Norwood Financial Corp Reports Decline in Net Income Amid Rising Interest Rates
In This Article:
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Net Income: Q4 net income fell to $355,000 from $7,140,000 in the previous year.
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Earnings Per Share: Q4 EPS dropped to $0.04 from $0.88 year-over-year.
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Net Interest Income: Decreased by $1,939,000 in Q4 and $6,330,000 annually.
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Provision for Credit Losses: Increased by $5,816,000 in Q4 and $4,648,000 for the year.
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Total Assets: Grew to $2.201 billion as of December 31, 2023.
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Loan Portfolio: Loans receivable increased by $129.7 million to $1.604 billion.
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Deposits: Total deposits rose to $1.795 billion, a 3.90% increase.
On January 29, 2024, Norwood Financial Corp (NASDAQ:NWFL) released its 8-K filing, detailing the financial results for the fourth quarter and the fiscal year ended December 31, 2023. The bank holding company, which serves various counties in Pennsylvania and New York through its subsidiary Wayne Bank, reported a significant decrease in net income for both the quarter and the year, primarily due to a decrease in net interest income and an increase in the provision for credit losses.
Financial Performance Overview
NWFL's net income for the fourth quarter of 2023 was $355,000, a stark decrease from the $7,140,000 reported in the same period of 2022. The annual net income also saw a substantial decline, totaling $16,759,000 for 2023, down from $29,233,000 in the previous year. This decrease was attributed to a $6,330,000 drop in net interest income and a $4,648,000 rise in the provision for credit losses for the year. The return on average assets and the return on average equity were 0.79% and 9.67%, respectively, for 2023, compared to 1.43% and 16.11% in 2022.
The bank's total assets increased to $2.201 billion as of December 31, 2023, with loans receivable growing to $1.604 billion due to increases in both retail and commercial loans. Total deposits also saw an uptick, reaching $1.795 billion, a 3.90% increase from the previous year. Despite these growth indicators, the bank faced challenges with net charge-offs, which totaled $3,181,000 for the quarter and $6,078,000 for the year, largely due to losses on one credit relationship.
Interest Income and Expenses
Net interest income on a fully taxable equivalent basis (fte) for the fourth quarter was $15,488,000, a decrease from the $17,429,000 reported in the same period of 2022. The annual net interest income (fte) also decreased by $6,348,000, primarily due to increased funding costs on interest-bearing liabilities outpacing the yield earned on interest-earning assets. The provision for credit losses for the quarter was $6,116,000, a significant increase from the $300,000 in the fourth quarter of 2022, reflecting the need to maintain an adequate allowance for credit losses.