Company: NWFL
Filing Date: 2025-10-28
Form Type: 424B3
Source: 0001193125-25-252482
Chunk: 240

Company: NORWOOD FINANCIAL CORP
Filing Date: 2025-10-28
Form: 424B3
Chunk 240
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 42,460 |     |          | 3.39 | % |

7. Financial Instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. F-60

The Company had the following off-balance sheet financial instruments whose contract amounts represent credit risk at June 30, 2025 and December 31, 2024 (in thousands):

|                                               |     | 2025 | June 30, |     | 2024 | December 31, |
|:----------------------------------------------|:----|:-----|---------:|:----|:-----|-------------:|
| Commitments to grant loans                    |     | $    |   25,297 |     | $    |       23,958 |
| Unfunded commitments under lines of credit    |     |      |   13,036 |     |      |       12,409 |
| Standby letters of credit                     |     |      |    7,593 |     |      |        6,698 |
| Total off-balance sheet financial instruments |     | $    |   45,926 |     | $    |       43,065 |

Outstanding loan commitments represent the unused portion of loan commitments available to individuals and companies as long as there is no violation of any condition established in the contract. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based upon management’s credit evaluation of the customer. Various types of collateral may be held, including property and marketable securities. The credit risk involved in these financial instruments is essentially the same as that involved in extending loan facilities to customers. 8. Contingencies In the normal course of business, the Company is subject to various lawsuits involving matters generally incidental to its business. As of June 30,