Company: NWFL
Filing Date: 2025-10-28
Form Type: 424B3
Source: 0001193125-25-252482
Chunk: 101

Company: NORWOOD FINANCIAL CORP
Filing Date: 2025-10-28
Form: 424B3
Chunk 101
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 June 30, 2024. Our net interest rate spread increased 36 basis points to 2.40% for the three months ended June 30, 2025 from 2.04% for the three
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, and the levels of non-performing and 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 $40,000 provision for credit losses for the three months ended
June 30, 2025 compared to $17,000 for the three months ended June 30, 2024. The increase in provision for credit losses was primarily due to a provision of $16,000 for unfunded commitments for the three months ended June 30, 2025 as
compared to a recovery of $13,000 for the

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three 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 PADOB and the FDIC, as an integral part of