NORWOOD FINANCIAL CORP
For the period ended Sep 30, 2026. Filed Nov 6, 2026.
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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, 2026 · Filed Nov 6, 2026
Extracted filing text, with the paragraph anchors used by the comparison.
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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) · 2026 · 2025 | ||||||||||
| Average · Average · Average · Average | ||||||||||
| Balance · Interest · Rate · Balance · Interest · Rate | ||||||||||
| (2) | (1) | (3) | (2) | (1) | (3) | |||||
| Assets | ||||||||||
| Interest-earning assets: | ||||||||||
| Fed funds sold | $15 | $— | —% | $— | $— | —% | ||||
| Interest-bearing deposits with banks | 39,717 | 354 | 3.54 | 12,485 | 144 | 4.58 | ||||
| Securities available for sale: | ||||||||||
| Taxable | 439,064 | 4,224 | 3.82 | 399,090 | 3,661 | 3.64 | ||||
| Tax-exempt (1) | 43,956 | 322 | 2.91 | 44,074 | 312 | 2.81 | ||||
| Total securities available for sale (1) | 483,020 | 4,546 | 3.73 | 443,164 | 3,973 | 3.56 | ||||
| Loans receivable (1) (4) (5) | 2,267,664 | 36,760 | 6.43 | 1,802,046 | 28,267 | 6.22 | ||||
| Total interest-earning assets | 2,790,416 | 41,660 | 5.92 | 2,257,695 | 32,384 | 5.69 | ||||
| Non-interest earning assets: | ||||||||||
| Cash and due from banks | 19,466 | 31,050 | ||||||||
| Allowance for credit losses | (26,101) | (21,128) | ||||||||
| Other assets | 125,818 | 96,142 | ||||||||
| Total non-interest earning assets | 119,183 | 106,064 | ||||||||
| Total Assets | $2,909,599 | $2,363,759 | ||||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Interest-bearing liabilities: | ||||||||||
| Interest-bearing demand and money market | $741,251 | $3,519 | 1.88 | $579,145 | $2,900 | 1.99 | ||||
| Savings | 230,456 | 268 | 0.46 | 200,559 | 113 | 0.22 | ||||
| Time | 1,045,893 | 8,989 | 3.41 | 822,491 | 7,717 | 3.72 | ||||
| Total interest-bearing deposits | 2,017,600 | 12,776 | 2.51 | 1,602,195 | 10,730 | 2.66 | ||||
| Short-term borrowings | 3,540 | 36 | 4.03 | 8,740 | 105 | 4.77 | ||||
| Other borrowings | 63,901 | 640 | 3.97 | 81,125 | 899 | 4.40 | ||||
| Total interest-bearing liabilities | 2,085,041 | 13,452 | 2.56 | 1,692,060 | 11,734 | 2.75 | ||||
| Non-interest bearing liabilities: | ||||||||||
| Demand deposits | 494,690 | 416,150 | ||||||||
| Other liabilities | 38,244 | 28,816 | ||||||||
| Total non-interest bearing liabilities | 532,934 | 444,966 | ||||||||
| Stockholders' equity | 291,624 | 226,733 | ||||||||
| Total Liabilities and Stockholders' Equity | $2,909,599 | $2,363,759 | ||||||||
| Net interest income/spread (tax equivalent basis) | 28,208 | 3.36% | 20,650 | 2.94% | ||||||
| Tax-equivalent basis adjustment | (199) | (192) | ||||||||
| Net interest income | $28,009 | $20,458 | ||||||||
| Net interest margin (tax equivalent basis) | 4.01% | 3.63% | ||||||||
(1)Interest and yields are presented on a tax-equivalent basis.
(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, 2026 Compared to | |||
| Three months ended September 30, 2025 | |||
| Variance due to | |||
| Volume | Rate | Net | |
| (dollars in thousands) | |||
| Interest-earning assets: | |||
| Fed funds sold | $— | $— | $— |
| Interest-bearing deposits with banks | 293 | (83) | 210 |
| Securities available for sale: | |||
| Taxable | 373 | 190 | 563 |
| Tax-exempt securities | (1) | 11 | 10 |
| Total securities | 372 | 201 | 573 |
| Loans receivable | 7,337 | 1,156 | 8,493 |
| Total interest-earning assets | 7,709 | 1,357 | 9,276 |
| Interest-bearing liabilities: | |||
| Interest-bearing demand and money market | 804 | (185) | 619 |
| Savings | 31 | 124 | 155 |
| Time | 2,043 | (771) | 1,272 |
| Total interest-bearing deposits | 2,878 | (832) | 2,046 |
| Short-term borrowings | (61) | (8) | (69) |
| Other borrowings | (186) | (73) | (259) |
| Total interest-bearing liabilities | 2,631 | (913) | 1,718 |
| Net interest income (tax-equivalent basis) | $5,078 | $2,270 | $7,558 |
Comparison of Operating Results for the Three Months Ended September 30, 2026 to September 30, 2025
General
For the three months ended September 30, 2026, net income totaled $11.8 million compared to net income of $8.3 million for the three months ended September 30, 2025. The increase in net income for the three months ended September 30, 2026 was due primarily to a $7.6 million increase in net interest income and a net increase of $415,000 in all other income, offset, in part by a $1.6 million increase in salaries and employee benefits, a $602,000 increase in provision for credit losses, and a net increase of $2.4 million in all other expenses. Earnings for the three-months ended September 30, 2026 were $1.08 per basic and fully diluted share, compared to $0.89 per basic and fully diluted share for the three months ended September 30, 2025. The resulting annualized return on average assets and annualized return on average equity for the three months ended September 30, 2026 were 1.60% and 16.00%, respectively, compared to 1.40% and 14.58%, respectively, for the same period in 2025.
The following table sets forth changes in net income:
| (dollars in thousands) | Three months ended |
|---|---|
| September 30, 2026 compared to September 30, 2025 | |
| Net income three months ended September 30, 2025 | $8,334 |
| Change due to: | |
| Net interest income | 7,551 |
| Provision for credit losses | (602) |
| Net gains on sales of securities and loans | (72) |
| Service charges and fees | 344 |
| Earnings and proceeds on bank-owned life insurance | 66 |
| Other income | 77 |
| Salaries and employee benefits | (1,578) |
| Occupancy, furniture and equipment | (160) |
| Data processing related | (563) |
| Professional fees | (130) |
| Merger-related | 568 |
| All other expenses | (755) |
| Income tax expense | (1,317) |
| Net income three months ended September 30, 2026 | $11,763 |
Net Interest Income
Net interest income on a fully taxable equivalent basis (fte) for the three months ended September 30, 2026 totaled $28.2 million which was $7.6 million higher than the comparable period in 2025. The increase in net interest income was due primarily to a $9.3 million increase in total interest income, offset by a $1.7 million increase in total interest expense. The (fte) net interest spread and net interest margin were 3.36% and 4.01%, respectively, for the three months ended September 30, 2026 compared to 2.94% and 3.63%, respectively, for the same period in 2025. See “Non-GAAP Financial Measures” described above beginning on page 43.
For the three-months ended September 30, 2026, interest income (fte) totaled $41.7 million, with a yield on average earning assets of 5.92% compared to $32.4 million and 5.69% for the three months ended September 30, 2025. Average loans increased $465.6 million during the three months ended September 30, 2026, over the comparable period of 2025, while average securities increased $39.9 million compared to the three months ended September 30, 2025. Average earning assets totaled $2.790 billion for the three months ended September 30, 2026, an increase of $532.7 million, over average earning assets for the same period in 2025. See “Non-GAAP Financial Measures” described above beginning on page 43.
Interest expense for the three months ended September 30, 2026 totaled $13.5 million, at an average cost of 2.56%, compared to $11.7 million, at an average cost of 2.75% for the same period in 2025. Average interest-bearing deposits increased $415.4 million during the three months ended September 30, 2026, over the comparable period in 2025, while average borrowings decreased $22.4 million during the three months ended September 30, 2026. During the three months ended September 30, 2026, the average cost of time deposits, which is the most significant component of funding costs, decreased 31 basis points compared to the same three-month period of last year. The average cost of interest-bearing demand and money market decreased 11 basis points during the three months ended September 30, 2026, while savings deposit costs increased 24 basis points. Average short-term borrowing costs decreased 74 basis points, while average other borrowings cost decreased 43 basis points, compared to the same three-month period of 2025.
Provision for Credit Losses
The Company had a provision for credit losses of $100,000 during the three months ended September 30, 2026, compared to a release of provision for credit losses of $502,000 for the three months ended September 30, 2025. 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 (CECL) methodology analysis. The Company recorded a net charge-off of $719,000 for the quarter ended September 30, 2026, compared to a net charge-off of $605,000 for the year earlier quarter. At September 30, 2026, the allowance for credit losses related to loans receivable was 1.10% of loans receivable, the same as at September 30, 2025. Additionally, at September 30, 2026, the allowance for credit losses related to loans receivable represented 150% of non-performing loans, compared to 302% at September 30, 2025.
Other Income
Other income totaled $2.9 million for the three months ended September 30, 2026, compared to $2.5 million for the same period in 2025. The increase was due primarily to an increase in service charges and fees of $344,000. All other categories of other income increased $71,000 net, during the three months ended September 30, 2026.
Other Expense
Other expense for the three months ended September 30, 2026 totaled $15.6 million, an increase of $2.6 million compared to the same period of 2025, due primarily to a $1.6 million increase in salaries and employee benefits, resulting primarily from the PB Bankshares acquisition which closed in January 2026. All other categories of other expense increased $1.6 million during the three months ended September 30, 2026 as compared to the year earlier quarter.
Income Tax Expense
Income tax expense totaled $3.5 million for an effective tax rate of 23.0% for the three months ended September 30, 2026 compared to $2.2 million for an effective tax rate of 20.9% for the three months ended September 30, 2025.
Results of Operations
Consolidated Average Balance Sheets with Resultant Interest and Rates
| (Tax-Equivalent Basis, | Nine Months Ended September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| dollars in thousands) · 2026 · 2025 | ||||||||||
| Average · Average · Average · Average | ||||||||||
| Balance · Interest · Rate · Balance · Interest · Rate | ||||||||||
| (2) | (1) | (3) | (2) | (1) | (3) | |||||
| Assets | ||||||||||
| Interest-earning assets: | ||||||||||
| Fed funds sold | $818 | $25 | 4.09% | $— | $— | —% | ||||
| Interest bearing deposits with banks | 51,908 | 1,107 | 2.85 | 17,427 | 590 | 4.53 | ||||
| Securities available for sale: | ||||||||||
| Taxable | 429,970 | 12,328 | 3.83 | 403,947 | 10,907 | 3.61 | ||||
| Tax-exempt (1) | 44,285 | 955 | 2.88 | 44,157 | 938 | 2.84 | ||||
| Total securities available for sale (1) | 474,255 | 13,283 | 3.74 | 448,104 | 11,845 | 3.53 | ||||
| Loans receivable (1) (4) (5) | 2,239,147 | 106,460 | 6.36 | 1,776,629 | 81,636 | 6.14 | ||||
| Total interest-earning assets | 2,766,128 | 120,875 | 5.84 | 2,242,160 | 94,071 | 5.61 | ||||
| Non-interest earning assets: | ||||||||||
| Cash and due from banks | 26,719 | 30,035 | ||||||||
| Allowance for loan losses | (24,691) | (20,675) | ||||||||
| Other assets | 128,943 | 94,389 | ||||||||
| Total non-interest earning assets | 130,971 | 103,749 | ||||||||
| Total Assets | $2,897,099 | $2,345,909 | ||||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Interest-bearing liabilities: | ||||||||||
| Interest-bearing demand and money market | $730,956 | $10,441 | 1.91 | $566,762 | $8,588 | 2.03 | ||||
| Savings | 227,101 | 605 | 0.36 | 205,552 | 374 | 0.24 | ||||
| Time | 1,052,670 | 27,416 | 3.48 | 812,778 | 23,385 | 3.85 | ||||
| Total interest-bearing deposits | 2,010,727 | 38,462 | 2.56 | 1,585,092 | 32,347 | 2.73 | ||||
| Short-term borrowings | 4,337 | 128 | 3.95 | 23,468 | 774 | 4.41 | ||||
| Other borrowings | 75,503 | 2,309 | 4.09 | 90,110 | 2,981 | 4.42 | ||||
| Total interest-bearing liabilities | 2,090,567 | 40,899 | 2.62 | 1,698,670 | 36,102 | 2.84 | ||||
| Non-interest bearing liabilities: | ||||||||||
| Demand deposits | 479,931 | 395,470 | ||||||||
| Other liabilities | 36,680 | 28,978 | ||||||||
| Total non-interest bearing liabilities | 516,611 | 424,448 | ||||||||
| Stockholders' equity | 289,921 | 222,791 | ||||||||
| Total Liabilities and Stockholders' Equity | $2,897,099 | $2,345,909 | ||||||||
| Net interest income/spread (tax equivalent basis) | 79,976 | 3.23% | 57,969 | 2.77% | ||||||
| Tax-equivalent basis adjustment | (574) | (589) | ||||||||
| Net interest income | $79,402 | $57,380 | ||||||||
| Net interest margin (tax equivalent basis) | 3.87% | 3.46% | ||||||||
(1) Interest and yields are presented on a tax-equivalent basis.
(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, 2026 Compared to | |||
| Nine months ended September 30, 2025 | |||
| Variance due to | |||
| Volume | Rate | Net | |
| (dollars in thousands) | |||
| Interest-earning assets: | |||
| Fed funds sold | $25 | — | $25 |
| Interest-bearing deposits with banks | 964 | $(447) | 517 |
| Securities available for sale: | |||
| Taxable | 724 | 697 | 1,421 |
| Tax-exempt securities | 3 | 14 | 17 |
| Total securities | 727 | 711 | 1,438 |
| Loans receivable | 21,356 | 3,468 | 24,824 |
| Total interest-earning assets | 23,072 | 3,732 | 26,804 |
| Interest-bearing liabilities: | |||
| Interest-bearing demand and money market | 2,458 | (605) | 1,853 |
| Savings | 53 | 178 | 231 |
| Time | 6,696 | (2,665) | 4,031 |
| Total interest-bearing deposits | 9,207 | (3,092) | 6,115 |
| Short-term borrowings | (629) | (17) | (646) |
| Other borrowings | (473) | (199) | (672) |
| Total interest-bearing liabilities | 8,105 | (3,308) | 4,797 |
| Net interest income (tax-equivalent basis) | $14,967 | $7,040 | $22,007 |
Comparison of Operating Results for the Nine Months Ended September 30, 2026 to September 30, 2025
General
For the nine months ended September 30, 2026, net income totaled $24.8 million compared to net income of $20.3 million for the nine months ended September 30, 2025. The increase in net income for the nine months ended September 30, 2026 was due primarily to an increase in net interest income of $22.0 million and an increase of $1.1 million in other income, offset in part by a $4.3 million increase in merger-related expenses, a $5.7 million increase in salaries and employee benefits, a $2.2 million increase in provision for credit losses, a net increase of $4.8 million in all other expenses, and an increase of $1.6 million in income tax expense. Earnings for the nine months ended September 30, 2026 were $2.29 per basic and fully diluted share, compared to $2.22 per basic and fully diluted share for the nine months ended September 30, 2025. The resulting annualized return on average assets and annualized return on average equity for the nine months ended September 30, 2026 were 1.15% and 11.45%, respectively, compared to 1.16% and 12.19%, respectively, for the same period in 2025.
| (dollars in thousands) | Nine months ended |
|---|---|
| September 30, 2026 compared to September 30, 2025 | |
| Net income nine months ended September 30, 2025 | $20,313 |
| Change due to: | |
| Net interest income | 22,022 |
| Provision for credit losses | (2,198) |
| Service charges and fees | 738 |
| Net gains on sales of securities and loans | (54) |
| Earnings and proceeds on bank-owned life insurance | 154 |
| Other income | 219 |
| Salaries and employee benefits | (5,724) |
| Occupancy, furniture and equipment | (727) |
| Data processing related | (1,299) |
| Professional fees | (420) |
| Merger-related | (4,276) |
| All other expenses | (2,360) |
| Income tax expense | (1,567) |
| Net income nine months ended September 30, 2026 | $24,821 |
Net Interest Income
Net interest income on a fully taxable equivalent basis (fte) for the nine months ended September 30, 2026 totaled $80.0 million, an increase of $22.0 million compared to the same period in 2025. The increase in net interest income was due primarily to a $26.8 million increase in total interest income, offset by a $4.8 million increase in total interest expense. The (fte) net interest spread and net interest margin were 3.23% and 3.87%, respectively, for the nine months ended September 30, 2026 compared to 2.77% and 3.46%, respectively, for the same period in 2025. See “Non-GAAP Financial Measures” described above beginning on page 43.
For the nine months ended September 30, 2026, interest income (fte) totaled $120.9 million, with a yield on average earning assets of 5.84% compared to $94.1 million and 5.61% for the nine months ended September 30, 2025. Average loans increased $462.5 million to $2.239 billion during the nine months ended September 30, 2026, compared to $1.777 billion during the comparable period of 2025, while average securities increased $26.2 million compared to the nine months ended September 30, 2025. Average earning assets totaled $2.766 billion for the nine months ended September 30, 2026, an increase of $524.0 million, over average earning assets for the same period in 2025. See “Non-GAAP Financial Measures” described above beginning on page 43.
Interest expense for the nine months ended September 30, 2026 totaled $40.9 million, at an average cost of 2.62%, compared to $36.1 million, at an average cost of 2.84% for the same period in 2025. Average interest-bearing deposits increased $425.6 million during the nine months ended September 30, 2026, over the comparable period in 2025, while average borrowings decreased $33.7 million compared to the nine months ended September 30, 2025. During the nine months ended September 30, 2026, the average cost of time deposits, which is the most significant component of funding costs, decreased 37 basis points compared to the nine months ended September 30, 2025. The average cost of interest-bearing demand and money market decreased 12 basis points during the nine months ended September 30, 2026, while savings deposit costs increased 12 basis points, compared to the year earlier period. Average short-term borrowing costs decreased 46 basis points, while average other borrowings cost decreased 33 basis points, compared to the same nine-month period of 2025.
Provision for Credit Losses
The Company had a provision for credit losses of $3.5 million during the nine months ended September 30, 2026, compared to $1.3 million for the nine months ended September 30, 2025. 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 CECL methodology analysis. The Company recorded a net charge-off of $2.6 million for the nine months ended September 30, 2026, compared to a net charge-off of $1.3 million for the similar period in 2025. At September 30, 2026, the allowance for credit losses related to loans receivable was 1.10% of loans receivable, the same as at September 30, 2025. Additionally, at September 30, 2026, the allowance for credit losses related to loans receivable represented 150% of non-performing loans, compared to 302% at September 30, 2025. The increase in net charge-offs and the decrease in allowance for credit losses as it relates to non-performing loans, were both due to one large commercial real estate relationship filing for chapter 11 bankruptcy in June 2026.
Other Income
Other income totaled $8.2 million for the nine months ended September 30, 2026, compared to $7.1 million for the same period in 2025. The increase was due primarily to an increase in service charges and fees of $738,000. All other categories of other income increased $319,000, net, during the nine months ended September 30, 2026.
Other Expense
Other expense for the nine months ended September 30, 2026 totaled $52.3 million, an increase of $14.8 million compared to the same period of 2025, due primarily to a $4.3 million increase in non-recurring merger-related expenses and a $5.7 million increase in salaries and employee benefits, resulting primarily from the PB Bankshares merger which closed in January 2026. All other categories of other expense increased $4.8 million during the nine months ended September 30, 2026 as compared to the year earlier quarter.
Income Tax Expense
Income tax expense totaled $6.9 million for an effective tax rate of 21.8% for the nine months ended September 30, 2026, compared to $5.3 million for an effective tax rate of 20.8% for the nine months ended September 30, 2025.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.