NORWOOD FINANCIAL CORP.
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                           ANNOUNCES DIVIDEND INCREASE
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HONESDALE - DECEMBER 14, 2006

         William W. Davis, Jr. President and Chief Executive  Officer of Norwood
Financial Corp (NWFL) and its subsidiary  Wayne Bank announced that the Board of
Directors  declared a $.23 per share quarterly dividend payable February 1, 2007
to shareholders of record January 17, 2007. The $.23 per share represents a $.02
per share or 9.5% increase over the $.21 per share  dividend paid on November 1,
2006. The current dividend rate also represents a 15% increase over the dividend
paid on February 1, 2006.

         Mr. Davis  commented,  "The Board is  extremely  pleased to provide our
shareholders  with this  increase in the  quarterly  dividend.  It reflects  the
Company's  strong earnings  performance  through the nine months ended September
30, 2006.  Earnings per share (fully diluted)  increased 7.0% to $1.52 per share
in the 2006  period  compared  to $1.42 in 2005.  This also marks the  fifteenth
consecutive year of dividend increases for the Company."

         Norwood  Financial Corp,  through its  subsidiary,  Wayne Bank operates
twelve  offices in  Northeastern  Pennsylvania.  As of September  30, 2006,  the
Company had total assets of $453.2 million, loans outstanding of $313.7 million,
and total  deposits  of $364.6  million.  The  Company's  stock is traded on the
Nasdaq  Global Market under the symbol  "NWFL".  References to per share amounts
reflect the 5% dividend distributed to shareholders on May 26, 2006.

CONTACT:        Lewis J. Critelli
                Executive Vice President and Chief Financial Officer
                NORWOOD FINANCIAL CORP
                (570) 253-1455