Norwood Financial (NWFL) 8-K Norwood Financial Corp Announces First Quarter Earnings

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
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	)
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
Cash and due from banks	$	22,394		$	20,364
Interest-bearing deposits with banks		143,632			190,135
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
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
TOTAL ASSETS	$	2,077,698		$	2,009,836
LIABILITIES
Deposits:
Non-interest bearing demand	$	438,979		$	415,395
Interest-bearing		1,342,798			1,269,793
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
TOTAL LIABILITIES		1,890,892			1,814,729
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: 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
TOTAL STOCKHOLDERS’ EQUITY		186,806			195,107
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,077,698		$	2,009,836

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
Total Interest income		17,347		17,301
INTEREST EXPENSE
Deposits		1,059		1,255
Short-term borrowings		48		69
Other borrowings		139		201
Total Interest expense		1,246		1,525
NET INTEREST INCOME		16,101		15,776
PROVISION FOR LOAN LOSSES		300		1,500
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
Total other income		3,338		1,992
OTHER EXPENSES
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
Total other expenses		10,157		9,455
INCOME BEFORE TAX		8,982		6,813
INCOME TAX EXPENSE		1,854		1,271
NET INCOME	$	7,128	$	5,542
Basic earnings per share	$	0.87	$	0.68
Diluted earnings per share	$	0.87	$	0.67

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
ASSETS
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
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
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
TOTAL ASSETS	$	2,077,698		$	2,068,504	$	2,053,691	$	2,025,564	$	2,009,836
LIABILITIES
Deposits:
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
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
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
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,077,698		$	2,068,504	$	2,053,691	$	2,025,564	$	2,009,836

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
INTEREST INCOME
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
Total interest income		17,347			17,853			18,399			17,517			17,301
INTEREST EXPENSE
Deposits		1,059			1,130			1,167			1,205			1,255
Borrowings		187			227			243			259			270
Total interest expense		1,246			1,357			1,410			1,464			1,525
NET INTEREST INCOME		16,101			16,496			16,989			16,053			15,776
PROVISION FOR LOAN LOSSES		300			450			750			1,500			1,500
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		15,801			16,046			16,239			14,553			14,276
OTHER INCOME
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
Total other income		3,338			2,021			2,159			2,189			1,992
OTHER EXPENSES
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
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
NET INCOME	$	7,128		$	6,638		$	6,981		$	5,755		$	5,542
Basic earnings per share	$	0.87		$	0.81		$	0.85		$	0.70		$	0.68
Diluted earnings per share	$	0.87		$	0.81		$	0.85		$	0.70		$	0.67
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	%