NORWOOD FINANCIAL CORP
For the period ended Sep 30, 2025. Filed Nov 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 7, 2025
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Item 2. Results of Operations
Consolidated Average Balance Sheets with Resultant Interest and Rates
| (Tax-Equivalent Basis, | Three Months Ended September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| dollars in thousands) · 2025 · 2024 | ||||||||||
| Average · Average · Average · Average | ||||||||||
| Balance · Interest · Rate · Balance · Interest · Rate | ||||||||||
| (2) | (1) | (3) | (2) | (1) | (3) | |||||
| Assets | ||||||||||
| Interest-earning assets: | ||||||||||
| Interest-bearing deposits with banks | $12,485 | $144 | 4.58% | $36,221 | $497 | 5.46% | ||||
| Securities available for sale: | ||||||||||
| Taxable | 399,090 | 3,661 | 3.64 | 392,168 | 2,161 | 2.19 | ||||
| Tax-exempt (1) | 44,074 | 312 | 2.81 | 67,563 | 461 | 2.71 | ||||
| Total securities available for sale (1) | 443,164 | 3,973 | 3.56 | 459,731 | 2,622 | 2.27 | ||||
| Loans receivable (1) (4) (5) | 1,802,046 | 28,267 | 6.22 | 1,651,921 | 25,575 | 6.16 | ||||
| Total interest-earning assets | 2,257,695 | 32,384 | 5.69 | 2,147,873 | 28,694 | 5.31 | ||||
| Non-interest earning assets: | ||||||||||
| Cash and due from banks | 31,050 | 28,193 | ||||||||
| Allowance for credit losses | (21,128) | (17,944) | ||||||||
| Other assets | 96,142 | 78,344 | ||||||||
| Total non-interest earning assets | 106,064 | 88,593 | ||||||||
| Total Assets | $2,363,759 | $2,236,466 | ||||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Interest-bearing liabilities: | ||||||||||
| Interest-bearing demand and money market | $579,145 | $2,900 | 1.99 | $461,897 | $2,782 | 2.40 | ||||
| Savings | 200,559 | 113 | 0.22 | 221,366 | 13 | 0.02 | ||||
| Time | 822,491 | 7,717 | 3.72 | 734,235 | 7,758 | 4.20 | ||||
| Total interest-bearing deposits | 1,602,195 | 10,730 | 2.66 | 1,417,498 | 10,553 | 2.96 | ||||
| Short-term borrowings | 8,740 | 105 | 4.77 | 53,622 | 323 | 2.40 | ||||
| Other borrowings | 81,125 | 899 | 4.40 | 146,357 | 1,680 | 4.57 | ||||
| Total interest-bearing liabilities | 1,692,060 | 11,734 | 2.75 | 1,617,477 | 12,556 | 3.09 | ||||
| Non-interest bearing liabilities: | ||||||||||
| Demand deposits | 416,150 | 400,314 | ||||||||
| Other liabilities | 28,816 | 29,540 | ||||||||
| Total non-interest bearing liabilities | 444,966 | 429,854 | ||||||||
| Stockholders' equity | 226,733 | 189,135 | ||||||||
| Total Liabilities and Stockholders' Equity | $2,363,759 | $2,236,466 | ||||||||
| Net interest income/spread (tax equivalent basis) | 20,650 | 2.94% | 16,138 | 2.23% | ||||||
| Tax-equivalent basis adjustment | (192) | (207) | ||||||||
| Net interest income | $20,458 | $15,931 | ||||||||
| Net interest margin (tax equivalent basis) | 3.63% | 2.99% | ||||||||
(1)Interest and yields are presented on a tax-equivalent basis using a marginal tax rate of 21%.
(2)Average balances have been calculated based on daily balances.
(3)Annualized
(4)Loan balances include non-accrual loans and are net of unearned income.
(5)Loan yields include the effect of amortization of deferred fees, net of costs.
Rate/Volume Analysis. The following table shows the fully taxable equivalent effect of changes in volumes and rates on interest income and interest expense. Changes in net interest income that could not be specifically identified as either a rate or volume change were allocated proportionately to changes in volume and changes in rate.
| Increase/(Decrease) | |||
|---|---|---|---|
| Three months ended September 30, 2025 Compared to | |||
| Three months ended September 30, 2024 | |||
| Variance due to | |||
| Volume | Rate | Net | |
| (dollars in thousands) | |||
| Interest-earning assets: | |||
| Interest-bearing deposits with banks | $(320) | $(33) | $(353) |
| Securities available for sale: | |||
| Taxable | 63 | 1,437 | 1,500 |
| Tax-exempt securities | (160) | 11 | (149) |
| Total securities | (97) | 1,448 | 1,351 |
| Loans receivable | 2,412 | 280 | 2,692 |
| Total interest-earning assets | 1,995 | 1,695 | 3,690 |
| Interest-bearing liabilities: | |||
| Interest-bearing demand and money market | 652 | (534) | 118 |
| Savings | (11) | 111 | 100 |
| Time | 886 | (926) | (40) |
| Total interest-bearing deposits | 1,527 | (1,349) | 178 |
| Short-term borrowings | (295) | 76 | (219) |
| Other borrowings | (745) | (36) | (781) |
| Total interest-bearing liabilities | 487 | (1,309) | (822) |
| Net interest income (tax-equivalent basis) | $1,508 | $3,004 | $4,512 |
Comparison of Operating Results for the Three Months Ended September 30, 2025 to September 30, 2024
General
For the three months ended September 30, 2025, net income totaled $8.3 million compared to net income of $3.8 million for the three months ended September 30, 2024. The increase in net income for the three months ended September 30, 2025, was due primarily to a $4.5 million increase in net interest income and a $1.8 million release of provision for credit losses, offset by a $457,000 increase in salaries and benefits, a $392,000 increase in professional fees, and a $1.2 million increase in income taxes. Earnings per share for the three-months ended September 30, 2025 were $0.89 per share for basic shares and fully diluted shares, compared to $0.48 per share for basic shares and for fully diluted shares for the three months ended September 30, 2024. The resulting annualized return on average assets and annualized return on average equity for the three months ended September 30, 2025 were 1.40% and 14.58%, respectively, compared to 0.68% and 8.09%, respectively, for the same period in 2024.
The following table sets forth changes in net income:
| (dollars in thousands) | Three months ended |
|---|---|
| September 30, 2025 to September 30, 2024 | |
| Net income three months ended September 30, 2024 | $3,844 |
| Change due to: | |
| Net interest income | 4,527 |
| Provision for credit losses | 1,847 |
| Net gains on sales of securities and loans | 27 |
| Service charges and fees | 143 |
| Earnings and proceeds on bank-owned life insurance | 7 |
| Other income | 33 |
| Salaries and employee benefits | (457) |
| Occupancy, furniture and equipment | (92) |
| Data processing related | 75 |
| Professional fees | (392) |
| All other expenses | (37) |
| Income tax expense | (1,191) |
| Net income three months ended September 30, 2025 | $8,334 |
Net Interest Income
Net interest income on a fully taxable equivalent basis (fte) for the three months ended September 30, 2025 totaled $20.7 million which was $4.5 million higher than the comparable period in 2024. The increase in net interest income was due primarily to a $3.7 million increase in total interest income. The (fte) net interest spread and net interest margin were 2.94% and 3.63%, respectively, for the three months ended September 30, 2025 compared to 2.23% and 2.99%, respectively, for the same period in 2024. See “Non-GAAP Financial Measures” described above beginning on page 40.
For the three-months ended September 30, 2025, interest income (fte) totaled $32.4 million, with a yield on average earning assets of 5.69% compared to $28.7 million and 5.31% for the three months ended September 30, 2024. Average loans increased $150.1 million during the three-months ended September 30, 2025, over the comparable period of 2024, while average securities decreased $16.6 million compared to the three months ended September 30, 2024. Average earning assets totaled $2.258 billion for the three months ended September 30, 2025, an increase of $109.8 million, over average earning assets for the same period in 2024. See “Non-GAAP Financial Measures” described above beginning on page 40.
Interest expense for the three months ended September 30, 2025 totaled $11.7 million, at an average cost of 2.75%, compared to $12.6 million, at an average cost of 3.09% for the same period in 2024. The decrease in interest expense during the three-months ended September 30, 2025 reflects the overall lower level of market interest rates. During the three months ended September 30, 2025, the average cost of time deposits, which is the most significant component of funding costs, decreased 48 basis points compared to the same three-month period of last year. The average cost of interest-bearing demand and money market decrease 41 basis points during the three months ended September 30, 2025, while savings deposit costs increased 20 basis points and short-term borrowing costs increased 237 basis points compared to the same three-month period of 2024.
Provision for Credit Losses
The Company had a release of provision for credit losses of $502,000 during the three months ended September 30, 2025, compared to a provision for credit losses of $1.3 million for the three months ended September 30, 2024. The Company makes provisions for, or releases of, credit loss expense in an amount necessary to maintain the allowance for credit losses at an acceptable level under the current expected credit loss methodology analysis. The Company recorded a net charge-off of $605,000 for the quarter ended September 30, 2025, compared to a net charge-off of $323,000 for the similar period in 2024. At September 30, 2025, the allowance for credit losses related to loans receivable was 1.10% of loans receivable, compared to 1.12% at September 30, 2024. Additionally, at September 30, 2025, the allowance for credit losses related to loans receivable represented 302% of non-performing loans, compared to 237% at September 30, 2024.
Other Income
Other income totaled $2.5 million for the three months ended September 30, 2025, compared to $2.3 million, for the same period in 2024. The increase was due primarily to an increase in service charges and fees of $143,000. All other categories of other income increased $67,000, net, during the three months ended September 30, 2025.
Other Expense
Other expense for the three months ended September 30, 2025 totaled $12.9 million, which was $903,000 higher than the same period of 2024, due primarily to a $457,000 increase in salaries and employee benefits, a $392,000 increase in professional fees. All other categories of other expense increased $54,000, net, during the three months ended September 30, 2025.
Income Tax Expense
Income tax expense totaled $2.2 million for an effective tax rate of 20.9% for the three months ended September 30, 2025 compared to $1.0 million for an effective tax rate of 20.6% for the three months ended September 30, 2024.
Results of Operations
Consolidated Average Balance Sheets with Resultant Interest and Rates
| (Tax-Equivalent Basis, | Nine Months Ended September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| dollars in thousands) · 2025 · 2024 | ||||||||||
| Average · Average · Average · Average | ||||||||||
| Balance · Interest · Rate · Balance · Interest · Rate | ||||||||||
| (2) | (1) | (3) | (2) | (1) | (3) | |||||
| Assets | ||||||||||
| Interest-earning assets: | ||||||||||
| Interest bearing deposits with banks | $17,427 | $590 | 4.53% | $53,046 | $2,194 | 5.52% | ||||
| Securities available for sale: | ||||||||||
| Taxable | 403,947 | 10,907 | 3.61 | 398,462 | 6,514 | 2.18 | ||||
| Tax-exempt (1) | 44,157 | 938 | 2.84 | 68,852 | 1,419 | 2.75 | ||||
| Total securities available for sale (1) | 448,104 | 11,845 | 3.53 | 467,314 | 7,933 | 2.27 | ||||
| Loans receivable (1) (4) (5) | 1,776,629 | 81,636 | 6.14 | 1,631,179 | 73,569 | 6.02 | ||||
| Total interest-earning assets | 2,242,160 | 94,071 | 5.61 | 2,151,539 | 83,696 | 5.20 | ||||
| Non-interest earning assets: | ||||||||||
| Cash and due from banks | 30,035 | 26,409 | ||||||||
| Allowance for loan losses | (20,675) | (18,353) | ||||||||
| Other assets | 94,389 | 73,935 | ||||||||
| Total non-interest earning assets | 103,749 | 81,991 | ||||||||
| Total Assets | $2,345,909 | $2,233,530 | ||||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Interest-bearing liabilities: | ||||||||||
| Interest-bearing demand and money market | $566,762 | $8,588 | 2.03 | $460,579 | $7,489 | 2.17 | ||||
| Savings | 205,552 | 374 | 0.24 | 223,825 | 549 | 0.33 | ||||
| Time | 812,778 | 23,385 | 3.85 | 738,205 | 23,311 | 4.22 | ||||
| Total interest-bearing deposits | 1,585,092 | 32,347 | 2.73 | 1,422,609 | 31,349 | 2.94 | ||||
| Short-term borrowings | 23,468 | 774 | 4.41 | 57,754 | 1,015 | 2.35 | ||||
| Other borrowings | 90,110 | 2,981 | 4.42 | 150,418 | 5,165 | 4.59 | ||||
| Total interest-bearing liabilities | 1,698,670 | 36,102 | 2.84 | 1,630,781 | 37,529 | 3.07 | ||||
| Non-interest bearing liabilities: | ||||||||||
| Demand deposits | 395,470 | 391,479 | ||||||||
| Other liabilities | 28,978 | 27,677 | ||||||||
| Total non-interest bearing liabilities | 424,448 | 419,156 | ||||||||
| Stockholders' equity | 222,791 | 183,593 | ||||||||
| Total Liabilities and Stockholders' Equity | $2,345,909 | $2,233,530 | ||||||||
| Net interest income/spread (tax equivalent basis) | 57,969 | 2.77% | 46,167 | 2.12% | ||||||
| Tax-equivalent basis adjustment | (589) | (601) | ||||||||
| Net interest income | $57,380 | $45,566 | ||||||||
| Net interest margin (tax equivalent basis) | 3.46% | 2.87% | ||||||||
(1)Interest and yields are presented on a tax-equivalent basis using a marginal tax rate of 21%.
(2)Average balances have been calculated based on daily balances.
(3)Annualized
(4)Loan balances include non-accrual loans and are net of unearned income.
(5)Loan yields include the effect of amortization of deferred fees, net of costs.
Rate/Volume Analysis. The following table shows the fully taxable equivalent effect of changes in volumes and rates on interest income and interest expense.
| Increase/(Decrease) | |||
|---|---|---|---|
| Nine months ended September 30, 2025 Compared to | |||
| Nine months ended September 30, 2024 | |||
| Variance due to | |||
| Volume | Rate | Net | |
| (dollars in thousands) | |||
| Interest-earning assets: | |||
| Interest-bearing deposits with banks | $(1,449) | $(155) | $(1,604) |
| Securities available for sale: | |||
| Taxable | 145 | 4,247 | 4,392 |
| Tax-exempt securities | (512) | 31 | (481) |
| Total securities | (367) | 4,278 | 3,911 |
| Loans receivable | 6,513 | 1,555 | 8,068 |
| Total interest-earning assets | 4,697 | 5,678 | 10,375 |
| Interest-bearing liabilities: | |||
| Interest-bearing demand and money market | 1,670 | (571) | 1,099 |
| Savings | (34) | (141) | (175) |
| Time | 2,233 | (2,159) | 74 |
| Total interest-bearing deposits | 3,869 | (2,871) | 998 |
| Short-term borrowings | (731) | 490 | (241) |
| Other borrowings | (2,065) | (119) | (2,184) |
| Total interest-bearing liabilities | 1,073 | (2,500) | (1,427) |
| Net interest income (tax-equivalent basis) | $3,624 | $8,178 | $11,802 |
Comparison of Operating Results for the Nine Months Ended September 30, 2025 to September 30, 2024
General
For the nine months ended September 30, 2025, net income totaled $20.3 million compared to net income of $12.5 million in the nine months ended September 30, 2024. The increase in net income for the nine months ended September 30, 2025 was due primarily to a $11.8 million increase in net interest income, offset by a $1.4 million increase in salaries and benefits, and an increase of $2.0 million in income tax expense. Earnings per share for the nine months ended September 30, 2025 were $2.22 per share for basic shares and fully diluted shares, compared to $1.55 per share for basic shares and fully diluted shares for the nine months ended September 30, 2024. The resulting annualized return on average assets and annualized return on average equity for the nine months ended September 30, 2025 were 1.16% and 12.19%, respectively, compared to 0.75% and 9.09%, respectively, for the same period in 2024.
The following table sets forth changes in net income:
| (dollars in thousands) | Nine months ended |
|---|---|
| September 30, 2025 to September 30, 2024 | |
| Net income nine months ended September 30, 2024 | $12,491 |
| Change due to: | |
| Net interest income | 11,814 |
| Provision for credit losses | (236) |
| Service charges and fees | 323 |
| Net gains on sales of securities and loans | 97 |
| Earnings and proceeds on bank-owned life insurance | 39 |
| Other income | 138 |
| Salaries and employee benefits | (1,445) |
| Occupancy, furniture and equipment | (330) |
| Data processing related | (153) |
| Professional fees | (581) |
| All other expenses | 186 |
| Income tax expense | (2,030) |
| Net income nine months ended September 30, 2025 | $20,313 |
Net Interest Income
Net interest income on a fully taxable equivalent basis (fte) for the nine months ended September 30, 2025 totaled $58.0 million which was $11.8 million higher than the comparable period in 2024. The increase in net interest income was due primarily to a $10.4 million increase in total interest income. The (fte) net interest spread and net interest margin were 2.77% and 3.46%, respectively, for the nine months ended September 30, 2025 compared to 2.12% and 2.87%, respectively, for the same period in 2024. See “Non-GAAP Financial Measures” described above beginning on page 40.
For the nine months ended September 30, 2025, interest income (fte) totaled $94.1 million, with a yield on average earning assets of 5.61% compared to $83.7 million and 5.20% for the nine months ended September 30, 2024. Average loans increased $145.5 million during the nine months ended September 30, 2025, over the comparable period of 2024, while average securities decreased $19.2 million compared to the nine months ended September 30, 2024. Average earning assets totaled $2.242 billion for the nine months ended September 30, 2025, an increase of $90.6 million, over average earning assets for the same period in 2024. See “Non-GAAP Financial Measures” described above beginning on page 40.
Interest expense for the nine months ended September 30, 2025, totaled $36.1 million, at an average cost of 2.84%, compared to $37.5 million, at an average cost of 3.07% for the same period in 2024. The decrease in interest expense during the nine months ended September 30, 2025 reflects the overall lower level of market interest rates, along with the decrease in our short-term borrowings of $34.3 million. During the nine months ended September 30, 2025, the average cost of time deposits, which is the most significant component of funding costs, decreased 37 basis points compared to the same nine month period of last year, while short-term borrowing costs increased 206 basis points compared to the same nine month period of 2024.
Provision for Credit Losses
The Company had a provision for credit loss expense of $1.3 million during the nine months ended September 30, 2025, compared to $1.1 million for the nine months ended September 30, 2024. The Company makes provisions for, or releases of credit loss expense in an amount necessary to maintain the allowance for credit losses at an acceptable level under the current expected credit loss methodology analysis. The Company had net charge-offs for the nine months ended September 30, 2025, of $1.3 million, compared to $1.2 million in the corresponding period in 2024. At September 30, 2025, the allowance for credit losses related to loans receivable was 1.10% of loans receivable, compared to 1.12% at September 30, 2024. Additionally, at September 30, 2025, the allowance for credit losses related to loans receivable represented 302% of non-performing loans, compared to 237% at September 30, 2024..
Other Income
Other income totaled $7.1 million for the nine months ended September 30, 2025, compared to $6.5 million for the same period in 2024. The increase was due primarily to an increased level of service charges and fees of $323,000. All other categories of other income increased $274,000, net, during the nine months ended September 30, 2025.
Other Expense
Other expense for the nine months ended September 30, 2025 totaled $37.5 million, which was $2.3 million or 6.60%, higher than the same period of 2024, due primarily to a $1.4 million increase in salaries and employee benefits, a $581,000 increase in professional fees, a $330,000 increase in occupancy, furniture and equipment, and a $153,000 increase in data processing expenses. All other categories of other expense decreased $186,000, net, during the nine months ended September 30, 2025.
Income Tax Expense
Income tax expense totaled $5.3 million for an effective tax rate of 20.8% for the nine months ended September 30, 2025 compared to $3.3 million for an effective tax rate of 20.9% for the nine months ended September 30, 2024.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.