Company: NWFL
Filing Date: 2025-09-19
Form Type: S-4
Source: 0001193125-25-208580
Chunk: 206

Company: NORWOOD FINANCIAL CORP
Filing Date: 2025-09-19
Form: S-4
Chunk 206
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rual loans as well as other loan modifications. |

| 5. | Existence and effect of any concentrations of credit and changes in the level of such concentrations. |

| 6. | Effect of external factors, such as competition and legal and regulatory requirements. |

| 7. | Experience, ability, and depth of lending management and other relevant staff. |

| 8. | Quality of loan review and Board of Director oversight. |

| 9. | The effect of other external factors (i.e. competition, legal and regulatory 
 requirements) on the level of estimated credit losses.                       |

| 10. | Changes in inflationary environment. |

| 11. | Changes in the interest rate environment. |

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for credit losses calculation for our loan portfolio. The evaluation also considers the following risk characteristics of each loan portfolio segment:

| • |     | One- to four-family residential real estate loans carry risks associated with the continued creditworthiness of 
 the borrower and changes in the value of the collateral.                                                        |

| • |     | Commercial real estate loans carry risks associated with the successful operation of a business or a real estate                                                                                      
 project, in addition to other risks associated with the ownership of real estate, because repayment of these loans may be dependent upon the profitability and cash flows of the business or project. |

| • |     | Construction loans carry risks that the project may not be finished according to schedule, the project may not be                                                                                                                                        
 finished according to budget, and the value of the collateral may, at any point in time, be less than the principal amount of the loan. Construction loans also bear the risk that the general contractor, who may or may not be a loan customer, may be 
 unable to finish the construction project as planned because of financial pressure or other factors unrelated to the project.                                                                                                                            |

| • |     | Commercial and industrial loans carry risks associated with the successful operation of a business because                                                                                                                                                
 repayment of these loans may be dependent upon the profitability and cash flows of the business. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time and cannot be appraised with as 
 much reliability.                                                                                                                                                                                                                                         |

| • |     | Consumer loans carry risk associated with the