HONESDALE, Pa., July 26, 2024 (GLOBE NEWSWIRE) -- 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 June 30, 2024 of $4,213,000, which was $2,290,000 lower than the same three-month period of last year. The decrease includes a $717,000 decrease in net interest income, a $424,000 increase in total other income, a $506,000 increase in total other expense, and a $2,097,000 increase in the provision for credit losses. Earnings per share (fully diluted) were $0.52 in the three months ended June 30, 2024, compared to $0.81 in the same period of last year. The annualized return on average assets for the three months ended June 30, 2024, was 0.75%, while the annualized return on average tangible equity was 11.26%. Net income for the six months ended June 30, 2024, was $8,646,000, which is $3,639,000 lower than the same six-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 six months ended June 30, 2024, were $1.07, compared to $1.51 for the six months ended June 30, 2023. The annualized return on average assets for the six months ended June 30, 2024 was 0.78%. The annualized return on average tangible equity for the six months ended June 30, 2024 was 11.46%. Total assets as of June 30, 2024 were $2.235 billion, compared to $2.142 billion at June 30, 2023. At June 30, 2024, loans receivable were $1.623 billion, total deposits were $1.811 billion and stockholders' equity was $182.2 million. For the three months ended June 30, 2024, net interest income, on a fully-taxable equivalent basis (fte), totaled $15,124,000, a decrease of $705,000 compared to the same period in 2023. A $150.8 million increase in average time deposits, combined with a 126 basis points increase in the cost of time deposits, contributed to the decreased net interest income. Borrowing costs also increased, offsetting a $4,447,000 increase in total interest income. Net interest margin (fte) for the three months ended June 30, 2024 was 2.79%, compared to 3.09% in the same period of 2023. The tax-equivalent yield on interest-earning assets increased 57 basis points to 5.14% during the three months ended June 30, 2024, compared to the same prior year period, while the cost of interest-bearing liabilities increased 108 basis points to 3.09%. Net interest income (fte) for the six months ended June 30, 2024 totaled $30,029,000, which was $2,075,000 lower than the same period in 2023, due primarily to a $11,762,000 increase in the cost of interest-bearing liabilities. The net interest margin (fte) was 2.79% for the six months ended June 30, 2024, as compared to 3.17% for the six months ended June 30, 2023. The decrease in the net interest margin (fte) was due to a 127 basis points increase in the cost of interest-bearing liabilities, which offset the 64 basis points increase in the yield on interest-earning assets. Other income for the three months ended June 30, 2024, totaled $2,207,000, compared to $1,783,000 for the same period in 2023. The increase is due primarily to a $151,000 increase in service charges on deposit accounts, and a $212,000 loss on the sale of investment securities in 2023. For the six months ended June 30, 2024, other income totaled $4,213,000, compared to $3,695,000 for the six months ended June 30, 2023. Other expenses totaled $11,444,000 for the three months ended June 30, 2024, an increase of $506,000, compared to the $10,938,000 for the same period of 2023. For the six months ended June 30, 2024, other expenses totaled $23,175,000, compared to $21,374,000 for the same period in 2023, due primarily to an increase in professional fees, data processing costs and FDIC insurance. Mr. Donnelly stated, "Our second quarter income decreased from the 2023 level due to a release of provision for credit losses in the three months ended June 30, 2023 and the rising cost of deposits and borrowed funds. These decreases were partially offset by a $424,000 increase in non-interest income. On a linked-quarter basis loan growth was an annualized 4.9%. Total deposits decreased $28 million compared to the first quarter of 2024. This was due to a seasonal outflow of municipal deposits of $53 million offset by inflows of $25 million of other customer funds, a 7.3% annualized increase. The net interest margin was stable at 2.79% for the first and second quarter. Our core operating expenses remain well-controlled at 2% of average assets during the quarter. Our capital base remains above "Well-Capitalized" targets. Additionally, our credit quality metrics remained strong during the second 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:               Three months ended   Six months ended (dollars in thousands)   June 30   June 30       2024     2023       2024     2023                 Net Interest Income   $ 14,925   $ 15,642     $ 29,635   $ 31,735   Taxable equivalent basis adjustment using 21% marginal tax rate     199     187       394     369   Net interest income on a fully taxable equivalent basis   $ 15,124   $ 15,829     $ 30,029   $ 32,104                 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   Six months ended (dollars in thousands)   June 30   June 30       2024     2023       2024     2023                 Average equity   $ 179,494   $ 186,111     $ 180,791   $ 180,952   Average goodwill and other intangibles     (29,457 )   (29,536 )     (29,466 )   (29,547 ) Average tangible equity   $ 150,037   $ 156,575     $ 151,325   $ 151,405                 Contact: John M. McCaffery Executive Vice President & Chief Financial Officer 272-304-3003 wayne.bank                                                 NORWOOD FINANCIAL CORP  Consolidated Balance Sheets     (dollars in thousands, except share and per share data)  (unaudited)          June 30                   2024     2023              ASSETS                       Cash and due from banks   $ 29,903   $   30,053               Interest-bearing deposits with banks     39,492       3,036               Cash and cash equivalents     69,395       33,089                                       Securities available for sale     397,578       403,621               Loans receivable     1,641,355       1,577,699               Less: Allowance for credit losses     17,806       17,483               Net loans receivable     1,623,549       1,560,216               Regulatory stock, at cost     6,443       7,924               Bank premises and equipment, net     18,265       17,363               Bank owned life insurance     46,121       45,806               Foreclosed real estate owned     -       387               Accrued interest receivable     8,329       7,276               Deferred tax assets, net     21,707       23,301               Goodwill     29,266       29,266               Other intangible assets     183       260               Other assets     14,480       13,256                 TOTAL ASSETS   $ 2,235,316   $   2,141,765                                       LIABILITIES                       Deposits:                       Non-interest bearing demand   $ 391,849   $   425,757               Interest-bearing     1,419,323       1,306,240               Total deposits     1,811,172       1,731,997               Short-term borrowings     62,335       112,290               Other borrowings     148,087       99,687               Accrued interest payable     13,329       7,101               Other liabilities     18,206       17,266                 TOTAL LIABILITIES     2,053,129       1,968,341                                       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: 2024: 8,311,851 shares, 2023: 8,291,401 shares     831       829               Surplus     98,082       97,268               Retained earnings     139,070       135,583               Treasury stock, at cost: 2024: 221,540 shares, 2023: 223,926 shares     (5,977 )     (6,007 )             Accumulated other comprehensive loss     (49,819 )     (54,249 )               TOTAL STOCKHOLDERS' EQUITY     182,187       173,424                                         TOTAL LIABILITIES AND                              STOCKHOLDERS' EQUITY   $ 2,235,316   $   2,141,765                                                                                                               NORWOOD FINANCIAL CORP Consolidated Statements of Income (dollars in thousands, except per share data) (unaudited)       Three Months Ended June 30,       Six Months Ended June 30,       2024       2023           2024       2023   INTEREST INCOME                       Loans receivable, including fees   $ 24,121   $   20,702       $   47,802   $   39,860   Securities     2,584       2,481           5,109       4,986   Other     966       53           1,697       101   Total Interest income     27,671       23,236           54,608       44,947                           INTEREST EXPENSE                       Deposits     10,687       5,740           20,796       10,102   Short-term borrowings     356       943           692       1,722   Other borrowings     1,703       911           3,485       1,388   Total Interest expense     12,746       7,594           24,973       13,212   NET INTEREST INCOME     14,925       15,642           29,635       31,735   (RELEASE OF) PROVISION FOR CREDIT LOSSES     347   $   (1,750 )     $   (276 ) $   (1,450 ) NET INTEREST INCOME AFTER (RELEASE OF) PROVISION FOR CREDIT LOSSES     14,578       17,392           29,911       33,185                                                   OTHER INCOME                       Service charges and fees     1,504       1,353           2,847       2,665   Income from fiduciary activities     225       229           463       441   Net realized (losses) gains on sales of securities