Norwood Financial (NWFL) 8-K Norwood Financial Corp Announces Earnings for the Fourth

Exhibit 99.1

FOR IMMEDIATE RELEASE

NORWOOD FINANCIAL CORP ANNOUNCES EARNINGS FOR THE FOURTH

QUARTER AND 2022 FISCAL YEAR

January 27, 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 net income for the three months ended December 31, 2022 of $7,140,000 compared to the net income of $6,638,000 earned in the three months ended December 31, 2021. The increase in net income was due primarily to a $736,000 increase in net interest income. For the year ended December 31, 2022, net income totaled $29,233,000, an increase of $4,318,000 from net income of $24,915,000 earned in year ended December 31, 2021. The increase includes a $3,084,000 increase in net interest income and a $3,300,000 reduction in the provision for loan losses.

Earnings per share (fully diluted) were $0.88 and $0.81 for the three-month periods ended December 31, 2022 and 2021, respectively. For the year ended December 31, 2022, earnings per share on a fully diluted basis were $3.58, compared to $3.05 for the year ended December 31, 2021. For the year ended December 31, 2022, the return on average assets was 1.43%, and the return on average equity was 16.11%, compared to 1.24% and 12.35%, respectively, for the year ended December 31, 2021.

Total assets were $2.047 billion as of December 31, 2022. As of December 31, 2022, loans receivable were $1.474 billion, total deposits were $1.728 billion and stockholders’ equity was $167.1 million. The $38.2 million decrease in stockholders’ equity compared to December 31, 2021, includes a $57.1 million decrease in accumulated other comprehensive income due to a decrease in the market value of available for sale securities related to the significant increase in interest rates during 2022.

Loans receivable increased $119.0 million from the year-ended December 31, 2021, including a $90.0 million increase in retail loans and a $28.4 million increase in commercial loans. For the three months and year ended December 31, 2022, net charge-offs totaled $232,000 and $344,000, respectively, compared to $111,000 and $907,000, respectively, for the corresponding periods in 2021.

Net interest income, on a fully taxable equivalent basis (fte), totaled $17,429,000 for the three months ended December 31, 2022, an increase of $758,000 compared to the same period in 2021. For the year ended December 31, 2022, net interest income (fte) totaled $69,164,000, an increase of $3,064,000 compared to 2021, due primarily to the higher volume of earning assets, including a $160.1 million increase in average securities available for sale.

Other income for the three months ended December 31, 2022, totaled $1,926,000 compared to $2,021,000 for the similar period in 2021. Gains on the sale of loans and securities decreased $32,000, while service charges and fees decreased $55,000. All other items of other income decreased $8,000, net. Other income for the year ended December 31, 2022, totaled $9,932,000 compared to $8,361,000 in 2021, an increase of $1,571,000 due primarily to income recognized on previously acquired purchased impaired loans that were carried at a discount. Gains on the sale of loans and investment securities decreased $263,000 in the aggregate, while gains on sales of foreclosed real estate owned increased $391,000.

Other expenses totaled $10,275,000 for the three months ended December 31, 2022, compared to $10,042,000 in the similar period of 2021. For the year ended December 31, 2022, other expenses totaled $41,044,000 compared to $38,614,000 for 2021, an increase of $2,430,000, or 6.3%.

Mr. Donnelly commented, “In 2022, our earnings increased $4.3 million over our previous record year of 2021. Our Return on Average Assets was 1.43%, and our Return on Average Equity was 16.11%. Earnings per share (fully diluted) also improved to $3.58 per share in 2022 from $3.04 per share in 2021. We have continued to grow our core business lines, including an 8.8% increase in loans outstanding, and maintain our strong credit quality metrics, which should bode well for future performance. Our cash dividend of $0.29 per share declared in the fourth quarter of 2022, represents a 3.6% increase over the same period of last year. 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 Delaware, Sullivan, Ontario, Otsego and Yates Counties, New York. The Company’s stock is traded 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 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 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 December 31				Year ended December 31
(dollars in thousands)	2022		2021		2022		2021
Net interest income	$	17,232	$	16,496	$	68,397	$	65,313
Tax equivalent basis adjustment using 21% marginal tax rate		197		175		767		787
Net interest income on a fully taxable equivalent basis	$	17,429	$	16,671	$	69,164	$	66,100

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 December 31,						Year ended December 31,
(dollars in thousands)	2022			2021			2022			2021
Average equity	$	162,762		$	205,053		$	181,499		$	201,681
Average goodwill and other Intangibles		(29,582	)		(29,683	)		(29,618	)		(29,738	)
Average tangible equity	$	133,180		$	175,370		$	151,881		$	171,943

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)

	December 31
	2022			2021
ASSETS
Cash and due from banks	$	28,847		$	21,073
Interest-bearing deposits with banks		3,019			185,608
Cash and cash equivalents		31,866			206,681
Securities available for sale		418,927			406,782
Loans receivable		1,473,945			1,354,931
Less: Allowance for loan losses		16,999			16,442
Net loans receivable		1,456,946			1,338,489
Regulatory stock, at cost		5,418			3,927
Bank premises and equipment, net		17,924			17,289
Bank owned life insurance		43,364			40,038
Foreclosed real estate owned		346			1,742
Accrued interest receivable		6,917			5,889
Deferred tax assets, net		23,549			8,791
Goodwill		29,266			29,266
Other intangible assets		306			407
Other assets		12,241			9,203
TOTAL ASSETS	$	2,047,070		$	2,068,504
LIABILITIES
Deposits:
Non-interest bearing demand	$	434,529		$	440,652
Interest-bearing		1,293,198			1,316,141
Total deposits		1,727,727			1,756,793
Short-term borrowings		93,215			60,822
Other borrowings		40,000			29,998
Accrued interest payable		2,653			1,203
Other liabilities		16,390			14,426
TOTAL LIABILITIES		1,879,985			1,863,242
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: 8,291,401 shares, 2021: 8,266,751 shares		829			827
Surplus		96,897			96,443
Retained earnings		130,020			110,015
Treasury stock, at cost: 2022: 124,650 shares, 2021: 65,328 shares		(3,308	)		(1,767	)
Accumulated other comprehensive (loss) income		(57,353	)		(256	)
TOTAL STOCKHOLDERS’ EQUITY		167,085			205,262
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$2,047,070			$2,068,504

NORWOOD FINANCIAL CORP.

Consolidated Statements of Income

(dollars in thousands, except per share data)

(unaudited)

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2022		2021		2022		2021
INTEREST INCOME
Loans receivable, including fees	$	17,810	$	16,149	$	66,013	$	65,257
Securities		2,487		1,612		9,051		5,547
Other		98		92		602		266
Total Interest income		20,395		17,853		75,666		71,070
INTEREST EXPENSE
Deposits		2,772		1,130		6,471		4,757
Short-term borrowings		329		71		524		284
Other borrowings		62		156		274		716
Total Interest expense		3,163		1,357		7,269		5,757
NET INTEREST INCOME		17,232		16,496		68,397		65,313
PROVISION FOR LOAN LOSSES	$	300		450		900		4,200
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		16,932		16,046		67,497		61,113
OTHER INCOME
Service charges and fees		1,370		1,425		5,661		5,693
Income from fiduciary activities		210		198		845		748
Net realized gains on sales of securities		3		36		3		92
Gains on sales of loans, net		1		—		3		177
Gains on sales of foreclosed real estate owned		—		—		427		36
Earnings and proceeds on life insurance policies		195		174		1,087		941
Other		147		188		1,906		674
Total other income		1,926		2,021		9,932		8,361
OTHER EXPENSES
Salaries and employee benefits		5,246		4,992		22,071		20,608
Occupancy, furniture and equipment		1,263		1,254		4,967		4,822
Data processing and related operations		917		655		2,948		2,415
Taxes, other than income		239		358		1,013		1,122
Professional fees		383		510		1,719		1,582
FDIC Insurance assessment		144		169		612		681
Foreclosed real estate		7		88		73		151
Amortization of intangibles		23		27		101		123
Other		2,053		1,989		7,540		7,110
Total other expenses		10,275		10,042		41,044		38,614
INCOME BEFORE TAX		8,583		8,025		36,385		30,860
INCOME TAX EXPENSE		1,443		1,387		7,152		5,945
NET INCOME	$	7,140	$	6,638	$	29,233	$	24,915
Basic earnings per share	$	0.88	$	0.81	$	3.59	$	3.05
Diluted earnings per share	$	0.88	$	0.81	$	3.58	$	3.05

NORWOOD FINANCIAL CORP.

Financial Highlights (Unaudited)

(dollars in thousands, except per share data)

For the Three Months Ended December 31	2022			2021
Net interest income	$	17,232		$	16,496
Net income		7,140			6,638
Net interest spread (fully taxable equivalent)		3.30	%		3.29	%
Net interest margin (fully taxable equivalent)		3.55	%		3.39	%
Return on average assets		1.40	%		1.26	%
Return on average equity		17.40	%		12.84	%
Return on average tangible equity		21.27	%		15.02	%
Basic earnings per share	$	0.88		$	0.81
Diluted earnings per share	$	0.88		$	0.81
For the Twelve Months Ended December 31	2022			2021
Net interest income	$	68,397		$	65,313
Net income		29,233			24,915
Net interest spread (fully taxable equivalent)		3.38	%		3.39	%
Net interest margin (fully taxable equivalent)		3.53	%		3.50	%
Return on average assets		1.43	%		1.24	%
Return on average equity		16.11	%		12.35	%
Return on average tangible equity		19.25	%		14.49	%
Basic earnings per share	$	3.59		$	3.05
Diluted earnings per share	$	3.58		$	3.04
As of December 31	2022			2021
Total assets	$	2,047,070		$	2,068,504
Total loans receivable		1,473,945			1,354,931
Allowance for loan losses		16,999			16,442
Total deposits		1,727,727			1,756,793
Stockholders’ equity		167,085			205,262
Trust assets under management		184,855			195,958
Book value per share	$	20.86		$	25.24
Tangible book value per share	$	17.24		$	21.63
Equity to total assets		8.16	%		9.92	%
Allowance to total loans receivable		1.15	%		1.21	%
Nonperforming loans to total loans		0.08	%		0.05	%
Nonperforming assets to total assets		0.07	%		0.12	%

NORWOOD FINANCIAL CORP.

Consolidated Balance Sheets (unaudited)

(dollars in thousands)

	December 31 2022		September 30 2022		June 30 2022		March 31 2022		December 31 2021
ASSETS
Cash and due from banks	$	28,847	$	23,092	$	29,931	$	22,394	$	21,073
Interest-bearing deposits with banks		3,019		17,785		79,735		143,632		185,608
Cash and cash equivalents		31,866		40,877		109,666		166,026		206,681
Securities available for sale		418,927		427,287		440,877		434,924		406,782
Loans receivable		1,473,945		1,432,288		1,404,317		1,371,645		1,354,931
Less: Allowance for loan losses		16,999		16,931		17,017		16,660		16,442
Net loans receivable		1,456,946		1,415,357		1,387,300		1,354,985		1,338,489
Regulatory stock, at cost		5,418		2,220		2,396		3,423		3,927
Bank owned life insurance		43,364		43,169		43,167		40,215		40,038
Bank premises and equipment, net		17,924		17,427		17,032		17,022		17,289
Foreclosed real estate owned		346		346		346		590		1,742
Goodwill and other intangibles		29,572		29,595		29,619		29,646		29,673
Other assets		42,707		42,592		35,981		30,867		23,883
TOTAL ASSETS	$	2,047,070	$	2,018,870	$	2,066,384	$	2,077,698	$	2,068,504
LIABILITIES
Deposits:
Non-interest bearing demand	$	434,529	$	453,560	$	442,991	$	438,979	$	440,652
Interest-bearing deposits		1,293,198		1,315,236		1,356,839		1,342,798		1,316,141
Total deposits		1,727,727		1,768,796		1,799,830		1,781,777		1,756,793
Borrowings		133,215		71,754		74,839		90,466		90,820
Other liabilities		19,043		19,471		17,884		18,649		15,629
TOTAL LIABILITIES		1,879,985		1,860,021		1,892,553		1,890,892		1,863,242
STOCKHOLDERS’ EQUITY		167,085		158,849		173,831		186,806		205,262
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,047,070	$	2,018,870	$	2,066,384	$	2,077,698	$	2,068,504

NORWOOD FINANCIAL CORP.

Consolidated Statements of Income (unaudited)

(dollars in thousands, except per share data)

Three months ended	December 31 2022			September 30 2022			June 30 2022			March 31 2022			December 31 2021
INTEREST INCOME
Loans receivable, including fees	$	17,810		$	17,114		$	15,714		$	15,375		$	16,149
Securities		2,487			2,473			2,197			1,894			1,612
Other		98			245			182			78			92
Total interest income		20,395			19,832			18,093			17,347			17,853
INTEREST EXPENSE
Deposits		2,772			1,557			1,083			1,059			1,130
Borrowings		391			105			116			187			227
Total interest expense		3,163			1,662			1,199			1,246			1,357
NET INTEREST INCOME		17,232			18,170			16,894			16,101			16,496
PROVISION FOR LOAN LOSSES		300			—			300			300			450
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		16,932			18,170			16,594			15,801			16,046
OTHER INCOME
Service charges and fees		1,370			1,346			1,475			1,470			1,425
Income from fiduciary activities		210			219			214			202			198
Net realized gains on sales of securities		3			—			—			—			36
Gains on sales of loans, net		1			1			—			—			—
Gains on sales of foreclosed real estate owned		—			—			—			427			—
Earnings and proceeds on life insurance policies		195			267			449			176			174
Other		147			345			351			1,063			188
Total other income		1,926			2,178			2,489			3,338			2,021
OTHER EXPENSES
Salaries and employee benefits		5,246			5,553			5,840			5,431			4,992
Occupancy, furniture and equipment, net		1,263			1,191			1,206			1,307			1,254
Foreclosed real estate		7			4			10			53			88
FDIC insurance assessment		144			143			142			183			169
Other		3,615			3,248			3,274			3,183			3,539
Total other expenses		10,275			10,139			10,472			10,157			10,042
INCOME BEFORE TAX		8,583			10,209			8,611			8,982			8,025
INCOME TAX EXPENSE		1,443			2,100			1,756			1,854			1,387
NET INCOME	$	7,140		$	8,109		$	6,855		$	7,128		$	6,638
Basic earnings per share	$	0.88		$	1.00		$	0.84		$	0.87		$	0.81
Diluted earnings per share	$	0.88		$	1.00		$	0.84		$	0.87		$	0.81
Book Value per share	$	20.86		$	19.92		$	21.65		$	22.99		$	25.24
Tangible Book Value per share		17.24			16.29			18.02			19.37			21.63
Return on average assets (annualized)		1.40	%		1.57	%		1.35	%		1.39	%		1.26	%
Return on average equity (annualized)		17.40	%		17.93	%		15.19	%		14.22	%		12.84	%
Return on average tangible equity (annualized)		21.27	%		21.48	%		18.16	%		16.65	%		15.02	%
Net interest spread (fte)		3.30	%		3.61	%		3.40	%		3.22	%		3.29	%
Net interest margin (fte)		3.55	%		3.74	%		3.49	%		3.32	%		3.39	%
Allowance for loan losses to total loans		1.15	%		1.18	%		1.21	%		1.21	%		1.21	%
Net charge-offs to average loans (annualized)		0.06	%		0.02	%		-0.02	%		0.02	%		0.03	%
Nonperforming loans to total loans		0.08	%		0.04	%		0.04	%		0.05	%		0.05	%
Nonperforming assets to total assets		0.07	%		0.05	%		0.05	%		0.06	%		0.12	%