Norwood Financial Corp announces First Quarter 2025 Results

Apr 17, 2025

Quarterly Highlights:

Fully diluted EPS of $0.63, a 14.5% increase over the same period in 2024
Return on assets rises to over 1.00%.
Net interest margin increased 30 basis points vs. the prior quarter and 11 basis points over the prior year.
Loans grew at a 13.5% annualized rate during the first quarter.
Capital continues to improve on increased earnings and lower AOCI adjustment.

HONESDALE, Pa., April 17, 2025 (GLOBE NEWSWIRE) -- Norwood Financial Corp (Nasdaq Global Market-NWFL) and its subsidiary, Wayne Bank, announced results for the three months March 31, 2025.

Jim Donnelly, President and Chief Executive Officer of Norwood Financial Corp and Wayne Bank, stated, “The actions that we took in December 2024 to improve our capital and earnings have given us a great start to 2025. The portfolio repositioning has improved our net interest margin. That, coupled with strong annualized growth in loans and deposits, put us on a positive trajectory for 2025. We continue to benefit from lower deposit costs together with higher assets yields and our deposit growth has allowed us to lower our use of wholesale borrowings.”

Mr. Donnelly continued, “The capital that we raised in December 2024, has strengthened our balance sheet and will allow our Company to better weather any headwinds that come with global uncertainty. Although we do not have any international business per se, we do have customers who may have exposure to developing trade conditions. Because we are a community bank we are contacting our customers to determine how we can best assist them, if necessary. Additionally, we are being prudent regarding the opportunities in front of us, taking the time to assess the effects of changing economic circumstances.”

Selected Financial Highlights

(dollars in thousands, except per share data)	Year-Over Year			Linked Quarter		Adjusted Linked Quarter¹
	3 Months Ended			3 Months Ended		3 Months Ended
	Mar-25	Mar-24	Change	Dec-24	Change	Dec-24	Change
Net interest income	17,857	14,710	3,147	16,625	1,232	16,625	1,232
Net interest spread (fte)	2.61%	2.08%	53 bps	2.31%	30 bps	2.31%	30 bps
Net interest margin (fte)	3.30%	2.80%	50 bps	3.04%	26 bps	3.04%	26 bps
Net income (loss)	5,773	4,433	1,340	(12,651)	18,424	3,119	2,654
Diluted earnings per share	0.63	0.55	0.08	-1.54	-2.09	0.38	0.25
Return on average assets	1.01%	0.80%	21 bps	-2.19%	320 bps	0.54%	47 bps
Return on tangible equity	12.40%	11.65%	75 bps	-30.77%	(4,317 bps)	7.59%	481 bps

1 - The above table includes non-GAAP financial measures excluding the one-time $20.0 million net realized loss incurred in the fourth quarter as a result of the repositioning of our investment portfolio. Please see “Non-GAAP Financial Measures” below for a reconciliation of all non-GAAP financial measures.

Discussion of financial results for the three months ended March 31, 2025:

The Company had net income of $5.8 million for the three months ended March 31, 2025, an increase $1.3 million over the same period last year.
Net interest income increased during the first quarter of 2025 compared to the first quarter of 2024 due to increases in asset yields which outpaced increases in yields on liabilities.
Correspondingly, the net interest margin in the first quarter of 2025 was 3.30% compared to 2.80% in the first quarter of 2024.
The efficiency ratio for the first quarter of 2025 was 59.7% compared to 70.6% in the first quarter of 2024.
As of March 31, 2025, total assets were $2.376 billion, compared to $2.260 billion at March 31, 2024, an increase of 5.07%.
Loans receivable were $1.771 billion at March 31 2025, compared to $1.621 billion at March 31, 2024, an increase of 9.24%.
Total deposits were $2.004 billion at March 31 2025, compared to $1.839 billion at March 31, 2024, an increase of 9.00%.
Tangible Common Equity was 8.16% as of March 31, 2025, versus 6.80% at March 31, 2024.
Tangible Book Value per share increased $0.81 from $19.85 at December 31, 2024 to $20.66 at March 31, 2025.

Norwood Financial Corp is the parent company of Wayne Bank, which operates from sixteen offices throughout Northeastern Pennsylvania and fourteen offices in Delaware, Sullivan, Ontario, Otsego and Yates Counties, New York. The Company’s stock trades on the Nasdaq Global Market under the symbol “NWFL”.

Non-GAAP Financial Measures

This release references adjusted net income, adjusted diluted earnings per share, adjusted return on average assets and adjusted return on tangible equity, all of which are non-GAAP (Generally Accepted Accounting Principles) financial measures. Adjusted values were derived by reversing the effect of loss on sale of securities in December 2024 along with the attendant tax effect. We believe the presentation of adjusted net income, adjusted diluted earnings per share, adjusted return on average assets and adjusted return on tangible equity ensures comparability of these measures as the portfolio restructuring is not something the Company expects to be a recurring event.

Adjusted Return on Average Assets
(Dollars in thousands)
	Three Months Ended
	December 31, 2024
Net (loss) income	$	(12,651)
Average assets		2,299,732
Return on average assets (annualized)		-2.19	%
Net (loss) income		(12,651)
Net realized losses on sale of securities		19,962
Tax effect at 21%		(4,192)
Adjusted Net Income (Non-GAAP)		3,119
Average assets		2,299,732
Adjusted return on average assets (annualized)
(Non-GAAP)		0.54	%


Adjusted Return on Average Tangible Shareholders' Equity
(Dollars in thousands)

	Three Months Ended
	December 31, 2024
Net (loss) income	$	(12,651)
Average shareholders' equity		192,981
Average intangible assets		29,424
Average tangible shareholders' equity		163,557
Return on average tangible shareholders' equity (annualized)		-30.77	%
Net (loss) income		(12,651)
Net realized losses on sale of securities		19,962
Tax effect at 21%		(4,192)
Adjusted Net Income (Non-GAAP)		3,119
Average tangible shareholders' equity		163,557
Adjusted return on average shareholders' equity (annualized)
(Non-GAAP)		7.59	%


Adjusted Earnings Per Share
(Dollars in thousands)

	Three Months Ended
	December 31, 2024
GAAP-Based Earnings Per Share, Basic	$	(1.54)
GAAP-Based Earnings Per Share, Diluted	$	(1.54)
Net (Loss) Income		(12,651)
Net realized losses on sale of securities		19,962
Tax effect at 21%		(4,192)
Adjusted Net Income (Non-GAAP)		3,119
Adjusted Earnings per Share, Basic (Non-GAAP)	$	0.38
Adjusted Earnings per Share, Diluted (Non-GAAP)	$	0.38

The following table reconciles average equity to average tangible equity:

	For the Period Ended
(dollars in thousands)	March 31
		2025			2024

Average equity	$	218,194		$	182,088
Average goodwill and other intangibles		(29,409	)		(29,476	)
Average tangible equity	$	188,785		$	152,612

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, among other things, changes in federal and state laws, changes in interest rates, our ability to maintain strong credit quality metrics, our ability to have future performance, our ability to control core operating expenses and costs, 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.

Contact: John M. McCaffery
Executive Vice President &
Chief Financial Officer
NORWOOD FINANCIAL CORP
272-304-3003
www.waynebank.com


NORWOOD FINANCIAL CORP
Consolidated Balance Sheets
(dollars in thousands, except share and per share data)
(unaudited)
		March 31
		2025			2024
ASSETS
Cash and due from banks	$	31,729		$	19,519
Interest-bearing deposits with banks		43,678			92,444
Cash and cash equivalents		75,407			111,963

Securities available for sale		408,742			398,374
Loans receivable		1,771,269			1,621,448
Less: Allowance for credit losses		20,442			18,020
Net loans receivable		1,750,827			1,603,428
Regulatory stock, at cost		7,616			6,545
Bank premises and equipment, net		20,273			18,057
Bank owned life insurance		46,914			45,869
Foreclosed real estate owned		-			97
Accrued interest receivable		8,587			8,135
Deferred tax assets, net		17,859			21,642
Goodwill		29,266			29,266
Other intangible assets		136			202
Other assets		10,417			16,845
TOTAL ASSETS	$	2,376,044		$	2,260,423

LIABILITIES
Deposits:
Non-interest bearing demand	$	391,377		$	383,362
Interest-bearing		1,613,071			1,455,636
Total deposits		2,004,448			1,838,998
Short-term borrowings		-			60,055
Other borrowings		118,590			151,179
Accrued interest payable		13,864			11,737
Other liabilities		18,435			17,241
TOTAL LIABILITIES		2,155,337			2,079,210

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: 2025: 9,489,398 shares, 2024: 8,310,847 shares		949			831
Surplus		126,785			97,893
Retained earnings		127,865			137,285
Treasury stock, at cost: 2025: 229,979 shares, 2024: 200,690 shares		(6,208	)		(5,397	)
Accumulated other comprehensive loss		(28,684	)		(49,399	)
TOTAL STOCKHOLDERS' EQUITY		220,707			181,213

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	2,376,044		$	2,260,423


NORWOOD FINANCIAL CORP
Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
	Three Months Ended March 31,
		2025			2024
INTEREST INCOME
Loans receivable, including fees	$	25,988		$	23,681
Securities		3,870			2,526
Other		226			731
Total Interest income		30,084			26,938

INTEREST EXPENSE
Deposits		10,748			10,110
Short-term borrowings		458			336
Other borrowings		1,021			1,782
Total Interest expense		12,227			12,228
NET INTEREST INCOME		17,857			14,710
PROVISION FOR (RELEASE OF) CREDIT LOSSES	$	857		$	(624	)
NET INTEREST INCOME AFTER PROVISION FOR (RELEASE OF) CREDIT LOSSES		17,000			15,334


OTHER INCOME
Service charges and fees		1,513			1,343
Income from fiduciary activities		325			238
Gains on sales of loans, net		47			6
Earnings and proceeds on life insurance policies		286			268
Other		180			151
Total other income		2,351			2,006

OTHER EXPENSES
Salaries and employee benefits		6,472			6,135
Occupancy, furniture and equipment		1,378			1,261
Data processing and related operations		1,085			1,022
Taxes, other than income		192			93
Professional fees		659			585
FDIC Insurance assessment		406			361
Foreclosed real estate		4			21
Amortization of intangibles		15			19
Other		1,853			2,235
Total other expenses		12,064			11,732

INCOME BEFORE TAX EXPENSE		7,287			5,608
INCOME TAX EXPENSE		1,514			1,175
NET INCOME	$	5,773		$	4,433

Basic earnings per share	$	0.63		$	0.55

Diluted earnings per share	$	0.63		$	0.55

NORWOOD FINANCIAL CORP
NET INTEREST MARGIN ANALYSIS
(dollars in thousands)

	For the Quarter Ended
	March 31, 2025								December 31, 2024								March 31, 2024
	Average						Average		Average						Average		Average						Average
	Balance			Interest			Rate		Balance			Interest			Rate		Balance			Interest			Rate
	(2)			(1)			(3)		(2)			(1)			(3)		(2)			(1)			(3)
Assets
Interest-earning assets:
Interest-bearing deposits with banks	$	20,802		$	226		4.41	%	$	46,629		$	574		4.90	%	$	53,930		$	730		5.44	%
Securities available for sale:
Taxable		408,427			3,623		3.60			404,777			2,434		2.39			402,275			2,147		2.15
Tax-exempt (1)		44,242			312		2.86			65,628			449		2.72			69,880			481		2.77
Total securities available for sale (1)		452,669			3,935		3.53			470,405			2,883		2.44			472,155			2,628		2.24
Loans receivable (1) (4) (5)		1,743,572			26,120		6.08			1,690,650			26,246		6.18			1,612,106			23,775		5.93
Total interest-earning assets		2,217,043			30,281		5.54			2,207,684			29,703		5.35			2,138,191			27,133		5.10
Non-interest earning assets:
Cash and due from banks		28,705								27,283								24,593
Allowance for credit losses		(20,154	)							(18,741	)							(19,096	)
Other assets		93,131								83,506								73,692
Total non-interest earning assets		101,682								92,048								79,189
Total Assets	$	2,318,725							$	2,299,732							$	2,217,380
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand and money market	$	546,884		$	2,801		2.08		$	528,330		$	3,017		2.27		$	449,825		$	2,311		2.07
Savings		211,905			142		0.27			209,362			162		0.31			235,545			250		0.43
Time		793,803			7,805		3.99			764,819			7,805		4.06			725,199			7,549		4.19
Total interest-bearing deposits		1,552,592			10,748		2.81			1,502,511			10,984		2.91			1,410,569			10,110		2.88
Short-term borrowings		44,297			458		4.19			46,267			348		2.99			57,997			336		2.33
Other borrowings		93,549			1,021		4.43			133,620			1,528		4.55			155,498			1,782		4.61
Total interest-bearing liabilities		1,690,438			12,227		2.93			1,682,398			12,860		3.04			1,624,064			12,228		3.03
Non-interest bearing liabilities:
Demand deposits		380,544								394,001								386,066
Other liabilities		29,549								30,352								25,162
Total non-interest bearing liabilities		410,093								424,353								411,228
Stockholders' equity		218,194								192,981								182,088
Total Liabilities and Stockholders' Equity	$	2,318,725							$	2,299,732							$	2,217,380
Net interest income/spread (tax equivalent basis)					18,054		2.61	%					16,843		2.31	%					14,905		2.08	%
Tax-equivalent basis adjustment					(197	)							(218	)							(195	)
Net interest income				$	17,857							$	16,625							$	14,710
Net interest margin (tax equivalent basis)							3.30	%							3.04	%							2.80	%


(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.

NORWOOD FINANCIAL CORP
Financial Highlights (Unaudited)
(dollars in thousands, except per share data)

For the Three Months Ended March 31		2025			2024

Net interest income	$	17,857		$	14,710
Net income		5,773			4,433

Net interest spread (fully taxable equivalent)		2.61	%		2.08	%
Net interest margin (fully taxable equivalent)		3.30	%		2.80	%
Return on average assets		1.01	%		0.80	%
Return on average equity		10.73	%		9.79	%
Return on average tangible equity		12.40	%		11.68	%
Basic earnings per share	$	0.63		$	0.55
Diluted earnings per share	$	0.63		$	0.55

As of March 31		2025			2024

Total assets	$	2,376,044		$	2,260,423
Total loans receivable		1,771,269			1,621,448
Allowance for credit losses		20,442			18,020
Total deposits		2,004,448			1,838,998
Stockholders' equity		220,707			181,213
Trust assets under management		198,761			202,020

Book value per share	$	23.84		$	22.34
Tangible book value per share	$	20.66		$	18.71
Equity to total assets		9.29	%		8.02	%
Allowance to total loans receivable		1.15	%		1.11	%
Nonperforming loans to total loans		0.45	%		0.23	%
Nonperforming assets to total assets		0.33	%		0.17	%

NORWOOD FINANCIAL CORP
Consolidated Balance Sheets (unaudited)
(dollars in thousands)
		March 31		December 31		September 30		June 30		March 31
		2025		2024		2024		2024		2024
ASSETS
Cash and due from banks	$	31,729	$	27,562	$	47,072	$	29,903	$	19,519
Interest-bearing deposits with banks		43,678		44,777		35,808		39,492		92,444
Cash and cash equivalents		75,407		72,339		82,880		69,395		111,963

Securities available for sale		408,742		397,846		396,891		397,578		398,374
Loans receivable		1,771,269		1,713,638		1,675,139		1,641,356		1,621,448
Less: Allowance for credit losses		20,442		19,843		18,699		17,807		18,020
Net loans receivable		1,750,827		1,693,795		1,656,440		1,623,549		1,603,428
Regulatory stock, at cost		7,616		13,366		6,329		6,443		6,545
Bank owned life insurance		46,914		46,657		46,382		46,121		45,869
Bank premises and equipment, net		20,273		19,657		18,503		18,264		18,057
Foreclosed real estate owned		-		-		-		-		97
Goodwill and other intangibles		29,402		29,418		29,433		29,449		29,468
Other assets		36,863		44,384		42,893		44,517		46,622
TOTAL ASSETS	$	2,376,044	$	2,317,462	$	2,279,751	$	2,235,316	$	2,260,423

LIABILITIES
Deposits:
Non-interest bearing demand	$	391,377	$	381,479	$	420,967	$	391,849	$	383,362
Interest-bearing deposits		1,613,071		1,477,684		1,434,284		1,419,323		1,455,636
Total deposits		2,004,448		1,859,163		1,855,251		1,811,172		1,838,998
Borrowings		118,590		214,862		197,412		210,422		211,234
Other liabilities		32,299		29,929		31,434		31,534		28,978
TOTAL LIABILITIES		2,155,337		2,103,954		2,084,097		2,053,128		2,079,210

STOCKHOLDERS' EQUITY		220,707		213,508		195,654		182,188		181,213

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	2,376,044	$	2,317,462	$	2,279,751	$	2,235,316	$	2,260,423

NORWOOD FINANCIAL CORP
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
		March 31			December 31			September 30			June 30			March 31
Three months ended		2025			2024			2024			2024			2024
INTEREST INCOME
Loans receivable, including fees	$	25,988		$	26,122		$	25,464		$	24,121		$	23,681
Securities		3,870			2,789			2,526			2,584			2,526
Other		226			574			497			966			731
Total interest income		30,084			29,485			28,487			27,671			26,938

INTEREST EXPENSE
Deposits		10,748			10,984			10,553			10,687			10,110
Borrowings		1,479			1,876			2,003			2,059			2,118
Total interest expense		12,227			12,860			12,556			12,746			12,228
NET INTEREST INCOME		17,857			16,625			15,931			14,925			14,710
PROVISION FOR (RELEASE OF) CREDIT LOSSES		857			1,604			1,345			347			(624	)
NET INTEREST INCOME AFTER (RELEASE OF) PROVISION
FOR CREDIT LOSSES		17,000			15,021			14,586			14,578			15,334

OTHER INCOME
Service charges and fees		1,513			1,595			1,517			1,504			1,343
Income from fiduciary activities		325			224			256			225			238
Net realized (losses) gains on sales of securities		-			(19,962	)		-			-			-
Gains on sales of loans, net		47			50			103			36			6
Gains on sales of foreclosed real estate owned		-			-			-			32			-
Earnings and proceeds on life insurance policies		286			275			261			253			268
Other		180			159			158			157			151
Total other income		2,351			(17,659	)		2,295			2,207			2,006

OTHER EXPENSES
Salaries and employee benefits		6,472			6,690			6,239			5,954			6,135
Occupancy, furniture and equipment, net		1,378			1,291			1,269			1,229			1,261
Foreclosed real estate		4			9			9			15			21
FDIC insurance assessment		406			335			339			309			361
Other		3,804			5,094			4,175			3,937			3,954
Total other expenses		12,064			13,419			12,031			11,444			11,732

INCOME BEFORE TAX (BENEFIT) EXPENSE		7,287			(16,057	)		4,850			5,341			5,608
INCOME TAX (BENEFIT) EXPENSE		1,514			(3,406	)		1,006			1,128			1,175
NET (LOSS) INCOME	$	5,773		$	(12,651	)	$	3,844		$	4,213		$	4,433

Basic (loss) earnings per share	$	0.63		$	(1.54	)	$	0.48		$	0.52		$	0.55

Diluted (loss) earnings per share	$	0.63		$	(1.54	)	$	0.48		$	0.52		$	0.55

Book Value per share	$	23.84		$	23.02		$	24.18		$	22.52		$	22.34
Tangible Book Value per share		20.66			19.85			20.54			18.88			18.71

Return on average assets (annualized)		1.01	%		-2.19	%		0.68	%		0.75	%		0.80	%
Return on average equity (annualized)		10.73	%		-26.08	%		8.09	%		9.41	%		9.79	%
Return on average tangible equity (annualized)		12.40	%		-30.77	%		9.58	%		11.26	%		11.68	%

Net interest spread (fte)		2.61	%		2.31	%		2.23	%		2.06	%		2.08	%
Net interest margin (fte)		3.30	%		3.04	%		2.99	%		2.80	%		2.80	%

Allowance for credit losses to total loans		1.15	%		1.16	%		1.12	%		1.08	%		1.11	%
Net charge-offs to average loans (annualized)		0.07	%		0.12	%		0.08	%		0.13	%		0.08	%
Nonperforming loans to total loans		0.45	%		0.46	%		0.47	%		0.47	%		0.23	%
Nonperforming assets to total assets		0.33	%		0.34	%		0.35	%		0.34	%		0.17	%

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