Exhibit 99.1
FOR IMMEDIATE RELEASE
NORWOOD FINANCIAL CORP ANNOUNCES FIRST QUARTER EARNINGS
Honesdale, Pennsylvania—April 18, 2022
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 | ||||||
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| 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 | ) | ||||
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| 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 |
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| Cash and due from banks |
$ | 22,394 | $ | 20,364 | ||||
| Interest-bearing deposits with banks |
143,632 | 190,135 | ||||||
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| 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 | ||||||
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| 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 | ||||||
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| TOTAL ASSETS |
$ | 2,077,698 | $ | 2,009,836 | ||||
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| LIABILITIES |
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| Deposits: |
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| Non-interest bearing demand |
$ | 438,979 | $ | 415,395 | ||||
| Interest-bearing |
1,342,798 | 1,269,793 | ||||||
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| 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 | ||||||
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| TOTAL LIABILITIES |
1,890,892 | 1,814,729 | ||||||
| STOCKHOLDERS’ EQUITY |
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| 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 | |||||
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| TOTAL STOCKHOLDERS’ EQUITY |
186,806 | 195,107 | ||||||
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| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 2,077,698 | $ | 2,009,836 | ||||
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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 | ||||||
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| Total Interest income |
17,347 | 17,301 | ||||||
| INTEREST EXPENSE |
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| Deposits |
1,059 | 1,255 | ||||||
| Short-term borrowings |
48 | 69 | ||||||
| Other borrowings |
139 | 201 | ||||||
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| Total Interest expense |
1,246 | 1,525 | ||||||
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| NET INTEREST INCOME |
16,101 | 15,776 | ||||||
| PROVISION FOR LOAN LOSSES |
300 | 1,500 | ||||||
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| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
15,801 | 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 | ||||||
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| Total other income |
3,338 | 1,992 | ||||||
| OTHER EXPENSES |
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| 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 | ||||||
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| Total other expenses |
10,157 | 9,455 | ||||||
| INCOME BEFORE TAX |
8,982 | 6,813 | ||||||
| INCOME TAX EXPENSE |
1,854 | 1,271 | ||||||
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| NET INCOME |
$ | 7,128 | $ | 5,542 | ||||
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| Basic earnings per share |
$ | 0.87 | $ | 0.68 | ||||
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| Diluted earnings per share |
$ | 0.87 | $ | 0.67 | ||||
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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 2022 |
December 31 2021 |
September 30 2021 |
June 30 2021 |
March 31 2021 |
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| ASSETS |
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| 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 | |||||||||||||||
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| 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 | |||||||||||||||
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| 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 | |||||||||||||||
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| TOTAL ASSETS |
$ | 2,077,698 | $ | 2,068,504 | $ | 2,053,691 | $ | 2,025,564 | $ | 2,009,836 | ||||||||||
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| LIABILITIES |
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| Deposits: |
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| 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 | |||||||||||||||
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| 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 | |||||||||||||||
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| 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 | |||||||||||||||
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| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 2,077,698 | $ | 2,068,504 | $ | 2,053,691 | $ | 2,025,564 | $ | 2,009,836 | ||||||||||
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NORWOOD FINANCIAL CORP.
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
| Three months ended | March 31 2022 |
December 31 2021 |
September 30 2021 |
June 30 2021 |
March 31 2021 |
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| INTEREST INCOME |
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| 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 | |||||||||||||||
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| Total interest income |
17,347 | 17,853 | 18,399 | 17,517 | 17,301 | |||||||||||||||
| INTEREST EXPENSE |
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| Deposits |
1,059 | 1,130 | 1,167 | 1,205 | 1,255 | |||||||||||||||
| Borrowings |
187 | 227 | 243 | 259 | 270 | |||||||||||||||
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| Total interest expense |
1,246 | 1,357 | 1,410 | 1,464 | 1,525 | |||||||||||||||
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| NET INTEREST INCOME |
16,101 | 16,496 | 16,989 | 16,053 | 15,776 | |||||||||||||||
| PROVISION FOR LOAN LOSSES |
300 | 450 | 750 | 1,500 | 1,500 | |||||||||||||||
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| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
15,801 | 16,046 | 16,239 | 14,553 | 14,276 | |||||||||||||||
| OTHER INCOME |
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| 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 | |||||||||||||||
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| Total other income |
3,338 | 2,021 | 2,159 | 2,189 | 1,992 | |||||||||||||||
| OTHER EXPENSES |
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| 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 | |||||||||||||||
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| 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 | |||||||||||||||
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| NET INCOME |
$ | 7,128 | $ | 6,638 | $ | 6,981 | $ | 5,755 | $ | 5,542 | ||||||||||
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| Basic earnings per share |
$ | 0.87 | $ | 0.81 | $ | 0.85 | $ | 0.70 | $ | 0.68 | ||||||||||
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| Diluted earnings per share |
$ | 0.87 | $ | 0.81 | $ | 0.85 | $ | 0.70 | $ | 0.67 | ||||||||||
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| 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 | % | ||||||||||