Norwood Financial Corp. ($NWFL)

Hello, and welcome to the Annual Meeting of Shareholders of Norwood Financial Corp. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Andy Forte. The floor is yours.

Thank you. The 2026 Annual Meeting of Shareholders will please come to order. Welcome to the Annual Meeting of Shareholders of Norwood Financial Corp. I am Andy Forte, Chairman of the Board of Directors, and I will act as Chairman of the meeting. Mackenzie Jackson will act as Secretary of the meeting. I would also like to introduce to you other members of your Board of Directors present today who are also participating in the meeting by remote Communications; James O. Donnelly, our President and CEO; Attorney Ralph A. Matergia, Kevin Lamont, Meg Hungerford, Alexandra, Nolan, Jeffrey Gifford, Dr. Kenneth Phillips, Ronald Schmalzle, Marissa Nasinovich, Jim Shuck, Spencer Andress, and Joseph Cal. We posted the meeting procedures and rules for conduct of the annual meeting on the meeting web page for your review. In order to conduct an orderly meeting, I ask that everyone please follow these rules. At this time, I would like to turn over the meeting to Mr. James Donnelly, the corporation's President and Chief Executive Officer who will conduct the formal business of the annual meeting.

Thank you, Andy. Good morning, everyone. I would like to thank you for participating in our 155th Annual Meeting. We feel we have an informative program to present to you this morning. John McCaffery, our Chief Financial Officer, will review last year's financial results as well as the review of the first quarter results. We will then answer any questions that you may have. At this point, however, there are some formal matters which must be completed at the Annual Meeting of our shareholders. The only person entitled to vote at this annual meeting are stockholders of record as of the close of business on March 18, 2026, the voting record date. In accordance with the bylaws, the company has prepared a complete alphabetical list of stockholders entitled to vote at the annual meeting with their addresses and number of shares held on the record date. We have previously received an affidavit that notice of the annual meeting was mailed on or about March 25, 2026, to each stockholder of record as of the close of business on the voting record date. Accordingly, this annual meeting has been duly called. This affidavit will be attached as an exhibit to the minutes of the annual meeting. The Board of Directors has previously appointed Philip Meyer, representing Computershare Trust Company NA, to act as the Inspector of Election at this annual meeting. The inspector is taking -- has taken an oath to fairly and impartially perform his duties, which oath will be filed as an exhibit to the minutes of the annual meeting. We have previously delivered to the inspector a certificate -- a certified list of stockholders as of the voting record date and all proxies which have been received. Also, the company has delivered the signed master ballot for the voted proxies voted by the Board of Directors, as indicated by such proxies. Our record shows that there are were outstanding on the record date and entitled to the notice of and to vote at this annual meeting, a total of 10,890,166 shares of common stock. Our records further show that a majority of such shares are present at the annual meeting in person or by proxy. The inspector is making an exact count and will submit a formal report on the number of shares present or representing during the course of the annual meeting. Based on our preliminary count, a quorum is declared present, touched to the confirmation of the fact by the inspector in his report. In order to save time at this meeting, we propose to arrange the proceedings so that the vote will be taken -- will not be taken until all items are before the shareholders. Questions from stockholders attending the webcast will be addressed while voting is underway. If you have voted by proxy, you do not need to vote at this annual meeting. As stated in the notice of the annual meeting, the first item of business is to -- a business to be acted upon by shareholders is the election of 3 directors. In accordance with the bylaws, Kevin M. Lamont; Dr. Kenneth A. Phillips and Jeffrey S. Gifford have each been nominated by the Board of Directors for election to a 3-year term and until their respective successors have been elected and qualified. I, therefore, declare the Board's slate to be in nomination. No timely notice of any other nominations having been received, and therefore, I declare nominations to be closed. The second item of business on the agenda is the ratification of the appointment of S.R. Snodgrass, P.C. as independent auditors for the fiscal year ending December 31, 2026. The Mr. Fok from S.R. Snodgrass, P.C. is available on an open conference line during the annual meeting and can respond to questions from stockholders attending the webcast while the voting is underway. The third and final proposal to be considered at this meeting is a consideration of a nonbinding advisory resolution regarding the compensation of the company's named executive officers, frequently referred to as say-on-pay proposal. The following resolution is proposed, resolved that the stockholders of Norwood Financial Corp. approve on an advisory basis, the overall compensation of the company's named executive officers as described in Proposal 1, election of Directors, Executive Compensation section in the proxy statement for this annual meeting. The vote will now be taken on proposals 1, 2 and 3. Remember, if you have voted by proxy in advance of the meeting, you do not need to vote at this meeting. In order to vote today, please press the vote now button on your meeting web page and follow the directions. At this time, while the online voting is underway, we will take questions from meeting participants through our meeting web page. If you have a question regarding any of the proposals, please click on the question button on the meeting web page and text your questions to me. Do not see any questions about these proposals -- once again, is there anyone who has any questions on the proposals before this annual meeting. It is now 11:08 a.m. as everyone had an opportunity to vote, I declare the polls closed. While the inspector is counting the votes, we will review our results from 2025 and quarter 1 2026. Before I start, here's our legal disclaimer on the forward-looking statements that John or I may make today. What this basically says is that when we talk about future events, there is no guarantee that everything will occur exactly as we say here today, and that we have no obligation to report if anything does change. Please see Slide 2 for the full forward-looking statement disclosure. Thank you for your trust and interest in Norwood Financial Corp. and its wholly owned subsidiary, Wayne Bank. We are a community bank headquartered in Honesdale, Pennsylvania. We have served the banking borrowing and investing needs of individuals, families, not-for-profit organizations and businesses since 1871. As a true community bank, we have deep ties to the people, neighborhoods and customers in the communities where we live and work. Our employees come from diverse backgrounds and bring unique experiences coming together as one unified team with a shared commitment to delivering exceptional customer service as their North Star. We strive to make every day better for each and every customer. Our mission remains the same to help our customers and communities build strong financial futures so that every day. every year, every generation is better than the last. We began 2026 with a strong performance, extending the momentum we began to build last year. This is the first quarter that included results from the Presence Bank acquisition, increasing our assets, loan portfolio, geographic presence and earnings power. I am proud of our team's ability to focus on our mission to make every day better by serving our customers and communities while making significant progress on our integration activities. It is remarkable to think that we began 155 years ago as a mission to bring banking to Main Street and Honesdale has grown to a commitment to serve main streets across Pennsylvania and New York. Today, we proudly support our customers and communities through 33 branches and a business production office, spanning from our roots in Honesdale to Walton. Cooperstown, Geneva, New York, 44, Milford and now extending the Coachfill and Camp Hill, Pennsylvania and all of the places between but we have not forgotten our core values of serving our community while we have grown. We commit to the service every day that by delivering high-tech and high-touch service to our customers. We are now a $2.9 billion community bank with $2.2 billion in loans and $2.4 billion in deposits. The combination of the 2 banks makes us better together so that we can serve more communities and create a stronger bank. We stay grounded on our 4 core tenets our customers, our employees, our communities and our shareholders, guiding every decision we make. During our fourth quarter earnings call, I introduced our 2026 strategic priorities to deliver results for these 4 core tenets. I would like to provide you with an update on these. The first priority was and continues to be the successful integration of Presence Bank. I am pleased to report that we are on track with those efforts. Our positive results include driving uniform systems and operating practices across the new combined entity, uniting the acquired businesses and branches under our new brand and engaging in open conversations across locations and functions to identify and adopt the best-in-class policies that will enable us to better serve our communities while improving our results. Among our early accomplishments, is the completion of our core integration, unifying our IT and HR systems. We have also begun work on all acquired locations including signage logos and branding materials to drive consistency and unity across the organization. The integration has required extensive planning, coordination and execution across teams and locations. And I'm actually proud to say we've accomplished all of that at this point. Even as we've worked across these complex system integrations, we remain fully focused on serving our customers and communities, resulting in strong loan and growth and deposit growth throughout this period. I am proud of our team for going above and beyond to ensure our integration plans are being accomplished and for taking great care of our customers while doing so. Our second strategic priority is to increase the operational efficiency and elevate the customer experience through the use of AI. This is an area where we are implementing the best practices from Presence Bank and to playing systems and processes across our combined organization. One item that I'm really excited about is the commercial credit system, which we will integrate in July. The system uses embedded AI and machine learning to enhance the productivity of our talented credit officers by bringing automation, speed and quality to the process. For example, automated spreading will streamline workflow for our credit analysts. Enhanced reporting will equip our credit officers with deeper insights from more informed decision-making and AI-assisted credit memo drafting will improve both speed and quality of our documentation. Together, these advancements allow our teams to focus on higher-value work while accelerating underwriting time lines and improving overall deal flow. Our third objective is to strengthen our talent pool and deepen our leadership bench. As I've met with the employees across our markets, including the newly added sites in Chester, Lancaster and Dolphin Counties, I am continually reminded of the great team we have. I firmly believe our key to success is our people. They are dedicated to serving their communities and working hard to find ways to make every day better. The team became bigger and stronger during the quarter as we welcome the former Presence Bank employees to our organization, including additions to our executive leadership team. I am confident that together, we can continue to deliver financial solutions that improve the lives of our customers, allowing them to achieve their financial goals. Our fourth and final priority is to ensure that everything we do increases shareholder value. The results we report today demonstrate how we have accomplished this during the quarter, a result of our performance in Q1 and actions in previous periods. The first 3 priorities I have reviewed position us to create even more value in future periods. One shining example of how we are creating shareholder value is our recent acquisition. The transaction delivered immediate and meaningful growth. We are realizing both the strategic and financial benefits faster than originally anticipated. We now expect accretion to shareholder value ahead of our initial projections, driven by the strength of the Presence Bank team and assets along with the favorable interest rate environment. As a result, we anticipate a quicker tangible book value earn-back period, just one quarter post close, it's evident we acquired high-quality business with strong credit metrics and an excellent team. The addition of the several talented executives to Wayne Bank further reinforces the strength of the organization and their confidence in our shared future. The powerful strategic fit and cultural alignment is contributing to our early success. I am encouraged by our initial progress and even more optimistic about our future and ability to generate meaningful and lasting shareholder value. I will now turn the call over to John to walk us through the results.

Thank you, Jim. Before I start, I would refer you to the disclosures about forward-looking statements and non-GAAP statements found on Page 3 of this presentation. A reconciliation of non-GAAP numbers can be found in the appendix to this presentation. Earnings per share and total net income on an adjusted basis grew during 2025 versus 2024. This is mostly due to the portfolio repositioning that took place in December 2024, along with solid balance sheet growth and a more favorable rate environment. The growth was supported by the capital that we raised, along with the repositioning. Total assets increased by 4.7% to $2.4 billion. All alone and deposit categories increased during 2025, including a 10% increase in noninterest-bearing deposits. Adjusted returns on assets and tangible equity also increased during the past year, showing that we are growing profitably as well. Net interest margin for 2025 rebounded from 2024 and continued to increase through most of '25. This helped improve our efficiency ratio down to 56% from 67.5% in 2024. We continue the long-term trend of increasing our dividend each year. Dividend increased 3.3% and provided a dividend yield of 4.2% based on recent stock price. Our capital levels continue to remain above the regulatory well-capitalized benchmark. The first quarter of 2026 was a busy time for Norwood Financial and Wayne Bank. We closed on the acquisition of Presence Bancshares and its subsidiary Presence Bank. Our bankers did not miss a step, posting annualized growth of loans and deposits of 8% and 12%, respectively. We posted solid adjusted returns during the quarter including expansion of our net interest margin and record net interest income. We believe we are positioned for a great 2026 and beyond. I will now turn the presentation back to Jim.

It is my pleasure to recognize our outstanding employees and retirees in 2025. We recognize those who hit milestones. Nancy Hart 47 years, Barb Ridd, 45 years, Aaron Gasper 25 years, Diane Scullian, 20 years and Cheryl Crandall, 20 years. As part of our rebranding, we rolled out awards for those employees who live our values as well. They are the shining example of the attributes that we aspire to each day. The boldness award went to Joanne Rivera Ortiz. Enthusiasm went to Lindsay Bailey, teamwork to Doug Atherton. Trust went to Katy Done and education to Tiffany Galeski and resilience to Jennifer Hooks. Congratulations to all of the award winners. Congratulations to all of the employees who are promoted in 2025. And they are Gala Dixon, Vice President and Business Intelligence Manager; Mike Rollison, Senior Vice President and Commercial Team Leader; Deb Kennedy, Senior Vice President; and Pennsylvania Retail Banking Market Manager. Alison Monette, Vice President and Loan Operations Manager; Fred Malloy, Senior Vice President and Controller; Joe Moran, Vice President and Commercial loan Officer. Matthew Schumerman, Vice President and Mortgage Loan Officer; Donald Sutton, Vice President and Information Technology Manager; Alexander Tressler, Assistant Vice President and Business Development Officer; Brian Erhart, Commercial Loan Officer; and Valerie A. O'Hare, Corporate Training management. Congratulations to all of these employees, and we wish you the very best as you continue your trip. Finally, our retirements, and these are some sad ones for me personally. Lori Bishop retired after 50 years with Wayne Bank. Nancy Hart retired after 47 years and O'Hessling after 30 years. Scott White retired after 18 years of service, Diane Scullion, with 21 years and Bar Baron with 19 years of service; and Doug Atherton with 12. We had some changes on our Board of Directors since the last annual meeting as well. Lewis Critelli and Susan Campfield retired from the Board in 2025. Lewis served the bank as CFO, CEO and Chairman of the Board for 30 years. Su served on the Board for 19 years. The Board elected Dr. Andrew Forte as the new Chairman. Kevin Lamont was elected the Vice Chairman. Norwood Financial and Wayne Bank added 2 new directors in 2025, James Shruck and Marissa Nisinovich are both strong community leaders and have both brought some good expertise to the Board. In addition to picking up some strong employees with Presence Bank, we had the former Chairman and Vice Chairman of their Board, joined Norwood Financial and Wayne Bank Boards. Joseph Carroll, and Spencer Andres, each bring years of governance experience with them as well extensive professional experience. Thank you for your support. John and I would be happy to answer any questions.

We have a question. Can you speak to how the integration is going? What are the impacts on the employees and customers?

The integration is going very well and as planned. As you integrate technology, there's always a couple of bumps along the way, but I can proudly say that our teams have stepped up, smoothed out those bumps and delivered the White Club service to the new customers by being on-premise and available to them. The integration of the employees has almost been seamless. You would think that these 2 teams have been working together for 20 years. They're relying on each other, they're joking with each other. And the production from the first quarter, I think, shows that they're also focused on the mission ahead of serving our customers and profitably growing the bank.

We have another question how is bench strength getting stronger after the integration.

So we were able to keep most of the executives from Presence Bank and integrate them into the team. So Gene Ackeman was the CEO with a -- if you read his background online, tremendous banking background, very smart guy and very focused on achieving results has joined us as our Chief Operating Officer. Doug Byers, who was the Chief Banking Officer, is now the market executive and leading the team in the Presence Bank -- former Presence Bank footprint. And then Larry Witt was the CIO for Presence Bank is now the CIO for the joint bank. Doug also just to hop back to him also is heading up treasury management for the whole bank. So I think this is one of those times where the integration deepen not only deepened the bench strength, but I think sets us up for some really good successes going forward.

And we have another question, what message would you like to shareholders to take away today?

I think the message for the shareholders today is the bank is running well. We're running profitably. The integration of the -- which can be a risky proposal when you acquire a bank is going particularly well. And it's also the shareholder value is being enhanced and will be enhanced by this integration. I think the shareholders can look going forward that they have a good management team in place, we have good employees across the footprint, serving customers, and we see great things ahead for the back and for the shareholder value. And I always like to thank shareholders for investing in Norwood Financial and having confidence in our ability to deliver for you.

Thank you, Jim, that concludes our questions.

Okay. The inspector has completed his count and provided me with a report. Mr. Inspector, would you like to read the voting results.

Mr. Donnelly, the report of the inspector of election confirms that a quorum is and has been in attendance at the annual meeting for all purposes. The report further confirms that each of the nominees for director has been duly elected. The appointment of S.R. Snodgrass, P.C. as the company's independent registered public accounting firm for the year ending December 31, 2026, has been ratified and that the nonbinding advisory resolution regarding the compensation of the company's named executive officers has been approved.

Thank you, Mr. Inspector. The report of the inspector confirms that a quorum is and has been in attendance at the annual meeting for all purposes. It also shows that Kevin M. Lamont, Dr. Kenneth A. Phillips and Jeffrey S. Gifford have each been duly elected as directors for a 3-year term. The report further shows that a majority of the votes cast have been in favor of the ratification of the appointment of S.R. Snodgrass, P.C. and the company's independent auditors for the 2026 fiscal year. And at the nonbinding advisory resolution regarding the compensation of the company's named executive officers has been approved. The report of the inspector is hereby accepted and approved and will be attached to the minutes of the annual meeting. I would like to thank all of you for attending today's meeting and for the interest that you have shown in the affairs of your company. This meeting is now adjourned.

This concludes the meeting. You may now disconnect.