On July 26, 2024, Norwood Financial Corp (NWFL, Financial) released its 8-K filing detailing the earnings for the second quarter of 2024. Norwood Financial Corp, a U.S.-based bank holding company, offers a range of personal and business credit services, trust and investment products, and real estate settlement services. The company serves several counties in Pennsylvania and New York through its subsidiary, Wayne Bank.
Performance Overview
Norwood Financial Corp reported a net income of $4.213 million for the three months ended June 30, 2024, a significant decrease of $2.29 million from the same period last year. The earnings per share (fully diluted) were $0.52, down from $0.81 in the previous year. The annualized return on average assets was 0.75%, and the annualized return on average tangible equity was 11.26% for the quarter.
Key Financial Metrics
For the six months ended June 30, 2024, the company reported a net income of $8.646 million, down by $3.639 million from the same period in 2023. Earnings per share (fully diluted) for the six months were $1.07, compared to $1.51 in the previous year. The annualized return on average assets was 0.78%, and the annualized return on average tangible equity was 11.46%.
Income Statement Highlights
Net interest income for the three months ended June 30, 2024, totaled $15.124 million, a decrease of $705,000 compared to the same period in 2023. The net interest margin (fte) was 2.79%, down from 3.09% in the previous year. The tax-equivalent yield on interest-earning assets increased by 57 basis points to 5.14%, while the cost of interest-bearing liabilities increased by 108 basis points to 3.09%.
Balance Sheet and Cash Flow
Total assets as of June 30, 2024, were $2.235 billion, compared to $2.142 billion at the same time last year. Loans receivable were $1.623 billion, and total deposits were $1.811 billion. Stockholders' equity stood at $182.2 million.
Challenges and Achievements
The decrease in net income was primarily due to a $717,000 decrease in net interest income, a $506,000 increase in total other expenses, and a $2.097 million increase in the provision for credit losses. However, the company saw a $424,000 increase in total other income, driven by higher service charges on deposit accounts and the absence of a loss on the sale of investment securities that occurred in 2023.
"Our second quarter income decreased from the 2023 level due to a release of provision for credit losses in the three months ended June 30, 2023, and the rising cost of deposits and borrowed funds. These decreases were partially offset by a $424,000 increase in non-interest income," stated James O. Donnelly, President and CEO of Norwood Financial Corp.
Financial Tables
| Three Months Ended June 30 | 2024 | 2023 |
|---|---|---|
| Net Interest Income | $15,124 | $15,829 |
| Net Income | $4,213 | $6,503 |
| Net Interest Margin (fte) | 2.79% | 3.09% |
| Return on Average Assets | 0.75% | 1.23% |
| Return on Average Tangible Equity | 11.26% | 17.66% |
Analysis
The decline in earnings highlights the challenges Norwood Financial Corp faces in a rising interest rate environment, which has increased the cost of deposits and borrowed funds. Despite these challenges, the company has managed to grow its total assets and maintain strong credit quality metrics. The increase in non-interest income and controlled operating expenses are positive signs for future performance.
For more detailed information, readers can access the full 8-K filing.
Explore the complete 8-K earnings release (here) from Norwood Financial Corp for further details.
