Norwood Financial (US:NWFL)2022-08-11 22:03Financial Position - Total assets as of June 30, 2022, were $2.066 billion, a slight decrease from $2.069 billion as of December 31, 2021, primarily due to a $105.9 million decrease in interest-bearing deposits with banks [120]. - As of June 30, 2022, stockholders' equity totaled $173.8 million, down from $205.3 million as of December 31, 2021, reflecting a net income of $14.0 million offset by $4.6 million in dividends declared [132]. - Total liquidity as of June 30, 2022, was $550.5 million, representing 26.6% of total assets, a decrease from $613.5 million and 29.7% of total assets as of December 31, 2021 [134]. Loans and Allowance for Loan Losses - Loans receivable increased by $49.4 million to $1.404 billion as of June 30, 2022, driven by increases in commercial real estate loans ($16.7 million), residential mortgage loans ($16.1 million), and consumer loans ($13.6 million) [123]. - The allowance for loan losses totaled $17.017 million as of June 30, 2022, representing 1.21% of total loans outstanding, unchanged from December 31, 2021 [124]. - Non-performing loans totaled $672,000 or 0.05% of total loans as of June 30, 2022, compared to $734,000 or 0.05% at December 31, 2021 [125]. - The Company had net charge-offs of $25,000 for the six months ended June 30, 2022, significantly lower than $810,000 in the same period in 2021 [124]. - The provision for loan losses decreased to $300,000 for the three months ended June 30, 2022, down from $1,500,000 in the same period in 2021, indicating a reduction of 80% [151]. - Provision for loan losses was $600,000, significantly lower than $3,000,000 in the previous year, reflecting improved credit quality [166]. Deposits and Borrowings - Total deposits increased by $43.0 million during the six-month period ended June 30, 2022, primarily due to growth in interest-bearing demand deposits [129]. - Other borrowings decreased to $4.4 million as of June 30, 2022, from $30.0 million as of December 31, 2021, reflecting the early payoff of $21.1 million in Federal Home Loan Bank term borrowings [130]. - The maximum borrowing capacity with the Federal Home Loan Bank was approximately $640.7 million as of June 30, 2022, with $4.4 million outstanding [138]. - The Company has a line of credit commitment from Atlantic Community Bankers Bank for $7 million, expiring June 30, 2023, with no borrowings under this line as of June 30, 2022 [136]. Income and Expenses - Net interest income for the three months ended June 30, 2022, was $16.9 million, an increase from $16.1 million for the same period in 2021 [140]. - The net interest margin (tax equivalent basis) for the three months ended June 30, 2022, was 3.49%, up from 3.44% for the same period in 2021 [140]. - Total expenses for the three months ended June 30, 2022, were $10,472,000, which is $980,000 higher than the same period in 2021, primarily due to increased salaries and employee benefits [154]. - Other income rose to $2,489,000 for the three months ended June 30, 2022, compared to $2,187,000 in the same period in 2021, marking an increase of 13.8% [153]. - Other income rose to $5,828,000, an increase of 39.6% from $4,176,000 in the same period of 2021 [168]. Net Income and Returns - For the three months ended June 30, 2022, net income increased to $6,855,000, up from $5,755,000 in the same period in 2021, representing a growth of 19.1% [146]. - Earnings per share for the three months ended June 30, 2022, were $0.84, compared to $0.70 for the same period in 2021, reflecting a 20% increase [146]. - For the six months ended June 30, 2022, net income totaled $13,983,000, an increase of 23.8% from $11,296,000 in the same period in 2021 [161]. - The annualized return on average assets for the six months ended June 30, 2022, was 1.37%, up from 1.16% in the same period in 2021 [161]. - The annualized return on average equity for the six months ended June 30, 2022, was 14.68%, compared to 11.49% for the same period in 2021, indicating a significant improvement [161]. Securities and Investments - The fair value of securities available for sale increased to $440.9 million as of June 30, 2022, from $406.8 million as of December 31, 2021 [121]. - The Company believes that unrealized losses on securities represent temporary impairment, as it intends to hold these investments until maturity or market price recovery [122]. - The Company had cash and cash equivalents of $109.7 million and total securities available for sale of $440.9 million as of June 30, 2022 [134]. - Interest income (fte) increased to $35,810,000 with a yield on average earning assets of 3.65%, down from 3.84% in 2021 [164]. Capital and Compliance - Tier 1 Capital to average assets ratio improved to 8.93% as of June 30, 2022, compared to 8.51% as of December 31, 2021 [133]. - The Company is in compliance with new regulatory capital requirements, including the capital conservation buffer, as of June 30, 2022 [133]. - The effective tax rate for the three months ended June 30, 2022, was 20.4%, slightly down from 20.6% in the same period in 2021 [155]. - Income tax expense for the six months ended June 30, 2022, was $3,610,000, with an effective tax rate of 20.5%, compared to 19.7% in 2021 [170]. Interest Sensitivity - As of June 30, 2022, the company had a positive 90-day interest sensitivity gap of $33.0 million, indicating potential for increased net interest income in a rising rate environment [175].