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NORWOOD FINANCIAL CORP (NWFL)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 EPS was $0.67, up 6% sequentially and 29% year over year; EPS modestly beat the S&P Global consensus of $0.66 by $0.01, while “revenue” missed (see Estimates Context) .*
  • Net interest margin expanded to 3.43% (+13 bps QoQ, +63 bps YoY) on higher asset yields and lower liability costs; ROA rose to 1.06% and the efficiency ratio improved to 58.7% from 66.7% YoY .
  • Balance sheet momentum: loans reached $1.79B (+9.1% YoY) and deposits hit $2.00B (+10.3% YoY), with deposit costs down 20 bps since Q4 2024 and reduced wholesale borrowings supporting NII growth .
  • Strategic actions and capital: tangible common equity rose to 8.39%; dividend increased to $0.31 (payable Aug 1) and announced PB Bankshares merger expected to be ~10% EPS accretive in 2026 with 4.2% TBV dilution and ~2.5-year earn-back .
  • Potential stock catalysts: continued NIM expansion, operating efficiency improvements, dividend growth, and the Presence Bank merger offering geographic expansion and scale benefits .

What Went Well and What Went Wrong

What Went Well

  • NIM expansion and spread improvement: NIM reached 3.43% (+13 bps QoQ, +63 bps YoY) and net interest spread improved to 2.75% as asset yields rose while liability yields fell .
  • Operating efficiency improved: Q2 efficiency ratio declined to 58.7% from 66.7% in Q2 2024; ROA increased to 1.06% and ROTCE to 12.83% .
  • Positive management momentum and branding: “Our company’s performance continues to strengthen… we enter the second half of 2025 on solid footing and with good momentum,” said CEO Jim Donnelly, highlighting a successful “Every Day Better” rebrand to energize culture and differentiate the bank .

What Went Wrong

  • “Revenue” miss vs S&P consensus: While EPS beat, S&P revenue came in below the single-estimate consensus (see Estimates Context). This may reflect definitional differences vs bank-reported NII + other income; management did not provide a formal revenue guide .*
  • Credit provisioning ticked up sequentially: Provision for credit losses was $0.95M in Q2 (vs $0.86M in Q1), though asset quality remained stable (NPLs/loans 0.45%; NPAs/assets 0.34%) .
  • No formal quantitative guidance: Beyond commentary on margin trends and capital, the company did not issue explicit revenue/margin/expense guidance ranges, limiting near-term estimate anchoring .

Financial Results

Core P&L and Margin Trends (Quarterly)

MetricQ4 2024Q1 2025Q2 2025
EPS ($)$(1.54) $0.63 $0.67
Net Income ($USD Millions)$(12.651) $5.773 $6.205
Net Interest Income ($USD Millions)$16.625 $17.857 $19.065
Net Interest Margin (fte) (%)3.04% 3.30% 3.43%
Net Interest Spread (fte) (%)2.31% 2.61% 2.75%
Efficiency Ratio (%)—59.7% 58.7%
ROA (%)-2.19% 1.01% 1.06%
ROTCE (%)-30.77% 12.40% 12.83%

Notes:

  • NIM QoQ +13 bps, YoY +63 bps; deposit costs down 20 bps since Q4 2024 .

Balance Sheet Snapshot

MetricQ4 2024Q1 2025Q2 2025
Total Assets ($USD Billions)$2.317 $2.376 $2.365
Loans Receivable ($USD Billions)$1.714 $1.771 $1.791
Total Deposits ($USD Billions)$1.859 $2.004 $1.998
TCE Ratio (%)8.05% 8.16% 8.39%
Tangible Book Value ($)$19.85 $20.66 $21.17

Asset Quality and Reserves

MetricQ4 2024Q1 2025Q2 2025
Allowance/Loans (%)1.16% 1.15% 1.17%
Net Charge-offs/Avg Loans (annualized, %)0.12% 0.07% 0.08%
NPLs/Total Loans (%)0.46% 0.45% 0.45%
NPAs/Total Assets (%)0.34% 0.33% 0.34%

Segment-Like Breakdown (Interest Income/Expense Components)

Component ($USD Millions)Q4 2024Q1 2025Q2 2025
Interest Income – Loans$26.122 $25.988 $27.115
Interest Income – Securities$2.789 $3.870 $3.871
Interest Income – Other$0.574 $0.226 $0.220
Total Interest Income$29.485 $30.084 $31.206
Interest Expense – Deposits$10.984 $10.748 $10.869
Interest Expense – Borrowings$1.876 $1.479 $1.272
Total Interest Expense$12.860 $12.227 $12.141
Net Interest Income$16.625 $17.857 $19.065
Other Income (noninterest)$(17.659) $2.351 $2.248

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal revenue/margin/OpEx guidance2025None providedNone providedMaintained (no guide)
Dividend per shareQ3 2025 payout (Aug 1)—$0.31 per share; +$0.01 vs 2Q24 dividendRaised
PB Bankshares (Presence) merger EPS accretionFY 2026—~10% EPS accretionNew (strategic update)
TBV dilution and earn-back (merger)At closing / earn-back period—4.2% TBV dilution; ~2.5-year earn-backNew (strategic update)

Earnings Call Themes & Trends

Earnings call transcript for Q2 2025 was not available in our document set; below themes use management press releases.

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Net interest marginQ4: NIM 3.04% (+11 bps YoY); portfolio repositioning to improve yield NIM 3.43% (+13 bps QoQ, +63 bps YoY) as asset yields increased and deposit costs fell Improving
Deposit costs & fundingQ1: deposit growth enabled lower wholesale borrowings ; Q4: higher deposit costs earlier in 2024 Deposit costs fell 20 bps since Q4 2024; deposits +10.3% YoY Improving
Capital/AOCIQ4: capital raise; AOCI lower; TBV $19.85 TCE 8.39%; TBV $21.17; continued AOCI improvement Strengthening
Growth (loans/deposits)Q1: loans +13.5% annualized; deposits grew; NIM +50 bps QoQ Loans +9.1% YoY; deposits +10.3% YoY; continued momentum Solid
Strategic initiativesQ4: portfolio repositioning; capital raise “Every Day Better” rebrand; Presence merger announced (scale to ~$3.0B assets) Expanding

Management Commentary

  • “Our company’s performance continues to strengthen… We enter the second half of 2025 on solid footing and with good momentum.” — Jim Donnelly, President & CEO .
  • “The actions that we took in December 2024 to improve our capital and earnings have given us a great start to 2025… deposit growth has allowed us to lower our use of wholesale borrowings.” — Jim Donnelly .
  • On strategic expansion: “I am very pleased to announce our merger with Presence Bank… Joining these institutions provides Wayne Bank with the opportunity to deepen Presence Bank’s relationships… given our broader product mix and larger balance sheet.” — Jim Donnelly .

Q&A Highlights

  • Earnings call transcript for Q2 2025 was not available; no Q&A themes could be extracted from transcripts in our document set [List: 0 Q2 2025 earnings-call-transcript found].

Estimates Context

MetricS&P ConsensusActual (S&P)Company ReportedOutcome
EPS ($)$0.66*$0.67*$0.67 Bold beat: EPS +$0.01 vs consensus*
Revenue ($USD Millions)$21.200*$20.363*NII + Other Income = $21.313 Bold miss vs S&P “Revenue”*

Notes:

  • Values retrieved from S&P Global.*
  • Revenue definitions for banks may differ; the company reports components (Net Interest Income and Other Income) rather than a single “revenue” line .

Key Takeaways for Investors

  • Margin story is intact: NIM 3.43% and spread 2.75% reflect favorable asset yields and easing funding costs; continued NIM expansion is a near-term earnings driver .
  • Operating leverage: Efficiency ratio improved to 58.7% from 66.7% YoY, supporting sustainable EPS gains if cost discipline persists .
  • Balance sheet growth with stable credit: Loans +9.1% YoY, deposits +10.3% YoY; asset quality stable (NPLs 0.45%, NPAs 0.34%) — reduces downside risk to margin gains .
  • Capital strengthening and shareholder returns: TCE up to 8.39%; TBV at $21.17; dividend increased to $0.31, signaling confidence in capital and earnings durability .
  • Strategic M&A: Presence Bank merger expands footprint and scale, with guided ~10% EPS accretion in 2026 and manageable TBV dilution/earn-back — a medium-term upside lever .
  • Near-term trading implication: Expect focus on NIM trajectory and efficiency; the small EPS beat vs consensus and dividend increase could support sentiment, while any ambiguity around “revenue” definitions may cap upside without formal guidance .*
  • Medium-term thesis: Execution on deposit cost management, loan growth, and Presence integration are key to sustaining >1% ROA and double-digit ROTCE; watch for regulatory approvals and integration updates .

Appendix: Additional Selected Highlights

  • Efficiency ratio Q2: 58.7% vs 66.7% prior year .
  • ROA Q2: 1.06%; ROTCE: 12.83% .
  • Deposit costs down 20 bps since Q4 2024; NIM +63 bps YoY .
  • Loans: $1.791B; Deposits: $1.998B as of June 30, 2025 .
  • Dividend: $0.31 per share payable Aug 1, 2025; +$0.01 vs 2Q24 .