Company: NWFL
Filing Date: 2025-10-28
Form Type: 424B3
Source: 0001193125-25-252482
Chunk: 79

Company: NORWOOD FINANCIAL CORP
Filing Date: 2025-10-28
Form: 424B3
Chunk 79
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 of scheduled payments and loan payoffs.

Management is monitoring the commercial real estate portfolio and concentrations, assessing their associated risks. As part of its risk
management process, Presence Bank segments and stress tests its non-owner occupied commercial real estate portfolio. Approximately 83.5% or $126.2 million of this portfolio was subject to stress testing
(loans having exposure under $500,000 and construction loans are not subject to stress testing). The commercial real estate portfolio has an average Loan-to-Value ratio
of 59.2% and a Debt Service Coverage ratio of 1.41 times, exclusive of any sponsor or guarantor support at December 31, 2024. The commercial real estate portfolio is diverse with respect to both property type as well as location with limited
concentrations.

Presence Bank’s hospitality portfolio is an area of market focus. Loan exposure to this segment totaled
$25.5 million (seven hotel properties) at December 31, 2024. The average Loan-to-Value ratio was low at 58.5% with a strong Debt Service Coverage ratio of 1.90
times, exclusive of any sponsor or guarantor support at December 31, 2024. Two hotels were newly acquired; therefore, the debt service coverage is based on the projected cash flow. Guarantor support for the hospitality sector is strong and
loans are supported by experienced hotel operators.

Debt securities
available-for-sale decreased $17.8 million, or 26.2%, to $50.3 million at December 31, 2024 from $68.1 million at December 31, 2023 due to
funding loans with securities maturity proceeds. The Company had maturities and calls of securities of $49.5 million combined with $596,000 of principal repayments on mortgage-backed securities, partially offset by purchases of
$24.7 million of treasury securities, $4.4 million of corporate bonds and $1.5 million of mortgage-backed securities, an increase in the fair market value of debt securities available-for-sale of $1.2 million and $460,000 in net accretion of discounts and premiums. The remaining weighted average life of our debt securities available for sale portfolio was 1.29 years at
December 31, 2024.

Premises and equipment increased by $22,000, or 1.1%, to $2.1 million at December 31, 2024, due to
additions