| [x] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|-----|-----------------------------------------------------------------------------------------|

| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|-----|------------------------------------------------------------------------------------------|

| Norwood Financial Corp.                                |
|--------------------------------------------------------|
| (Exact name of Registrant as specified in its charter) |

| Pennsylvania                                                  |   | 23-2828306                           |
|---------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction ofIncorporation or organization) |   | (I.R.S. employer identification no.) |

| 717 Main Street, Honesdale, Pennsylvania |   | 18431      |   |
|------------------------------------------|--------|------------|--------|
| (Address of principal executive offices) |   | (Zip Code) |   |

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

| NA                                                                                  |
|-------------------------------------------------------------------------------------|
| (Former name, former address and former fiscal year, if changed since last report)) |

| Large accelerated filer  o                | Accelerated filer  x         |
|-----------------------------------------------------|----------------------------------------|
| Non-accelerated filer   o            | Smaller reporting company  o |
| (Do not check if a smaller reporting company)  |

| Class                                   |   | Outstanding as of May 3, 2011 |   |
|-----------------------------------------|--------|-------------------------------|--------|
| Common stock, par value $0.10 per share |   |  2,761,444               |   |

----

|       |                                                                                        |   PageNumber |
|------------|---------------------------------------------------------------------------------------------|------------------------|
| PART I -   | CONSOLIDATED FINANCIAL INFORMATION OF NORWOODFINANCIAL CORP.                                |                   |
|       |                                                                                        |                   |
| Item 1.    | Financial Statements                                                                        |   3          |
| Item 2.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28                     |
| Item 3.    | Quantitative and Qualitative Disclosures about Market Risk                                  | 37                     |
| Item 4.    | Controls and Procedures                                                                     | 38                     |
| PART II -  | OTHER INFORMATION                                                                           |                   |
|       |                                                                                        |                   |
| Item 1.    | Legal Proceedings                                                                           | 39                     |
| Item 1A.   | Risk Factors                                                                                | 39                     |
| Item 2.    | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 39                     |
| Item 3.    | Defaults upon Senior Securities                                                             | 40                     |
| Item 4.    | Removed and Reserved                                                                        | 40                     |
| Item 5.    | Other Information                                                                           | 40                     |
| Item 6.    | Exhibits                                                                                    | 40                     |
|       |                                                                                        |                   |
| Signatures |                                                                                        | 42                     |

----

|                                                                                                                                  |   | March 31,  2011 |    |   | December 31, 2010 |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|---------|--------|------------------------|--------|
|  ASSETS                                                                                                                          |   |                 |    |   |                   |   |
| Cash and due from banks                                                                                                               |   | $                    | 5,670   |   |                   | $      | 5,782 |   |
| Interest bearing deposits with banks                                                                                                  |   |                 | 13,864  |   |                   |   | 7,843 |   |
| Federal funds sold                                                                                                                    |   |                 | 0       |   |                   |   | 3,000 |   |
|           Cash and cash equivalents                                                 |   |                 | 19,534  |   |                   |   | 16,625 |   |
|                                                                                                                                  |   |                 |    |   |                   |   |   |   |
| Securities available for sale                                                                                                         |   |                 | 143,104 |   |                   |   | 145,815 |   |
| Securities held to maturity, fair value 2011:   $177, 2010: $179                                                       |   |                 | 170     |   |                   |   | 170 |   |
| Loans receivable (net of unearned income)                                                                                             |   |                 | 350,128 |   |                   |   | 356,855 |   |
|    Less:  Allowance for loan losses                                                                          |   |                 | 5,780   |   |                   |   | 5,616 |   |
| Net loans receivable                                                                                                                  |   |                 | 344,348 |   |                   |   | 351,239 |   |
| Investment in Federal Home Loan Bank Stock, at cost                                                                                   |   |                 | 3,193   |   |                   |   | 3,361 |   |
| Bank premises and equipment, net                                                                                                      |   |                 | 4,798   |   |                   |   | 4,904 |   |
| Bank owned life insurance                                                                                                             |   |                 | 8,333   |   |                   |   | 8,249 |   |
| Accrued interest receivable                                                                                                           |   |                 | 2,191   |   |                   |   | 2,166 |   |
| Foreclosed real estate owned                                                                                                          |   |                 | 948     |   |                   |   | 748 |   |
| Other assets                                                                                                                          |   |                 | 4,307   |   |                   |   | 3,728 |   |
|     TOTAL ASSETS                                                                                                  |   | $                    | 530,926 |   |                   | $      | 537,005 |   |
|                                                                                                                                  |   |                 |    |   |                   |   |   |   |
| LIABILITIES                                                                                                                           |   |                 |    |   |                   |   |   |   |
|   Deposits:                                                                                                                 |   |                 |    |   |                   |   |   |   |
|       Non-interest bearing demand                                                                       |   | $                    | 62,736  |   |                   | $      | 62,238 |   |
|       Interest-bearing                                                                                  |   |                 | 334,384 |   |                   |   | 331,627 |   |
|         Total deposits                                                                        |   |                 | 397,120 |   |                   |   | 393,865 |   |
|   Short-term borrowings                                                                                                     |   |                 | 25,465  |   |                   |   | 33,309 |   |
|   Other borrowings                                                                                                          |   |                 | 35,000  |   |                   |   | 38,000 |   |
|   Accrued interest payable                                                                                                  |   |                 | 1,342   |   |                   |   | 1,536 |   |
|   Other liabilities                                                                                                         |   |                 | 3,424   |   |                   |   | 2,597 |   |
|     TOTAL LIABILITIES                                                                                             |   |                 | 462,351 |   |                   |   | 469,307 |   |
|                                                                                                                                  |   |                 |    |   |                   |   |   |   |
| STOCKHOLDERS’ EQUITY                                                                                                            |   |                 |    |   |                   |   |   |   |
|     Common stock, $.10 par value per share, authorized    10,000,000; shares issued 2,840,872 |   |                 | 284     |   |                   |   | 284 |   |
|     Surplus                                                                                                       |   |                 | 9,867   |   |                   |   | 9,826 |   |
|     Retained  earnings                                                                                  |   |                 | 59,507  |   |                   |   | 58,648 |   |
|     Treasury stock at cost: 2011: 78,960 shares, 2010:        72,068      |   |                 | (2,388  | )      |                   |   | (2,197 | ) |
|   Accumulated other comprehensive income                                                                                    |   |                 | 1,305   |   |                   |   | 1,137 |   |
|      TOTAL STOCKHOLDERS’ EQUITY                                                                        |   |                 | 68,575  |   |                   |   | 67,698 |   |
|      TOTAL LIABILITIES AND     STOCKHOLDERS’ EQUITY                           |   | $                    | 530,926 |   |                   | $      | 537,005 |   |

----

|                                                                   |   |  Three Months Ended March 31, |   |
|------------------------------------------------------------------------|--------|------------------------------------|--------|
|                                                                   |   |  2011                         |   |   |  2010 |   |
| INTEREST INCOME                                                        |   |                               |   |   |   |   |
|   Loans receivable, including fees                           |   | $                                  | 4,928  |   |   | $ | 5,410 |   |
|   Securities                                                 |   |                               | 1,090  |   |   |   | 1,221 |   |
|   Other                                                      |   |                               | 8      |   |   |   |  11 |   |
|   Total interest income                                      |   |                               | 6,026  |   |   |   | 6,642 |   |
|                                                                   |   |                               |   |   |   |   |   |   |
| INTEREST EXPENSE                                                       |   |                               |   |   |   |   |   |   |
|   Deposits                                                   |   |                               | 885    |   |   |   | 1,199 |   |
|   Short-term borrowings                                      |   |                               | 24     |   |   |   | 34 |   |
|   Other borrowings                                           |   |                               | 336    |   |   |   |  412 |   |
|   Total interest expense                                     |   |                               | 1,245  |   |   |   | 1,645 |   |
| NET INTEREST INCOME                                                    |   |                               | 4,781  |   |   |   | 4,997 |   |
| PROVISION FOR LOAN LOSSES                                              |   |                               | 220    |   |   |   |  330 |   |
| NET INTEREST INCOME AFTER  PROVISION FOR LOAN LOSSES         |   |                               | 4,561  |   |   |   |   4,667 |   |
|                                                                   |   |                               |   |   |   |   |   |   |
| OTHER INCOME                                                           |   |                               |   |   |   |   |   |   |
|   Service charges and fees                                   |   |                               | 549    |   |   |   | 523 |   |
|   Income from fiduciary activities                           |   |                               | 113    |   |   |   | 86 |   |
|   Net realized gains on sales of securities                  |   |                               | 212    |   |   |   | 155 |   |
|   Gains on sale of loans and servicing rights                |   |                               | 143    |   |   |   | 75 |   |
|   Other                                                      |   |                               | 191    |   |   |   |  163 |   |
|   Total other income                                         |   |                               | 1,208  |   |   |   |  1,002 |   |
|                                                                   |   |                               |   |   |   |   |   |   |
| OTHER EXPENSES                                                         |   |                               |   |   |   |   |   |   |
|   Salaries and employee benefits                             |   |                               | 1,701  |   |   |   | 1,615 |   |
|   Occupancy, furniture & equipment, net                  |   |                               | 398    |   |   |   | 394 |   |
|   Data processing related                                    |   |                               | 215    |   |   |   | 196 |   |
|   Taxes, other than income                                   |   |                               | 129    |   |   |   | 147 |   |
|   Professional fees                                          |   |                               | 134    |   |   |   | 139 |   |
|   Merger related expenses                                    |   |                               | 267    |   |   |   | - |   |
|   Federal Deposit Insurance Corporation Insurance assessment |   |                               | 120    |   |   |   | 118 |   |
|   Foreclosed real estate owned                               |   |                               | 19     |   |   |   | 16 |   |
|   Other                                                      |   |                               | 551    |   |   |   | 535 |   |
|   Total other expenses                                       |   |                               | 3,534  |   |   |   | 3,160 |   |
|                                                                   |   |                               |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAXES                                             |   |                               | 2,235  |   |   |   | 2,509 |   |
| INCOME TAX EXPENSE                                                     |   |                               | 575    |   |   |   |  712 |   |
| NET INCOME                                                             |   | $                                  | 1,660  |   |   | $ | 1,797 |   |
|                                                                   |   |                               |   |   |   |   |   |   |
| BASIC EARNINGS PER SHARE                                               |   | $                                  | 0.60   |   |   | $ | 0.65 |   |
|                                                                   |   |                               |   |   |   |   |   |   |
| DILUTED EARNINGS PER SHARE                                             |   | $                                  | 0.60   |   |   | $ | 0.65 |   |
|                                                                   |   |                               |   |   |   |   |   |   |

----

|                                                                                                                                                                                           |   |   Common Stock |      |   |   |   |   |   Retained |   |   |   Treasury Stock |   |   | AccumulatedOtherComprehensive |   |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|-----------|--------|--------|--------|--------|----------------------|--------|--------|----------------------------|--------|--------|-------------------------------|--------|--------|--------|--------|
|                                                                                                                                                                                           |   | Shares                   |      |   | Amount |   |   | Surplus              |   |   | Earnings                   |   |   | Shares                        |   |   | Amount |   |   | Income |   |   | Total |   |
| Balance December 31, 2010                                                                                                                                                                      |   |                     | 2,840,872 |   |   | $      | 284    |                 |   | $      | 9,826                      |   |   | $                             | 58,648 |   |   |   | 72,068 |   |   | $ | (2,197 | ) |   | $ | 1,137 |   |   | $ | 67,698 |   |
| Comprehensive Income:                                                                                                                                                                          |   |                     |      |   |   |   |   |                 |   |   |                       |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net Income                                                                                                                                                                         |   |                     |      |   |   |   |   |                 |   |   |                       |   |   |                          | 1,660  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,660 |   |
| Change in unrealized gains on   securities available for sale,   net of  reclassification  adjustments and  tax  effects |   |                     |      |   |   |   |   |                 |   |   |                       |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |    168 |   |   |   |   168 |   |
| Total comprehensive income                                                                                                                                                                     |   |                     |      |   |   |   |   |                 |   |   |                       |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 1,828 |   |
|                                                                                                                                                                                           |   |                     |      |   |   |   |   |                 |   |   |                       |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                           |   |                     |      |   |   |   |   |                 |   |   |                       |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash dividends declared $.29 per share                                                                                                                                                         |   |                     |      |   |   |   |   |                 |   |   |                       |   |   |                          | (801   | )      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (801 | ) |
| Acquisition of  treasury  stock                                                                                                                                            |   |                     |      |   |   |   |   |                 |   |   |                       |   |   |                          |   |   |   |   | 6,892 |   |   |   | (191 | ) |   |   |   |   |   |   | (191 | ) |
| Compensation expense related   to stock options                                                                                                                                 |   |                     |      |   |   |   |   |                 |   |   | 41                         |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 41 |   |
|                                                                                                                                                                                           |   |                     |      |   |   |   |   |                 |   |   |                       |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, March 31, 2011                                                                                                                                                                        |   |                     | 2,840,872 |   |   | $      | 284    |                 |   | $      | 9,867                      |   |   | $                             | 59,507 |   |   |   | 78,960 |   |   | $ | (2,388 | ) |   | $ | 1,305 |   |   | $ | 68,575 |   |

----

|                                                                                         |   | Three Months Ended March 31,  |    |
|----------------------------------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                                         |   | 2011                               |    |   | 2010 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                         |   |                               |    |   |   |   |
| Net Income                                                                                   |   | $                                  | 1,660   |   |   | $ | 1,797 |   |
| Adjustments to reconcile net income to net cash provided by operating  activities: |   |                               |    |   |   |   |   |   |
|   Provision for loan losses                                                        |   |                               | 220     |   |   |   | 330 |   |
|   Depreciation                                                                     |   |                               | 110     |   |   |   | 117 |   |
|   Amortization of intangible assets                                                |   |                               | 13      |   |   |   | 13 |   |
|   Deferred income taxes                                                            |   |                               | (84     | ) |   |   | 28 |   |
|   Net amortization of securities premiums and discounts                            |   |                               | 179     |   |   |   | 59 |   |
|   Net realized gain on sales of securities                                         |   |                               | (212    | ) |   |   | (155 | ) |
|   Net increase in investment in life insurance                                     |   |                               | (84     | ) |   |   | (95 | ) |
|   Net gain on sale of mortgage loans and servicing rights                          |   |                               | (143    | ) |   |   | (75 | ) |
|   Mortgage loans originated for sale                                               |   |                               | (4,692  | ) |   |   | (4,300 | ) |
|   Proceeds from sale of mortgage loans originated for sale                         |   |                               | 4,835   |   |   |   | 4,375 |   |
|   Compensation expense related to stock options                                    |   |                               | 41      |   |   |   | 39 |   |
|   Decrease (increase) in accrued interest receivable and other assets              |   |                               | (615    | ) |   |   | 199 |   |
|   Increase  in accrued interest payable and other liabilities            |   |                               | 635     |   |   |   | 33 |   |
|     Net cash provided by operating activities                            |   |                               | 1,863   |   |   |   | 2,365 |   |
|                                                                                         |   |                               |    |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                         |   |                               |    |   |   |   |   |   |
|   Securities available for sale:                                                   |   |                               |    |   |   |   |   |   |
|   Proceeds from sales                                                              |   |                               | 6,187   |   |   |   | 8,837 |   |
|   Proceeds from maturities and principal reductions on mortgage-backed securities  |   |                               | 7,113   |   |   |   | 15,055 |   |
|   Purchases                                                                        |   |                               | (10,302 | ) |   |   | (18,748 | ) |
|   Securities held to maturity, proceeds from maturities                            |   |                               | -       |   |   |   | 540 |   |
|   Redemption of FHLB stock                                                         |   |                               | 168     |   |   |   | - |   |
|   Net decrease  in loans                                                 |   |                               | 6,467   |   |   |   | 5,396 |   |
|   Purchase of bank premises and equipment                                          |   |                               | (4      | ) |   |   | (54 | ) |
|   Net cash provided by investing activities                                        |   |                               | 9,629   |   |   |   | 11,026 |   |
|                                                                                         |   |                               |    |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                         |   |                               |    |   |   |   |   |   |
|   Net increase in deposits                                                         |   |                               | 3,255   |   |   |   | 183 |   |
|   Net decrease in short-term borrowings                                            |   |                               | (7,844  | ) |   |   | (4,022 | ) |
|   Repayments of other borrowings                                                   |   |                               | (3,000  | ) |   |   | - |   |
|   Stock options exercised                                                          |   |                               | -       |   |   |   | 10 |   |
|   Tax benefit of stock options exercised                                           |   |                               | -       |   |   |   | 5 |   |
|   Acquisition of treasury stock                                                    |   |                               | (191    | ) |   |   | (529 | ) |
|   Cash dividends paid                                                              |   |                               | (803    | ) |   |   | (776 | ) |
|    Net cash  used in financing activities                           |   |                               | (8,583  | ) |   |   | (5,129 | ) |
|    Increase in cash and cash equivalents                                      |   |                               | 2,909   |   |   |   | 8,262 |   |
|                                                                                         |   |                               |    |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                               |   |                               | 16,625  |   |   |   | 17,355 |   |
| CASH AND CASH EQUIVALENTS, END OF PERIOD                                                     |   | $                                  | 19,534  |   |   | $ | 25,617 |   |
|                                                                                         |   |                               |    |   |   |   |   |   |

----

|                                            |   | Three Months Ended |   |
|-------------------------------------------------|--------|--------------------|--------|
|                                            |   | March 31,          |   |
|                                            |   | 2011               |   |   | 2010 |   |
| Basic EPS weighted average shares outstanding   |   |               | 2,767  |   |   |   | 2,768 |   |
| Dilutive effect of stock options                |   |               | 3      |   |   |   | 7 |   |
| Diluted EPS weighted average shares outstanding |   |               | 2,770  |   |   |   | 2,775 |   |
|                                            |   |               |   |   |   |   |   |   |

----

|                                        | Options                                                                   |   |   | Weighted Average Exercise PricePer Share |   | Weighted Average Remaining Contractual Term |   | Aggregate Intrinsic Value ($000) |       |
|---------------------------------------------|---------------------------------------------------------------------------|--------|--------|------------------------------------------|--------|---------------------------------------------|--------|----------------------------------|------------|
|                                        |                                                                      |   |   |                                     |   |                                        |   |                             |       |   |   |   |     |
|    Outstanding at January 1, 2011 | 189,639                                                                   |   |   | $                                        | 28.52  |                                        |   |  6.6                        |  Yrs. |   | $ | 146 |      |
|    Granted                        | -                                                                         |   |   |                                     | -      |                                        |   | -                                |       |   |   | - |   |
|    Exercised                      |             - |   |   |                                     | -      |                                        |   | -                                |       |   |   | - |   |
|    Outstanding at March 31, 2011  | 189,639                                                                   |   |   | $                                        | 28.52  |                                        |   | 6.3                              | Yrs.       |   | $ | 126 |   |
|                                        |                                                                      |   |   |                                     |   |                                        |   |                             |       |   |   |   |   |
|    Exercisable at March 31, 2011  | 162,639                                                                   |   |   | $                                        | 28.65  |                                        |   | 4.9                              | Yrs.       |   | $ | 126 |   |
|                                        |                                                                      |   |   |                                     |   |                                        |   |                             |       |   |   |   |   |

----

| (in thousands)                                                  |   | Three Months Ended March 31, |   |
|----------------------------------------------------------------------|--------|------------------------------|--------|
|                                                                 |   | 2011                         |   |   | 2010 |   |
| Unrealized holding gains  on available for sale securities |   | $                            | 466    |   |   | $ | 279 |   |
| Reclassification adjustment for gains  Realized in income  |   |                         | (212   | ) |   |   | (155 | ) |
| Net unrealized gains                                                 |   |                         | 254    |   |   |   | 124 |   |
| Income tax expense                                                   |   |                         | 86     |   |   |   | 43 |   |
| Other comprehensive income                                           |   | $                            | 168    |   |   | $ | 81 |   |
|                                                                 |   |                         |   |   |   |   |   |   |

| (in thousands)                             |   | March 31, |   |
|--------------------------------------------|--------|-----------|--------|
|                                       |   | 2011      |   |   | 2010 |   |
|  Commitments to grant loans           |   | $         | 23,466 |   |   | $ | 16,473 |   |
| Unfunded commitments under lines of credit |   |      | 29,809 |   |   |   | 37,020 |   |
| Standby letters of credit                  |   |      | 3,636  |   |   |   | 3,438 |   |
|                                       |   |      |   |   |   |   |   |   |
|                                       |   | $         | 56,911 |   |   | $ | 56,931 |   |

----

|                                                           |   | March 31, 2011      |    |
|----------------------------------------------------------------|--------|---------------------|---------|
|                                                           |   |  AmortizedCost |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   |  FairValue |   |
|                                                           |   | (In Thousands)      |    |
| Available for Sale:                                            |   |                |    |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies                                       |   | $                   | 32,278  |   |   | $ | 281 |   |   | $ | (369 | ) |   | $ | 32,190 |   |
| States and political subdivisions                              |   |                | 45,423  |   |   |   | 751 |   |   |   | (159 | ) |   |   | 46,015 |   |
| Corporate obligations                                          |   |                | 3,016   |   |   |   | 221 |   |   |   | - |   |   |   | 3,237 |   |
| Mortgage-backed securities- government sponsored entities |   |                | 60,189  |   |   |   | 1,276 |   |   |   | (301 | ) |   |   | 61,164 |   |
|                                                           |   |                | 140,906 |   |   |   | 2,529 |   |   |   | (829 | ) |   |   | 142,606 |   |
| Equity securities-financial services                           |   |                | 215     |   |   |   | 284 |   |   |   | (1 | ) |   |   | 498 |   |
|                                                           |   | $                   | 141,121 |   |   | $ | 2,813 |   |   | $ | (830 | ) |   | $ | 143,104 |   |
| Held to Maturity:                                              |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| States and political subdivisions                              |   | $                   | 170     |   |   | $ | 7 |   |   |   | - |   |   | $ | 177 |   |
|                                                           |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                            |   | December 31, 2010   |    |
|---------------------------------------------------------------------------------|--------|---------------------|---------|
|                                                                            |   |  AmortizedCost |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   |  FairValue |   |
|                                                                            |   | (In Thousands)      |    |
| Available for Sale:                                                             |   |                |    |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies                                                        |   | $                   | 30,194  |   |   | $ | 392 |   |   | $ | (318 | ) |   | $ | 30,268 |   |
| States and political subdivisions                                               |   |                | 49,880  |   |   |   | 510 |   |   |   | (624 | ) |   |   | 49,766 |   |
| Corporate obligations                                                           |   |                | 4,018   |   |   |   | 231 |   |   |   | - |   |   |   | 4,249 |   |
| Mortgage-backed securities-government    sponsored entities |   |                | 59,770  |   |   |   | 1,398 |   |   |   | (240 | ) |   |   | 60,928 |   |
|                                                                            |   |                | 143,862 |   |   |   | 2,531 |   |   |   | (1,182 | ) |   |   | 145,211 |   |
| Equity securities-financial services                                            |   |                | 224     |   |   |   | 381 |   |   |   | (1 | ) |   |   | 604 |   |
|                                                                            |   | $                   | 144,086 |   |   | $ | 2,912 |   |   | $ | (1,183 | ) |   | $ | 145,815 |   |
| Held to Maturity:                                                               |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| States and political subdivisions                                               |   | $                   | 170     |   |   | $ | 9 |   |   | $ | - |   |   | $ | 179 |   |
|                                                                            |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                     |   | March 31, 2011                        |          |
|----------------------------------------------------------|--------|---------------------------------------|---------------|
|                                                     |   | Less than 12 Months    |          |   | 12 Months or More |   |   |  Total |   |
|                                                     |   | Fair Value                            |          |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |
| U.S. Government agencies                                 |   | $                                     | 12,730        |   |   | $ | (369 | ) |   | $ | - |   |   | $ | - |   |   | $ | 12,730 |   |   | $ | (369 | ) |
| States and political subdivisions                        |   |                                  | 10,051        |   |   |   | (159 | ) |   |   | - |   |   |   | - |   |   |   | 10,051 |   |   |   | (159 | ) |
| Mortgage-backed securities-government sponsored agencies |   |                                  |   21,874 |   |   |   | (301 | ) |   |   |   - |   |   |   |   - |   |   |   |   21,874 |   |   |   | (301 | ) |
| Equity securities-financial services                     |   |                                  | -             |   |   |   | - |   |   |   | 16 |   |   |   | (1 | ) |   |   | 16 |   |   |   | (1 | ) |
|                                                     |   |                                  |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   | $                                     | 44,655        |   |   | $ | (829 | ) |   | $ | 16 |   |   | $ | (1 | ) |   | $ | 44,671 |   |   | $ | (830 | ) |

----

|                                                |   | December 31, 2010   |          |
|----------------------------------------------------------|--------|---------------------|---------------|
|                                                     |   | Less than 12 Months |          |   | 12 Months or More |   |   | Total |   |
|                                                     |   | FairValue           |          |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |
|  U.S. Government agencies                           |   | $                   | 8,696         |   |   | $ | (318 | ) |   | $ | - |   |   | $ | - |   |   | $ | 8,696 |   |   | $ | (318 | ) |
| States and political subdivisions                        |   |                | 21,829        |   |   |   | (624 | ) |   |   | - |   |   |   | - |   |   |   | 21,829 |   |   |   | (624 | ) |
| Mortgage-backed securities-government sponsored agencies |   |                |   20,113 |   |   |   | (240 | ) |   |   |   - |   |   |   |   - |   |   |   |   20,113 |   |   |   | (240 | ) |
| Equity securities-financial services                     |   |                |  15      |   |   |   | (1 | ) |   |   |  - |   |   |   |  - |   |   |   |  15 |   |   |   | (1 | ) |
|                                                     |   | $                   | 50,653        |   |   | $ | (1,183 | ) |   | $ | - |   |   | $ | - |   |   | $ | 50,653 |   |   | $ | (1,183 | ) |
|                                                     |   |                |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                          |   | Available for Sale |    |   | Held to Maturity |   |
|---------------------------------------------------------------|--------|--------------------|---------|--------|------------------|--------|
|                                                          |   | Amortized Cost     |    |   | Fair Value       |   |   | Amortized Cost |   |   | Fair Value |   |
|                                                          |   | (In Thousands)     |    |
| Due after one year through five years                         |   | $                  | 30,859  |   |             | $      | 31,346 |   |   | $ | 170 |   |   | $ | 177 |   |
| Due after five years through ten years                        |   |               | 23,089  |   |             |   | 23,213 |   |   |   | - |   |   |   | - |   |
| Due after ten years                                           |   |               | 26,769  |   |             |   | 26,883 |   |   |   | - |   |   |   | - |   |
|                                                          |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities-government sponsored agencies |   |               | 60,189  |   |             |   | 61,164 |   |   |   | - |   |   |   | - |   |
|                                                          |   | $                  | 140,906 |   |             | $      | 142,606 |   |   | $ | 170 |   |   | $ | 177 |   |

----

|                              |   | Three Months    |   |
|-----------------------------------|--------|-----------------|--------|
|                              |   | Ended March 31, |   |
|                              |   | 2011            |   |   | 2010 |   |
| Gross realized gains              |   | $               | 212    |   |   | $ | 155 |   |
| Gross realized losses             |   |            | -      |   |   | ___- |   |
| Net realized gain                 |   | $               | 212    |   |   | $ | 155 |   |
| Proceeds from sales of securities |   | $               | 6,187  |   |   | $ | 8,837 |   |

| Types of loans(dollars in thousands)                                                                       |   |
|------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                       |   | March 31, 2011 |   |   | December 31, 2010 |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real Estate-Residential                                                                                    |   | $ | 118,382 |   |   |   | 33.8 | % |   | $ | 124,562 |   |   |   | 34.9 | % |
|                 Commercial |   |   | 186,195 |   |   |   | 53.1 |   |   |   | 184,094 |   |   |   | 51.5 |   |
|                 Construction    |   |   | 11,894 |   |   |   | 3.4 |   |   |   | 12,638 |   |   |   | 3.5 |   |
| Commercial, financial and agricultural                                                                     |   |   | 21,194 |   |   |   | 6.0 |   |   |   | 22,386 |   |   |   | 6.3 |   |
| Consumer loans to individuals                                                                              |   |   | 12,963 |   |   |   | 3.7 |   |   |   | 13,668 |   |   |   | 3.8 |   |
|   Total loans                                                                                    |   |   | 350,628 |   |   |   | 100.0 | % |   |   | 357,348 |   |   |   | 100.0 | % |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Deferred fees (net)                                                                            |   |   | (500 | ) |   |   |   |   |   |   | (493 | ) |   |   |   |   |
|                                                                                                       |   |   | 350,128 |   |   |   |   |   |   |   | 356,855 |   |   |   |   |   |
|   Allowance for loan losses                                                                      |   |   | (5,780 | ) |   |   |   |   |   |   | (5,616 | ) |   |   |   |   |
|   Net loans receivable                                                                           |   | $ | 344,348 |   |   |   |   |   |   | $ | 351,239 |   |   |   |   |   |

----

|                                                                                            |   | Real Estate Loans |    |   |       |   |         |           |   |           |       |   |
|-------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|------------|--------|--------------|----------------|--------|----------------|------------|--------|
|                                                                                            |   |              |    |   |       |   |         |           |   |           | Commercial |   |   | Consumer |   |   |   |   |
|                                                                                            |   | Residential       |    |   | Commercial |   |         | Construction   |   |           | Loans      |   |   | Loans |   |   | Total |   |
| March 31, 2011                                                                                  |   |              |    |   |       |   |         | (In thousands) |   |           |       |   |   |   |   |   |   |   |
| Total Loans                                                                                     |   | $                 | 118,382 |   |       | $      | 186,195      |           |   | $              | 11,894     |   |   | $ | 21,194 |   |   | $ | 12,963 |   |   | $ | 350,628 |   |
|                                                                                            |   |              |    |   |       |   |         |           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |              |    |   |       |   |         |           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |              |    |   |       |   |         |           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Individually    evaluated for    impairment |   | $                 | — |   |       | $      | 16,498       |           |   | $              | —    |   |   | $ | 511 |   |   | $ | — |   |   | $ | 17,009 |   |
|   Collectively    evaluated for    impairment |   | $                 | 118,382 |   |       | $      | 169,697      |           |   | $              | 11,894     |   |   | $ | 20,683 |   |   | $ | 12,963 |   |   | $ | 336,619 |   |
|                                                                                            |   |              |    |   |       |   |         |           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   | Real Estate Loans |    |   |       |   |         |           |   |           |       |   |   |
|                                                                                            |   |              |    |   |       |   |         |           |   |           |       |   | Commercial |   |   | Consumer |   |   |   |   |   |
|                                                                                            |   | Residential       |    |   | Commercial |   | Construction |           |   | Loans          |       |   | Loans |   |   | Total |   |
| December 31, 2010                                                                          |   |              |    |   |       |   |         |           |   | (In thousands) |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Loans                                                                                     |   | $                 | 124,562 |   |       | $      | 184,094      |           |   | $              | 12,638     |   |   | $ | 22,386 |   |   | $ | 13,668 |   |   | $ | 357,348 |   |
|                                                                                            |   |              |    |   |       |   |         |           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Individually    evaluated for    impairment |   | $                 | — |   |       | $      | 14,239       |           |   | $              | —    |   |   | $ | 513 |   |   | $ | — |   |   | $ | 14,752 |   |
|   Collectively    evaluated for    impairment |   | $                 | 124,562 |   |       | $      | 169,855      |           |   | $              | 12,638     |   |   | $ | 21,873 |   |   | $ | 13,668 |   |   | $ | 342,596 |   |

----

|                                                                        |   |  RecordedInvestment |    |   | UnpaidPrincipalBalance |   |    |  AssociatedAllowance |   |   | AverageRecordedInvestment |   |   | InterestIncomeRecognized |    |
|----------------------------------------------------------------------------------|--------|--------------------------|---------|--------|------------------------|--------|---------|---------------------------|--------|--------|---------------------------|--------|--------|--------------------------|---------|
| March 31, 2011With no related allowance recorded:                                |   |                     |    |   |                   |   |    | (In thousands)            |   |   |                      |   |   |                     |    |
| Real Estate Loans                                                                |   |                     |    |   |                   |   |    |                      |   |   |                      |   |   |                     |    |
|     Residential                                              |   | $                        | — |   |                   | $      | — |                      |   | $      | —                   |   |   | $                        | — |   |   | $ | — |   |
|     Construction                                             |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|     Commercial                                               |   |                     | 4,875   |   |                   |   | 4,875   |                      |   |   | —                   |   |   |                     | 3,714   |   |   |   | 15 |   |
| Commercial Loans                                                                 |   |                     | 511     |   |                   |   | 511     |                      |   |   | —                   |   |   |                     | 512     |   |   |   | — |   |
| Consumer Loans                                                                   |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|           Total                |   |                     | 5,386   |   |                   |   | 5,386   |                      |   |   | —                   |   |   |                     | 4,226   |   |   |   | 15 |   |
| With an allowance recorded:                                                      |   |                     |    |   |                   |   |    |                      |   |   |                      |   |   |                     |    |   |   |   |   |   |
| Real Estate Loans                                                                |   |                     |    |   |                   |   |    |                      |   |   |                      |   |   |                     |    |   |   |   |   |   |
|     Residential                                              |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|     Construction                                             |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|     Commercial                                               |   |                     | 11,623  |   |                   |   | 11,531  |                      |   |   | 2,153                     |   |   |                     | 11,654  |   |   |   | 103 |   |
| Commercial Loans                                                                 |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
| Consumer Loans                                                                   |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|           Total                |   |                     | 11,623  |   |                   |   | 11,531  |                      |   |   | 2,153                     |   |   |                     | 11,654  |   |   |   | 103 |   |
| Total:                                                                           |   |                     |    |   |                   |   |    |                      |   |   |                      |   |   |                     |    |   |   |   |   |   |
| Real Estate loans                                                                |   |                     |    |   |                   |   |    |                      |   |   |                      |   |   |                     |    |   |   |   |   |   |
|     Residential                                              |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|     Construction                                             |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|     Commercial                                               |   |                     | 16,498  |   |                   |   | 16,406  |                      |   |   | 2,153                     |   |   |                     | 15,368  |   |   |   | 118 |   |
| Commercial Loans                                                                 |   |                     | 511     |   |                   |   | 511     |                      |   |   | —                   |   |   |                     | 512     |   |   |   | — |   |
| Consumer Loans                                                                   |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|           Total Impaired Loans |   | $                        | 17,009  |   |                   | $      | 16,917  |                      |   | $      | 2,153                     |   |   | $                        | 15,880  |   |   | $ | 118 |   |

----

|                                                                             |   |  RecordedInvestment |    |   | UnpaidPrincipalBalance |   |    |  AssociatedAllowance |   |   | AverageRecordedInvestment |   |   | InterestIncomeRecognized |    |
|----------------------------------------------------------------------------------|--------|--------------------------|---------|--------|------------------------|--------|---------|---------------------------|--------|--------|---------------------------|--------|--------|--------------------------|---------|
| December 31, 2010With no related allowance recorded:                             |   |                     |    |   | (In thousands)         |   |    |                      |   |   |                      |   |
| Real Estate Loans                                                                |   |                     |    |   |                   |   |    |                      |   |   |                      |   |   |                     |    |
|     Residential                                              |   | $                        | — |   |                   | $      | — |                      |   | $      | —                   |   |   | $                        | — |   |   | $ | — |   |
|     Construction                                             |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|     Commercial                                               |   |                     | 5,598   |   |                   |   | 5,598   |                      |   |   | —                   |   |   |                     | 5,088   |   |   |   | 266 |   |
| Commercial Loans                                                                 |   |                     | 513     |   |                   |   | 513     |                      |   |   | —                   |   |   |                     | 115     |   |   |   | — |   |
| Consumer Loans                                                                   |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|           Total                |   |                     | 6,111   |   |                   |   | 6,111   |                      |   |   | —                   |   |   |                     | 5,203   |   |   |   | 266 |   |
| With an allowance recorded:                                                      |   |                     |    |   |                   |   |    |                      |   |   |                      |   |   |                     |    |   |   |   |   |   |
| Real Estate Loans                                                                |   |                     |    |   |                   |   |    |                      |   |   |                      |   |   |                     |    |   |   |   |   |   |
|     Residential                                              |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|     Construction                                             |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|     Commercial                                               |   |                     | 8,641   |   |                   |   | 8,548   |                      |   |   | 1,648                     |   |   |                     | 4,734   |   |   |   | 119 |   |
| Commercial Loans                                                                 |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | 159     |   |   |   | — |   |
| Consumer Loans                                                                   |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|           Total                |   |                     | 8,641   |   |                   |   | 8,548   |                      |   |   | 1,648                     |   |   |                     | 4,893   |   |   |   | 119 |   |
| Total:                                                                           |   |                     |    |   |                   |   |    |                      |   |   |                      |   |   |                     |    |   |   |   |   |   |
| Real Estate loans                                                                |   |                     |    |   |                   |   |    |                      |   |   |                      |   |   |                     |    |   |   |   |   |   |
|     Residential                                              |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|     Construction                                             |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|     Commercial                                               |   |                     | 14,239  |   |                   |   | 14,146  |                      |   |   | 1,648                     |   |   |                     | 9,822   |   |   |   | 385 |   |
| Commercial Loans                                                                 |   |                     | 513     |   |                   |   | 513     |                      |   |   | —                   |   |   |                     | 274     |   |   |   | — |   |
| Consumer Loans                                                                   |   |                     | — |   |                   |   | — |                      |   |   | —                   |   |   |                     | — |   |   |   | — |   |
|           Total Impaired Loans |   | $                        | 14,752  |   |                   | $      | 14,659  |                      |   | $      | 1,648                     |   |   | $                        | 10,096  |   |   | $ | 385 |   |

----

|                                                         |   |  Pass |    |   | SpecialMention |   |   |  Substandard |   |   |  Doubtful |   |   |  Loss |    |   |  Total |   |
|-------------------------------------------------------------------|--------|------------|---------|--------|----------------|--------|--------|-------------------|--------|--------|----------------|--------|--------|------------|---------|--------|-------------|--------|
| March 31, 2011                                                    |   |       |    |   |           |   |   |              |   |   |           |   |   |       |    |   |        |   |
| Commercial real estate loans                                      |   | $          | 167,696 |   |           | $      | 1,601  |              |   | $      | 16,898         |   |   | $          | — |   |        | $      | — |   |   | $ | 186,195 |   |
| Commercial loans                                                  |   |       | 20,586  |   |           |   | 75     |              |   |   | 533            |   |   |       | — |   |        |   | — |   |   |   | 21,194 |   |
|           Total |   | $          | 188,282 |   |           | $      | 1,676  |              |   | $      | 17,431         |   |   | $          | — |   |        | $      | — |   |   | $ | 207,389 |   |
|                                                              |   |       |    |   |           |   |   |              |   |   |           |   |   |       |    |   |        |   |   |   |   |   |   |   |

|                                                              |   |  Pass |    |   | SpecialMention |   |   |  Substandard |   |   |  Doubtful |   |   |  Loss |    |   |  Total |   |
|-------------------------------------------------------------------|--------|------------|---------|--------|----------------|--------|--------|-------------------|--------|--------|----------------|--------|--------|------------|---------|--------|-------------|--------|
| December 31,  2010                                      |   |       |    |   |           |   |   |              |   |   |           |   |   |       |    |   |        |   |
| Commercial real estate loans                                      |   | $          | 165,226 |   |           | $      | 1,780  |              |   | $      | 17,088         |   |   | $          | — |   |        | $      | — |   |   | $ | 184,094 |   |
| Commercial loans                                                  |   |       | 21,759  |   |           |   | 75     |              |   |   | 552            |   |   |       | — |   |        |   | — |   |   |   | 22,386 |   |
|           Total |   | $          | 186,985 |   |           | $      | 1,855  |              |   | $      | 17,640         |   |   | $          | — |   |        | $      | — |   |   | $ | 206,480 |   |
|                                                              |   |       |    |   |           |   |   |              |   |   |           |   |   |       |    |   |        |   |   |   |   |   |   |   |

| March 31, 2011                      |   | Performing |    |   | Nonperforming |   |    | Total  |   |
|-------------------------------------|--------|------------|---------|--------|---------------|--------|---------|--------|--------|
| Residential real estate loans       |   | $          | 117,490 |   |          | $      | 892     |   |   | $ | 118,382 |   |
| Construction                        |   |       | 11,894  |   |          |   | — |   |   |   | 11,894 |   |
| Consumer loans                      |   |       | 12,963  |   |          |   | — |   |   |   | 12,963 |   |
|      Total |   | $          | 142,347 |   |          | $      | 892     |   |   | $ | 143,239 |   |
|                                |   |       |    |   |          |   |    |   |   |   |   |   |

| December 31, 2010                   |   | Performing |    |   | Nonperforming |   |    | Total  |   |
|-------------------------------------|--------|------------|---------|--------|---------------|--------|---------|--------|--------|
| Residential real estate loans       |   | $          | 123,623 |   |          | $      | 939     |   |   | $ | 124,562 |   |
| Construction                        |   |       | 12,638  |   |          |   | — |   |   |   | 12,638 |   |
| Consumer loans                      |   |       | 13,668  |   |          |   | — |   |   |   | 13,668 |   |
|      Total |   | $          | 149,929 |   |          | $      | 939     |   |   | $ | 150,868 |   |
|                                |   |       |    |   |          |   |    |   |   |   |   |   |

----

|                          |   |     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, 2011          |   |                            |    |   |                                  |   |    |                                  |   |   |                                             |   |   |                          |    |   |                                       |   |    |                          |   |
| Real Estate loans             |   |                            |    |   |                                  |   |    |                                  |   |   |                                             |   |   |                          |    |   |                                       |   |    |                          |   |
|    Residential |   | $                               | 117,227 |   |                                  | $      | 263     |                                  |   | $      | —                                          |   |   | $                             | — |   |                                       | $      | 892     |                          |   | $ | 1,155 |   |   | $ | 118,382 |   |
|    Construction     |   |                            | 11,783  |   |                                  |   | 111     |                                  |   |   | —                                          |   |   |                          | — |   |                                       |   | — |                          |   |   | 111 |   |   |   | 11,894 |   |
|    Commercial       |   |                            | 180,035 |   |                                  |   | 176     |                                  |   |   | —                                          |   |   |                          | — |   |                                       |   | 5,984   |                          |   |   | 6,160 |   |   |   | 186,195 |   |
| Commercial  loans   |   |                            | 20,683  |   |                                  |   | — |                                  |   |   | —                                          |   |   |                          | — |   |                                       |   | 511     |                          |   |   | 511 |   |   |   | 21,194 |   |
| Consumer  loans     |   |                            | 12,948  |   |                                  |   | 7       |                                  |   |   | 8                                                |   |   |                          | — |   |                                       |   | — |                          |   |   | 15 |   |   |   | 12,963 |   |
|     Total |   | $                               | 342,676 |   |                                  | $      | 557     |                                  |   | $      | 8                                                |   |   | $                             | — |   |                                       | $      | 7,387   |                          |   | $ | 7,952 |   |   | $ | 350,628 |   |
|                          |   |                            |    |   |                                  |   |    |                                  |   |   |                                             |   |   |                          |    |   |                                       |   |    |                          |   |   |   |   |   |   |   |   |

|                          |   |     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, 2010       |   |                            |    |   |                                  |   |   |                                  |   |   |                                                   |   |   |                          |    |   |                                       |   |    |                          |   |
| Real Estate loans             |   |                            |    |   |                                  |   |   |                                  |   |   |                                                   |   |   |                          |    |   |                                       |   |    |                          |   |
|    Residential |   | $                               | 123,177 |   |                                  | $      | 407    |                                  |   | $      | —                                                |   |   | $                             | 39      |   |                                       | $      | 939     |                          |   | $ | 1,385 |   |   | $ | 124,562 |   |
|    Construction     |   |                            | 12,622  |   |                                  |   | 16     |                                  |   |   | —                                                |   |   |                          | — |   |                                       |   | — |                          |   |   | 16 |   |   |   | 12,638 |   |
|    Commercial       |   |                            | 176,981 |   |                                  |   | 3,047  |                                  |   |   | 1,478                                                  |   |   |                          | — |   |                                       |   | 2,588   |                          |   |   | 7,113 |   |   |   | 184,094 |   |
| Commercial  loans   |   |                            | 21,858  |   |                                  |   | 15     |                                  |   |   | —                                                |   |   |                          | — |   |                                       |   | 513     |                          |   |   | 528 |   |   |   | 22,386 |   |
| Consumer  loans     |   |                            | 13,642  |   |                                  |   | 24     |                                  |   |   | 2                                                      |   |   |                          | — |   |                                       |   | — |                          |   |   | 26 |   |   |   | 13,668 |   |
|     Total |   | $                               | 348,280 |   |                                  | $      | 3,509  |                                  |   | $      | 1,480                                                  |   |   | $                             | 39      |   |                                       | $      | 4,040   |                          |   | $ | 9,068 |   |   | $ | 357,348 |   |
|                          |   |                            |    |   |                                  |   |   |                                  |   |   |                                                   |   |   |                          |    |   |                                       |   |    |                          |   |   |   |   |   |   |   |   |

|                                                  |  Three months ended March 31, |   |
|-------------------------------------------------------|------------------------------------|--------|
|                                                  | 2011                               |   | 2010 |   |
|                                                  | (dollars in thousands)             |
|    Allowance balance at beginning of period |                               | $      | 5,616 |   |   | $ | 5,453 |   |
|    Charge-offs:                             |                               |   | (75 | ) |   |   | (429 | ) |
|    Recoveries:                              |                               |   | 19 |   |   |   | 8 |   |
|    Provision expense                        |                               |   | 220 |   |   |   | 330 |   |
|    Allowance balance at end of period       |                               | $      | 5,780 |   |   | $ | 5,362 |   |

----

| (In thousands)                                                  |   |  ResidentialReal Estate |           |                |  CommercialReal Estate |   |         |   Construction |   |   |    Commercial |   |   |   Consumer |           |   |   Total |   |
|-----------------------------------------------------------------|--------|------------------------------|----------------|---------------------|-----------------------------|--------|--------------|--------------------------|--------|--------|------------------------------|--------|--------|----------------------|----------------|--------|-------------------|--------|
|                                                            |   |                         |           |                |                        |   |         |                     |   |   |                         |   |   |                 |           |   |              |   |
|                                                            |   |                         |           |                |                        |   |         |                     |   |   |                         |   |   |                 |           |   |              |   |
| Beginning balance, December 31, 2010                            |   | $                            | 1,167          |                |                        | $      | 3,976        |                     |   | $      | 110                          |   |   | $                    | 171            |   |              | $      | 192 |   |   | $ | 5,616 |   |
| Charge Offs                                                     |   |                         | (37            | )    |                        |   | (14          | )                        |   |   | —                      |   |   |                 | (2             | )      |              |   | (22 | ) |   |   | (75 | ) |
| Recoveries                                                      |   |                         | 2              |                |                        |   | —      |                     |   |   | —                      |   |   |                 | 5              |   |              |   | 12 |   |   |   | 19 |   |
| Provision Expense                                               |   |                         | (14            | )         |                        |   | 124          |                     |   |   | 1                            |   |   |                 | 139            |   |              |   | (30 | ) |   |   | 220 |   |
| Ending balance                                                  |   | $                            | 1,118          |                |                        | $      | 4,086        |                     |   | $      | 111                          |   |   | $                    | 313            |   |              | $      | 152 |   |   | $ | 5,780 |   |
| Ending balance individually  evaluated for impairment |   | $                            |   — |                |                        | $      |   2,153 |                     |   | $      |   —               |   |   | $                    |   — |   |              | $      |   — |   |   | $ |   2,153 |   |
| Ending balance collectively  evaluated for impairment |   | $                            |   1,118   |                |                        | $      |   1,933 |                     |   | $      |   111                   |   |   | $                    |   313     |   |              | $      |   152 |   |   | $ |   3,627 |   |
|                                                            |   |                         |           |                |                        |   |         |                     |   |   |                         |   |   |                 |           |   |              |   |   |   |   |   |   |   |

----

| (dollars in thousands)                                  |   | March 31, 2011 |      |    | December 31, 2010 |   |
|---------------------------------------------------------|--------|----------------|-----------|---------|-------------------|--------|
|   Loans accounted for on a non-accrual basis: |   |           |      |    |              |   |
|    Commercial and all other              |   | $              | -         |    |              | $      | 513 |   |
|    Real Estate                           |   |           | 6,786     |    |              |   | 3,527 |   |
|    Consumer                              |   |           | 601       |    |              |   |  - |   |
|    Total                                 |   |           | 7,387     |    |              |   | 4,040 |   |
|                                                    |   |           |      |    |              |   |   |   |
| Accruing loans which are contractually                  |   |           |      |    |              |   |   |   |
|   past due 90 days or more                    |   |           | -         |    |              |   |  39 |   |
| Total non-performing loans                              |   |           | 7,387     |    |              |   | 4,079 |   |
| Foreclosed real estate                                  |   |           | 948       |    |              |   |  748 |   |
| Total non-performing assets                             |   | $              | 8,335     |    |              | $      | 4,827 |   |
| Allowance for loans losses                              |   | $              | 5,780     |    |              | $      | 5,616 |   |
| Coverage of non-performing loans                        |   |           |  .78 | x  |              |   |  1.38 | x  |
| Non-performing loans to total loans                     |   |           | 2.11      | %       |              |   | 1.14 | % |
| Non-performing loans to total assets                    |   |           | 1.39      | %       |              |   | .76 | % |
| Non-performing assets to total assets                   |   |           | 1.57      | %       |              |   | .90 | % |

|   | Level 1: | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
|--------|----------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 2: | Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. |
|--------|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Level 3: | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity). |
|--------|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                | Fair Value Measurement Reporting Date Using |   |
|---------------------------------------------------------------------|---------------------------------------------|--------|
|     Description                                 |     Total               |   |   | (Level 1)Quoted Prices in Active MarketsFor IdenticalAssets |   |   | (Level 2)SignificantOtherObservableInputs |   |   |  (Level 3)SignificantUnobservableInputs |   |
|                                                                | (In thousands)                              |   |
| March 31, 2011                                                      |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Available for Sale:                                                 |                                        |   |   |   |   |   |   |   |   |   |   |   |
| US Government agencies                                              |                                        | $      | 32,190 |   |   | $ | - |   |   | $ | 32,190 |   |   | $ | - |   |
| States and political subdivisions                                   |                                        |   | 46,015 |   |   |   | - |   |   |   | 46,015 |   |   |   | - |   |
| Corporate obligations                                               |                                        |   | 3,237 |   |   |   | - |   |   |   | 3,237 |   |   |   | - |   |
| Mortgage-backed securities-government  sponsored agencies |                                        |   | 61,164 |   |   |   | - |   |   |   | 61,164 |   |   |   | - |   |
| Equity securities-financial services                                |                                        |   | 498 |   |   |   | 498 |   |   |   | - |   |   | ­- |   |
| Total                                                               |                                        | $      | 143,104 |   |   | $ | 498 |   |   | $ | 142,606 |   |   | $ | - |   |
|                                                                |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010                                                   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available for Sale:                                                 |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| US Government agencies                                              |                                        | $      | 30,268 |   |   | $ | - |   |   | $ | 30,268 |   |   | $ | - |   |
| States and political subdivisions                                   |                                        |   | 49,766 |   |   |   | - |   |   |   | 49,766 |   |   |   | - |   |
| Corporate obligations                                               |                                        |   | 4,249 |   |   |   | - |   |   |   | 4,249 |   |   |   | - |   |
| Mortgage-backed securities-government  sponsored agencies |                                        |   | 60,928 |   |   |   | - |   |   |   | 60,928 |   |   |   | - |   |
| Equity securities-financial services                                |                                        |   | 604 |   |   |   | 604 |   |   | _____-_ |   |   | ­- |   |
| Total                                                               |                                        | $      | 145,815 |   |   | $ | 604 |   |   | $ | 145,211 |   |   | $ | - |   |

----

|                    |   |   |   |   | Fair Value Measurement Reporting Date using |   |
|------------------------------|--------|--------|--------|--------|---------------------------------------------|--------|
|                         |   |   |   |   |  (Level 1)                             |   |   |   |   |   |   |   |
|                         |   |   |   |   | Quoted Prices                               |   |   | (Level 2) |   |   |   |   |
| (In thousands)               |   |   |   |   | in Active                                   |   |   | Significant |   |   | (Level 3) |   |
|                         |   |   |   |   | Markets                                     |   |   | Other |   |   | Significant |   |
|                         |   |   |   |   | For Identical                               |   |   | Observable |   |   | Unobservable |   |
| Description                  |   | Total  |   |   | Assets                                      |   |   | Inputs |   |   | Inputs |   |
| March 31, 2011               |   |   |   |
| Impaired Loans               |   | $      | 14,856 |   |                                        | $      | - |   |   | $ | - |   |   | $ | 14,856 |   |
| Foreclosed Real Estate Owned |   |   | 948    |   |                                        |   | - |   |   |   | - |   |   |   | 948 |   |
|                         |   | $      | 15,804 |   |                                        | $      | - |   |   | $ | - |   |   | $ | 15,804 |   |
|                         |   |   |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010            |   |   |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Impaired Loans               |   | $      | 13,104 |   |                                        | $      | - |   |   | $ | 7,038 |   |   | $ | 6,066 |   |
| Foreclosed Real Estate Owned |   |   | 748    |   |                                        |   | - |   |   |   | 748 |   |   |   | - |   |
|                         |   | $      | 13,852 |   |                                        | $      | - |   |   | $ | 7,786 |   |   | $ | 6,066 |   |

----

----

----

|                                                                                                                          |   | March 31, 2011  |     |   | December 31, 2010 |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|----------|--------|-------------------|--------|
|                                                                                                                          |   | Carrying Amount |     |   | Fair Value        |   |   | Carrying Amount |   |   | Fair Value |   |
|                                                                                                                          |   | (In Thousands)  |     |
| Financial assets:                                                                                                             |   |            |     |   |              |   |   |   |   |   |   |   |
| Cash and due from banks, interest-  bearing deposits with banks and  federal funds sold                   |   | $               | 19,534   |   |              | $      | 19,534 |   |   | $ | 16,625 |   |   | $ | 16,625 |   |
| Securities                                                                                                                    |   |            | 143,274  |   |              |   | 143,281 |   |   |   | 145,985 |   |   |   | 145,994 |   |
| Loans receivable, net                                                                                                         |   |            | 344,348  |   |              |   | 357,701 |   |   |   | 351,239 |   |   |   | 358,873 |   |
| Mortgage servicing rights                                                                                                     |   |            | 298      |   |              |   | 298 |   |   |   | 250 |   |   |   | 274 |   |
| Investment in FHLB stock                                                                                                      |   |            | 3,193    |   |              |   | 3,193 |   |   |   | 3,361 |   |   |   | 3,361 |   |
| Accrued interest receivable                                                                                                   |   |            | 2,191    |   |              |   | 2,191 |   |   |   | 2,166 |   |   |   | 2,166 |   |
|                                                                                                                          |   |            |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                                                                                                        |   |            |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                                      |   |            | 397,120  |   |              |   | 398,190 |   |   |   | 393,865 |   |   |   | 395,157 |   |
| Short-term borrowings                                                                                                         |   |            | 25,465   |   |              |   | 25,465 |   |   |   | 33,309 |   |   |   | 33,309 |   |
| Other borrowings                                                                                                              |   |            | 35,000   |   |              |   | 37,037 |   |   |   | 38,000 |   |   |   | 40,413 |   |
| Accrued interest payable                                                                                                      |   |            | 1,342    |   |              |   | 1,342 |   |   |   | 1,536 |   |   |   | 1,536 |   |
|                                                                                                                          |   |            |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Off-balance sheet financial instruments: Commitments to extend credit and   outstanding letters of credit |   |            |   - |   |              |   |   - |   |   |   |   - |   |   |   |   - |   |

----

----

----

|   | • | our ability to realize the anticipated benefits from our acquisition of North Penn Bancorp, Inc. |
|--------|---------|--------------------------------------------------------------------------------------------------|
|   | • | our ability to effectively manage future growth                                                  |
|   | • | loan losses in excess of our allowance                                                           |
|   | • | risks inherent in commercial lending                                                             |
|   | • | real estate collateral which is subject to declines in value                                     |
|   | • | potential other-than-temporary impairments                                                       |
|   | • | higher deposit insurance premiums                                                                |
|   | • | soundness of other financial institutions                                                        |
|   | • | increased compliance burden under new financial reform legislation                               |
|   | • | risk of failure to stabilize the financial system                                                |
|   | • | current market volatility                                                                        |
|   | • | potential liquidity risk                                                                         |
|   | • | availability of capital                                                                          |
|   | • | regional economic factors                                                                        |
|   | • | loss of senior officers                                                                          |
|   | • | comparatively low legal lending limits                                                           |
|   | • | limited market for the Company’s stock                                                     |
|   | • | restrictions on ability to pay dividends                                                         |
|   | • | common stock may lose value                                                                      |
|   | • | competitive environment                                                                          |
|   | • | issuing additional shares may dilute ownership                                                   |
|   | • | extensive and complex governmental regulation and associated cost                                |
|   | • | interest rate risks                                                                              |

----

----

|                                                                 |   | March 31, 2011 |    |   | December 31, 2010 |   |
|----------------------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
| (dollars in thousands)                                               |   | Amount         |    |   | % of portfolio    |   |   | Amount |   |   | % of portfolio |   |
|                                                                 |   |           |    |   |              |   |   |   |   |   |   |   |
| US Government agencies                                               |   | $              | 32,190  |   |              |   | 22.5 | % |   | $ | 30,268 |   |   |   | 20.7 | % |
| States and political subdivisions                                    |   |           | 46,185  |   |              |   | 32.2 |   |   |   | 49,936 |   |   |   | 34.2 |   |
| Corporate obligations                                                |   |           | 3,237   |   |              |   | 2.3 |   |   |   | 4,249 |   |   |   | 2.9 |   |
| Mortgage-backed securities-  government sponsored entities |   |           | 61,164  |   |              |   |  42.7 |   |   |   |  60,928 |   |   |   |  41.8 |   |
| Equity securities-financial services                                 |   |           | 498     |   |              |   |  0 .3 |   |   |   |  604 |   |   |   |  0.4 |   |
|   Total                                                    |   | $              | 143,274 |   |              |   | 100.0 | % |   | $ | 145,985 |   |   |   | 100.0 | % |

----

| (dollars in thousands)              |   | March 31, 2011 |    |   | December 31, 2010 |   |
|-------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                |   |           |    |   |              |   |
| Non-interest bearing demand         |   | $              | 62,736  |   |              | $      | 62,238 |   |
| Interest bearing demand             |   |           | 37,851  |   |              |   | 38,168 |   |
| Money market deposit accounts       |   |           | 70,093  |   |              |   | 70,812 |   |
| Savings                             |   |           | 52,200  |   |              |   | 50,341 |   |
| Time deposits <$100,000          |   |           | 112,436 |   |              |   | 112,291 |   |
| Time deposits >$100,000          |   |           | 61,804  |   |              |   |  60,015 |   |
|                                |   |           |    |   |              |   |   |   |
|      Total |   | $              | 397,120 |   |              | $      | 393,865 |   |
|                                |   |           |    |   |              |   |   |   |

|                                           |   | March 31, 2011 |   |   | December 31, 2010 |   |
|------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
| (dollars in thousands)                         |   |           |   |   |              |   |
| Securities sold under agreements to repurchase |   | $              | 25,267 |   |              | $      | 33,110 |   |
| U.S. Treasury demand notes                     |   |           | 198    |   |              |   |  199 |   |
|                                           |   | $              | 25,465 |   |              | $      | 33,309 |   |

|                                   |   | March 31, 2011 |   |   | December 31, 2010 |   |
|---------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
| Notes with the FHLB:                        |   |           |   |   |              |   |
| Convertible note due January 2011 at 5.24%  |   | $              | -      |   |              | $      | 3,000 |   |
| Convertible note due August 2011 at 2.69%   |   |           | 10,000 |   |              |   | 10,000 |   |
| Fixed rate note due September 2011 at 4.06% |   |           | 5,000  |   |              |   | 5,000 |   |
| Convertible note due October 2012 at 4.37%  |   |           | 5,000  |   |              |   | 5,000 |   |
| Convertible note due May 2013 at 3.015%     |   |           | 5,000  |   |              |   | 5,000 |   |
| Convertible note due January 2017 at 4.71%  |   |           | 10,000 |   |              |   | 10,000 |   |
|                                        |   | $              | 35,000 |   |              | $      | 38,000 |   |

----

|                                       |   | March 31, 2011 |   |   | December 31, 2010 |   |
|--------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|
|                                       |   | (in thousands)      |   |
| Commitments to grant loans                 |   | $                   | 23,466 |   |                   | $      | 21,448 |   |
| Unfunded commitments under lines of credit |   |                | 29,809 |   |                   |   | 30,311 |   |
| Standby letters of credit                  |   |                | 3,636  |   |                   |   |  3,605 |   |
|                                       |   |                |   |   |                   |   |   |   |
|                                       |   | $                   | 56,911 |   |                   | $      | 55,364 |   |
|                                       |   |                |   |   |                   |   |   |   |

|                             |   | March 31, 2011 |   |    | December 31, 2010 |   |
|---------------------------------------|--------|----------------|--------|---------|-------------------|--------|
| :Tier 1 Capital                       |   |           |   |    |              |   |
|   (To average assets)       |   |           | 12.71  | %  |              |   | 12.41 | %  |
| Tier 1 Capital                        |   |           |   |    |              |   |   |   |
|   (To risk-weighted assets) |   |           | 18.94  | %  |              |   | 18.44 | %  |
| Total Capital                         |   |           |   |    |              |   |   |   |
|   (To risk-weighted assets) |   |           | 20.23  | %  |              |   | 19.74 | %  |
|                                  |

----

----

| (Tax-Equivalent Basis, dollars in thousands)                                            |   |  Three Months Ended March 31, |    |
|-----------------------------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                                    |   |  2011                         |    |   |  2010 |   |
|                                                                                    |   | AverageBalance(2)                  |    |   | Interest(1) |   |   | Average Rate(3) |   |   | AverageBalance(2) |   |   | Interest(1) |   |   | Average Rate(3) |   |
| Assets                                                                                  |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                                |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold                                                                      |   | $                                  | 167     |   |   | $ | - |   |   |   | 0.24 | % |   | $ | 3,000 |   |   | $ | 2 |   |   |   | 0.27 | % |
|    Interest bearing deposits with banks                                       |   |                               | 10,564  |   |   |   | 8 |   |   |   | 0.30 |   |   |   | 11,128 |   |   |   | 9 |   |   |   | 0.32 |   |
|    Securities held-to-maturity                                           |   |                               | 170     |   |   |   | 3 |   |   |   | 7.06 |   |   |   | 618 |   |   |   | 13 |   |   |   | 8.41 |   |
|    Securities available for sale:                                        |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Taxable                                                   |   |                               | 97,489  |   |   |   | 650 |   |   |   | 2.67 |   |   |   | 97,496 |   |   |   | 903 |   |   |   | 3.70 |   |
|      Tax-exempt(1)                                             |   |                               | 46,629  |   |   |   | 664 |   |   |   | 5.70 |   |   |   | 31,946 |   |   |   | 468 |   |   |   | 5.86 |   |
|         Total securities available for sale (1) |   |                               | 144,118 |   |   |   | 1,314 |   |   |   | 3.65 |   |   |   | 129,442 |   |   |   | 1,371 |   |   |   | 4.24 |   |
|      Loans receivable (1) (4) (5)                              |   |                               | 353,118 |   |   |   | 4,970 |   |   |   | 5.63 |   |   |   | 358,737 |   |   |   | 5,453 |   |   |   | 6.08 |   |
|         Total interest earning assets           |   |                               | 508,137 |   |   |   | 6,295 |   |   |   | 4.96 |   |   |   | 502,925 |   |   |   | 6,848 |   |   |   | 5.45 |   |
| Non-interest earning assets:                                                            |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Cash and due from banks                                               |   |                               | 6,798   |   |   |   |   |   |   |   |   |   |   |   | 6,915 |   |   |   |   |   |   |   |   |   |
|    Allowance for loan losses                                             |   |                               | (5,742  | ) |   |   |   |   |   |   |   |   |   |   | (5,439 | ) |   |   |   |   |   |   |   |   |
|    Other assets                                                          |   |                               | 21,619  |   |   |   |   |   |   |   |   |   |   |   | 22,223 |   |   |   |   |   |   |   |   |   |
|         Total non-interest earning assets       |   |                               | 22,675  |   |   |   |   |   |   |   |   |   |   |   | 23,699 |   |   |   |   |   |   |   |   |   |
| Total Assets                                                                            |   | $                                  | 530,812 |   |   |   |   |   |   |   |   |   |   | $ | 526,624 |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders' Equity                                                    |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing liabilities:                                                           |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Interest bearing demand and money    market       |   | $                                  | 108,944 |   |   |   | 108 |   |   |   | 0.40 |   |   | $ | 97,214 |   |   |   | 145 |   |   |   | 0.60 |   |
|    Savings                                                               |   |                               | 51,326  |   |   |   | 25 |   |   |   | 0.19 |   |   |   | 46,069 |   |   |   | 28 |   |   |   | 0.24 |   |
|    Time                                                                  |   |                               | 172,924 |   |   |   | 752 |   |   |   | 1.74 |   |   |   | 186,963 |   |   |   | 1,026 |   |   |   | 2.20 |   |
|       Total interest bearing deposits                     |   |                               | 333,194 |   |   |   | 885 |   |   |   | 1.06 |   |   |   | 330,246 |   |   |   | 1,199 |   |   |   | 1.45 |   |
| Short-term borrowings                                                                   |   |                               | 27,819  |   |   |   | 24 |   |   |   | 0.35 |   |   |   | 25,010 |   |   |   | 34 |   |   |   | 0.54 |   |
| Other borrowings                                                                        |   |                               | 35,600  |   |   |   | 336 |   |   |   | 3.78 |   |   |   | 43,000 |   |   |   | 412 |   |   |   | 3.83 |   |
|    Total interest bearing liabilities                                    |   |                               | 396,613 |   |   |   | 1,245 |   |   |   | 1.26 |   |   |   | 398,256 |   |   |   | 1,645 |   |   |   | 1.65 |   |
| Non-interest bearing liabilities:                                                       |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Demand deposits                                                       |   |                               | 61,858  |   |   |   |   |   |   |   |   |   |   |   | 58,570 |   |   |   |   |   |   |   |   |   |
|    Other liabilities                                                     |   |                               | 3,723   |   |   |   |   |   |   |   |   |   |   |   | 4,105 |   |   |   |   |   |   |   |   |   |
|       Total non-interest bearing liabilities              |   |                               | 65,581  |   |   |   |   |   |   |   |   |   |   |   | 62,675 |   |   |   |   |   |   |   |   |   |
|    Stockholders' equity                                                  |   |                               | 68,618  |   |   |   |   |   |   |   |   |   |   |   | 65,693 |   |   |   |   |   |   |   |   |   |
| Total Liabilities and Stockholders' Equity                                              |   | $                                  | 530,812 |   |   |   |   |   |   |   |   |   |   | $ | 526,624 |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income (tax equivalent basis)                                              |   |                               |    |   |   |   | 5,050 |   |   |   | 3.70 | % |   |   |   |   |   |   | 5,203 |   |   |   | 3.79 | % |
| Tax-equivalent basis adjustment                                                         |   |                               |    |   |   |   | (269 | ) |   |   |   |   |   |   |   |   |   |   | (206 | ) |   |   |   |   |
| Net interest income                                                                     |   |                               |    |   |   | $ | 4,781 |   |   |   |   |   |   |   |   |   |   | $ | 4,997 |   |   |   |   |   |
| Net interest margin (tax equivalent basis)                                              |   |                               |    |   |   |   |   |   |   |   | 3.98 | % |   |   |   |   |   |   |   |   |   |   | 4.14 | % |

| (1) | Interest and yields are presented on a tax-equivalent basis using a marginal tax rate of 34%. |
|-----|-----------------------------------------------------------------------------------------------|
| (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.                |

----

|                                                               |   | Increase/(Decrease)                                                                                       |   |
|--------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------|--------|
|                                                               |   | Three months ended March 31, 2011 Compared to Three months ended March 31, 2010 Variance due to |   |
|                                                               |   | Volume                                                                                                    |   |   | Rate |   |   | Net |   |
|                                                               |   |                                                                                                      |   |   |   |   |   |   |   |
| Interest earning assets:                                           |   |                                                                                                      |   |   |   |   |   |   |   |
| Federal funds sold......................................           |   | $                                                                                                         | (2     | ) |   | $ | - |   |   | $ | (2 | ) |
| Interest bearing deposits with banks.............. |   |                                                                                                      | -      |   |   |   | (1 | ) |   |   | (1 | ) |
| Securities held to maturity............................            |   |                                                                                                      | (8     | ) |   |   | (2 | ) |   |   | (10 | ) |
| Securities available for sale:                                     |   |                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Taxable...................................................         |   |                                                                                                      | -      |   |   |   | (253 | ) |   |   | (253 | ) |
| Tax-exempt securities..................................            |   |                                                                                                      | 283    |   |   |   | (87 | ) |   |   | 196 |   |
| Total securities..........................................         |   |                                                                                                      | 275    |   |   |   | (342 | ) |   |   | (67 | ) |
| Loans receivable........................................           |   |                                                                                                      | (84    | ) |   |   | (399 | ) |   |   | (483 | ) |
| Total interest earning assets...........................           |   |                                                                                                      | 189    |   |   |   | (742 | ) |   |   | (553 | ) |
|                                                               |   |                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Interest bearing liabilities:                                      |   |                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing demand and money market....                   |   |                                                                                                      | 93     |   |   |   | (130 | ) |   |   | (37 | ) |
| Savings................................................            |   |                                                                                                      | 15     |   |   |   | (18 | ) |   |   | (3 | ) |
| Time...................................................            |   |                                                                                                      | (73    | ) |   |   | (201 | ) |   |   | (274 | ) |
| Total interest bearing deposits.......................             |   |                                                                                                      | 35     |   |   |   | (349 | ) |   |   | (314 | ) |
| Short-term borrowings................................              |   |                                                                                                      | 21     |   |   |   | (31 | ) |   |   | (10 | ) |
| Other borrowings......................................             |   |                                                                                                      | (70    | ) |   |   | (6 | ) |   |   | (76 | ) |
| Total interest bearing liabilities.....................            |   |                                                                                                      | (14    | ) |   |   | (386 | ) |   |   | (400 | ) |
| Net interest income (tax-equivalent basis).........                |   | $                                                                                                         | 203    |   |   | $ | (356 | ) |   | $ | (153 | ) |
|                                                               |   |                                                                                                      |   |   |   |   |   |   |   |   |   |   |

----

| (dollars in thousands)                                  |   | Three months endedMarch 31, 2011 to March 31, 2010 |   |
|---------------------------------------------------------|--------|----------------------------------------------------|--------|
| Net income three months ended March 31, 2010            |   | $                                                  | 1,797  |   |
| Change due to:                                          |   |                                               |   |   |
| Net interest income                                     |   |                                               | (216   | ) |
| Provision for loan losses                               |   |                                               | 110    |   |
| Gain on sales of loans and securities                   |   |                                               | 125    |   |
| Other income                                            |   |                                               | 81     |   |
| Salaries and employee benefits                          |   |                                               | (86    | ) |
| Occupancy, furniture and equipment                      |   |                                               | (4     | ) |
| Merger related expenses                                 |   |                                               | (267   | ) |
| All other expenses                                      |   |                                               | (17    | ) |
| Income tax expense                                      |   |                                               | 137    |   |
|                                                    |   |                                               |   |   |
| Net income three months ended  March 31, 2011 |   | $                                                  | 1,660  |   |
|                                                    |   |                                               |   |   |

----

----

|                                             |   | 3 Months |    |   | 3-12 Months |   |    | 1 to 3 Years |   |   | Over3 Years |   |   | Total  |    |
|--------------------------------------------------|--------|----------|---------|--------|-------------|--------|---------|--------------|--------|--------|-------------|--------|--------|--------|---------|
| Federal funds sold and interest bearing deposits |   | $        | 13,614  |   |        | $      | 250     |         |   | $      | -           |   |   | $      | -       |   |   | $ | 13,864 |   |
| Securities                                       |   |     | 9,901   |   |        |   | 21,885  |         |   |   | 44,670      |   |   |   | 66,818  |   |   |   | 143,274 |   |
| Loans Receivable                                 |   |     | 90,059  |   |        |   | 61,036  |         |   |   | 104,949     |   |   |   | 94,084  |   |   |   | 350,128 |   |
|   Total RSA                            |   |     | 113,574 |   |        |   | 83,171  |         |   |   | 149,619     |   |   |   | 160,902 |   |   |   | 507,266 |   |
|                                             |   |     |    |   |        |   |    |         |   |   |        |   |   |   |    |   |   |   |   |   |
| Non-maturity interest-bearing deposits           |   |     | 25,332  |   |        |   | 28,129  |         |   |   | 74,373      |   |   |   | 32,311  |   |   |   | 160,145 |   |
| Time Deposits                                    |   |     | 43,628  |   |        |   | 65,989  |         |   |   | 47,829      |   |   |   | 16,793  |   |   |   | 174,239 |   |
| Other                                            |   |     | 5,697   |   |        |   | 23,762  |         |   |   | 21,006      |   |   |   | 10,000  |   |   |   | 60,465 |   |
|   Total RSL                            |   |     | 74,657  |   |        |   | 117,880 |         |   |   | 143,208     |   |   |   | 59,104  |   |   |   | 394,849 |   |
|                                             |   |     |    |   |        |   |    |         |   |   |        |   |   |   |    |   |   |   |   |   |
| Interest Sensitivity Gap                         |   |     | 38,917  |   |        |   | (34,709 | )            |   |   | 6,411       |   |   |   | 101,798 |   |   | $ | 112,417 |   |
| Cumulative Gap                                   |   |     | 38,917  |   |        |   | 4,208   |         |   |   | 10,619      |   |   |   | 112,417 |   |   |   |   |   |
| RSA/RSL-cumulative                               |   |     | 152.1   | %      |        |   | 102.2   | %            |   |   | 103.2       | %      |   |   | 128.5   | % |   |   |   |   |
|                                             |   |     |    |   |        |   |    |         |   |   |        |   |   |   |    |   |   |   |   |   |
| December 31, 2010                                |   |     |    |   |        |   |    |         |   |   |        |   |   |   |    |   |   |   |   |   |
|                                             |   |     |    |   |        |   |    |         |   |   |        |   |   |   |    |   |   |   |   |   |
| Interest Sensitivity Gap                         |   | $        | 41,341  |   |        | $      | (33,613 | )            |   | $      | 10,969      |   |   | $      | 92,050  |   |   | $ | 110,747 |   |
| Cumulative Gap                                   |   |     | 41,341  |   |        |   | 7,728   |         |   |   | 18,697      |   |   |   | 110,747 |   |   |   |   |   |
| RSA/RSL-cumulative                               |   |     | 162.9   | %      |        |   | 103.9   | %            |   |   | 105.5       | %      |   |   | 127.5   | % |   |   |   |   |

----

|                               |   | Issuer Purchases of Equity Securities  |   |
|------------------------------------|--------|--------------------------------------------------|--------|
|                               |   |    Total numberof sharespurchased |   |   |    Average pricepaid pershare |   |   |  Total number ofshares purchasedas part of publiclyannounced plansor programs |   |   | Maximum numberof shares (or approximatedollar value) that may yet be purchasedunder the plansor programs (2) |   |
|                               |   |                                             |   |   |   |   |   |   |   |   |   |   |
| January 1–January 31, 2011   |   |                                             | -      |   |   | $ | - |   |   |   | - |   |   |   | - |   |
| February 1–February 28, 2011 |   |                                             | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| March 1 – March 31, 2011(1)  |   |                                             | 6,892  |   |   |   |  27.77 |   |   |   | - |   |   |   | 86,000 |   |
|                               |   |                                             | 6,892  |   |   | $ | 27.77 |   |   |   | - |   |   |   | 86,000 |   |
|                               |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| No.   | Description                                                                                                                                                |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1   | Agreement and Plan of Merger, dated December 14, 2010, by and among Norwood Financial Corp., Wayne Bank, North Penn Bancorp, Inc. and North Penn Bank. (1) |
| 3(i)  | Articles of Incorporation of Norwood Financial Corp.(2)                                                                                                    |
| 3(ii) | Bylaws of Norwood Financial Corp. (3)                                                                                                                      |
| 4.0   | Specimen Stock Certificate of Norwood Financial Corp. (2)                                                                                                  |
| 10.1  | Employment Agreement with Lewis J. Critelli (3)                                                                                                            |
| 10.2  | Change in Control Severance Agreement with William S. Lance(3)                                                                                             |
| 10.3  | Norwood Financial Corp. Stock Option Plan (5)                                                                                                              |
| 10.4  | Salary Continuation Agreement between the Bank and William W. Davis, Jr. (4)                                                                               |
| 10.5  | Salary Continuation Agreement between the Bank and Lewis J. Critelli (4)                                                                                   |
| 10.6  | Salary Continuation Agreement between the Bank and Edward C. Kasper (4)                                                                                    |
| 10.7  | 1999 Directors Stock Compensation Plan (4)                                                                                                                 |
| 10.8  | Salary Continuation Agreement between the Bank and Joseph A. Kneller (6)                                                                                   |
| 10.9  | Salary Continuation Agreement between the Bank and John H. Sanders (6)                                                                                     |
| 10.10 | 2006 Stock Option Plan (7)                                                                                                                                 |
| 10.11 | First and Second Amendments to Salary Continuation Agreement with William W. Davis, Jr. (8)                                                                |
| 10.12 | First and Second Amendments to Salary Continuation Agreement with Lewis J. Critelli (8)                                                                    |
| 10.13 | First and Second Amendments to Salary Continuation Agreement with Edward C. Kasper (8)                                                                     |
| 10.14 | First and Second Amendments to Salary Continuation Agreement with Joseph A. Kneller (8)                                                                    |
| 10.15 | First and Second Amendments to Salary Continuation Agreement with John H. Sanders (8)                                                                      |
| 31    | Rule 13a-14(a)/15d-14(a) Certification of CEO and CFO                                                                                                      |
| 32    | Certification pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of Sarbanes Oxley Act of 2002                                             |

| (1) | Incorporated by reference into this document from the identically numbered exhibit to the Registrant’s Current Report on Form 8-K filed with the Commission on December 17, 2010. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated herein by reference into this document from the Exhibits to Form 10, Registration Statement initially filed with the Commission on April 29, 1996, Registration No. 0-28364 |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated by reference into this document from the identically numbered exhibits to the Registrant’s Form 10-K filed with the Commission on March 15, 2010. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (4) | Incorporated herein by reference to the identically numbered exhibits of the Registrant’s Form 10-K filed with the Commission on March 23, 2000. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Incorporated by reference into this document from the Exhibits to Form S-8 filed with the Commission on August 14, 1998, File No. 333-61487. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

| (6) |  Incorporated herein by reference to the identically numbered exhibit to the Registrant’s Form 10-K filed with the Commission on March 22, 2004. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Incorporated by reference to this document from Exhibit 4.1 to Registrant’s Registration Statement on Form S-8 (File No. 333-134831) filed with the Commission on June 8, 2006. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Incorporated herein by reference from the Exhibits to the Registrant’s Current Report on Form 8-K filed on April 4, 2006. |
|-----|---------------------------------------------------------------------------------------------------------------------------------|

----

|              |   | NORWOOD FINANCIAL CORP. |
|-------------------|--------|-------------------------|
|              |   |                    |
|              |   |                    |
| Date: May 9, 2011 |   |                    |
|              |   |                    | By: | /s/ Lewis J. Critelli |
|              |   |                    |   | Lewis J. Critelli |
|              |   |                    |   | President and Chief Executive Officer |
|              |   |                    |   | (Principal Executive Officer) |
|              |   |                    |   |   |
|              |   |                    |   |   |
|              |   |                    |   |   |
| Date: May 9, 2011 |   | By:                     | /s/ William S. Lance |
|              |   |                    |   | William S. Lance |
|              |   |                    |   | Senior Vice President, and |
|              |   |                    |   | Chief Financial Officer |
|              |   |                    |   | (Principal Financial Officer) |