Norwood Financial Q4 Earnings Call Highlights

Norwood Financial (NASDAQ:NWFL) executives used the company’s fourth-quarter 2025 earnings call to highlight improved profitability following a late-2024 balance sheet repositioning and to outline integration plans after closing the Presence Bank acquisition early in 2026.

Management says 2025 momentum carried into year-end

Chief Executive Officer Jim Donnelly said the company “ended 2025 on a positive note and with good momentum,” pointing to higher net interest income and improved profitability metrics. Donnelly said Norwood expanded its net interest spread by 62 basis points and increased net interest income by 62% compared with the fourth quarter of 2024. He added that net income and earnings per share more than doubled on an adjusted basis, while returns on average assets and tangible equity also improved.

Donnelly attributed the improvement to a portfolio repositioning completed in December 2024, along with “strong loan and deposit growth,” which he said resulted in a more robust balance sheet and “higher quality earnings.”

Presence Bank acquisition closes; integration becomes top priority

Donnelly described the company’s “biggest achievement” in 2025 as announcing and preparing for the acquisition of Presence Bank, which closed on January 5. Presence Bank, a “nearly 106-year-old institution,” was described as sharing Norwood’s values and commitment to customer service.

According to Donnelly, the transaction grew Norwood’s asset base by 20% and expanded its footprint with four branches in Southeast and South Central Pennsylvania. He said the combination also enhanced the company’s talent base with additional employees and strengthened Norwood’s ability to serve a range of customer needs, from small business financing to homeowner borrowing and consumer digital tools.

Looking ahead, Donnelly said the company has established four strategic priorities for 2026, led by integration work tied to Presence Bank. He said Norwood is moving with “a sense of urgency” to unify systems and operating practices, rebrand acquired businesses and branches under a single brand, and evaluate processes from both organizations to adopt best-in-class policies. Donnelly emphasized that while progress will be urgent, it will not be rushed, with an aim to limit customer and employee disruptions.

AI tools highlighted as part of efficiency and customer experience efforts

As part of its operational priorities, Donnelly said Norwood intends to explore opportunities to increase efficiency and elevate customer experience, including by adopting artificial intelligence tools that Presence Bank had already implemented.

He said the company is using AI to supplement credit officers’ work in areas such as drafting credit narratives, summarizing financials, and confirming required documentation. Donnelly said these tools are intended to speed underwriting and enable the bank to “do more deals with our existing team,” with additional evaluation to determine where AI can improve efficiency across the broader organization.

Leadership additions and shareholder focus

Donnelly also pointed to efforts to strengthen the organization’s leadership bench. He welcomed Janak Amin as Chief Operating Officer following the Presence Bank acquisition and noted other recent hires, including Larry Witt as Chief Information Officer and Doug Byers as Market Executive and Head of Treasury Management. Donnelly also said Joseph Carroll and Spencer Andress joined Norwood’s board of directors.

On capital and shareholder priorities, Donnelly said the company will manage deposits and assets to maintain a strong financial position and continue to actively grow through deposits, investment decisions, and strategic M&A when targets are attractive and fairly valued. He also said the company intends to pair those efforts with a capital allocation framework that includes “returning cash to shareholders through a reliable and growing dividend.”

CFO outlines quarterly drivers, merger charges, and expense trends

Chief Financial Officer John McCaffery focused his prepared remarks on fourth-quarter performance, describing continued progress following the December 2024 balance sheet repositioning. McCaffery said net interest income increased by $500,000 on a linked-quarter basis. While net interest margin declined by three basis points, he attributed the decrease to loan growth during the quarter and a seasonal, temporary outflow of municipal deposits.

McCaffery noted that results below the margin line continued to include merger-related expenses. He said the company recorded approximately $520,000 in merger charges during the quarter and that certain performance ratios were adjusted in the press release to show results without those costs. He also referenced prior-year comparisons that were presented net of securities losses tied to the 2024 portfolio repositioning and said the company was presenting pre-provision net revenue metrics across the press release period.

McCaffery said unadjusted pre-provision net revenue decreased 2% on a linked-quarter basis, with the adjusted measure also impacted “mostly due to higher expenses during the quarter.” He added that excluding the impact of securities sale losses tied to the 2024 repositioning, non-interest income increased, with most of the growth coming from fees on loan and deposit products.

On expenses, McCaffery said quarterly expenses were up 1.5% year over year versus the fourth quarter of 2024 and up 5% on a linked-quarter basis. He attributed the increase to several factors, including lower loan volumes that resulted in lower expense deferrals, the vesting of restricted stock for long-term retiring employees, and elevated incentive accruals reflecting improved performance in the second half of 2025.

McCaffery also said credit metrics improved year over year, with non-performing loans as a percentage of total loans declining and reserves to non-performing assets increasing. He characterized the quarter’s overarching themes as “profitable growth, sound balance sheet management, and benign credit.”

No analyst questions were asked during the Q&A portion of the call. In closing remarks, Donnelly reiterated management’s optimism for 2026, citing a larger asset base, expanded geographic coverage, and a strengthened team following the Presence Bank acquisition.

About Norwood Financial (NASDAQ:NWFL)

Norwood Financial Corporation is the bank holding company for Norwood Bank, a community-oriented financial institution headquartered in Norwood, Massachusetts. Incorporated in 2010, the company oversees a network of branch offices serving suburban and metropolitan communities in eastern Massachusetts. Norwood Financial’s mission emphasizes personalized service, local decision-making and a commitment to supporting neighborhood growth.

The company’s primary business activities encompass a full suite of personal and commercial banking products and services.