1013272--3/13/2009--NORWOOD_FINANCIAL

related topics

{stock, price, share}

{condition, economic, financial}

{loan, real, estate}

{tax, income, asset}

{regulation, change, law}

{acquisition, growth, future}

{competitive, industry, competition}

{personnel, key, retain}

{stock, price, operating}

{provision, law, control}

{loss, insurance, financial}

{debt, indebtedness, cash}

Risks Related to Our Business Our success will depend upon our ability to effectively manage our future growth. If we experience loan losses in excess of our allowance, our earnings will be adversely affected. Most of our loans are to commercial borrowers, which have a higher degree of risk than other types of loans. Most of our loans are secured, in whole or in part, with real estate collateral which is subject to declines in value. We may be required to record other-than temporary impairment charges in respect of our investment securities portfolio and restricted stock. Recent legislative and regulatory initiatives to address difficult market and economic conditions may not stabilize the U.S. banking system. Current levels of market volatility are unprecedented. Liquidity risk could impair our ability to fund operations and jeopardize our financial condition. We may elect or be compelled to seek additional capital in the future, but that capital may not be available when it is needed. Our business is geographically concentrated and is subject to regional economic factors that could have an adverse impact on our business. The loss of senior executive officers and certain other key personnel could hurt our business. Our legal lending limits are relatively low and restrict our ability to compete for larger customers. Risks Related to Our Common Stock There is a limited trading market for our common stock, which may adversely impact your ability to sell your shares and the price you receive for your shares. There are restrictions on our ability to pay cash dividends. Our common stock is not insured and you could lose the value of your entire investment. Our management and significant shareholders control a substantial percentage of our stock and therefore have the ability to exercise substantial control over our affairs. We may issue additional shares of common or preferred stock, which may dilute the ownership and voting power of our shareholders and the book value of our common stock. Provisions of our Articles of Incorporation and the Pennsylvania Business Corporation Law could deter takeovers which are opposed by the Board of Directors. Risks Related to Our Industry We operate in a competitive market which could constrain our future growth and profitability. We are required to comply with extensive and complex governmental regulation which can adversely affect our business. We realize income primarily from the difference between interest earned on loans and investments and interest paid on deposits and borrowings, and changes in interest rates may adversely affect our profitability and assets. As a public company, we are subject to numerous reporting requirements that are currently evolving and could substantially increase our operating expenses and divert management s attention from the operation of our business.

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1013272--3/13/2009--NORWOOD_FINANCIAL_CORP