,357
Regulatory stock, at cost		8,843			2,220
Bank premises and equipment, net		17,254			17,427
Bank owned life insurance		46,197			43,169
Foreclosed real estate owned		290			346
Accrued interest receivable		7,759			6,303
Deferred tax assets, net		25,610			24,405
Goodwill		29,266			29,266
Other intangible assets		240			329
Other assets		14,911			11,884

TOTAL ASSETS	$	2,179,998		$	2,018,870

LIABILITIES
Deposits:
Non-interest bearing demand	$	430,242		$	453,560
Interest-bearing		1,316,582			1,315,236

Total deposits		1,746,824			1,768,796
Short-term borrowings		103,881			71,754
Other borrowings		137,447			0
Accrued interest payable		8,605			1,425
Other liabilities		18,539			18,046

TOTAL LIABILITIES		2,015,296			1,860,021
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: 2023: 8,291,401 shares, 2022: 8,275,901 shares		829			828
Surplus		97,449			96,785
Retained earnings		137,363			125,243
Treasury stock, at cost: 2023: 222,051 shares, 2022: 130,046 shares		(5,957	)		(3,442	)
Accumulated other comprehensive loss		(64,982	)		(60,565	)

TOTAL STOCKHOLDERS’ EQUITY		164,702			158,849

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,179,998		$	2,018,870

NORWOOD FINANCIAL CORP

Consolidated Statements of Income

(dollars in thousands, except per share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023			2022
INTEREST INCOME
Loans receivable, including fees	$	22,021	$	17,114	$	61,881		$	48,203
Securities		2,433		2,473		7,418			6,564
Other		54		245		156			504

Total Interest income		24,508		19,832		69,455			55,271
INTEREST EXPENSE
Deposits		7,017		1,557		17,119			3,699
Short-term borrowings		1,126		88		2,702			196
Other borrowings		1,326		17		2,860			212

Total Interest expense		9,469		1,662		22,681			4,107

NET INTEREST INCOME		15,039		18,170		46,774			51,164
(RELEASE OF) PROVISION FOR CREDIT LOSSES	$	882		0	$	(568	)		600

NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES		14,157		18,170		47,342			50,564
OTHER INCOME
Service charges and fees		1,527		1,346		4,192			4,292
Income from fiduciary activities		246		219		688			634
Net realized gains on sales of securities		—		—		(209	)		—
Gains on sales of loans, net		18		1		27			1
Gains on sales of foreclosed real estate owned		13		—		13			427
Earnings and proceeds on life insurance policies		328		267		770			892
Other		174		345		520			1,760

Total other income		2,306		2,178		6,001			8,006
OTHER EXPENSES
Salaries and employee benefits		6,083		5,553		17,893			16,824
Occupancy, furniture and equipment		1,242		1,191		3,818			3,704
Data processing and related operations		876		736		2,465			2,031
Taxes, other than income		167		240		490			773
Professional fees		524		354		1,132			1,336
FDIC Insurance assessment		254		143		699			468
Foreclosed real estate		9		4		112			66
Amortization of intangibles		20		24		66			78
Other		2,101		1,894		5,974			5,488

Total other expenses		11,276		10,139		32,649			30,768
INCOME BEFORE TAX		5,187		10,209		20,694			27,802
INCOME TAX EXPENSE		1,068		2,100		4,289			5,709

NET INCOME	$	4,119	$	8,109	$	16,405		$	22,093

Basic earnings per share	$	0.51	$	1.00	$	2.03		$	2.71

Diluted earnings per share	$	0.51	$	1.00	$	2.03		$	2.71

NORWOOD FINANCIAL CORP

Financial Highlights (Unaudited)

(dollars in thousands, except per share data)


For the Three Months Ended September 30	2023			2022
Net interest income	$	15,039		$	18,170
Net income		4,119			8,109
Net interest spread (fully taxable equivalent)		2.28	%		3.61	%
Net interest margin (fully taxable equivalent)		2.94	%		3.74	%
Return on average assets		0.76	%		1.57	%
Return on average equity		9.33	%		17.93	%
Return on average tangible equity		11.22	%		21.48	%
Basic earnings per share	$	0.51		$	1.00
Diluted earnings per share	$	0.51		$	1.00

For the Nine Months Ended September 30	2023			2022
Net interest income	$	46,774		$	51,164
Net income		16,405			22,093

Net interest spread (fully taxable equivalent)		2.55	%		3.41	%
Net interest margin (fully taxable equivalent)		3.09	%		3.52	%
Return on average assets		1.04	%		1.44	%
Return on average equity		12.54	%		15.73	%
Return on average tangible equity		15.08	%		18.67	%
Basic earnings per share	$	2.03		$	2.71
Diluted earnings per share	$	2.03		$	2.71

As of September 30	2023			2022
Total assets	$	2,179,998		$	2,018,870
Total loans receivable		1,611,069			1,432,288
Allowance for credit losses		16,086			16,931
Total deposits		1,746,824			1,768,796
Stockholders’ equity		164,702			158,849
Trust assets under management		185,913			172,037
Book value per share	$	21.15		$	19.92
Tangible book value per share	$	17.49		$	16.29
Equity to total assets		7.56	%		7.87	%
Allowance to total loans receivable		1.00	%		1.18	%
Nonperforming loans to total loans		0.65	%		0.04	%
Nonperforming assets to total assets		0.50	%		0.05	%

NORWOOD FINANCIAL CORP

Consolidated Balance Sheets (unaudited)

(dollars in thousands)


	September 30 2023		June 30 2023		March 31 2023		December 31 2022		September 30 2022
ASSETS
Cash and due from banks	$	41,141	$	30,053	$	25,701	$	28,847	$	23,092
Interest-bearing deposits with banks		13,005		3,036		3,314		3,019		17,785

Cash and cash equivalents		54,146		33,089		29,015		31,866		40,877
Securities available for sale		380,499		403,621		418,245		418,927		427,287
Loans receivable		1,611,069		1,577,699		1,535,643		1,473,945		1,432,288
Less: Allowance for credit losses		16,086		17,483		19,445		16,999		16,931

Net loans receivable		1,594,983		1,560,216		1,516,198		1,456,946		1,415,357
Regulatory stock, at cost		8,843		7,924		5,963		5,418		2,220
Bank owned life insurance		46,197		45,806		45,577		43,364		43,169
Bank premises and equipment, net		17,254		17,363		17,660		17,924		17,427
Foreclosed real estate owned		290		387		346		346		346
Goodwill and other intangibles		29,506		29,526		29,549		29,572		29,595
Other assets		48,280		43,833		41,810		42,707		42,592

TOTAL ASSETS	$	2,179,998	$	2,141,765	$	2,104,363	$	2,047,070	$	2,018,870

LIABILITIES
Deposits:
Non-interest bearing demand	$	430,242	$	425,757	$	419,615	$	434,529	$	453,560
Interest-bearing deposits		1,316,582		1,306,240		1,336,320		1,293,198		1,315,236

Total deposits		1,746,824		1,731,997		1,755,935		1,727,727		1,768,796
Borrowings		241,328		211,978		148,744		133,215		71,754
Other liabilities		27,144		24,366		23,269		19,043		19,471

TOTAL LIABILITIES		2,015,296		1,968,341		1,927,948		1,879,985		1,860,021
STOCKHOLDERS’ EQUITY		164,702		173,424		176,415		167,085		158,849

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,179,998	$	2,141,765	$	2,104,363	$	2,047,070	$	2,018,870

NORWOOD FINANCIAL CORP

Consolidated Statements of Income (unaudited)

(dollars in thousands, except per share data)


Three months ended	September 30 2023			June 30 2023			March 31 2023			December 31 2022			September 30 2022
INTEREST INCOME
Loans receivable, including fees	$	22,021		$	20,702		$	19,158		$	17,810		$	17,114
Securities		2,433			2,481			2,505			2,487			2,473
Other		54			53			48			98			245

Total interest income		24,508			23,236			21,711			20,395			19,832
INTEREST EXPENSE
Deposits		7,017			5,740			4,362			2,772			1,557
Borrowings		2,452			1,854			1,256			391			105

Total interest expense		9,469			7,594			5,618			3,163			1,662

NET INTEREST INCOME		15,039			15,642			16,093			17,232			18,170
(RELEASE OF) PROVISION FOR CREDIT LOSSES		882			(1,750	)		300			300			—

NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES		14,157			17,392			15,793			16,932			18,170
OTHER INCOME
Service charges and fees		1,527			1,353			1,313			1,370			1,346
Income from fiduciary activities		246			229			212			210			219
Net realized (losses) gains on sales of securities		—			(212	)		2			3			—
Gains on sales of loans, net		18			10			—			1			1
Gains on sales of foreclosed real estate owned		13			—			—			—			—
Earnings and proceeds on life insurance policies		328			229			213			195			267
Other		174			174			172			147			345

Total other income		2,306			1,783			1,912			1,926			2,178
OTHER EXPENSES
Salaries and employee benefits		6,083			5,842			5,969			5,246			5,553
Occupancy, furniture and equipment, net		1,242			1,314			1,262			1,263			1,191
Foreclosed real estate		9			74			29			7			4
FDIC insurance assessment		254			244			200			144			143
Other		3,688			3,464			2,976			3,615			3,248

Total other expenses		11,276			10,938			10,436			10,275			10,139
INCOME BEFORE TAX		5,187			8,237			7,269			8,583			10,209
INCOME TAX EXPENSE		1,068			1,734			1,487			1,443			2,100

NET INCOME	$	4,119		$	6,503		$	5,782		$	7,140		$	8,109

Basic earnings per share	$	0.51		$	0.81		$	0.71		$	0.88		$	1.00

Diluted earnings per share	$	0.51		$	0.81		$	0.71		$	0.88		$	1.00

Book Value per share	$	21.15		$	22.24		$	21.92		$	20.86		$	19.92
Tangible Book Value per share		17.49			18.58			18.31			17.24			16.29
Return on average assets (annualized)		0.76	%		1.23	%		1.13	%		1.40	%		1.57	%
Return on average equity (annualized)		9.33	%		14.72	%		13.61	%		17.40	%		17.93	%
Return on average tangible equity (annualized)		11.22	%		17.66	%		16.42	%		21.27	%		21.48	%
Net interest spread (fte)		2.28	%		2.56	%		2.83	%		3.30	%		3.61	%
Net interest margin (fte)		2.94	%		3.09	%		3.25	%		3.55	%		3.74	%
Allowance for credit losses to total loans		1.00	%		1.11	%		1.27	%		1.15	%		1.18	%
Net charge-offs to average loans (annualized)		0.59	%		0.06	%		0.08	%		0.06	%		0.02	%
Nonperforming loans to total loans		0.65	%		0.20	%		0.18	%		0.08	%		0.04	%
Nonperforming assets to total assets		0.50	%		0.17	%		0.15	%		0.07	%		0.05	%

Document and Entity Information	Oct. 24, 2023
Cover [Abstract]
Amendment Flag	false
Entity Central Index Key	0001013272
Document Type	8-K
Document Period End Date	Oct. 24, 2023
Entity Registrant Name	NORWOOD FINANCIAL CORP
Entity Incorporation State Country Code	PA
Entity File Number	0-28364
Entity Tax Identification Number	23-2828306
Entity Address, Address Line One	717 Main Street
Entity Address, City or Town	Honesdale
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	18431
City Area Code	(570)
Local Phone Number	253-1455
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, par value $0.10 per share
Trading Symbol	NWFL
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

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NORWOOD FINANCIAL CORP

Date: October 24, 2023

/s/ William S. Lance

William S. Lance

Executive Vice President and Chief Financial Officer

(Duly Authorized Representative)