nwfl-20240930x10q

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, 2024


☐	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 (570) 253-1455

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, 2024
Common stock, par value $0.10 per share		8,091,755

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,
	2024		2023
ASSETS
Cash and due from banks	$	47,072	$	28,533
Interest-bearing deposits with banks		35,808		37,587
Cash and cash equivalents		82,880		66,120
Securities available for sale, at fair value (net of allowance for credit losses of $0)		396,891		406,259
Loans receivable (net of allowance for credit losses of $18,699 and $18,968)		1,656,440		1,584,650
Regulatory stock, at cost		6,329		7,318
Bank premises and equipment, net		18,503		17,838
Bank owned life insurance		46,382		46,439
Accrued interest receivable		8,062		8,123
Foreclosed real estate owned		—		97
Deferred tax assets, net		18,818		21,353
Goodwill		29,266		29,266
Other intangibles		167		221
Other assets		16,013		13,395
TOTAL ASSETS	$	2,279,751	$	2,201,079
LIABILITIES
Deposits:
Non-interest bearing demand	$	420,967	$	399,545
Interest-bearing		1,434,284		1,395,614
Total deposits		1,855,251		1,795,159
Short-term borrowings		52,453		74,076
Other borrowings		144,959		124,236
Accrued interest payable		12,688		10,510
Other liabilities		18,746		16,028
TOTAL LIABILITIES		2,084,097		2,020,009
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: 2024: 8,311,851 shares, 2023: 8,310,847 shares		831		831
Surplus		98,330		97,700
Retained earnings		140,489		135,284
Treasury stock at cost: 2024: 221,140 shares; 2023: 200,690 shares		(5,969)		(5,397)
Accumulated other comprehensive loss		(38,027)		(47,348)
TOTAL STOCKHOLDERS’ EQUITY		195,654		181,070
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,279,751	$	2,201,079

See accompanying notes to the unaudited consolidated financial statements.
‎

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,
	2024		2023		2024		2023
INTEREST INCOME
Loans receivable, including fees	$	25,464	$	22,021	$	73,266	$	61,881
Securities		2,526		2,433		7,635		7,418
Other		497		54		2,194		156
Total interest income		28,487		24,508		83,095		69,455
INTEREST EXPENSE
Deposits		10,553		7,017		31,349		17,119
Short-term borrowings		323		1,126		1,015		2,702
Other borrowings		1,680		1,326		5,165		2,860
Total interest expense		12,556		9,469		37,529		22,681
NET INTEREST INCOME		15,931		15,039		45,566		46,774
PROVISION FOR (RELEASE OF)
CREDIT LOSS EXPENSE		1,345		882		1,069		(568)
NET INTEREST INCOME AFTER
PROVISION FOR (RELEASE OF) CREDIT LOSSES		14,586		14,157		44,497		47,342
OTHER INCOME
Service charges and fees		1,517		1,527		4,364		4,192
Income from fiduciary activities		256		246		719		688
Net realized gains on sales of securities		—		—		—		(209)
Gains on sales of loans, net		103		18		145		27
Gain on sales of foreclosed real estate owned		—		13		32		13
Earnings and proceeds on bank owned life insurance		261		328		781		770
Other		158		174		467		520
Total other income		2,295		2,306		6,508		6,001
OTHER EXPENSES
Salaries and employee benefits		6,239		6,083		18,328		17,893
Occupancy, furniture & equipment, net		1,269		1,242		3,758		3,818
Data processing and related operations		1,162		876		3,208		2,465
Taxes, other than income		179		167		452		490
Professional fees		576		524		1,669		1,132
Federal Deposit Insurance Corporation insurance		339		254		1,009		699
Foreclosed real estate		9		9		45		112
Amortization of intangibles		16		20		54		66
Other		2,242		2,101		6,683		5,974
Total other expenses		12,031		11,276		35,206		32,649
INCOME BEFORE INCOME TAXES		4,850		5,187		15,799		20,694
INCOME TAX EXPENSE		1,006		1,068		3,308		4,289
NET INCOME	$	3,844	$	4,119	$	12,491	$	16,405
BASIC EARNINGS PER SHARE	$	0.48	$	0.51	$	1.55	$	2.03
DILUTED EARNINGS PER SHARE	$	0.48	$	0.51	$	1.55	$	2.03

See accompanying notes to the unaudited consolidated financial statements.

‎

NORWOOD FINANCIAL CORP

Consolidated Statements of Comprehensive Income (unaudited)

(dollars in thousands)



	Three Months Ended
	September 30,
	2024		2023
Net income	$	3,844	$	4,119
Other comprehensive income (loss)
Investment securities available for sale:
Unrealized holding (losses) gains		14,928		(13,586)
Tax effect		(3,136)		2,853
Reclassification of investment securities losses
recognized in net income		—		—
Tax effect		—		—
Other comprehensive income (loss)		11,792		(10,733)
Comprehensive Income (loss)	$	15,636	$	(6,614)



	Nine Months Ended
	September 30,
	2024		2023
Net income	$	12,491	$	16,405
Other comprehensive income (loss)
Investment securities available for sale:
Unrealized holding (loss) gain		11,799		(9,867)
Tax effect		(2,478)


		Page Number

PART I -	CONSOLIDATED FINANCIAL INFORMATION OF NORWOOD FINANCIAL CORP	3

Item 1.	Financial Statements (unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47
Item 4.	Controls and Procedures	50

PART II -	OTHER INFORMATION	51

Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	51
Item 6.	Exhibits	53

Signatures		54