Company: NWFL
Filing Date: 2025-10-08
Form Type: S-4/A
Source: 0001193125-25-234244
Chunk: 109

Company: NORWOOD FINANCIAL CORP
Filing Date: 2025-10-08
Form: S-4/A
Chunk 109
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 the six months ended June 30, 2024.

Provision for credit losses. We charge provisions for credit losses to operations in order to maintain our
allowance for credit losses on loans and reserve for unfunded commitments at a level that is considered reasonable and necessary to absorb expected credit losses inherent in the loan portfolio and expected losses on commitments to grant loans that
are expected to be advanced at the consolidated balance sheet date. In determining the level of the allowance for credit losses, we consider our past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect
the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current and forecasted economic conditions,

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and the levels of non-performingand other classified loans. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates as more information becomes available or conditions change. We assess the allowance for credit losses on a quarterly basis and make provisions for credit losses in order to maintain the allowance. Based on our evaluation of the above factors, we recorded a $101,000 provision for credit losses for the six months ended June 30, 2025 compared to a reversal of provision for credit losses of $67,000 for the six months ended June 30, 2024. The increase in provision for credit losses was primarily due to a provision for loans of $90,000 for the six months ended June 30, 2025 as compared to a recovery for loans of $14,000 for the six months ended June 30, 2024. It is also due to a provision of $11,000 for unfunded commitments for the six months ended June 30, 2025 as compared to a recovery of $53,000 for the six months ended June 30, 2024. The allowance for credit losses on loans was $4.5 million, or 1.25%, of loans outstanding at June 30, 2025 and $4.4 million, or 1.25%, of loans outstanding at December 31, 2024. To the best of our knowledge, we have recorded our best estimate of expected losses in the loan portfolio and for unfunded commitments at June 30, 2025. However, future changes in the factors described above, including, but not limited to, actual loss experience with respect to our loan portfolio could result in material increases in our provision for credit losses. In addition, the PAD