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Net Income: $4.43M for Q1 2024, down by 23.3% from $5.78M in Q1 2023.
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Earnings Per Share: Decreased to $0.55 in Q1 2024 from $0.71 in Q1 2023.
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Total Assets: Increased to $2.26 billion as of March 31, 2024, up from $2.10 billion as of March 31, 2023.
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Net Interest Income: Dropped to $14.71M in Q1 2024 from $16.09M in Q1 2023.
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Total Deposits: Rose to $1.84 billion as of March 31, 2024, from $1.76 billion as of March 31, 2023.
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Return on Average Assets: Decreased to 0.80% in Q1 2024 from 1.13% in Q1 2023.
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Return on Average Equity: Fell to 9.79% in Q1 2024 from 13.61% in Q1 2023.
Norwood Financial Corp (NASDAQ:NWFL), the parent company of Wayne Bank, disclosed its financial results for the first quarter of 2024 on April 22, 2024, through its 8-K filing. The company reported a net income of $4,433,000 for the quarter, marking a decrease of $1,349,000 from the $5,782,000 recorded in the same period the previous year. This decline was primarily attributed to a $1,383,000 decrease in net interest income and a $1,296,000 increase in total other expenses.
Norwood Financial Corp, headquartered in Honesdale, Pennsylvania, operates as a bank holding company through Wayne Bank. It provides a variety of banking services including personal and business credit services, trust and investment products, and real estate settlement services across several counties in Pennsylvania and New York. The bank manages multiple automated teller machines and has a significant presence in the communities it serves.
Financial Performance Overview
The earnings per share (EPS) on a fully diluted basis were $0.55 for the quarter, down from $0.71 in the first quarter of 2023. The annualized return on average assets and the return on average equity were also lower at 0.80% and 9.79% respectively, compared to 1.13% and 13.61% in the prior year. Despite these challenges, total assets increased by $156.1 million to $2.260 billion as of March 31, 2024.
Net interest income on a fully taxable equivalent basis was $14,905,000 during the quarter, compared to $16,275,000 in the corresponding period of 2023. The company experienced a significant increase in the cost of funds by 147 basis points, which outpaced the 71 basis points increase in the yield on interest-earning assets, leading to a reduced annualized net interest spread of 2.07%.
Operational Highlights and Challenges
President and CEO James O. Donnelly commented on the financial results, noting the pressure on net interest income due to rising deposit costs. However, he highlighted the growth in core business lines, including a 4.5% annualized increase in loans and a 9.8% annual increase in total deposits. Donnelly emphasized the bank’s strong capital position and improved credit quality metrics, which remain above the “Well-Capitalized” targets.
The bank also saw a slight increase in other income, primarily due to earnings and proceeds from bank-owned life insurance and a net increase in other income categories. Meanwhile, the provision for credit losses decreased by $924,000, attributed to a lower level of non-performing loans and reduced charge-offs.
Strategic Outlook and Future Prospects
Looking forward, Norwood Financial Corp aims to continue enhancing shareholder value by capitalizing on growth opportunities in its service areas. The bank’s strategic initiatives are focused on maintaining strong financial health and expanding its customer base across its operational territories.
In conclusion, while Norwood Financial Corp faced some financial headwinds in the first quarter of 2024, its strategic growth initiatives and strong capital position provide a solid foundation for future performance. Investors and stakeholders will be watching closely to see how the company navigates the challenges of rising costs and leverages its opportunities in the coming quarters.
Explore the complete 8-K earnings release (here) from Norwood Financial Corp for further details.
This article first appeared on GuruFocus.
