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10-Q

Norwood Financial Corp (NWFL)

10-Q 2026-05-08 For: 2026-03-31
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Added on May 08, 2026
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 0-28364

Norwood Financial Corp

(Exact name of registrant as specified in its charter)

Pennsylvania 23-2828306
(State or other jurisdiction of<br><br>incorporation or organization) (I.R.S. employer<br><br>identification no.)
717 Main Street, Honesdale, Pennsylvania 18431
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (570) 253-1455

N/A

Former name, former address and former fiscal year, if changed since last report.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading<br><br>symbol(s) Name of each exchange<br><br>on which registered
Common Stock, par value $0.10 per share NWFL The Nasdaq Stock Market LLC

Indicate by check (x) whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒
Non-accelerated filer ☐ Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    ☐  Yes    ☒  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class Outstanding as of May 1, 2026
Common stock, par value $0.10 per share 10,890,699

NORWOOD FINANCIAL CORP

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2026

Page<br><br>Number
PART I - CONSOLIDATED FINANCIAL INFORMATION OF NORWOOD FINANCIAL CORP 3
Item 1. Financial Statements (unaudited) 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36
Item 3. Quantitative and Qualitative Disclosures about Market Risk 46
Item 4. Controls and Procedures 48
PART II - OTHER INFORMATION 49
Item 1. Legal Proceedings 49
Item 1A. Risk Factors 49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 49
Item 3. Defaults Upon Senior Securities 50
Item 4. Mine Safety Disclosures 50
Item 5. Other Information 50
Item 6. Exhibits 50
Signatures 51

‎

2

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

NORWOOD FINANCIAL CORP

Consolidated Balance Sheets (unaudited)

(dollars in thousands, except share and per share data)

December 31,
2025
ASSETS
Cash and due from banks 25,480 $ 32,118
Interest-bearing deposits with banks 75,258 12,318
Fed funds sold 1,835 —
Cash and cash equivalents 102,573 44,436
Securities available for sale, at fair value (net of allowance for credit losses of 0) 431,184 408,782
Loans receivable (net of allowance for credit losses of 24,350 and 19,882) 2,214,307 1,833,540
Regulatory stock, at cost 7,181 6,623
Bank premises and equipment, net 25,299 22,971
Bank owned life insurance 55,078 46,089
Accrued interest receivable 10,815 9,250
Foreclosed real estate owned 771 771
Deferred tax assets, net 19,728 14,654
Goodwill 36,375 29,266
Other intangibles 3,318 98
Other assets 10,625 8,362
TOTAL ASSETS 2,917,254 $ 2,424,842
LIABILITIES
Deposits:
Non-interest bearing demand 470,706 $ 419,597
Interest-bearing 2,035,992 1,659,048
Total deposits 2,506,698 2,078,645
Short-term borrowings — 14,714
Other borrowings 88,268 59,419
Accrued interest payable 9,692 12,138
Other liabilities 28,658 17,769
TOTAL LIABILITIES 2,633,316 2,182,685
STOCKHOLDERS’ EQUITY
Preferred stock, no par value per share,
authorized: 5,000,000 shares; issued: none — —
Common stock, 0.10 par value per share,
authorized: 20,000,000 shares,
issued: 2026: 11,181,491 shares, 2025: 9,516,503 shares 1,118 952
Surplus 174,078 127,426
Retained earnings 140,843 141,130
Treasury stock at cost: 2026: 291,325 shares; 2025: 222,645 shares (7,970) (6,008)
Accumulated other comprehensive loss (24,131) (21,343)
TOTAL STOCKHOLDERS’ EQUITY 283,938 242,157
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 2,917,254 $ 2,424,842

All values are in US Dollars.

See accompanying notes to the unaudited consolidated financial statements.  ‎

3

NORWOOD FINANCIAL CORP

Consolidated Statements of Income (unaudited)

(dollars in thousan ds, except per share data)

Three Months Ended
March 31,
2026 2025
INTEREST INCOME
Loans receivable, including fees $ 33,873 $ 25,988
Securities 4,110 3,870
Interest bearing deposits with other banks 400 226
Total interest income 38,383 30,084
INTEREST EXPENSE
Deposits 12,787 10,748
Short-term borrowings 60 458
Other borrowings 982 1,021
Total interest expense 13,829 12,227
NET INTEREST INCOME 24,554 17,857
PROVISION FOR CREDIT LOSSES
Provision for credit losses 1,505 923
(Release of) off balance sheet commitments (46) (66)
Total provision for credit losses 1,459 857
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES 23,095 17,000
OTHER INCOME
Service charges and fees 1,755 1,513
Income from fiduciary activities 238 325
Gains on sales of loans, net 76 47
Earnings and proceeds on bank owned life insurance 314 286
Other 332 180
Total other income 2,715 2,351
OTHER EXPENSES
Salaries and employee benefits 8,549 6,472
Occupancy, furniture & equipment, net 1,725 1,378
Data processing and related operations 1,435 1,085
Taxes, other than income 202 192
Professional fees 826 659
Federal Deposit Insurance Corporation insurance 507 406
Foreclosed real estate 36 4
Amortization of intangibles 165 15
Merger-related expenses 4,941 —
Other 2,604 1,853
Total other expenses 20,990 12,064
INCOME BEFORE INCOME TAXES 4,820 7,287
INCOME TAX EXPENSE 1,090 1,514
NET INCOME $ 3,730 $ 5,773
BASIC EARNINGS PER SHARE $ 0.35 $ 0.63
DILUTED EARNINGS PER SHARE $ 0.35 $ 0.63

See accompanying notes to the unaudited consolidated financial statements.

‎

4

NORWOOD FINANCIAL CORP

Consolidated Statements of Comprehensive Income (unaudited)

(dollars in thousands)

Three Months Ended
March 31,
2026 2025
Net income $ 3,730 $ 5,773
Other comprehensive (loss) income
Investment securities available for sale:
Unrealized holding (losses) gains (3,529) 5,616
Tax effect 741 (1,179)
Other comprehensive (loss) income (2,788) 4,437
Comprehensive Income $ 942 $ 10,210

See accompanying notes to the unaudited consolidated financial statements.

‎

5

NORWOOD FINANCIAL CORP

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

Three Months Ended March 31, 2026 and 2025

(dollars in thousands, except share and per share data)

Accumulated
Other
Retained Treasury Stock Comprehensive
Amount Surplus Earnings Shares Amount Loss Total
Balance, December 31, 2025 9,516,503 $ 952 $ 127,426 $ 141,130 222,645 $ (6,008) $ (21,343) $ 242,157
Net income - - - 3,730 - - - 3,730
Other comprehensive loss - - - - - - (2,788) (2,788)
PB Bankshares, Inc Acquisition 1,662,935 166 46,396 - 81,201 (2,296) - 44,266
Cash dividends declared (0.32 per share) - - - (4,017) - - - (4,017)
Compensation expense related to restricted stock - - 136 - - - - 136
Director retainer stock 2,053 - 60 - - - - 60
Stock options exercised - - (14) - (12,521) 334 - 320
Compensation expense related to stock options - - 74 - - - - 74
Balance, March 31, 2026 11,181,491 $ 1,118 $ 174,078 $ 140,843 291,325 $ (7,970) $ (24,131) $ 283,938
Accumulated
Other
Retained Treasury Stock Comprehensive
Amount Surplus Earnings Shares Amount Loss Total
Balance, December 31, 2024 9,487,068 $ 949 $ 126,514 $ 124,963 214,161 $ (5,797) $ (33,121) $ 213,508
Net income - - - 5,773 - - - 5,773
Other comprehensive income - - - - - - 4,437 4,437
Cash dividends declared (0.31 per share) - - - (2,871) - - - (2,871)
Acquisition of treasury stock - - - - 13,671 (349) - (349)
Compensation expense related to restricted stock 1,220 - 179 - 2,147 (62) - 117
Stock options exercised 1,110 - 30 - - - - 30
Compensation expense related to stock options - - 62 - - - - 62
Balance, March 31, 2025 9,489,398 $ 949 $ 126,785 $ 127,865 229,979 $ (6,208) $ (28,684) $ 220,707

All values are in US Dollars.

See accompanying notes to the unaudited consolidated financial statements.

‎

6

NORWOOD FINANCIAL CORP

Consolidated Statements of Cash Flows (Unaudited)

(dollars in thousands)
Three Months Ended March 31,
2026 2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,730 $ 5,773
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 1,459 857
Depreciation 438 316
Amortization of intangible assets 165 15
Deferred income taxes (996) (1,342)
Net accretion of securities premiums and discounts (196) (164)
Earnings and proceeds on life insurance policies (314) (286)
Gain on sales and write-downs of fixed assets and foreclosed real estate owned, net 71 —
Net amortization of loan fees 129 179
Net gain on sale of loans (76) (47)
Mortgage loans originated for sale (2,707) (2,085)
Proceeds from sale of loans originated for sale 2,783 2,132
Compensation expense related to stock options 74 62
Compensation expense related to restricted stock 136 117
Increase in accrued interest receivable (85) (121)
(Decrease) increase in accrued interest payable (3,418) 1,249
Other, net 4,804 2,443
Net cash provided by operating activities 5,997 9,098
CASH FLOWS FROM INVESTING ACTIVITIES
Securities available for sale:
Proceeds from maturities and principal reductions on mortgage-backed securities 17,076 14,785
Purchases (24,084) (19,901)
Purchase of regulatory stock (909) (5,398)
Redemption of regulatory stock 2,380 11,148
Net increase in loans (39,816) (51,521)
Purchase of premises and equipment (455) (932)
Acquisition, net of cash and cash equivalents acquired 57,020 —
Net cash used in investing activities 11,212 (51,819)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 71,457 145,285
Net decrease in short-term borrowings (14,714) (113,069)
Repayments of other borrowings (12,950) (23,203)
Proceeds from other borrowings 155 40,000
Stock options exercised 320 —
Purchase of treasury stock — (349)
Proceeds from capital issuance 166 —
Cash dividends paid (3,506) (2,875)
Net cash provided by financing activities 40,928 45,789
Increase in cash and cash equivalents 58,137 3,068
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 44,436 72,339
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 102,573 $ 75,407

‎

7

NORWOOD FINANCIAL CORP

Consolidated Statements of Cash Flows (Unaudited) (continued)

(dollars in thousands)
Three Months Ended March 31,
2026 2025
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest on deposits and borrowings $ 15,626 $ 10,978
Income taxes paid, net of refunds $ — $ 46
Supplemental Schedule of Noncash Investing Activities:
Transfers of loans to foreclosed real estate and repossession of other assets $ 580 $ 466
Dividends payable $ 3,485 $ 2,871
Right of use for operating leases $ 1,596 $ —
Lease liability for operating leases $ 1,596 $ —
Merger with PB Bankshares
--- --- ---
Fair Value of assets acquired in business combination, excluding cash (1) $ 415,124
Goodwill recorded (1) $ 7,108
Fair Value of liabilities assumed in business combination (1) $ 407,217
Fair Value of shares issued in business combination (1) $ 44,266

(1)Includes impact of PB Bankshares acquisition on January 5, 2026. See Note 13 to the Consolidated Financial Statements for more information.

See accompanying notes to the unaudited consolidated financial statements.

‎

8

Notes to the Unaudited Consolidated Financial Statements

1.           Basis of Presentation

The unaudited consolidated financial statements include the accounts of Norwood Financial Corp (the “Company”) and its wholly-owned subsidiary, Wayne Bank (the “Bank”), and the Bank’s wholly-owned subsidiaries, WCB Realty Corp., Norwood Investment Corp., and WTRO Properties, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in conformity with generally accepted accounting principles for interim financial statements and with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ from those estimates. The financial statements reflect, in the opinion of management, all normal, recurring adjustments necessary to present fairly the consolidated financial position and results of operations of the Company. The operating results for the three-months ended March 31, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or any other future interim period.

2.           Revenue Recognition

Under ASC Topic 606, management determined that the primary sources of revenue emanating from interest and dividend income on loans and investments along with noninterest revenue resulting from investment security gains, loan servicing, gains on the sale of loans sold and earnings on bank-owned life insurance are not within the scope of this Topic.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three-months ended March 31:

Three months ended
March 31,
(dollars in thousands)
Noninterest Income 2026 2025
In-scope of Topic 606:
Service charges on deposit accounts $ 154 $ 110
ATM fees 37 94
Overdraft fees 421 363
Safe deposit box rental 38 24
Loan related service fees 153 148
Debit card fees 704 589
Fiduciary activities 238 325
Commissions on mutual funds and annuities 199 146
Other income 332 180
Noninterest Income (in-scope of Topic 606) 2,276 1,979
Out-of-scope of Topic 606:
Loan servicing fees 49 39
Gains on sales of loans 76 47
Earnings on and proceeds from bank-owned life insurance 314 286
Noninterest Income (out-of-scope of Topic 606) 439 372
Total Noninterest Income $ 2,715 $ 2,351

3.          Earnings Per Share

Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding stock options and restricted stock, and are determined using the treasury stock method.

9

The following table sets forth the weighted average shares outstanding used in the computations of basic and diluted earnings per share.

(in thousands) Three Months Ended
March 31,
2026 2025
Weighted average shares outstanding 10,827 9,268
Less: Unvested restricted shares (58) (53)
Basic EPS weighted average shares outstanding 10,769 9,215
Basic EPS weighted average shares outstanding 10,769 9,215
Add: Dilutive effect of stock options and restricted shares 6 1
Diluted EPS weighted average shares outstanding 10,775 9,216

For the three month period ended March 31, 2026, there were 152,850 stock options that were anti-dilutive and thereby excluded from the earnings per share calculations based upon the closing price of the Company’s common stock of $29.42 per share as of March 31, 2026.

For the three month period ended March 31, 2025, there were 203,850 stock options that were anti-dilutive and thereby excluded from the earnings per share calculations based upon the closing price of the Company’s common stock of $24.17 per share as of March 31, 2025.

4.           Stock-Based Compensation

During the three-month period ended March 31, 2026, no stock options were granted. As of March 31, 2026, there was $221,000 of total unrecognized compensation cost related to non-vested options granted in 2025 under the 2024 Equity Incentive Plan, which will be fully realized by December 31, 2026. Compensation costs related to stock options amounted to $74,000 and $62,000 during the three-month period ended March 31, 2026 and 2025, respectively.

A summary of the Company’s stock option activity for the three-month period ended March 31, 2026 is as follows:

Weighted
Average Exercise Weighted Average Aggregate
Price Remaining Intrinsic Value
Options Per Share Contractual Term (000)
Outstanding at January 1, 2026 234,871 $ 29.98 6.37 Yrs.
Granted — — —
Exercised (12,521) 25.59 4.81
Forfeited — — —
Outstanding at March 31, 2026 222,350 $ 30.19 6.22 Yrs.
Exercisable at March 31, 2026 183,350 $ 30.28 5.48 Yrs.

All values are in US Dollars.

Intrinsic value represents the amount by which the market price of the stock on the measurement date exceeded the exercise price of the option. The market price was $29.42 per share as of March 31, 2026 and $28.05 per share as of December 31, 2025.

10

A summary of the Company’s restricted stock activity for the three-month periods ended March 31, 2026 and 2025 is as follows:

2026 2025
Weighted- Weighted-
Average Average
Number of Grant Date Number of Grant Date
Restricted Restricted
Stock Fair Value Stock Fair Value
Non-vested, January 1, 58,127 $ 29.12 54,484 $ 22.72
Granted — — 1,220 26.44
Vested — — — —
Forfeited — — (2,147) 28.99
Non-vested, March 31, 58,127 $ 29.12 53,557 $ 22.56

The expected future compensation expense relating to the 58,127 shares of non-vested restricted stock outstanding as of March 31, 2026 is $1,554,000. This cost will be recognized over the remaining vesting period of 4.75 years. Compensation costs related to restricted stock amounted to $136,000 and $117,000 during the three-month periods ended March 31, 2026 and 2025, respectively.

5.           Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss (in thousands) by component net of tax for the three months ended March 31, 2026 and 2025:

Unrealized losses on
available for sale securities
and pension liability (a)
Balance as of December 31, 2025 $ (21,343)
Other comprehensive loss before reclassification (2,788)
Amount reclassified from accumulated other comprehensive loss -
Total other comprehensive loss (2,788)
Balance as of March 31, 2026 $ (24,131)
Unrealized gains on
available for sale securities
and pension liability (a)
Balance as of December 31, 2024 $ (33,121)
Other comprehensive income before reclassification 4,437
Amount reclassified from accumulated other comprehensive loss -
Total other comprehensive income 4,437
Balance as of March 31, 2025 $ (28,684)

(a)All amounts are net of tax. Amounts in parentheses indicate debits.

There were no amounts reclassified out of accumulated other comprehensive loss for the three months ended March 31, 2026 and 2025.

6.           Off-Balance Sheet Financial Instruments and Guarantees

The Bank 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 and letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets.

11

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

A summary of the Bank’s financial instrument commitments is as follows:

(in thousands) March 31,
2026 2025
Commitments to grant loans $ 136,171 $ 94,161
Unfunded commitments under lines of credit 188,420 151,339
Standby letters of credit 5,845 7,022
$ 330,436 $ 252,522

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Bank evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the customer and generally consists of real estate.

The Bank does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit. Standby letters of credit written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued, have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to customers. The Bank, generally, holds collateral and/or personal guarantees supporting these commitments. Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees.

The allowance for credit loss on off-balance sheet commitments were $336,000 and $267,000, respectively, at March 31, 2026 and December 31, 2025.

7.Securities

The amortized cost, gross unrealized gains and losses, approximate fair value, and allowance for credit losses of securities available for sale were as follows:

March 31, 2026
Gross Gross Allowance
Amortized Unrealized Unrealized for Credit Fair
Cost Gains Losses Losses Value
(In Thousands)
Available for Sale:
U.S. Treasury securities $ 22,853 $ 12 $ (111) $ - $ 22,754
U.S. Government agencies 8,000 12 (367) - 7,645
States and political subdivisions 106,601 - (15,660) - 90,941
Corporate obligations 19,116 166 (124) - 19,158
Mortgage-backed securities-
government sponsored entities 305,854 1,563 (16,731) - 290,686
Total debt securities $ 462,424 $ 1,753 $ (32,993) $ - $ 431,184

12

December 31, 2025
Gross Gross Allowance
Amortized Unrealized Unrealized for Credit Fair
Cost Gains Losses Losses Value
(In Thousands)
Available for Sale:
U.S. Treasury securities $ 20,834 $ 32 $ (9) $ - $ 20,857
U.S. Government agencies 8,000 26 (351) - 7,675
States and political subdivisions 107,164 1 (14,665) - 92,500
Corporate obligations 13,545 96 (90) 13,551
Mortgage-backed securities-
government sponsored entities 286,950 2,820 (15,571) - 274,199
Total debt securities $ 436,493 $ 2,975 $ (30,686) $ - $ 408,782

The following tables summarize debt securities available for sale in a loss position for which an allowance for credit losses has not been recorded, aggregated by security type and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

March 31, 2026
Less than 12 Months 12 Months or More Total
Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
U.S. Treasury securities $ 16,743 $ (111) $ - $ - $ 16,743 $ (111)
U.S. Government agencies - - 4,633 (367) 4,633 (367)
States and political subdivisions 1,661 (69) 86,700 (15,591) 88,361 (15,660)
Corporate obligations 9,564 (124) - - 9,564 (124)
Mortgage-backed securities-government sponsored entities 60,442 (854) 91,035 (15,877) 151,477 (16,731)
$ 88,410 $ (1,158) $ 182,368 $ (31,835) $ 270,778 $ (32,993)
December 31, 2025
--- --- --- --- --- --- --- --- --- --- --- --- ---
Less than 12 Months 12 Months or More Total
Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
U.S. Treasury securities $ 14,837 $ (9) $ - $ - $ 14,837 $ (9)
U.S. Government agencies - - 4,649 (351) 4,649 (351)
States and political subdivisions - - 89,462 (14,665) 89,462 (14,665)
Corporate obligations 5,556 (90) - - 5,556 (90)
Mortgage-backed securities-government sponsored entities 11,979 (62) 103,744 (15,509) 115,723 (15,571)
$ 32,372 $ (161) $ 197,855 $ (30,525) $ 230,227 $ (30,686)

At March 31, 2026, the Company had 20 debt securities in an unrealized loss position in the less than twelve months category and 174 debt securities in the twelve months or more category. In Management’s opinion the unrealized losses reflect changes in interest rates subsequent to the acquisition of specific securities. The Company concluded that the decline in the value of these securities was not indicative of a credit loss. The Company did not recognize any credit losses on these available for sale debt securities for the three months ended March 31, 2026 and 2025. The Company does not have the intent to sell the securities, and it is more likely than not that it will not have to sell the securities before recovery of its cost basis.

13

The amortized cost and fair value of debt securities as of March 31, 2026 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.

Available for Sale
Amortized Cost Fair Value
(In Thousands)
Due in one year or less $ 7,347 $ 7,352
Due after one year through five years 23,881 23,381
Due after five years through ten years 85,157 75,960
Due after ten years 40,185 33,805
156,570 140,498
Mortgage-backed securities-government sponsored entities 305,854 290,686
$ 462,424 $ 431,184

There were no sales of securities available for sale for the three months ended March 31, 2026 and 2025.

Securities with a carrying value of $303,176,000 and $264,698,000 at March 31, 2026 and December 31, 2025, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law.

8.Loans Receivable and Allowance for Credit Losses

Set forth below is selected data relating to the composition of the loan portfolio at the dates indicated (dollars in thousands):

March 31, 2026 December 31, 2025
Real Estate Loans:
Residential $ 409,440 18.3 % $ 352,342 19.0 %
Commercial 1,027,729 45.9 750,249 40.5
Agricultural 64,370 2.9 59,202 3.2
Construction 105,746 4.7 85,393 4.6
Commercial loans 248,070 11.1 229,849 12.4
Other agricultural loans 25,928 1.1 26,430 1.4
Consumer loans to individuals 358,032 16.0 350,410 18.9
Total loans 2,239,315 100.0 % 1,853,875 100.0 %
Deferred fees, net (658) (453)
Total loans receivable 2,238,657 1,853,422
Allowance for credit losses (24,350) (19,882)
Net loans receivable $ 2,214,307 $ 1,833,540

Foreclosed assets acquired in settlement of loans are carried at fair value less estimated costs to sell and are included in foreclosed real estate owned on the Consolidated Balance Sheets. As of March 31, 2026 and December 31, 2025, foreclosed real estate owned totaled $771,000 and $771,000, respectively. During the three months ended March 31, 2026, there were no additions to the foreclosed real estate category. As of March 31, 2026, the Company has initiated formal foreclosure proceedings on 7 properties classified as consumer residential mortgages with an aggregate carrying value of $403,000.

Management uses an eight point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first four categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans greater than 90 days past due are considered Substandard. Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as nonperformance, repossession, or death occurs to

14

raise awareness of a possible credit event. The Company’s Loan Review Department is responsible for the timely and accurate risk rating of the loans on an ongoing basis. Every credit which must be approved by Loan Committee or the Board of Directors is assigned a risk rating at time of consideration. Loan Review, in conjunction with a third-party consultant, also annually reviews all criticized credits and relationships of $1,500,000 and over to re-affirm risk ratings.

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of March 31, 2026 and December 31, 2025 (in thousands):

Current 31-60 Days Past Due 61-90 Days Past Due Greater than 90 Days Past Due and still accruing Non-accrual Total Past Due and Non-Accrual Total Loans
March 31, 2026
Real Estate loans
Residential $ 406,046 $ 1,653 $ 575 $ - $ 1,166 $ 3,394 $ 409,440
Commercial 1,020,336 1,288 217 - 5,888 7,393 1,027,729
Agricultural 62,226 592 - - 1,552 2,144 64,370
Construction 105,712 - - - 34 34 105,746
Commercial loans 247,384 548 - 15 123 686 248,070
Other agricultural loans 25,740 - - - 188 188 25,928
Consumer loans 355,966 483 249 - 1,334 2,066 358,032
Total $ 2,223,410 $ 4,564 $ 1,041 $ 15 $ 10,285 $ 15,905 $ 2,239,315
Current 31-60 Days Past Due 61-90 Days Past Due Greater than 90 Days Past Due and still accruing Non-accrual Total Past Due and Non-Accrual Total Loans
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2025
Real Estate loans
Residential $ 350,711 $ 438 $ 274 $ - $ 919 $ 1,631 $ 352,342
Commercial 740,901 4,850 434 - 4,064 9,348 750,249
Agricultural 59,073 - 83 46 - 129 59,202
Construction 85,359 - - - 34 34 85,393
Commercial loans 228,074 1,618 33 56 68 1,775 229,849
Other agricultural loans 25,589 772 69 - - 841 26,430
Consumer loans 348,115 862 281 21 1,131 2,295 350,410
Total $ 1,837,822 $ 8,540 $ 1,174 $ 123 $ 6,216 $ 16,053 $ 1,853,875

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the allowance for credit losses. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the allowance.

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The following table presents the allowance for credit losses by the classes of the loan portfolio:

(In thousands) Residential Real Estate Commercial Real Estate Agricultural Real Estate Construction Commercial Other Agricultural Consumer Total
Beginning balance, December 31, 2025 $ 2,271 $ 7,534 $ 395 $ 1,471 $ 3,011 $ 282 $ 4,918 $ 19,882
Acquisition adjustment 124 2,626 62 188 457 16 (9) 3,464
Charge offs - - - - (24) - (593) (617)
Recoveries 24 9 - - 49 - 34 116
(Release of) Provision for credit losses 661 (300) 136 62 202 46 698 1,505
Ending balance, March 31, 2026 $ 3,080 $ 9,869 $ 593 $ 1,721 $ 3,695 $ 344 $ 5,048 $ 24,350
(In thousands) Residential Real Estate Commercial Real Estate Agricultural Real Estate Construction Commercial Other Agricultural Consumer Total
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Beginning balance, December 31, 2024 $ 1,146 $ 11,406 $ 48 $ 884 $ 1,732 $ 162 $ 4,465 $ 19,843
Charge offs - (49) - - - (38) (329) (416)
Recoveries - - - - 54 - 38 92
(Release of) Provision for credit losses (131) (772) 33 101 186 45 1,461 923
Ending balance, March 31, 2025 $ 1,015 $ 10,585 $ 81 $ 985 $ 1,972 $ 169 $ 5,635 $ 20,442

During the three months ended March 31, 2026, the Company recorded a provision for credit losses related to loans totaling $1,505,000. The increase in provision was due primarily to an increase in the residential real estate portfolio provision of $661,000, an increase in the consumer portfolio provision of $698,000, and an increase of $146,000 in all other portfolios, net. Factors impacting the provision include changes in the cumulative loss rates applied to the respective loan pools due to loss activity being added or subtracted with the passage of time, and variances in Qualitative Factors and Economic Factors. In addition, the Company recorded a one-time adjustment of $3,464,000 as a result of the PB Bankshares acquisition.

The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Company’s historical loss experience. The Company chose to apply qualitative factors based on “quantitative metrics” which link the quantifiable metrics to historical changes in the qualitative factor categories. The Company also chose to apply economic projections to the model. A select group of economic indicators was utilized which was then correlated to the historical loss experience of the Company and its peers. Based on the correlation results, the economic adjustments are then weighted for relevancy and applied to the individual loan pools.

The following table presents the carrying value of loans on nonaccrual status and loans past due over 90 days still accruing interest (in thousands):

Nonaccrual Nonaccrual Loans Past Due
with no with Total Over 90 Days Total
ACL ACL Nonaccrual Still Accruing Nonperforming
March 31, 2026
Real Estate loans
Residential $ 1,166 $ - $ 1,166 $ - $ 1,166
Commercial 5,869 19 5,888 - 5,888
Agricultural 1,552 - 1,552 - 1,552
Construction 34 - 34 - 34
Commercial loans 123 - 123 15 138
Other agricultural loans 188 - 188 - 188
Consumer loans 265 1,069 1,334 - 1,334
Total $ 9,197 $ 1,088 $ 10,285 $ 15 $ 10,300

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Nonaccrual Nonaccrual Loans Past Due
with no with Total Over 90 Days Total
ACL ACL Nonaccrual Still Accruing Nonperforming
December 31, 2025
Real Estate loans
Residential $ 919 $ - $ 919 $ - $ 919
Commercial 4,045 19 4,064 - 4,064
Agricultural - - - 46 46
Construction 34 - 34 - 34
Commercial loans 68 - 68 56 124
Other agricultural loans - - - - -
Consumer loans 323 808 1,131 21 1,152
Total $ 5,389 $ 827 $ 6,216 $ 123 $ 6,339

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Based on the most recent analysis performed, the following table presents the recorded investment in non-homogenous pools by internal risk rating systems (in thousands):

Revolving Revolving
Term Loans Amortized Costs Basis by Origination Year Loans Loans
Amortized Converted
March 31, 2026 2026 2025 2024 2023 2022 Prior Cost Basis to Term Total
Commercial real estate
Risk Rating
Pass $ 30,922 $ 169,684 $ 129,238 $ 111,190 $ 159,159 $ 382,044 $ 28,018 $ - $ 1,010,255
Special Mention - 50 - 630 - 5,276 74 - 6,030
Substandard - - 135 - 204 10,705 400 - 11,444
Doubtful - - - - - - - - -
Total $ 30,922 $ 169,734 $ 129,373 $ 111,820 $ 159,363 $ 398,025 $ 28,492 $ - $ 1,027,729
Commercial real estate
Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ -
Real Estate - Agriculture
Risk Rating
Pass $ 648 $ 3,066 $ 4,033 $ 3,264 $ 10,693 $ 35,465 $ 670 $ - $ 57,839
Special Mention - 152 614 - - 638 - - 1,404
Substandard 3,557 - 565 - - 987 18 - 5,127
Doubtful - - - - - - - - -
Total $ 4,205 $ 3,218 $ 5,212 $ 3,264 $ 10,693 $ 37,090 $ 688 $ - $ 64,370
Real Estate - Agriculture
Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ -
Commercial loans
Risk Rating
Pass $ 9,198 $ 55,909 $ 43,015 $ 22,618 $ 26,536 $ 27,138 $ 59,085 $ - $ 243,499
Special Mention - 17 123 575 21 590 12 - 1,338
Substandard - 34 - 599 299 1,226 1,075 - 3,233
Doubtful - - - - - - - - -
Total $ 9,198 $ 55,960 $ 43,138 $ 23,792 $ 26,856 $ 28,954 $ 60,172 $ - $ 248,070
Commercial loans
Current period gross charge-offs $ - $ - $ 6 $ 18 $ - $ - $ - $ - $ 24

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Other agricultural loans
Risk Rating
Pass $ 375 $ 2,875 $ 2,525 $ 1,238 $ 2,108 $ 5,033 $ 7,846 $ - $ 22,000
Special Mention - - - - - 76 - - 76
Substandard 2,181 - 196 - - - 1,475 - 3,852
Doubtful - - - - - - - - -
Total $ 2,556 $ 2,875 $ 2,721 $ 1,238 $ 2,108 $ 5,109 $ 9,321 $ - $ 25,928
Other agricultural loans
Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ -
Total
Risk Rating
Pass $ 41,143 $ 231,534 $ 178,811 $ 138,310 $ 198,496 $ 449,680 $ 95,619 $ - $ 1,333,593
Special Mention - 219 737 1,205 21 6,580 86 - 8,848
Substandard 5,738 34 896 599 503 12,918 2,968 - 23,656
Doubtful - - - - - - - - -
Total $ 46,881 $ 231,787 $ 180,444 $ 140,114 $ 199,020 $ 469,178 $ 98,673 $ - $ 1,366,097

‎

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|  |  |  |  |  |  |  |  |  |  |  |  |  |  | Revolving |  | Revolving |  |  |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Term Loans Amortized Costs Basis by Origination Year | | | | | | | | | | | | | Loans | | Loans | | | | | | | | | | | | | | | | | | Amortized | | Converted | | | | December 31, 2025 | | 2025 | | 2024 | | 2023 | | 2022 | | 2021 | | Prior | | Cost Basis | | to Term | | Total | | Commercial real estate | | | | | | | | | | | | | | | | | | | | Risk Rating | | | | | | | | | | | | | | | | | | | | Pass | $ | 114,399 | $ | 98,460 | $ | 67,351 | $ | 114,785 | $ | 84,564 | $ | 231,547 | $ | 20,653 | $ | - | $ | 731,759 | | Special Mention | | 50 | | - | | 630 | | 204 | | 2,493 | | 4,335 | | 198 | | - | | 7,910 | | Substandard | | - | | 135 | | - | | - | | 2,413 | | 7,632 | | 400 | | - | | 10,580 | | Doubtful | | - | | - | | - | | - | | - | | - | | - | | - | | - | | Total | $ | 114,449 | $ | 98,595 | $ | 67,981 | $ | 114,989 | $ | 89,470 | $ | 243,514 | $ | 21,251 | $ | - | $ | 750,249 | | Commercial real estate | | | | | | | | | | | | | | | | | | | | Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 63 | $ | - | $ | - | $ | 63 | | Real Estate - Agriculture | | | | | | | | | | | | | | | | | | | | Risk Rating | | | | | | | | | | | | | | | | | | | | Pass | $ | 3,016 | $ | 4,027 | $ | 3,287 | $ | 10,789 | $ | 3,536 | $ | 30,851 | $ | 361 | $ | - | $ | 55,867 | | Special Mention | | 152 | | 1,479 | | - | | - | | - | | 1,684 | | - | | - | | 3,315 | | Substandard | | - | | - | | - | | - | | - | | - | | 20 | | - | | 20 | | Doubtful | | - | | - | | - | | - | | - | | - | | - | | - | | - | | Total | $ | 3,168 | $ | 5,506 | $ | 3,287 | $ | 10,789 | $ | 3,536 | $ | 32,535 | $ | 381 | $ | - | $ | 59,202 | | Real Estate - Agriculture | | | | | | | | | | | | | | | | | | | | Current period gross charge-offs | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | | Commercial loans | | | | | | | | | | | | | | | | | | | | Risk Rating | | | | | | | | | | | | | | | | | | | | Pass | $ | 58,956 | $ | 40,670 | $ | 23,869 | $ | 24,385 | $ | 13,051 | $ | 18,356 | $ | 46,495 | $ | - | $ | 225,782 | | Special Mention | | 35 | | - | | 578 | | 22 | | 109 | | 259 | | 88 | | - | | 1,091 | | Substandard | | - | | 6 | | 309 | | 317 | | 550 | | 794 | | 1,000 | | - | | 2,976 | | Doubtful | | - | | - | | - | | - | | - | | - | | - | | - | | - | | Total | $ | 58,991 | $ | 40,676 | $ | 24,756 | $ | 24,724 | $ | 13,710 | $ | 19,409 | $ | 47,583 | $ | - | $ | 229,849 | | Commercial loans | | | | | | | | | | | | | | | | | | | | Current period gross charge-offs | $ | - | $ | - | $ | - | $ | 100 | $ | - | $ | - | $ | - | $ | - | $ | 100 |

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Other agricultural loans
Risk Rating
Pass $ 3,291 $ 2,706 $ 1,320 $ 2,330 $ 1,995 $ 3,423 $ 7,453 $ - $ 22,518
Special Mention - 367 - - - 1,281 789 - 2,437
Substandard - - - - - - 1,475 - 1,475
Doubtful - - - - - - - - -
Total $ 3,291 $ 3,073 $ 1,320 $ 2,330 $ 1,995 $ 4,704 $ 9,717 $ - $ 26,430
Other agricultural loans
Current period gross charge-offs $ - $ - $ - $ - $ - $ 48 $ - $ - $ 48
Total
Risk Rating
Pass $ 179,662 $ 145,863 $ 95,827 $ 152,289 $ 103,146 $ 284,177 $ 74,962 $ - $ 1,035,926
Special Mention 237 1,846 1,208 226 2,602 7,559 1,075 - 14,753
Substandard - 141 309 317 2,963 8,426 2,895 - 15,051
Doubtful - - - - - - - - -
Total $ 179,899 $ 147,850 $ 97,344 $ 152,832 $ 108,711 $ 300,162 $ 78,932 $ - $ 1,065,730

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The Company monitors the credit risk profile by payment activity for residential and consumer loan classes. Loans past due over 90 days and loans on nonaccrual status are considered nonperforming. Nonperforming loans are reviewed monthly. The following table presents the carrying value of residential and consumer loans based on payment activity (in thousands):

Revolving Revolving
Term Loans Amortized Costs Basis by Origination Year Loans Loans
Amortized Converted
March 31, 2026 2026 2025 2024 2023 2022 Prior Cost Basis to Term Total
Residential real estate
Payment Performance
Performing $ 6,928 $ 28,797 $ 44,379 $ 40,025 $ 59,058 $ 183,293 $ 45,794 $ - $ 408,274
Nonperforming - - - 125 395 589 57 - 1,166
Total $ 6,928 $ 28,797 $ 44,379 $ 40,150 $ 59,453 $ 183,882 $ 45,851 $ - $ 409,440
Residential real estate
Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ -
Construction
Payment Performance
Performing $ 17,487 $ 43,125 $ 22,720 $ 17,890 $ 638 $ 335 $ 3,517 $ - $ 105,712
Nonperforming - - - 34 - - - - 34
Total $ 17,487 $ 43,125 $ 22,720 $ 17,924 $ 638 $ 335 $ 3,517 $ - $ 105,746
Construction
Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ -
Consumer loans to individuals
Payment Performance
Performing $ 38,333 $ 128,578 $ 85,976 $ 54,667 $ 29,013 $ 18,261 $ 1,870 $ - $ 356,698
Nonperforming - 161 352 263 404 154 - - 1,334
Total $ 38,333 $ 128,739 $ 86,328 $ 54,930 $ 29,417 $ 18,415 $ 1,870 $ - $ 358,032
Consumer loans to individuals
Current period gross charge-offs $ 65 $ 56 $ 185 $ 102 $ 143 $ 42 $ - $ - $ 593
Total
Payment Performance
Performing $ 62,748 $ 200,500 $ 153,075 $ 112,582 $ 88,709 $ 201,889 $ 51,181 $ - $ 870,684
Nonperforming - 161 352 422 799 743 57 - 2,534
Total $ 62,748 $ 200,661 $ 153,427 $ 113,004 $ 89,508 $ 202,632 $ 51,238 $ - $ 873,218

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Revolving Revolving
Term Loans Amortized Costs Basis by Origination Year Loans Loans
Amortized Converted
December 31, 2025 2025 2024 2023 2022 2021 Prior Cost Basis to Term Total
Residential real estate
Payment Performance
Performing $ 28,385 $ 41,869 $ 38,305 $ 54,474 $ 47,475 $ 105,711 $ 35,204 $ - $ 351,423
Nonperforming - - 125 147 170 420 57 - 919
Total $ 28,385 $ 41,869 $ 38,430 $ 54,621 $ 47,645 $ 106,131 $ 35,261 $ - $ 352,342
Residential real estate
Current period gross charge-offs $ - $ - $ - $ - $ - $ 63 $ - $ - $ 63
Construction
Payment Performance
Performing $ 37,511 $ 26,381 $ 17,070 $ 656 $ 289 $ 91 $ 3,361 $ - $ 85,359
Nonperforming - - - 34 - - - - 34
Total $ 37,511 $ 26,381 $ 17,070 $ 690 $ 289 $ 91 $ 3,361 $ - $ 85,393
Construction
Current period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ -
Consumer loans to individuals
Payment Performance
Performing $ 137,403 $ 94,951 $ 61,651 $ 33,145 $ 9,385 $ 11,363 $ 1,360 $ - $ 349,258
Nonperforming 54 285 311 344 61 97 - - 1,152
Total $ 137,457 $ 95,236 $ 61,962 $ 33,489 $ 9,446 $ 11,460 $ 1,360 $ - $ 350,410
Consumer loans to individuals
Current period gross charge-offs $ 26 $ 458 $ 685 $ 419 $ 151 $ 94 $ - $ - $ 1,833
Total
Payment Performance
Performing $ 203,299 $ 163,201 $ 117,026 $ 88,275 $ 57,149 $ 117,165 $ 39,925 $ - $ 786,040
Nonperforming 54 285 436 525 231 517 57 - 2,105
Total $ 203,353 $ 163,486 $ 117,462 $ 88,800 $ 57,380 $ 117,682 $ 39,982 $ - $ 788,145

Occasionally, the Bank modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, and other-than-insignificant payment delay or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

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In some cases, the Bank provides multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. During the three months ended March 31, 2026, there were modifications made to borrowers experiencing financial difficulty consisting of 11 loan relationships. The following table presents modifications made to borrowers experiencing financial difficulty:

Significant Payment Delay
Amortized Cost Basis at March 31, 2026 % of Total Class of Financing Receivable Financial Effect
(in thousands)
Commercial real estate loans $ 718 0.07 % Deferred principal for 4-8 months
Commercial loans 787 0.32 Deferred principal for 7-12 months
Consumer loans to individuals 7 — Deferred principal for 5 months
Total $ 1,512
Term Extension
Amortized Cost Basis at March 31, 2026 % of Total Class of Financing Receivable Financial Effect
(in thousands)
Commercial real estate loans $ 311 0.03 % Added a weighted-average 5.8 years to the life of loans
Agricultural real estate loans 3,603 5.60 Added a weighted-average 19.8 years to the life of loans
Commercial loans 5 — Added a weighted-average 1.0 years to the life of loans
Other agricultural loans 2,181 8.41 Added a weighted-average 10.0 years to the life of loans
Total $ 6,100
Combination -Significant Payment Delay and Term Extension
Amortized Cost Basis at March 31, 2026 % of Total Class of Financing Receivable Financial Effect
Commercial real estate loans $ 535 0.05 % Deferred principal for 14 months and extended term by 14 months
Total $ 535

Of the modifications made to borrowers experiencing financial difficulty, there were none that had a payment default during the period.

The Company’s primary business activity as of March 31, 2026 was with customers located in northeastern and southeastern Pennsylvania, and the New York counties of Delaware, Sullivan, Ontario, Otsego and Yates. Accordingly, the Company has extended credit primarily to commercial entities and individuals in this area whose ability to repay their loans is influenced by the region’s economy.

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As of March 31, 2026, the Company considered its concentration of credit risk to be acceptable. The highest concentrations are in commercial rentals with $268.3 million of loans outstanding, or 12.0% of total loans outstanding, and hotels/motels with loans outstanding of $184.1 million, or 8.2% of loans outstanding. For the three months ended March 31, 2026, the Company recognized charge offs of $0 on commercial rentals and $0 on hotels/motels. The following table presents additional details regarding the Company’s largest loan concentrations by industry as of March 31, 2026 (in thousands):

Account Type Outstanding as of March 31, 2026 Percent of Loans as of March 31, 2026
Commercial Rentals $ 268,295 11.98 %
Hotels/Motels 184,123 8.22
Residential Rentals 169,214 7.56
Fuel/Gas Stations 50,840 2.27
Builders/Contractors 46,705 2.09
Dairy Cattle/Milk Product 42,687 1.91
Resorts 39,846 1.78
Government Support 32,254 1.44
Mobile Home Park 30,321 1.35
Camps 28,256 1.26
Wineries 19,966 0.89
Account Type Outstanding as of December 31, 2025 Percent of Loans as of March 31, 2026
Commercial Rentals $ 178,684 9.68 %
Hotels/Motels 125,089 6.78
Residential Rentals 116,639 6.32
Fuel/Gas Stations 50,337 2.73
Dairy Cattle/Milk Product 42,777 2.32
Resorts 39,435 2.14
Builders/Contractors 36,650 1.99
Government Support 29,919 1.62
Camps 22,998 1.25
Mobile Home Park 19,967 1.08
Wineries 19,935 1.08

9.          Fair Value of Assets and Liabilities

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In accordance with fair value accounting guidance, the Company measures, records, and reports various types of assets and liabilities at fair value on either a recurring or non-recurring basis in the Consolidated Financial Statements. Those assets and liabilities are presented in the sections entitled “Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis” and “Assets and Liabilities Required to be Measured and Reported at Fair Value on a Non-Recurring Basis”. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

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Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The methods of determining the fair value of assets and liabilities presented in this note are consistent with our methodologies disclosed in Note 16 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2026 and December 31, 2025 are as follows:

Fair Value Measurement Using
Reporting Date
Description Total Level 1 Level 2 Level 3
March 31, 2026 (In thousands)
ASSETS
Available for Sale:
U.S. Treasury securities $ 22,754 $ 22,754 $ - $ -
U.S. Government agencies 7,645 - 7,645 -
States and political subdivisions 90,941 - 90,941 -
Corporate obligations 19,158 - 19,158 -
Mortgage-backed securities-government
sponsored entities 290,686 - 290,686 -
Interest rate derivatives 776 - 776 -
LIABILITIES
Interest rate derivatives 776 - 776 -
Description Total Level 1 Level 2 Level 3
December 31, 2025 (In thousands)
ASSETS
Available for Sale:
U.S. Treasury securities $ 20,857 $ 20,857 $ - $ -
U.S. Government agencies 7,675 - 7,675 -
States and political subdivisions 92,500 - 92,500 -
Corporate obligations 13,551 - 13,551 -
Mortgage-backed securities-government
sponsored entities 274,199 - 274,199 -
Interest rate derivatives 771 - 771 -
LIABILITIES
Interest rate derivatives 771 - 771 -

Securities:

The fair value of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3). In the absence of such evidence, management’s best estimate is used. Management’s best estimate consists of both internal and external support on certain Level 3 investments. Internal cash flow models using a present value formula that includes assumptions market participants would use along

26

with indicative exit pricing obtained from broker/dealers (where available) are used to support fair values of certain Level 3 investments, if applicable.

Interest Rate Swaps:

The fair value of interest rate swaps is based upon the present value of the expected future cash flows using the Secured Overnight Financing Rate (“SOFR”) swap curve, the basis for the underlying interest rate. To price interest rate swaps, cash flows are first projected for each payment date using the fixed rate for the fixed side of the swap and the forward rates for the floating side of the swap. These swap cash flows are then discounted to time zero using SOFR zero-coupon interest rates. The sum of the present value of both legs is the fair market value of the interest rate swap. These valuations have been derived from our third party vendor’s proprietary models rather than actual market quotations. The proprietary models are based upon financial principles and assumptions that we believe to be reasonable.

Assets and Liabilities Required to be Measured and Reported at Fair Value on a Non-Recurring Basis

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2026 and December 31, 2025 are as follows:

Fair Value Measurement Using Reporting Date
(In thousands)
Description Total Level 1 Level 2 Level 3
March 31, 2026
Individually analyzed loans held for investment $ 11,618 $ - $ - $ 11,618
Foreclosed Real Estate Owned 771 - - 771
December 31, 2025
Individually analyzed loans held for investment $ 7,923 $ - $ - $ 7,923
Foreclosed Real Estate Owned 771 - - 771

Individually analyzed loans held for investment:

The Company measures impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the lowest level of input that is significant to the fair value measurements.

As of March 31,2026, the fair value investment in individually analyzed loans totaled $11,618,000, which included 64 loan relationships with a carrying value of $8,858,000 that did not require a specific allowance for credit loss since either the estimated realizable value of the collateral or the discounted cash flows exceeded the recorded investment in the loan. As of March 31, 2026, the Company has recognized charge-offs against the allowance for credit losses on these individually analyzed loans in the amount of $18,000. As of March 31, 2026, the fair value investment in individually analyzed loans included 49 loan relationships with a carrying value of $3,397,000 that required a valuation allowance of $637,000 since the estimated realizable value of the collateral did not support the recorded investment in the loan. As of March 31, 2026, the Company has recognized charge-offs against the allowance for credit losses on these individually analyzed loans in the amount of $0 over the life of the loan.

As of December 31, 2025, the fair value investment in individually analyzed loans totaled $7,923,000, which included 51 loan relationships with a carrying value of $5,492,000 that did not require a specific allowance for credit loss since either the estimated realizable value of the collateral or the discounted cash flows exceeded the recorded investment in the loan. As of December 31, 2025, the Company has recognized charge-offs against the allowance for credit losses on these individually analyzed loans in the amount of $0 over the life of the loans. As of December 31, 2025, the fair value investment in individually analyzed loans included 40 loan relationships with a carrying value of $2,976,000 that required a valuation allowance of $293,000 since the estimated realizable value of the collateral did not support the recorded investment in the loan. As of December 31, 2025, the Company has recognized charge-offs against the allowance for credit losses on these individually analyzed loans in the amount of $0 over the life of the loan.

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The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands) Fair Value Estimate Valuation Techniques Unobservable Input Range (Weighted Average)
March 31, 2026
Individually analyzed loans held for investment $ 11,618 Appraisal of collateral(1) Appraisal adjustments(2) 0%-100.0% (9.06%)
Foreclosed real estate owned $ 771 Appraisal of collateral(1) Liquidation Expenses(2) 15.7% (15.7%)
Quantitative Information about Level 3 Fair Value Measurements
--- --- --- --- --- ---
(dollars in thousands) Fair Value Estimate Valuation Techniques Unobservable Input Range (Weighted Average)
December 31, 2025
Individually analyzed loans held for investment $ 7,923 Appraisal of collateral(1) Appraisal adjustments(2) 0%-20.0% (7.51%)
Foreclosed real estate owned $ 771 Appraisal of collateral(1) Liquidation Expenses(2) 11.3% (11.3%)

(1)Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable, less any associated allowance.

(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Assets and Liabilities Not Required to be Measured or Reported at Fair Value

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at March 31, 2026 and December 31, 2025.

Loans receivable (carried at cost):

The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Mortgage servicing rights (carried at lower of cost or fair value)

The Company utilizes a third party provider to estimate the fair value of certain loan servicing rights. Fair value for the purpose of this measurement is defined as the amount at which the asset could be exchanged in a current transaction between willing parties, other than in a forced liquidation.

Deposit liabilities (carried at cost):

The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

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Other borrowings (carried at cost):

Fair values of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a fair value that is deemed to represent the transfer price if the liability were assumed by a third party.

The estimated fair values of the Bank’s financial instruments not required to be measured or reported at fair value were as follows at March 31, 2026 and December 31, 2025. (In thousands)

Fair Value Measurements at March 31, 2026
Quoted Prices in Active<br>‎Markets for Identical Assets Significant Other Observable<br>‎Inputs Significant Unobservable Inputs
Carrying Amount Fair Value Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents (1) $ 102,573 $ 102,573 $ 102,573 $ - $ -
Loans receivable, net 2,214,307 2,221,638 - - 2,221,638
Mortgage servicing rights 240 673 - - 673
Regulatory stock (1) 7,161 7,161 7,161 - -
Bank owned life insurance (1) 55,078 55,078 55,078 - -
Accrued interest receivable (1) 10,815 10,815 10,815 - -
Financial liabilities:
Deposits 2,506,698 2,504,414 1,443,157 - 1,061,257
Short-term borrowings (1) - - - - -
Other borrowings 88,268 88,244 - - 88,244
Accrued interest payable (1) 9,692 9,692 9,692 - -
Fair Value Measurements at December 31, 2025
--- --- --- --- --- --- --- --- --- --- ---
Carrying Amount Fair Value Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents (1) $ 44,436 $ 44,436 $ 44,436 $ - $ -
Loans receivable, net 1,833,540 1,841,753 - - 1,841,753
Mortgage servicing rights 238 673 - - 673
Regulatory stock (1) 6,623 6,623 6,623 - -
Bank owned life insurance (1) 46,089 46,089 46,089 - -
Accrued interest receivable (1) 9,250 9,250 9,250 - -
Financial liabilities:
Deposits 2,078,645 2,076,705 1,213,279 - 863,426
Short-term borrowings (1) 14,714 14,714 14,714 - -
Other borrowings 59,419 59,635 - - 59,635
Accrued interest payable (1) 12,138 12,138 12,138 - -

(1)This financial instrument is carried at cost, which approximates the fair value of the instrument.

10.Interest Rate Swaps

The Company enters into interest rate swaps that allow our commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement. Under these agreements, the Company enters into a variable-rate loan agreement with a customer in addition to an interest rate swap agreement, which serves to effectively swap the customer’s variable-rate into a fixed-rate. The Company then enters into a corresponding swap agreement with a third party in order to economically hedge its exposure through the customer agreement. The interest rate swaps with both the customers and third parties are not designated as hedges under FASB ASC 815 and are not marked to market through earnings. As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by FASB ASC 820. There was no effect on earnings in any periods presented. At March 31, 2026 and December 31,

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2025, based upon the swap contract values, the Company pledged cash in the amount of $350,000 as collateral for its interest rate swaps `with a third-party financial institution. The fair value of the swaps as of March 31, 2026 and December 31, 2025 was $776,000 and $771,000, respectively.

Summary information regarding these derivatives is presented below

(Amounts in thousands)
Notional Amount Fair Value
March 31, 2026 December 31, 2025 Interest Rate Paid Interest Rate Received March 31, 2026 December 31, 2025
Customer interest rate swap
Maturing November, 2030 $ 5,266 $ 5,366 Term SOFR + Margin Fixed $ 475 $ 471
Maturing December, 2030 3,400 3,474 Term SOFR + Margin Fixed 301 300
Total $ 8,666 $ 8,840 $ 776 $ 771
Third party interest rate swap
Maturing November, 2030 $ 5,266 $ 5,366 Fixed Term SOFR + Margin $ 475 $ 471
Maturing December, 2030 3,400 3,474 Fixed Term SOFR + Margin 301 300
Total $ 8,666 $ 8,840 $ 776 $ 771

The following table presents the fair values of derivative instruments in the Consolidated Balance Sheet.

(Amounts in thousands)
Assets Liabilities
Balance Sheet Location Fair Value Balance Sheet Location Fair Value
March 31, 2026
Interest rate derivatives Other assets $ 776 Other liabilities $ 776
December 31, 2025
Interest rate derivatives Other assets 771 Other liabilities 771

11.New and Recently Adopted Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures. This ASU requires disclosure in the notes to financial statements of specified information about certain costs and expenses. Specific disclosures are required for (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas producing activities. The amendments in this update do not change or remove current expense disclosure requirements. However, the amendments affect where this information appears in the notes to financial statements because entities are required to include certain current disclosures in the same tabular format disclosure as the other disaggregation requirements in the amendments. The amendments in ASU 2024-03 apply only to public business entities and are effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this new guidance on its financial statements.

In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which revises the effective date of ASU 2024-03 (on disclosures about disaggregation of income statement expenses) “to clarify that all public business entities are required to adopt the guidance in annual reporting periods

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beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.” Entities within the ASU’s scope are permitted to early adopt the ASU. The Company is currently evaluating the impact of this new guidance on its financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software that is developed using an incremental and iterative method (e.g., agile method). The guidance removes all references to project stages in ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. The guidance specifies that the property, plant, and equipment disclosure requirements under ASC 360-10 apply to capitalized software costs accounted for under ASC 350-40, regardless of how those costs are presented in the financial statements. The guidance, which applies to all entities, is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Entities may apply the guidance using a prospective, retrospective, or modified transition approach. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance on its financial statements.

In 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract, which (1) refines the scope of the guidance on derivatives in ASC 815 (Issue 1) and (2) clarifies the guidance on share-based payments from a customer in ASC 606 (Issue 2). The ASU is intended to address concerns about the application of derivative accounting to contracts that have features based on the operations or activities of one of the parties to the contract and to reduce diversity in the accounting for share-based payments in revenue contracts. The ASU adds a new scope exception for certain contracts that are not traded on an exchange and have an underlying that is based on operations or activities specific to one of the parties to the contract. This ASU clarifies that when an entity has a right to receive a share-based payment from its customer in exchange for the transfer of goods or services, the share-based payment should be accounted for as noncash consideration within the scope of ASC 606. ASU 2025-07 is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance on its financial statements.

In November 2025, the FASB issued ASU 2025-08, Financial Instruments – Credit Losses (Topic 326), which amends the guidance in Topic 326 to expand the population of acquired financial assets subject to the gross-up approach to include loans (excluding credit cards) that are acquired without credit deterioration and deemed “seasoned.” All non-purchased credit deteriorated loans (excluding credit cards) that are acquired in a business combination are deemed seasoned. Other non-purchased credit deteriorated loans (excluding credit cards) are considered to be seasoned if they were purchased at least 90 days after origination and the acquirer was not involved in the origination of the loans. ASU 2025-08 should be applied prospectively and is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods. Early adoption is permitted.  The Company early adopted ASU 2025-08.

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815), which amends certain aspects of the hedge accounting guidance in ASC 815 to more closely align hedge accounting with the economics of an entity’s risk management activities. The amendments, among other things, provide more flexibility for cash flow hedges and hedging of raw materials and other nonfinancial assets, as well as simplify hedge accounting for flexible debt and foreign currency debt. ASU 2025-09 should be applied prospectively for public business entities for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods. For all other entities, the ASU is to be applied prospectively and is effective for fiscal years beginning after December 15, 2027, including interim reporting periods within those annual reporting periods. Early adoption is permitted.  The Company is currently evaluating the impact of this new guidance on its financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, to clarify interim disclosure requirements, the form and content of interim financial statements, and when ASC Topic 270 applies. The amendments in the ASU provide a list of specific interim disclosures that are required by generally accepted accounting principles (GAAP), which, together with the disclosure principle, represent the complete population of required disclosures in interim reporting periods. The intent of the disclosure principle is to help entities determine whether any disclosures not specified in Topic 270 should be provided in interim reporting periods. ASU 2025-11 may be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements for public business entities for interim periods in fiscal years beginning after December 15, 2027, and all other entities in interim periods in fiscal years beginning after December 15, 2028.  The Company is currently evaluating the impact of this new guidance on its financial statements.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements, to address 33 issues that amend the Codification to (1) clarify, (2) correct errors, or (3) make minor improvements that affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. The amendments make the Codification easier

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to understand and apply. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact of this new guidance on its financial statements.

12.Segment Reporting

ASC Topic 280 – Segment Reporting identifies operating segments as components of an enterprise which are evaluated regularly by the Corporation’s Chief Operating Decision Maker, our Chief Executive Officer, in deciding how to develop strategy, allocate resources and assess performance.

The Company acts as an independent community financial services provider and offers traditional banking related financial services to individual, business and government customers. Through its Community Office and automated teller machine network, the Company offers a full array of commercial and retail financial services, including the taking of time, savings and demand deposits; the making of commercial, consumer and mortgage loans; and the providing of safe deposit services. The Company also performs personal, corporate, pension and fiduciary services through its Trust Department.

Operating segments are aggregated into one segment, as operating results for all segments are similar. Accordingly, all the financial service operations are considered by management to be aggregated in one reportable operating segment, Community Banking.

The Chief Operating Decision Maker assesses performance and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income. Net income is used to monitor budget versus actual results.

The Chief Operating Decision Maker uses revenue streams and significant expenses to assess performance and evaluate return on assets and return on equity. The chief operating decision maker uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis and budget to actual results are used in assessing performance and in establishing compensation.

The accounting policies for the Community Banking segment are the same as those of our consolidated entity, which are described in Note 2 in the Annual Report filed on Form 10-K. Information utilized in the performance assessment by the Chief Operating Decision Maker is consistent with the level of aggregation disclosed in the Consolidated Statement of Income. The measure of segment assets is reported on the balance sheet as total consolidated assets.

13.Acquisition of PB Bankshares, Inc. and Presence Bank

On January 5, 2026, the Company and the Bank completed its previously announced acquisition of PB Bankshares, Inc. ("PB Bankshares") and its subsidiary bank, Presence Bank, pursuant to the terms of the Agreement and Plan of Merger (the "Merger Agreement") dated as of July 7, 2025. Under the terms of the Merger Agreement, PB Bankshares merged with and into the Company, with the Company as the surviving entity (“Merger”), and immediately following the Merger, Presence Bank merged with and into the Bank, with the Bank as the surviving bank.

Presence Bank conducted its business from offices and two loan production offices in Chester, Lancaster and Dauphin Counties, Pennsylvania. Presence Bank’s primary market area for deposits includes the communities in which it maintains banking offices, while its primary lending market area is broader and includes customers in Lebanon and Cumberland Counties in Pennsylvania.

Pursuant to the Merger Agreement, 80% of PB Bankshares’ common stock were converted into Company common stock while the remaining 20% were exchanged for cash. PB Bankshares’ stockholders had the option to elect to receive either 0.7850 shares of Company common stock or $19.75 in cash for each common share of PB Bankshares they own. The election was subject to proration to ensure that, in the aggregate, 80% of the transaction consideration were paid in the form of Company common stock. In accordance with the Merger Agreement, the Presence Bank ESOP was terminated shortly after the closing date and of the transaction (the “ESOP Termination Date”) and the Company paid off the ESOP loan via the return of common stock issued and recorded as treasury shares.

In addition per the Merger Agreement, each option to acquire shares of PB Common Stock that was outstanding and unexercised became vested and were converted into the right to receive from Norwood Financial a cash payment equal to the product of (i) the number of shares of PB Bankshares Common Stock subject to the PB Bankshares Stock Option, multiplied by (ii) the amount by which the Cash Consideration (the “Option Payment Amount”) exceeds the exercise price of such PB Bankshares Stock Option. To follow is a summary of the purchase price for the merger which totaled $60.0 million.

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The following table summarizes the purchase of PB Bankshares, Inc. as of January 5, 2026:

(Dollars in Thousands, Except Per Share Data)
Purchase Price Consideration - Common Stock (excluding ESOP Loan Settlement)
PB Bankshares, Inc. common shares settled for common stock 2,648,186
PB Bankshares, Inc. common shares to be exchanged for stock consideration - 80% of adjusted shares outstanding 2,118,549
Exchange Ratio 0.7850
Norwood Financial Corp. shares to be issued in the merger and excludes fractional shares 1,662,933
Fair Value price per share of Norwood Financial Corp. common stock $ 28.00
Fair value of Purchase Price Consideration for Common Stock Issued $ 46,562
Shares used to terminate ESOP Loan - recorded as Norwood Treasury Shares
ESOP Loan Balance 2,296
Norwood Financial Corp. closing stock price $ 28.28
Shares of Norwood Financial Corp., Common Stock to pay off ESOP Loan (81,201)
Impact of ESOP Loan Settlement (2,296)
Total Fair Value of Purchase Price Consideration for Common Stock 44,266
Fair Value of Purchase Price Cash Consideration
PB Bankshares, Inc. common shares settled for cash 529,637
Purchase price assigned to cash consideration $ 19.75
Cash consideration for Common Stock 10,460
Cash in lieu of fractional shares 4
Purchase Price Consideration in Cash for PB Bankshares, Inc.'s Outstanding Stock Options
PB Bankshares, Inc. stock options outstanding 169,144
Cash price to pay out options $ 19.75
Weighted average strike price for options $ 12.28
In-the-money value for PB Bankshares, Inc. stock $ 7.47
Purchase price assigned to PB Bankshares, Inc. stock 1,264
Total Purchase Price Assigned to Cash Consideration 11,728
Total Purchase Price for Accounting Purposes 55,994

Pursuant to accounting standards, the Company assigned a fair value to the assets acquired and liabilities assumed of PB Bankshares. ASC 820 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The assets acquired and liabilities assumed in the acquisition of PB Bankshares were recorded at their estimated fair values based on management’s best estimates using information available at the date of the acquisition and are subject to adjustment for up to one year after the closing date of the acquisition. While the fair values are not expected to be materially different from the estimates, any material adjustments to the estimates will be reflected, retroactively, as of the date of the acquisition. The items most susceptible to adjustment are the fair value adjustments on loans, core deposit intangible and the deferred income tax assets resulting from the acquisition. The Company is continuing to finalize the fair values of all aspects of the acquisition.

Goodwill represents consideration transferred in excess of the fair value of the net assets acquired. The goodwill resulting from the acquisition represents the value expected from the expansion of the Company's market and enhancement of operations and efficiencies. Goodwill acquired in the acquisition is not deductible for tax purposes.

The following tables provides a summary of the consideration transferred and the fair value of the assets acquired, and liabilities assumed as of the date of the Merger, (dollars in thousands) and as a result of the Merger, the Corporation recorded goodwill totaling $7.1 million at January 5, 2026.

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(Dollars in Thousands)
Total Purchase Price For Accounting Purposes $ 55,994
Recognized amounts of identifiable assets acquired and liabilities assumed, at fair value
Cash and cash equivalents $ 40,979
Federal funds 27,769
Securities, available for sale 18,787
Loans Gross 345,769
Allowance for credit losses (3,464)
Loans, net of allowance 342,305
Bank owned life insurance 8,676
Premises 1,828
Furniture, fixtures and equipment 554
Accrued interest receivable 1,480
Restricted investment in bank stock 2,009
Deferred tax asset 3,337
Core deposit intangible 3,386
Operating lease right of use asset 1,246
Other asset 3,747
Total identifiable assets acquired at fair value 456,103
Deposits 356,596
Borrowings 41,644
Accrued interest payable 972
Operating lease liability 1,240
Reserve for unfunded commitments 115
Other liabilities 6,650
Total liabilities assumed 407,217
Total identifiable net assets, at fair value 48,886
Goodwill $ 7,108

Investment securities available-for-sale

All acquired investments were classified as available for sale. The estimated fair value of available for sale securities we calculated using Level 2 inputs, The securities acquired are bought and sold in active markets.

Loans

The acquired loan portfolio was valued utilizing Level 3 inputs and included the use of a discounted cash flow methodology applied on a pooled basis for accruing loan and on individual basis for non-accruing loans and incorporated assumption that a market participant would employ. In the fair value process the Company developed assumptions as to credit risk, expected lifetime losses, qualitative credit factors, collateral values, discount rates, expected payments and expected prepayments.

Acquired loans are classified into two categories: Purchased Seasoned Loans (PSLs) and Purchased Credit Deteriorated loans (PCDs). PCD loans are defined as a loan or group of loans that have experienced more than insignificant credit deterioration since origination, and the remaining loans were considered PSLs. Effective January 1, 2025, the Company early adopted ASU 2025-08 (Topic 326) on a prospective basis. In accordance with ASU 2025-08 an allowance for credit loss was determined using the same methodology as other loans held for investment and an initial allowance for credit losses for all acquired loans totaled $3.4 million. There was no provision for credit losses expense recognized because the initial allowance is established by grossing-up the amortized cost of the acquired loans. The remaining difference between the net of the amortized cost basis and the allowance for credit losses and the fair value allocated to

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the loans on the date of acquisition is recognized as a non-credit-related discount that will be accreted into interest income of the life of the loans.

At the date of the acquisition, 91.4 % of the acquired loans from Presence Bank were PSL loans and 8.6% were PCD loans. The following table provides details related to the fair value of PCD loans.

PCD Accruing PCD Non-Accruing Total PCD Loans
1/5/2026 1/5/2026 1/5/2026
Par Value of acquired PCD Loans $ 29,246 $ 1,415 $ 30,660
Allowance for credit losses at acquisition 341 - 341
Non-Credit discount (premium) at acquisition (1,247) (1,047) (2,294)
Purchase price PCD Loans $ 28,340 $ 368 $ 28,707

Leased Facilities

The fair value adjustment for leased facilities contracts was based on a discounted cash flow methodology of the contract lease obligations versus observed comparable market rents and discounted based upon interest rates for similar term borrowings rates. The facilities fair value adjustment will be amortized into expense over the contractual life of the leased facility.

Premises

The fair value estimate is based upon appraised values. The owned facilities fair value adjustment will be amortized into expense over the estimated life of the owned facility.

Core Deposit Intangible

The fair value of the core deposit intangible was determined based on a discounted cash flow analysis using a discount rate commensurate with market participants. To calculate cash flows, deposit account servicing costs (net of deposit fee income) and interest expense on deposits were compared to the higher cost of alternative funding sources available through national brokered CD offering rates and FHLB advance rates. The projected cash flows were developed using expected deposit attrition. The core deposit intangible will be amortized over ten years using the sum-of-years digits method.

Time Deposits

The fair value adjustment for time deposits was based on a discounted cash flow methodology of the contract rates and contractual repayments of fixed maturity deposits using prevailing market interest rates for similar-term time deposits. The time deposit fair value adjustment will be amortized into income on a level yield amortization method over the contractual life of the deposits.

Borrowings

The fair value adjustment for borrowings was based on a discounted cash flow methodology of the contract rates and contractual repayments of borrowings using prevailing market interest rates for similar-term borrowings. The borrowings fair value adjustment will be amortized into income on a level yield amortization method over the contractual life of the borrowings.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q may include certain forward-looking statements based on current management expectations. Such forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may”, “will”, “believe”, “expect”, “estimate”, “anticipate”, “continue”, or similar terms or variations on those terms, or the negative of those terms. The actual results of the Company could differ materially from those management expectations. This includes statements regarding general economic conditions, legislative and regulatory changes, monetary, trade, tariff and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax authorities and failure to integrate or profitably operate acquired businesses. Additional potential factors include changes in interest rates, the rate of inflation, deposit flows, cost of funds, demand for loan products and financial services, competition and changes in the quality or composition of loan and investment portfolios of the Company. Other factors that could cause future results to vary from current management expectations include changes in accounting principles, policies or guidelines, and other economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services and prices, instability in the banking system, and the potential for a recessionary economy. Further description of the risks and uncertainties to the business are included in the Company’s other filings with the Securities and Exchange Commission.

The majority of the assets and liabilities of a financial institution are monetary in nature, and therefore, differ greatly from most commercial and industrial companies that have significant investments in fixed assets or inventories. However, inflation does have an impact on the Company, particularly with respect to the growth of total assets and noninterest expenses, which tend to rise during periods of general inflation. Risks also exist due to supply and demand imbalances, employment shortages, the interest rate environment, and geopolitical tensions. It is reasonably foreseeable that estimates made in the financial statements could be materially and adversely impacted in the near term as a result of these conditions, including expected credit losses on loans and the fair value of financial instruments that are carried at fair value.

Our operations are subject to risks and uncertainties surrounding our exposure to changes in the interest rate environment. Earnings and liquidity depend to a great extent on our interest rates. Interest rates are highly sensitive to many factors beyond our control, including competition, general economic conditions, geopolitical tensions and conflicts and monetary and fiscal policies of various governmental and regulatory authorities, including the Federal Reserve. Conditions such as inflation, deflation, recession, unemployment and other factors beyond our control may also affect interest rates. The nature and timing of any changes in interest rates or general economic conditions and their effect on us cannot be controlled and are difficult to predict. If the rate of interest we pay on our interest-bearing liabilities increases more than the rate of interest we receive on our interest-earning assets, our net interest income, and therefore our earnings, could contract and be materially adversely affected. Our earnings could also be materially adversely affected if the rates on interest-earning assets fall more quickly than those on our interest-bearing liabilities. Changes in interest rates could also create competitive pressures, which could impact our liquidity position. See “Item 3. Quantitative and Qualitative Disclosures about Market Risk – Asset/Liability Management.”

Except as required by applicable law or regulation, the Company does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

Critical Accounting Policies

Note 2 to the Company’s consolidated financial statements for the fiscal year ended December 31, 2025 (included in Item 8 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2025) lists significant accounting policies used in the development and presentation of its financial statements. This discussion and analysis, the significant accounting policies, and other financial statement disclosures identify and address key variables and other qualitative and quantitative factors that are necessary for an understanding and evaluation of the Company and its results of operations.

Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the determination of goodwill impairment, and business combination accounting. Please refer to the discussion of the allowance for credit losses calculation under “Changes in Financial Condition - Loans” below.

In connection with the acquisition of North Penn in 2011, we recorded goodwill in the amount of $9.7 million, representing the excess of amounts paid over the fair value of the net assets of the institution acquired at the date of acquisition. In connection with the acquisition of Delaware in 2016, we recorded goodwill in the amount of $1.6 million, representing the excess of amounts paid over the fair value of the net assets of the institution acquired at the date of acquisition. In connection with the acquisition of UpState New York

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Bancorp, Inc. in July 2020, we recorded goodwill in the amount of $17.9 million, representing the excess of amounts paid over the fair value of the net assets of the institution acquired at the date of acquisition. In connection with the acquisition of PB Bankshares, we recorded goodwill in the amount of $7.1 million, representing the excess of amounts paid over the fair value of the net assets of the institution acquired at the date of acquisition. Goodwill is tested annually and deemed impaired when the carrying value of goodwill exceeds its implied fair value.

Changes in Financial Condition

General

Total assets as of March 31, 2026 were $2.917 billion compared to $2.425 billion as of December 31, 2025. The increase was due primarily to a $385.2 million increase in gross loans outstanding and a $58.1 million increase in cash and cash equivalents. Both were primarily a result of the PB Bankshares acquisition.

Other Assets

Other assets as of March 31, 2026 were $10.6 million compared to $8.4 million as of December 31, 2025. The increase was primarily due to the increase of $1.4 million in right of use asset.

Securities

The fair value of securities available for sale as of March 31, 2026 was $431.2 million compared to $408.8 million as of December 31, 2025. The increase of $22.4 million was due primarily to the acquired portfolio.

The Company has securities in an unrealized loss position. In Management’s opinion the unrealized losses reflect changes in interest rates subsequent to the acquisition of specific securities. The Company did not recognize any credit losses on these available for sale debt securities for the three months ended March 31, 2026. The Company does not intend to sell the securities and it is more likely than not that it will not have to sell the securities before recovery of its cost basis.

Loans

Loans receivable totaled $2.239 billion at March 31, 2026 compared to $1.853 billion as of December 31, 2025, due primarily to the acquired portfolio. The $385.4 million increase in loans receivable during the three months ended March 31, 2026, was due primarily to a $118.3 million increase in commercial real estate loans, a $177.4 million increase in commercial loans, a $57.1 million increase in residential real estate loans, and an increase of $32.6 million in all other portfolios, net.

The allowance for credit losses totaled $24.4 million as of March 31, 2026, and represented 1.09% of total loans outstanding, compared to $19.9 million, or 1.07% of total loans outstanding, at December 31, 2025. The Company had net charge-offs for the three months ended March 31, 2026 of $501,000, compared to $324,000 in the corresponding period in 2025. The Company’s management assesses the adequacy of the allowance for credit losses on a quarterly basis. Based on management’s best judgement, the qualitative factors are applied to the final adjusted loss rate each quarter. Management considers the allowance for credit losses adequate at March 31, 2026 based on the Company’s criteria. However, there can be no assurance that the allowance for credit losses will be adequate to cover significant losses, if any, which might be incurred in the future.

As of March 31, 2026, non-performing loans totaled $10.3 million or 0.46%, of total loans compared to $6.3 million, or 0.34%, of total loans at December 31, 2025. At March 31, 2026, non-performing assets totaled $11.1 million, or 0.38%, of total assets, compared to $7.1 million, or 0.29%, of total assets at December 31, 2025.

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The following table sets forth information regarding non-performing loans and foreclosed real estate at the dates indicated:

(dollars in thousands) March 31, 2026 December 31, 2025
Loans accounted for on a non-accrual basis:
Real Estate
Residential $ 1,166 $ 919
Commercial 5,888 4,064
Agricultural 1,552 —
Construction 34 34
Commercial loans 123 68
Other agricultural loans 188 —
Consumer loans to individuals 1,334 1,131
Total non-accrual loans 10,285 6,216
Accruing loans which are contractually
past due 90 days or more 15 123
Total non-performing loans 10,300 6,339
Foreclosed real estate 771 771
Total non-performing assets $ 11,071 $ 7,110
Allowance for credit losses $ 24,350 $ 19,882
Coverage of non-performing loans 2.36 % 3.14 %
Non-performing loans to total loans 0.46 % 0.34 %
Non-performing loans to total assets 0.35 % 0.27 %
Non-performing assets to total assets 0.38 % 0.29 %

Deposits

During the three-months ended March 31, 2026, total deposits increased $428.1 million due primarily to a $198.1 million increase in certificates of deposit, an $83.9 million increase in interest-bearing demand deposits, and a $146.1 million increase in all other deposit categories. All increases were primarily due to the PB Bankshares acquisition.

The following table sets forth deposit balances as of the dates indicated:

(dollars in thousands) December 31, 2025
Non-interest bearing demand 470,706 $ 419,597
Interest-bearing demand 487,951 404,079
Money market deposit accounts 252,458 188,215
Savings 232,099 201,388
Time deposits <250,000 738,590 575,515
Time deposits >250,000 324,894 289,851
Total 2,506,698 $ 2,078,645

All values are in US Dollars.

Borrowings

The Company had no short-term borrowings at March 31, 2026, compared to $14.7 million at December 31, 2025, due primarily to a decrease in overnight borrowings, which was a result of the overall growth in deposits.

Other borrowings as of March 31, 2026, were $88.3 million compared to $59.4 million as of December 31, 2025. There were no Federal Reserve Bank borrowings during three-months ended March 31, 2026, while Federal Home Loan Bank borrowings increased $29.0 million during the three-months ended March 31, 2026.

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Other borrowings consisted of the following:

(dollars in thousands) March 31, 2026 December 31, 2025
Notes with the FHLB:
Fixed rate borrowing due March 2026 at 4.31% $ — $ 10,000
Fixed rate borrowing due April 2026 at 4.04% 20,000 20,000
Fixed rate borrowing due October 2026 at 4.92% 1,500 —
Fixed rate borrowing due January 2027 at 1.39% 5,000 —
Fixed rate borrowing due January 2027 at 1.74% 3,400 —
Amortizing fixed rate borrowing due May 2027 at 4.37% 9,299 11,231
Fixed rate borrowing due June 2027 at 2.96% 5,000 —
Fixed rate borrowing due November 2027 at 4.15% 3,000 —
Fixed rate borrowing due December 2027 at 3.96% 3,100 —
Fixed rate borrowing due January 2028 at 3.85% 5,400 —
Fixed rate borrowing due March 2028 at 3.86% 1,500 —
Fixed rate borrowing due April 2028 at 3.59% 3,000 —
Amortizing fixed rate borrowing due July 2028 at 4.70% 7,438 8,188
Fixed rate borrowing due July 2028 at 4.49% 10,000 10,000
Fixed rate borrowing due September 2028 at 4.59% 3,750 —
Fixed rate borrowing due March 2030 at 4.11% 2,000 —
Fixed rate borrowing due April 2030 at 3.84% 3,000 —
Amortizing fixed rate borrowing due January 2032 at 1.83% 1,998 —
88,385 59,419
Fair value adjustment of borrowings (117) —
$ 88,268 $ 59,419

Stockholders’ Equity and Capital Ratios

As of March 31, 2026, total stockholders’ equity was $283.9 million, compared to $242.2 million as of December 31, 2025. Total stockholders’ equity increased $41.7 million as of March 31, 2026. The increase consisted of $44.3 million due to the PB Bankshares acquisition and net income of $3.7 million, offset, in part by a $2.8 million decrease in the fair value of securities in the available-for-sale portfolio and a decrease of $4.0 million of dividends declared, net of tax. Because of interest rate volatility, the Company’s accumulated other comprehensive income could materially fluctuate for each interim and year-end period.

Regulatory Capital Requirements. The Federal Reserve has adopted regulatory capital rules pursuant to which it assesses the adequacy of capital in examining and supervising a bank holding company and in analyzing applications to it under the Bank Holding Company Act (“BHCA”). The Federal Reserve’s capital rules are similar to those imposed on the Bank by the FDIC. The Federal Reserve’s Small Bank Holding Company Policy Statement, however, exempts from the regulatory capital requirements bank holding companies with less than $3.0 billion in consolidated assets that are not engaged in significant non-banking or off-balance sheet activities and that do not have a material amount of debt or equity securities registered with the SEC. As long as their bank subsidiaries are well capitalized, such bank holding companies need only maintain a pro forma debt to equity ratio of less than 1.0 in order to pay dividends and repurchase stock and to be eligible for expedited treatment on applications.

A comparison of the Company’s consolidated regulatory capital ratios is as follows:

March 31, 2026 December 31, 2025
Tier 1 Capital
(To average assets) 9.39% 9.65%
Tier 1 Capital
(To risk-weighted assets) 11.80% 12.37%
Common Equity Tier 1 Capital
(To risk-weighted assets) 11.80% 12.37%
Total Capital
(To risk-weighted assets) 12.89% 13.41%

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The Bank is required to comply with applicable capital adequacy rules adopted by the FDIC and other federal bank regulatory agencies (the “Basel III Capital Rules”). The Basel III Capital Rules apply to all depository institutions as well as to all top-tier bank and savings and loan holding companies that are not subject to the Federal Reserve Small Bank Holding Company Policy Statement.

Under the Basel III Capital Rules, banks are required to meet four minimum capital standards: (1) a “Tier 1” or “core” capital leverage ratio equal to at least 4% of total adjusted assets; (2) a common equity Tier 1 capital ratio equal to 4.5% of risk-weighted assets; (3) a Tier 1 risk-based ratio equal to 6% of risk-weighted assets; and (4) a total capital ratio equal to 8% of total risk-weighted assets. Common equity Tier 1 capital is defined as common stock instruments, retained earnings, any common equity Tier 1 minority interest and, unless the bank has made an “opt-out” election, accumulated other comprehensive income, net of goodwill and certain other intangible assets. Tier 1 or core capital is defined as common equity Tier 1 capital plus certain qualifying subordinated interests and grandfathered capital instruments. Total capital consists of Tier 1 capital plus Tier 2 or supplementary capital items, which include allowances for loan losses in an amount of up to 1.25% of risk-weighted assets, qualifying subordinated instruments and certain grandfathered capital instruments. An institution’s risk-based capital requirements are measured against risk-weighted assets, which equal the sum of each on-balance-sheet asset and the credit-equivalent amount of each off-balance-sheet item after being multiplied by an assigned risk weight. Risk weightings range from 0% for cash to 100% for property acquired through foreclosure, commercial loans, and certain other assets to 150% for exposures that are more than 90 days past due or are on nonaccrual status and certain commercial real estate facilities that finance the acquisition, development or construction of real property.

In addition to the above minimum requirements, the Basel III Capital Rules require banks and covered financial institution holding companies to maintain a capital conservation buffer of at least 2.5% of risk-weighted assets over and above the minimum risk-based capital requirements. Institutions that do not maintain the required capital buffer will become subject to progressively more stringent limitations on the percentage of earnings that can be paid out in dividends or used for stock repurchases and on the payment of discretionary bonuses to senior executive management. The capital buffer requirement effectively raises the minimum required risk-based capital ratios to 7% for Common Equity Tier 1 Capital, 8.5% for Tier 1 Capital and 10.5% for Total Capital on a fully phased-in basis. The Company and the Bank were in compliance with all applicable regulatory capital requirements as of March 31, 2026.

Liquidity

As of March 31, 2026, the Company had cash and cash equivalents of $102.6 million in the form of cash, due from banks, short-term deposits with other institutions, and fed funds sold. In addition, the Company had total non-pledged securities available for sale of $137.9 million which could be used for liquidity needs. Total liquidity of $234.3 million as of March 31, 2026, represents 8.0% of total assets, compared to $190.8 million and 7.9% of total assets as of December 31, 2025. The Company also monitors other liquidity measures, all of which were within the Company’s policy guidelines as of March 31, 2026 and December 31, 2025. Based upon these measures, the Company believes its liquidity is adequate.

Capital Resources

The Company has a line of credit commitment from Atlantic Community Bankers Bank for $7.0 million which expires June 30, 2026. There were no borrowings under this line as of March 31, 2026 and December 31, 2025.

The Company has a line of credit commitment available which has no stated expiration date from PNC Bank for $10.0 million. There were no borrowings under this line as of March 31, 2026 and December 31, 2025.

The Bank’s maximum borrowing capacity with the Federal Home Loan Bank was estimated to be $682.8 million as of March 31, 2026, of which $88.4 million was outstanding in the form of borrowings as of March 31, 2026. As of December 31, 2025, the maximum borrowing capacity was $677.6 million, of which $74.1 million of borrowings was outstanding as of December 31, 2025. Additionally, as of March 31, 2026, the Bank had secured Letters of Credit from the Federal Home Loan Bank in the amount of $178.1 million as collateral for specific municipal deposits. These Letters of Credit reduce the availability under the maximum borrowing capacity. As of December 31, 2025, there was $155.5 million outstanding in the form of Letters of Credit. Advances and Letters of Credit from the Federal Home Loan Bank are secured by qualifying assets of the Bank.

Non-GAAP Financial Measures

This report contains or references fully taxable-equivalent (fte) interest income and net interest income, which are non-GAAP financial measures. Interest income (fte) and net interest income (fte) are derived from GAAP interest income and net interest income using an assumed tax rate of 21%. We believe the presentation of interest income (fte) and net interest income (fte) ensures comparability of interest income and net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice. Interest income (fte) and Net interest income (fte) is reconciled to GAAP interest income and net interest income on page 42. Fully

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taxable equivalent interest income and net interest income is also reflected in the table on page 43. Although the Company believes that these non-GAAP financial measures enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered as an alternative to GAAP measures.

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Results of Operations

NORWOOD FINANCIAL CORP

Consolidated Average Balance Sheets with Resultant Interest and Rates

(Tax-Equivalent Basis, Three Months Ended March 31,
dollars in thousands) 2026 2025
Average Average Average Average
Balance Interest Rate Balance Interest Rate
(2) (1) (3) (2) (1) (3)
Assets
Interest-earning assets:
Fed funds sold $ 933 $ 11 4.78% $ — $ — —%
Interest-bearing deposits with banks 72,896 389 2.16 20,802 226 4.41
Securities available for sale:
Taxable 415,567 3,859 3.77 408,427 3,623 3.60
Tax-exempt (1) 44,634 318 2.89 44,242 312 2.86
Total securities available for sale (1) 460,201 4,177 3.68 452,669 3,935 3.53
Loans receivable (1) (4) (5) 2,195,033 33,999 6.28 1,743,572 26,120 6.08
Total interest-earning assets 2,729,063 38,576 5.73 2,217,043 30,281 5.54
Non-interest earning assets:
Cash and due from banks 30,663 28,705
Allowance for credit losses (23,391) (20,154)
Other assets 131,739 93,131
Total non-interest earning assets 139,011 101,682
Total Assets $ 2,868,074 $ 2,318,725
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand and money market $ 723,966 $ 3,462 1.94 $ 546,884 $ 2,801 2.08
Savings 218,829 137 0.25 211,905 142 0.27
Time 1,040,656 9,188 3.58 793,803 7,805 3.99
Total interest-bearing deposits 1,983,451 12,787 2.61 1,552,592 10,748 2.81
Short-term borrowings 6,358 60 3.83 44,297 458 4.19
Other borrowings 95,152 982 4.19 93,549 1,021 4.43
Total interest-bearing liabilities 2,084,961 13,829 2.69 1,690,438 12,227 2.93
Non-interest bearing liabilities:
Demand deposits 458,126 380,544
Other liabilities 35,188 29,549
Total non-interest bearing liabilities 493,314 410,093
Stockholders' equity 289,799 218,194
Total Liabilities and Stockholders' Equity $ 2,868,074 $ 2,318,725
Net interest income/spread (tax equivalent basis) 24,747 3.04% 18,054 2.61%
Tax-equivalent basis adjustment (193) (197)
Net interest income $ 24,554 $ 17,857
Net interest margin (tax equivalent basis) 3.68% 3.30%

(1)Interest and yields are presented on a tax-equivalent basis using a marginal tax rate of 21%.

(2)Average balances have been calculated based on daily balances.

(3)Annualized

(4)Loan balances include non-accrual loans and are net of unearned income.

(5)Loan yields include the effect of amortization of deferred fees, net of costs.

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Rate/Volume Analysis. The following table shows the fully taxable equivalent effect of changes in volumes and rates on interest income and interest expense. Changes in net interest income that could not be specifically identified as either a rate or volume change were allocated proportionately to changes in volume and changes in rate.

Increase/(Decrease)
Three months ended March 31, 2026 Compared to
Three months ended March 31, 2025
Variance due to
Volume Rate Net
(dollars in thousands)
Interest-earning assets:
Fed funds sold $ 11 $ — $ 11
Interest-bearing deposits with banks 395 (233) 162
Securities available for sale:
Taxable 65 171 236
Tax-exempt securities 3 3 6
Total securities 68 174 242
Loans receivable 6,796 1,084 7,880
Total interest-earning assets 6,875 1,258 8,295
Interest-bearing liabilities:
Interest-bearing demand and money market 893 (232) 661
Savings 4 (10) (6)
Time 2,347 (964) 1,383
Total interest-bearing deposits 3,244 (1,206) 2,038
Short-term borrowings (391) (7) (398)
Other borrowings 17 (55) (38)
Total interest-bearing liabilities 2,870 (1,268) 1,602
Net interest income (tax-equivalent basis) $ 4,005 $ 2,526 $ 6,693

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Comparison of Operating Results for the Three Months Ended March 31, 2026 to March 31, 2025

General

For the three months ended March 31, 2026, net income totaled $3.7 million compared to net income of $5.8 million for the three months ended March 31, 2025. The decrease in net income for the three months ended March 31, 2026, was due primarily to a $4.9 million increase in merger-related expenses, a $2.1 million increase in salaries and employee benefits, a $602,000 increase in provision for credit losses, and a net increase of $1.9 million in all other expenses, offset, in part by an increase of $6.7 million in net interest income. Earnings for the three-months ended March 31, 2026 were $0.35 per basic and fully diluted share, compared to $0.63 per basic and fully diluted share for the three months ended March 31, 2025. The resulting annualized return on average assets and annualized return on average equity for the three months ended March 31, 2026 were 0.53% and 5.22%, respectively, compared to 1.01% and 10.73%, respectively, for the same period in 2025.

The following table sets forth changes in net income:

(dollars in thousands) Three months ended
March 31, 2026 to March 31, 2025
Net income three months ended March 31, 2025 $ 5,773
Change due to:
Net interest income 6,697
Provision for credit losses (602)
Net gains on sales of securities and loans 29
Service charges and fees 242
Earnings and proceeds on bank-owned life insurance 28
Other income 65
Salaries and employee benefits (2,077)
Occupancy, furniture and equipment (347)
Data processing related (350)
Professional fees (167)
Merger related (4,941)
All other expenses (1,044)
Income tax expense 424
Net income three months ended March 31, 2026 $ 3,730

Net Interest Income

Net interest income on a fully taxable equivalent basis (fte) for the three months ended March 31, 2026 totaled $24.7 million which was $6.7 million higher than the comparable period in 2025. The increase in net interest income was due primarily to an $8.3 million increase in total interest income, offset by a $1.6 million increase in total interest expense. The (fte) net interest spread and net interest margin were 3.04% and 3.68%, respectively, for the three months ended March 31, 2026 compared to 2.61% and 3.30%, respectively, for the same period in 2025. See “Non-GAAP Financial Measures” described above beginning on page 40.

For the three-months ended March 31, 2026, interest income (fte) totaled $38.6 million, with a yield on average earning assets of 5.73% compared to $30.3 million and 5.54% for the three months ended March 31, 2025. Average loans increased $451.5 million during the three-months ended March 31, 2026, over the comparable period of 2025, while average securities increased $7.5 million compared to the three-months ended March 31, 2025. Average earning assets totaled $2.729 billion for the three months ended March 31, 2026, an increase of $512.0 million, over average earning assets for the same period in 2025. See “Non-GAAP Financial Measures” described above beginning on page 40.

Interest expense for the three months ended March 31, 2026 totaled $13.8 million, at an average cost of 2.69%, compared to $12.2 million, at an average cost of 2.93% for the same period in 2025. Average interest-bearing deposits increased $2.0 million during the three-months ended March 31, 2026, over the comparable period in 2025, while average borrowings decreased $437,000 compared to the three-months ended March 31, 2026. During the three months ended March 31, 2026, the average cost of time deposits, which is the most significant component of funding costs, decreased 41 basis points compared to the same three-month period of last year. The average cost of interest-bearing demand and money market decreased 14 basis points during the three months ended March 31, 2026, while savings deposit costs decreased two basis points. Average short-term borrowing costs decreased 36 basis points, while average other borrowings cost decreased 24 basis points, compared to the same three-month period of 2025.

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Provision for Credit Losses

The Company had a provision for credit losses of $1.5 million during the three months ended March 31, 2026, compared to $857,000 for the three months ended March 31, 2025. The Company makes provisions for, or releases of, credit loss expense in an amount necessary to maintain the allowance for credit losses at an acceptable level under the current expected credit loss methodology analysis. The Company recorded a net charge-off of $501,000 for the quarter ended March 31, 2026, compared to a net charge-off of $324,000 for the similar period in 2025. At March 31, 2026, the allowance for credit losses related to loans receivable was 1.09% of loans receivable, compared to 1.15% at March 31, 2025. Additionally, at March 31, 2026, the allowance for credit losses related to loans receivable represented 236% of non-performing loans, compared to 257% at March 31, 2025.

Other Income

Other income totaled $2.7 million for the three months ended March 31, 2026, compared to $2.4 million for the same period in 2025. The increase was due primarily to an increase in service charges and fees of $242,000. All other categories of other income increased $122,000, net, during the three months ended March 31, 2026.

Other Expense

Other expense for the three months ended March 31, 2026 totaled $21.0 million, an increase of $8.9 million compared to the same period of 2025, due primarily to a $4.9 million increase in merger-related expenses and a $2.1 million increase in salaries and employee benefits. All other categories of other expense increased $1.9 million during the three months ended March 31, 2026 as compared to the year earlier quarter.

Income Tax Expense

Income tax expense totaled $1.1 million for an effective tax rate of 22.6% for the three months ended March 31, 2026 compared to $1.5 million for an effective tax rate of 20.8% for the three months ended March 31, 2025.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Asset/Liability Management

Management considers interest rate risk to be our most significant market risk. Market risk is the risk of loss from adverse changes in market prices and rates. Interest rate risk is the exposure to adverse changes in our net income as a result of changes in interest rates.

Our primary earnings source is net interest income, which is affected by changes in the level of interest rates, the relationship between rates, the impact of interest rate fluctuations on asset prepayments, the level and composition of deposits and liabilities, and the credit quality of earning assets. Our asset and liability management objectives are to maintain a strong, stable net interest margin, to utilize our capital effectively without taking undue risks, to maintain adequate liquidity, and to reduce vulnerability of our operations to changes in interest rates.

Our Asset and Liability Committee evaluates periodically, but at least four times a year, the impact of changes in market interest rates on assets and liabilities, net interest margin, capital and liquidity. Risk assessments are governed by policies and limits established by senior management, which are reviewed and approved by the full Board of Directors at least annually. The economic environment continually presents uncertainties as to future interest rate trends. The Asset and Liability Committee regularly utilizes a model that projects net interest income based on increasing or decreasing interest rates, in order to be better able to respond to changes in interest rates.

Changes in interest rates affect the value of our interest-earning assets and, in particular, our securities portfolio. Generally, the value of securities fluctuates inversely with changes in interest rates. Increases in interest rates could result in decreases in the market value of interest-earning assets, which could adversely affect our stockholders' equity and results of operations if sold. We are also subject to reinvestment risk associated with changes in interest rates. Changes in market interest rates also could affect the type (fixed-rate or adjustable-rate) and amount of loans we originate and the average life of loans and securities, which can impact the yields earned on our loans and securities. In periods of decreasing interest rates, the average life of loans and securities we hold may be shortened to the extent increased prepayment activity occurs during such periods which, in turn, may result in the investment of funds from such prepayments in lower yielding assets. Under these circumstances, we are subject to reinvestment risk to the extent that we are unable to reinvest the cash received from such prepayments at rates that are comparable to the rates on existing loans and securities. Additionally, increases in interest rates may result in decreasing loan prepayments with respect to fixed rate loans (and therefore an increase in the average life of such loans), may result in a decrease in loan demand, and may make it more difficult for borrowers to repay adjustable rate loans.

We utilize the results of a detailed and dynamic simulation model to quantify the estimated exposure of net interest income to sustained interest rate changes. Management routinely monitors simulated net interest income sensitivity over a rolling two-year horizon. The simulation model captures the impact of changing interest rates on the interest income received and the interest expense paid on all assets and liabilities reflected on our consolidated balance sheet. This sensitivity analysis is compared to the asset and liability policy limits that specify a maximum tolerance level for net interest income exposure over a one-year horizon given 100 through 300-basis point upward and 100 through 200 downward shifts in interest rates. A parallel and pro-rata shift in rates over a twelve-month period is assumed.

In addition to the above scenarios, we consider other non-parallel rate shifts that would also exert pressure on earnings. During the three months ended March 31, 2026, the U.S. Treasury yield curve has steepened slightly. During the three months ended March 31, 2026, the yield on U.S. Treasury 5-year notes increased 19 basis points from 3.73% to 3.92%, while the yield on 3-month Treasury bills increased 3 basis points from 3.67% to 3.70%. The 3-month/5-year Treasury spread increased from a positive 7 basis point at December 31, 2025 to a positive 22 basis points at March 31, 2026. A continued steepening in the yield curve may positively affect net interest income as shorter term deposits reprice at lower rates while longer term assets reprice at higher rates. However, there is no certainty on the direction of interest rates. The Federal Reserve Open Market Committee has indicated that it will take a measured stance toward further changes in short-term rates.

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The following reflects our net interest income sensitivity analysis at March 31, 2026 and December 31, 2025:

March 31, 2026
Potential Change
in Future Net
Changes in Interest Interest Income
Rates in Basis Points Year 1 Year 2
(Dollars in thousands) $ Change % Change $ Change % Change
+300 (2,192) -2.0% 1,058 0.9%
+200 (1,273) -1.1% 1,153 0.9%
+100 (503) -0.4% 867 7.0%
Static - 0.0% - 0.0%
-100 124 1.0% (2,667) -2.2%
-200 (1,269) -1.1% (9,008) -7.4%
December 31, 2025
Potential Change
in Future Net
Changes in Interest Interest Income
Rates in Basis Points Year 1 Year 2
(Dollars in thousands) $ Change % Change $ Change % Change
+300 (6,467) -6.9% (194) -0.2%
+200 (4,159) -4.4% 319 0.3%
+100 (1,993) -2.0% 448 0.4%
Static - 0.0% - 0.0%
-100 1,415 1.5% (1,987) -2.0%
-200 1,125 1.2% (7,003) -6.9%

As noted in the table above, a 200-basis point increase in interest rates is projected to decrease net interest income by 1.1% in year 1 and increase net interest income by 0.9% in year 2. Our balance sheet sensitivity to such a move in interest rates at March 31, 2026 decreased as compared to December 31, 2025 (which was a decrease of 3.3% in net interest income over a twelve-month period). This decrease in sensitivity is the result in a decrease in the cost of deposits over the three-month period.  Overall, our strategy has been to proactively take advantage of the drop in short-term by aggressively lowering deposit and borrowing costs, ultimately dampening the effect of variable and adjustable-rate loan repricing and additional fixed rate loan refinancing. Over the intervening year, the effective duration (a measure of price sensitivity to interest rates) of the bond portfolio declined to 4.5 Years at March 31, 2026 from 4.6 at December 31, 2025.

The preceding sensitivity analysis does not represent a Company forecast and should not be relied on as being indicative of expected operating results. These hypothetical estimates are based on numerous assumptions including, but not limited to, the nature and timing of interest rate levels and yield curve shapes, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, and reinvestment and replacement of asset and liability cash flows. While assumptions are developed based on perceived current economic and local market conditions, we cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences may change. Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will also differ due to prepayment and refinancing levels likely deviating from those assumed, the varying impact of interest rate change caps or floors on adjustable rate assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals, prepayment penalties and product preference changes and other internal and external variables. Furthermore, the sensitivity analysis does not reflect actions that management might take in responding to, or anticipating, changes in interest rates and market conditions.

‎

47

Item 4. Controls and Procedures

The Company’s management evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures, as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (the “Commission”) rules and forms.

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Because of its inherent limitations, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system is based upon assumptions and can provide only reasonable, not absolute, assurance that its objective will be met. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No evaluation of control can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, with the Company have been detected.

‎

48

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

On February 20, 2024, the Company was notified of a Complaint (the “Complaint”) entitled Ian Werkmeister vs. Wayne Bank, filed on February 12, 2024 in the United States District Court for the Middle District of Pennsylvania seeking class action status. The Plaintiff is seeking monetary recovery and other relief on behalf of themselves and one or more putative classes of other individuals similarly situated. The Complaint arises out of a widely reported data security incident involving MOVEit, a file sharing software used globally by government agencies, enterprise corporations, and financial institutions. In October of 2023, Wayne Bank was notified by its third-party information service provider of a cyber-incident that involved unauthorized access to Wayne Bank customer information in one of the vendor’s file transfer applications. The incident involved vulnerabilities discovered in MOVEit Transfer, a file transfer software used by the Bank’s vendor to support services provided by the vendor to Wayne Bank and its related institutions. MOVEit is a commonly used secure Managed File Transfer software, which supports file transfer activities used by thousands of organizations around the world, including government agencies and major financial firms. The vulnerability discovered in MOVEit did not involve any of Wayne Bank’s internal systems and did not impact the Bank’s ability to service its customers.

The MOVEit cases have since been transferred and consolidated in the United States District Court for the District of Massachusetts (the “Court”) and are now entitled MOVEit Customer Data Security Breach Litigation. On July 23, 2024, on behalf of all of the Defendants (including the Company) in this case, an omnibus Motion to Dismiss the cases for lack of Article III standing pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure was filed with the Court. A hearing on this motion was held on October 9, 2024. On December 12, 2024, Judge Burroughs denied the defendants’ Rule 12(b)(1) motion in large part. The Court has ordered that a bellwether process be used to test claims and defenses. Because Wayne Bank is not a bellwether defendant, its obligations will be much lessened but will include, among other things, modest discovery.

The Company believes it has meritorious defenses to the claims asserted in the Complaint and intends to vigorously defend itself against such Complaint. While we continue to measure the impact of this cyber-incident, including certain remediation expenses and other potential liabilities, we do not currently believe this incident will have a material adverse effect on our business, operations, or financial results.

Other than the foregoing, neither the Company nor its subsidiaries are involved in any other pending legal proceedings, other than routine legal matters occurring in the ordinary course of business, which in the aggregate involve amounts which are believed by management to be immaterial to the consolidated financial condition or results of operations of the Company.

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Sales and Use of Proceeds

(a)    Unregistered Sales of Equity Securities. Not Applicable.

(b)    Use of Proceeds. Not Applicable

(c)    Issuer Purchases of Equity Securities. Set forth below is information regarding the Company’s stock repurchases during the quarter ended March 31, 2026.

Issuer Purchases of Equity Securities
Maximum Number
Total Number of (or Approximate
Total Shares (or Units) Dollar Value) of Shares
Number Average Purchased as Part of (or Units)
of Shares Price Paid Publicly that May Yet Be
(or Units) Per Share Announced Plans Purchased Under the
Purchased (or Unit) or Programs * Plans or Programs
January 1 – 31, 2026 - $ - - 244,234
February 1 – 28, 2026 - - - 244,234
March 1 – 31, 2026 - - - 244,234
Total - $ - - 244,234

49

*On March 30, 2021, the Company announced a share repurchase program for up to approximately 5% of the Company’s outstanding shares of common stock, or approximately 400,000 shares, in the open market, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended.  On March 19, 2008, the Company announced its intention to repurchase up to 5% of its outstanding common stock (approximately 226,050 split-adjusted shares) in the open market. On November 10, 2011, the Company announced that it had increased the number of shares which may be repurchased under its open-market program to 5% of its currently outstanding shares, or approximately 270,600 split-adjusted shares. Both share repurchase programs are currently in effect.

Item 3. Defaults Upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

No director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non- Rule 10b5-1 trading arrangement, as each term is defined in Item 408 of regulation S-K, during the quarter ended March 31, 2026.

Item 6. Exhibits

No. Description
3(i) Amended and Restated Articles of Incorporation of Norwood Financial Corp^(1)^
3(ii) Bylaws of Norwood Financial Corp^(2)^
4.0 Specimen Stock Certificate of Norwood Financial Corp^(3)^
31.1 Rule 13a-14(a)/15d-14(a) Certification of CEO
31.2 Rule 13a-14(a)/15d-14(a) Certification of CFO
32 Certification pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of Sarbanes Oxley Act of 2002
101 The following materials from the Company’s Form 10-Q for the quarter ended September 30, 2025, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Changes in Stockholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.
101.INS Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document)
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

(1)Incorporated by reference into this document from Exhibit 3(i) to the Company’s Form 10-K filed with the Commission on March 13, 2020.

(2)Incorporated by reference from Exhibit 3(ii) to the Company’s Annual Report on Form 10-K filed with the Commission on March 14, 2024.

(3)Incorporated herein by reference into this document from the identically numbered exhibit to the Company’s Form 10, Registration Statement initially filed in paper with the Commission on April 29, 1996, Registration No. 0-28364.

50

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NORWOOD FINANCIAL CORP
Date: May 8, 2026 By: /s/ James O. Donnelly
James O. Donnelly
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 8, 2026 /s/ John M. McCaffery
John M. McCaffery
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)

51

		Exhibit 311

Exhibit 31.1

CERTIFICATION

I, James O. Donnelly, certify that:



1.I have reviewed this quarterly report on Form 10-Q of Norwood Financial Corp;



2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



(c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(d)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and



5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):



(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and



(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 |  | | | --- | --- | | Date: May 8, 2026 | /s/ James O. Donnelly | |  | James O. Donnelly | |  | President and Chief Executive Officer | 

		Exhibit 312

Exhibit 31.2

CERTIFICATION



I, John M.  McCaffery, certify that:



1.I have reviewed this quarterly report on Form 10-Q of Norwood Financial Corp;



2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



(c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(d)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and



5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):



(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and



(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 |  | | | --- | --- | | Date: May 8, 2026 | /s/ John M.  McCaffery | |  | John M.  McCaffery | |  | Executive Vice President and Chief Financial Officer | 

		Exhibit 32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Norwood Financial Corp (the Company) on Form 10-Q for the period ending March  31, 2026 as filed with the Securities and Exchange Commission on the date hereof (the Report), we, James O. Donnelly, President and Chief Executive Officer, and John M.  McCaffery, Executive Vice President and Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 |  | | | --- | --- | | /s/ James O. Donnelly | /s/ John M.  McCaffery | | James O. Donnelly | John M.  McCaffery | | President and Chief Executive Officer | Executive Vice President and Chief Financial Officer | |  | | | May 8, 2026 | | 

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