Quarterly Highlights:
- Net interest margin increased 5 basis points vs. the prior quarter and 11 basis points over the prior year.
- Loans grew at an 9% annualized rate during the fourth quarter.
- Completed capital raise that supports our long-term strategy and repositions our investment portfolio to improve our yield on the portfolio.
- Capital continues to improve due to recent equity offering and lower AOCI adjustment.
Jim Donnelly, President and Chief Executive Officer of Norwood Financial Corp and Wayne Bank, stated, "During the fourth quarter, we successfully completed a capital raise that enabled us to reposition our investment portfolio for improved yields on the portfolio in future periods. While we incurred a one-time $20 million loss as a result of this repositioning, we believe the portfolio is better positioned for the current and future interest rate environment. Excluding this loss, we performed well during the fourth quarter, delivering higher net interest income year-over-year for both the fourth quarter and the full year. As a result of these actions, we believe the Company is financially stronger and better protected from changes in interest rates and will enhance our future performance.”
Selected Financial Highlights
| (dollars in thousands, except per share data) | Three Months Ended | Twelve Months Ended | ||||||||||
| December 31, 2024 | December 31, 2024 | |||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||
| Net interest income | 16,625 | 15,293 | 1,332 | 62,191 | 62,067 | 124 | ||||||
| Net interest spread (fte) | 2.31% | 2.23% | 8 bps | 2.17% | 2.47% | (30 bps | ) | |||||
| Net interest margin (fte) | 3.04% | 2.93% | 11 bps | 2.91% | 3.06% | (15 bps | ) | |||||
| Net income (loss) | (12,651 | ) | 355 | (13,006 | ) | (160 | ) | 16,759 | (16,919 | ) | ||
| Diluted earnings per share | (1.54 | ) | 0.04 | (1.41 | ) | (0.02 | ) | 2.07 | (2.09 | ) | ||
| Return on average assets | (2.19% | ) | 0.06% | (225 bps | ) | -0.01% | 0.79% | (80 bps | ) | |||
| Return on tangible equity | (30.77% | ) | 1.01% | (3,178 bps | ) | (0.10% | ) | 11.66% | (1,167 bps | ) | ||
Discussion of financial results for the three months ended December 31, 2024:
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| The following non-GAAP financial measures exclude 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. | ||||||||||||
| (dollars in thousands, except per share data)
| Three Months Ended | Twelve Months Ended | ||||||||||
| December 31, 2024 | December 31, 2024 | |||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||
| Adjusted net income | 3,119 | 355 | 2,764 | 15,610 | 16,759 | (1,149 | ) | |||||
| Adjusted diluted earnings per share | 0.38 | 0.04 | 0.34 | 1.93 | 2.07 | (0.14 | ) | |||||
| Adjusted return on average assets | 0.54% | 0.06% | 48 bps | 0.69% | 0.79% | (10 bps | ) | |||||
| Adjusted return on tangible equity | 7.59% | 1.01% | 654 bps | 9.97% | 11.66% | (169 bps | ) | |||||
Norwood Financial Corp is the parent company of Wayne Bank, which operates from 16 offices throughout Northeastern Pennsylvania and 14 offices in 4 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 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, | Twelve Months Ended December 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net (loss) income | $ | (12,651 | ) | $ | 355 | $ | (160 | ) | $ | 16,759 | ||||||
| Average assets | 2,299,732 | 2,166,821 | 2,250,171 | 2,128,570 | ||||||||||||
| Return on average assets (annualized) | -2.19 | % | 0.06 | % | -0.01 | % | 0.79 | % | ||||||||
| Net (loss) income | (12,651 | ) | 355 | (160 | ) | 16,759 | ||||||||||
| Net realized losses on sale of securities | 19,962 | 0 | 19,962 | 0 | ||||||||||||
| Tax effect at 21% | (4,192 | ) | 0 | (4,192 | ) | 0 | ||||||||||
| Adjusted Net Income (Non-GAAP) | 3,119 | 355 | 15,610 | 16,759 | ||||||||||||
| Average assets | 2,299,732 | 2,166,821 | 2,250,171 | 2,128,570 | ||||||||||||
| Adjusted return on average assets (annualized) | ||||||||||||||||
| (Non-GAAP) | 0.54 | % | 0.06 | % | 0.69 | % | 0.79 | % | ||||||||
| Adjusted Return on Average Tangible Shareholders' Equity | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net (loss) income | $ | (12,651 | ) | $ | 355 | $ | (160 |
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