Norwood Financial Corp. Q4 FY2025 earnings call

Key Points

• Ended 2025 on a positive note with strong results, expanding net interest spread by 62 basis points and increasing net interest income 62% compared to 2024. Net income and EPS more than doubled adjusted.
• Completed portfolio repositioning in December 2024 and had strong loan and deposit growth, leading to a more robust balance sheet.
• Announced and closed the acquisition of Presence Bank on January 5, growing asset base by 20%, adding 4 branches, and enhancing talent base.
• Strategic priorities for 2026: integrate Presence Bank acquisition, explore ways to increase operational efficiency using AI, strengthen talent pool, manage deposits/assets, grow assets, and return cash to shareholders via dividend.
• Q4 2025: Net interest income increased $5M linked quarter but margin dropped 3bps due to loan growth and seasonal municipal deposit outflow. Had $520k merger charges. Unadjusted pre-provision net revenue decreased 2% linked quarter due to higher expenses. Noninterest income up, expenses up 1.5% year over year and 5% linked quarter. Credit metrics improved with nonperforming loans decreasing as a percentage of total loans.

Net interest spread expanded by 62 basis points, net interest income increased 62% compared with 2024. Net income and earnings per share more than doubled on an adjusted basis. The acquisition of Presence Bank in January increased the asset base by 20%, added 4 branches in the Southeast and South Central Pennsylvania region.

Forward-Looking Statements

• Successfully integrate Presence Bank acquisition, driving uniform systems and operating practices.
• Explore ways to increase operational efficiency using AI tools from Presence Bank.
• Strengthen talent pool and deepen leadership bench.
• Manage deposits and assets to maintain strong financial position, actively grow assets through deposits, investments, and strategic M&A.
• Return cash to shareholders through a reliable and growing dividend.

Q: Instructions to ask a question by pressing 11 on telephone.

A: Operator provided instructions for asking and withdrawing questions via pressing 11