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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 0-28364

 

Norwood Financial Corp

(Exact name of registrant as specified in its charter)

 

Pennsylvania

 

23-2828306

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. employer

identification no.)

717 Main Street, Honesdale, Pennsylvania

 

18431

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code (570253-1455

N/A

Former name, former address and former fiscal year, if changed since last report.

 

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 (x) whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

  

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.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):      Yes      No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

 

Outstanding as of November 1, 2023

Common stock, par value $0.10 per share

 

8,069,350


2


PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

NORWOOD FINANCIAL CORP

Consolidated Balance Sheets (unaudited)

(dollars in thousands, except share and per share data)

September 30,

December 31,

2023

2022

ASSETS

Cash and due from banks

$

41,141

$

28,847

Interest-bearing deposits with banks

13,005

3,019

Cash and cash equivalents

54,146

31,866

Securities available for sale, at fair value (net of allowance for credit losses of $0)

380,499

418,927

Loans receivable, net of allowance for credit losses of $16,086 and $16,999)

1,594,983

1,456,946

Regulatory stock, at cost

8,843

5,418

Bank premises and equipment, net

17,254

17,924

Bank owned life insurance

46,197

43,364

Accrued interest receivable

7,759

6,917

Foreclosed real estate owned

290

346

Deferred tax assets, net

25,610

23,549

Goodwill

29,266

29,266

Other intangibles

240

306

Other assets

14,911

12,241

TOTAL ASSETS

$

2,179,998

$

2,047,070

LIABILITIES

Deposits:

Non-interest bearing demand

$

430,242

$

434,529

Interest-bearing

1,316,582

1,293,198

Total deposits

1,746,824

1,727,727

Short-term borrowings

103,881

93,215

Other borrowings

137,447

40,000

Accrued interest payable

8,605

2,653

Other liabilities

18,539

16,390

TOTAL LIABILITIES

2,015,296

1,879,985

STOCKHOLDERS’ EQUITY

Preferred stock, no par value per share,

authorized: 5,000,000 shares; issued: none

Common stock, $0.10 par value per share,

authorized: 20,000,000 shares,

issued: 2023: 8,291,401 shares, 2022: 8,291,401 shares

829

829

Surplus

97,449

96,897

Retained earnings

137,363

130,020

Treasury stock at cost: 2023: 222,051 shares; 2022: 124,650 shares

(5,957)

(3,308)

Accumulated other comprehensive loss

(64,982)

(57,353)

TOTAL STOCKHOLDERS’ EQUITY

164,702

167,085

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

2,179,998

$

2,047,070

See accompanying notes to the unaudited consolidated financial statements. 

3


NORWOOD FINANCIAL CORP

Consolidated Statements of Income (unaudited)

(dollars in thousan ds, except per share data)

Three Months Ended

Nine Months Ended

September 30,

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

PROVISION FOR (RELEASE OF)

CREDIT LOSS EXPENSE

882

(568)

600

NET INTEREST INCOME AFTER

PROVISION FOR (RELEASE OF) 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 (losses) gains on sales of securities

(209)

Gains on sales of loans, net

18

1

27

1

Gain on sales of foreclosed real estate owned

13

13

427

Earnings and proceeds on bank owned life insurance

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 & equipment, net

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

Federal Deposit Insurance Corporation insurance

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 INCOME TAXES

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

See accompanying notes to the unaudited consolidated financial statements.

 

4


NORWOOD FINANCIAL CORP

Consolidated Statements of Comprehensive Income (Loss) (unaudited)

(dollars in thousands)

Three Months Ended

September 30,

2023

2022

Net income

$

4,119

$

8,109

Other comprehensive income (loss)

Investment securities available for sale:

Unrealized holding gains (losses)

(13,586)

(25,739)

Tax effect

2,853

5,404

Reclassification of investment securities losses

recognized in net income

Tax effect

Other comprehensive loss

(10,733)

(20,335)

Comprehensive Loss

$

(6,614)

$

(12,226)

Nine Months Ended

September 30,

2023

2022

Net income

$

16,405

$

22,093

Other comprehensive (loss) income

Investment securities available for sale:

Unrealized holding (loss) gain

(9,867)

(76,340)

Tax effect

2,073

16,031

Reclassification of investment securities losses

recognized in net income

209

Tax effect

(44)

Other comprehensive loss

(7,629)

(60,309)

Comprehensive Income (Loss)

$

8,776

$