<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                       For the quarter ended June 30, 2006

                                       OR

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

                For the transition period from _______ to _______

                            Commission File 000-32605

                               NEFFS BANCORP, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                 <C>
          Pennsylvania                                       23-2400383
(State or other jurisdiction of                     (IRS Employer Identification
 incorporation or organization)                                 No.)
</TABLE>

              5629 PA Route 873, P.O. Box 10, Neffs, PA l8065-0010
                    (Address of principal executive offices)

                                 (610) 767-3875
                           (Issuer's telephone number)

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                               Yes   X   No
                                   -----    -----

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12-b-2 of the Exchange Act. (Check
one):

Large accelerated filer:      Accelerated filer:      Non-Accelerated filer:  X
                         ---                     ---                         ---

     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act.)

                               Yes       No   X
                                   -----    -----

As of June 30, 2006, 197,941 shares of common stock, par value of $1.00 were
outstanding.


                                       1

<PAGE>

                               NEFFS BANCORP, INC.

                                      INDEX

<TABLE>
<S>                                                                           <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

         Consolidated Statements of Financial Condition
         (Unaudited) June 30, 2006 and December 31, 2005...................    3

         Consolidated Statements of Income (Unaudited)
         Three months ended June 30, 2006 and June 30, 2005
         Six months ended June 30, 2006 and June 30, 2005..................    4

         Consolidated Statements of Stockholders' Equity
         (Unaudited) Six months ended June 30, 2006 and June 30, 2005......    5

         Consolidated Statements of Cash Flows (Unaudited)
         Six months ended June 30, 2006 and June 30, 2005..................    6

         Notes to the Interim Consolidated Financial
         Statements (Unaudited)............................................    7

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations...............................   10

Item 3.  Quantitative and Qualitative Disclosures about Market Risk........   20

Item 4.  Controls and Procedures...........................................   20

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.................................................   20

Item 1A. Risk Factors......................................................   20

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.......   20

Item 3.  Defaults Upon Senior Securities...................................   20

Item 4.  Submission of Matters to a Vote of Security Holders...............   21

Item 5.  Other Information.................................................   21

Item 6.  Exhibits..........................................................   21

SIGNATURES.................................................................   22
</TABLE>


                                        2

<PAGE>

                        NEFFS BANCORP, INC AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                      June 30,   December 31,
Dollars in thousands, except share data                 2006         2005
                                                      --------   ------------
<S>                                                   <C>        <C>
                      ASSETS
Cash and due from banks                               $  2,524     $  2,958
Interest bearing deposits with banks                       114          163
Federal funds sold                                          --        2,348
Securities available for sale                           38,808       42,021
Securities held to maturity, fair value
   $79,700 in 2006; $79,248 in 2005                     80,228       78,923
Loans                                                   86,175       83,042
   Less allowance for loan losses                         (657)        (657)
                                                      --------     --------
         Net loans                                      85,518       82,385
                                                      --------     --------
Premises and equipment, net                              2,598        2,549
Other assets                                             2,827        2,200
                                                      --------     --------
         Total assets                                 $212,617     $213,547
                                                      ========     ========
       LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Deposits
      Non-interest bearing                            $ 16,987     $ 16,912
      Interest bearing                                 153,954      156,364
                                                      --------     --------
         Total deposits                                170,941      173,276
   Federal funds purchased                               1,015           --
   Other liabilities                                       979          977
                                                      --------     --------
         Total liabilities                             172,935      174,253
                                                      --------     --------
Stockholders' Equity
   Common stock, $1 par value, authorized
      2,500,000 shares; issued 200,000
      shares; outstanding 197,941 shares                   200          200
   Paid-in capital                                         753          753
   Retained earnings                                    40,604       39,603
   Accumulated other comprehensive loss                 (1,457)        (844)
   Treasury stock, at cost 2,059 shares                   (418)        (418)
                                                      --------     --------
         Total stockholders' equity                     39,682       39,294
                                                      --------     --------
         Total liabilities and stockholders' equity   $212,617     $213,547
                                                      ========     ========
</TABLE>

See Notes to Consolidated Financial Statements.


                                        3

<PAGE>

                        NEFFS BANCORP, INC AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                    Three Months           Six Months
                                                   Ended June 30,        Ended June 30,
                                                -------------------   -------------------
Dollars in thousands,except per share data        2006       2005       2006       2005
                                                --------   --------   --------   --------
<S>                                             <C>        <C>        <C>        <C>
Interest income:
   Interest and fees on loans                   $  1,327   $  1,238   $  2,631   $  2,448
   Interest and dividends on investments:
      Taxable                                        869        829      1,724      1,653
      Exempt from federal income taxes               500        515      1,005      1,034
   Interest on federal funds sold and other           11         18         29         34
                                                --------   --------   --------   --------
         Total interest income                     2,707      2,600      5,389      5,169
                                                --------   --------   --------   --------
Interest Expense:
   Deposits                                        1,231      1,108      2,443      2,144
   Borrowings                                          2         --          2         --
                                                --------   --------   --------   --------
         Total interet expense                     1,233      1,108      2,445      2,144
                                                --------   --------   --------   --------
         Net interest income                       1,474      1,492      2,944      3,025
                                                --------   --------   --------   --------
Other income:
   Service charges on deposit accounts                35         41         74         83
   Other service charges and fees                     10         22         36         48
   Other income                                        6          7         16          4
                                                --------   --------   --------   --------
         Total other income                           51         70        126        135
                                                --------   --------   --------   --------
Other expenses:
   Salaries and employee benefits                    338        311        695        624
   Occupancy                                          37         41         71         71
   Furniture and equipment                            75         50        150         99
   Pennsylvania shares tax                            95         90        190        132
   Other expenses                                    190        162        343        310
                                                --------   --------   --------   --------
         Total other expenses                        735        654      1,449      1,236
                                                --------   --------   --------   --------
         Income before income taxes                  790        908      1,621      1,924
Income tax expense                                   107        139        224        317
                                                --------   --------   --------   --------
         Net income                             $    683   $    769   $  1,397   $  1,607
                                                ========   ========   ========   ========
Per share data:
   Earnings per share, basic                    $   3.45   $   3.90   $   7.06   $   8.15
                                                ========   ========   ========   ========
   Weighted average common shares outstanding    197,941    197,091    197,941    197,091
                                                ========    =======   ========    =======
   Cash dividends declared per share            $     --   $     --   $   2.00   $   2.00
                                                ========   ========   ========   ========

                            See Notes to Consolidated Financial Statements.
</TABLE>


                                        4

<PAGE>

                        NEFFS BANCORP, INC AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     Six Months Ended June 30, 2006 and 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                       Total
                                                     Common   Paid-In   Retained    Accumulated Other   Treasury   Stockholders'
Dollars in thousands, except per share data           Stock   Capital   Earnings   Comprehensive loss     Stock        Equity
                                                     ------   -------   --------   ------------------   --------   -------------
<S>                                                  <C>      <C>       <C>        <C>                  <C>        <C>
Balance, December 31, 2004                            $200      $690    $37,319          $(331)          $(562)       $37,316
   Comprehensive Income:
      Net income                                        --        --      1,607             --              --          1,607
      Change in unrealized net losses on
         securities available for sale, net of tax                                          27                             27
                                                                                                                      -------
         Total comprehensive income                                                                                     1,634
                                                                                                                      -------
   Cash dividends declared on common
      stock, $2.00 per share                            --        --       (394)            --              --           (394)
                                                      ----      ----    -------          -----           -----        -------
Balance, June 30, 2005                                $200      $690    $38,532          $(304)          $(562)       $38,556
                                                      ====      ====    =======          =====           =====        =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                                                       Total
                                                     Common   Paid-In   Retained    Accumulated Other   Treasury   Stockholders'
Dollars in thousands                                  Stock   Capital   Earnings   Comprehensive loss     Stock        Equity
                                                     ------   -------   --------   ------------------   --------   -------------
<S>                                                  <C>      <C>       <C>        <C>                  <C>        <C>
Balance, December 31, 2005                            $200      $753    $39,603         $  (844)         $(418)       $39,294
   Comprehensive Income:
      Net income                                        --        --      1,397              --             --          1,397
      Change in unrealized net losses on
         securities available for sale, net of tax                                         (613)                         (613)
                                                                                                                      -------
         Total comprehensive income                                                                                       784
                                                                                                                      -------
   Cash dividends declared on common
      stock, $2.00 per share                            --        --       (396)             --             --           (396)
                                                      ----      ----    -------         -------          -----        -------
Balance, June 30, 2006                                $200      $753    $40,604         $(1,457)         $(418)       $39,682
                                                      ====      ====    =======         =======          =====        =======
</TABLE>

See Notes to Consolidated Financial Statements.


                                        5

<PAGE>

                        NEFFS BANCORP, INC AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

Dollars in thousands

<TABLE>
<CAPTION>
Six Months Ended June 30,                                     2006      2005
                                                            -------   -------
<S>                                                         <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                               $ 1,397   $ 1,607
   Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation                                              101        95
      Net amortization of securities                             72       116
      Change in assets and liabilities:
         Increase in:
            Accrued interest receivable                         (54)      (37)
            Other assets                                       (257)     (251)
         Increase in:
            Other liabilities                                     2        14
                                                            -------   -------
         Net cash provided by operating activities            1,261     1,544
                                                            -------   -------
CASH FLOWS FROM INVESTING ACTIVITIES
   Net decrease in interest bearing deposits
      with banks                                                 49        13
   Increase in interest bearing time deposits                    --      (100)
   Net (increase) decrease in federal funds sold              2,348    (1,086)
   Purchase of securities available for sale                 (1,308)   (4,532)
   Proceeds from maturities/calls of securities
      available for sale                                      3,512     4,501
   Purchase of securities held to maturity                   (3,229)   (1,143)
   Proceeds from maturities/calls of securities
      held to maturity                                        1,932     1,838
   Net increase in loans                                     (3,133)   (2,118)
   Purchases of premises and equipment                         (150)     (376)
                                                            -------   -------
      Net cash provided (used) in investing activities           21    (3,003)
                                                            -------   -------
CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in deposits                       (2,335)    1,205
   Increase in short-term orrowing                            1,015        --
   Dividends paid                                              (396)     (394)
                                                            -------   -------
      Net cash provided (used) in financing activities       (1,716)      811
                                                            -------   -------
      Decrease in cash and cash equivalents                    (434)     (648)
Cash and cash equivalents:
   Beginning                                                  2,958     4,076
                                                            -------   -------
   Ending                                                   $ 2,524   $ 3,428
                                                            =======   =======
Supplementary Cash Flows Information
   Interest Paid                                            $ 2,391   $ 2,105
                                                            =======   =======
   Income Taxes Paid                                        $   233   $   381
                                                            =======   =======
</TABLE>

See Notes to Consolidated Financial Statements.


                                        6

<PAGE>

                               NEFFS BANCORP, INC.
             NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2006
                                   (UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Neffs Bancorp,
Inc. (the "Corporation") and its wholly owned subsidiary, The Neffs National
Bank (the "Bank"). All material intercompany accounts and transactions have been
eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles in the United States
of America for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation have been included and
are of a normal, recurring nature. Operating results for the six-month period
ended June 30, 2006, are not necessarily indicative of the results that may be
expected for the year ending December 3l, 2006. These statements should be read
in conjunction with notes to the financial statements contained in the 2005
Annual Report to Stockholders.

For further information, refer to the financial statements and footnotes thereto
included in the Neffs Bancorp, Inc. Annual Report for the year ended December
31, 2005.

NOTE 2. COMMITMENTS AND CONTINGENCIES

The Corporation is subject to certain routine legal proceedings and claims
arising in the ordinary course of business. It is management's opinion that the
ultimate resolution of these claims will not have a material adverse effect on
the Corporation's financial position or results of operations.

NOTE 3. COMPREHENSIVE INCOME

The components of other comprehensive income and related tax effects for the six
months and three months ended June 30, 2006 and 2005 are as follows:

<TABLE>
<CAPTION>
                                                Three Months Ended   Six Months Ended
                                                     June 30,            June 30,
                                                ------------------   ----------------
                                                    2006    2005        2006   2005
                                                   -----   -----       -----   ----
                                                            (In Thousands)
<S>                                             <C>        <C>       <C>       <C>
Unrealized holding gains (losses) on
   available for sale securities                   $(352)  $ 530       $(929)  $ 41
Tax effect                                           120    (180)        316    (14)
                                                   -----   -----       -----   ----
Other comprehensive income (loss), net of tax      $(232)  $ 350       $(613)  $ 27
                                                   =====   =====       =====   ====
</TABLE>


                                        7

<PAGE>

NOTE 4. EARNINGS PER SHARE

Earnings per share is based on the weighted average shares of common stock
outstanding during each year. The Corporation currently maintains a simple
capital structure, thus there are no dilutive effects on earnings per share.

NOTE 5. GUARANTEES

The Corporation does not issue any guarantees that would require liability
recognition or disclosure, other than its standby letters of credit. Standby
letters of credit written are conditional commitments issued by the Corporation
to guarantee the performance of a customer to a third party. Generally, all
letters of credit, when issued have expiration dates within one year. The credit
risk involved in issuing letters of credit is essentially the same as those that
are involved in extending loan facilities to customers. The Corporation,
generally, holds collateral and/or personal guarantees supporting these
commitments. The Corporation has $336,000 of standby letters of credit as of
June 30, 2006. Management believes that the proceeds obtained through a
liquidation of collateral and the enforcement of guarantees would be sufficient
to cover the potential amount of future payment required under the corresponding
guarantees. The current amount of the liability as of June 30, 2006 for
guarantees under standby letters of credit issued is not material.

NOTE 6. NEW ACCOUNTING STANDARDS

In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments". SFAS No. 155 amends FASB Statement No. 133 and FASB
Statement No. 140, and improves the financial reporting of certain hybrid
financial instruments by requiring more consistent accounting that eliminates
exemptions and provides a means to simplify the accounting for these
instruments. Specifically, SFAS No. 155 allows financial instruments that have
embedded derivatives to be accounted for as a whole (eliminating the need to
bifurcate the derivative from its host) if the holder elects to account for the
whole instrument on a fair value basis. SFAS No. 155 is effective for all
financial instruments acquired or issued after the beginning of an entity's
first fiscal year that begins after September 15, 2006. The Corporation is
required to adopt the provisions of SFAS No. 155, as applicable, beginning in
fiscal year 2007. Management does not believe the adoption of SFAS No. 155 will
have any impact on the Corporation's financial position and results of
operations.

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets - An Amendment of FASB Statement No. 140" ("SFAS 156"). SFAS
156 requires that all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable. The statement
permits, but does not require, the subsequent measurement of servicing assets
and servicing liabilities at fair value. SFAS 156 is effective as of the
beginning of an entity's first fiscal year that begins after September 15, 2006,
which for the Corporation will be as of the beginning of fiscal 2007. The
Corporation does not believe that the adoption of SFAS 156 will have any effect
on its financial statements.

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes-an
interpretation of FASB Statement


                                        8

<PAGE>

No. 109" (FIN 48)), which clarifies the accounting for uncertainty in tax
positions. This Interpretation requires that companies recognize in their
financial statements the impact of a tax position, if that position is more
likely that not of being sustained on audit, based on the technical merits of
the position. The provisions of FIN 48 are effective for fiscal years beginning
after December 15, 2006, with the cumulative effect of the change in accounting
principle recorded as an adjustment to opening retained earnings. We do not
expect that there will be any impact of adopting FIN 48 on our financial
statements.


                                        9

<PAGE>

Item 2.

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of
Operations analyzes the major elements of the Corporation's balance sheets and
statements of income. This section should be read in conjunction with the
Corporation's financial statements and accompanying notes.

Management of the Corporation has made forward-looking statements in this Form
10-Q. These forward-looking statements may be subject to risks and
uncertainties. Forward-looking statements include the information concerning
possible or assumed future results of operations of the Corporation and its
subsidiary. When words such as "believes," "expects," "anticipates" or similar
expressions occur in this Form 10-Q, management is making forward-looking
statements.

Readers should note that many factors, some of which are discussed elsewhere in
this report and in the documents that management incorporates by reference,
could affect the future financial results of the Corporation and its subsidiary,
both individually and collectively, and could cause those results to differ
materially from those expressed in the forward-looking statements contained or
incorporated by reference in this Form 10-Q. These factors include the
following:

-    operating, legal and regulatory risks;

-    economic, political and competitive forces affecting banking, securities,
     asset management and credit services businesses; and

-    the risk that management's analyses of these risks and forces could be
     incorrect and/or that the strategies developed to address them could be
     unsuccessful.

The Corporation undertakes no obligation to publicly revise or update these
forward-looking statements to reflect events or circumstances that arise after
the date of this report. Readers should carefully review the risk factors
described in other documents that the Corporation files periodically with the
Securities and Exchange Commission.

CRITICAL ACCOUNTING POLICIES

Disclosure of the Corporation's significant accounting policies is included in
Note 1 to the financial statements of the Corporation's Annual Report on Form
10-K for the year ended December 31, 2005. Some of these policies are
particularly sensitive, requiring significant judgments, estimates and
assumptions to be made by management, most particularly in connection with
determining the provision for loan losses and the appropriate level of the
allowance for loan losses. Additional information is contained in this Form 10-Q
on page 12 under the paragraph titled "Provision for Loan Losses" and on page 15
under the paragraphs titled "Loan and Asset Quality and Allowance for Loan
Losses".


                                       10

<PAGE>

OVERVIEW

Net income for the second quarter of 2006 decreased 11% to $683,000 as compared
to $769,000 for the second quarter of 2005 as total revenues increased 3.3% from
$2.670 million to $2.758 million for the quarter and total expenses increased
9.2% from $1.901 million to $2.075 million. Net income per common share
decreased 11.5% to $3.45 per share from $3.90 per share in the second quarter a
year ago. At June 30, 2006, the Corporation had total assets of $212.6 million,
total loans of $86.2 million, and total deposits of $170.9 million.

RESULTS OF OPERATIONS

AVERAGE BALANCES AND AVERAGE INTEREST RATES

Interest earning assets averaged $205.8 million for the second quarter of 2006
as compared to $204.3 million for the same period in 2005. The yield on earning
assets for the second quarter of 2006 increased to 5.3% from 5.1% for the same
period last year. The growth in interest earning assets was mainly the result of
an increase of $5.3 million in average total loans and decrease of $3.8 million
in investments. Average interest-bearing liabilities decreased from $157.2
million during the second quarter of 2005 to $154.9 million during the second
quarter of 2006. The decline in average interest bearing liabilities was the
result of an increase in time deposits and Federal Funds purchased of $9.3
million offset by decreases in demand deposits and savings deposits of $500,000
and $11.1 million, respectively. The decline in average interest bearing
liabilities was mainly due to the competitive interest rate environment.

The average yield on earning assets was 5.3% for the second quarter of 2006 as
compared to 5.1% for the same quarter in 2005. The average rate paid on
interest-bearing liabilities was 3.2% for the second quarter of 2006 and 2.8%
for the second quarter of 2005, an increase of 40 basis points. This was the
result of the increasing interest rate environment that was experienced during
2005 and into 2006.

NET INTEREST INCOME AND NET INTEREST MARGIN

Net interest income is the difference between interest income earned on assets
and interest expense incurred on liabilities used to fund those assets. Interest
earning assets primarily include loans and securities and Federal Funds Sold.
Liabilities used to fund such assets include deposits and borrowed funds.
Changes in net interest income and margin result from the interaction between
the volume and composition of earning assets, related yields and associated
funding costs.

Interest income for the second quarter of 2006 increased by $107,000, or 4.1%
over the second quarter of 2005. The increase in interest income is attributed
to the slight rise in interest rates on the Bank's loan and securities
portfolios and the increase in average earning assets. Interest expense for the
second quarter of 2006 increased by $125,000, or 11.3%, compared to the second
quarter of 2005. The increase was due to the continued increase in rates being
offered and paid on interest bearing deposits, mainly certificates of deposits.

Net interest income for the second quarter of 2006 decreased by $18,000 or 1.2%
over the second quarter of 2005. As marketplace rates increased slightly on
loans and securities, the rates on interest bearing accounts increased
significantly higher. Net income for the second quarter of 2006 was affected by
those increasing rate adjustments.


                                       11

<PAGE>

For the six months ended June 30, 2006, interest income increased by $220,000 or
4.3%, over the same period in 2005. The increase for the first six months was
mostly related to the increasing interest rates on loan products and securities
purchased. Interest earning assets for the first six months of 2006 averaged
$206.0 million versus $203.5 million for the comparable period in 2005. The
yield on those assets increased from 5.1% for the first six month of 2005 to
5.2% for the same period in 2006.

Interest expense for the first six months of 2006 increased $301,000 or 14.0% as
compared to the first six months of 2005. The level of average interest-bearing
liabilities decreased from $157.1 million for the first half of 2005 to $155.2
million for the first six months of 2006. The average rate paid for the first
half of 2006 was 3.2% as compared to 2.8% for the first half of 2005.

Net interest income for the first six months of 2006 decreased by $81,000 or
2.7% over the same period in 2005. The company's net interest margin decreased
from 3.0% for the six months ended June 30, 2006 to 2.9% for the same period
last year.

Net interest margin represents the difference between interest income, including
net loan fees earned, and interest expense, reflected as a percentage of average
earning assets. Net interest margin for the second quarter of 2006 remained
relatively stable compared to the same period in 2005. During the second quarter
of 2006, yields on earning assets increased to 5.3% as compared to 5.1% for the
second quarter of 2005. Rates paid on interest bearing deposits increased to
3.2%, as compared to 2.8%, for the second quarter of 2005.

PROVISION FOR LOAN LOSSES

Based on historical and projected loss trends, no provision for loan losses was
made for the second quarter of 2006 or 2005. Management concluded that the
allowance for loan losses had an adequate balance to justify no provision for
these quarters.

For six months ending June 30, 2006 and 2005, there was no provision for loan
losses. Based on historical and projected loss trends, management concluded that
the allowance for loan loss had an adequate balance to justify no provision for
the first six months of 2006 and 2005.

NON-INTEREST INCOME

Non-interest income for the second quarter of 2006 decreased by $19,000, or
27.1% from the same period in 2005 due mainly to an adjustment for creditor
insurance fee income. Non-interest income for the first six months of 2006
decreased by $9,000 or 6.7% from the same period in 2005. The decrease was
mainly attributed to the adjustment for creditor insurance fee income and was
offset in part by increase in rental income.

NON-INTEREST EXPENSE

For the second quarter of 2006, non-interest expenses increased by $81,000, or
12.3%, to $735,000, compared to $654,000 over the same period in 2005. This
increase is primarily the result of an increase in salaries/employee benefits
and maintenance/depreciation expenses related to data processing and Internet
related hardware and software purchases.


                                       12

<PAGE>

Salary expenses and employee benefits, which represent the largest component,
46.0%, of non-interest expenses, increased by $27,000, or 8.7%, for the second
quarter of 2006. This increase is the result of increases in health insurance
costs and the hiring of additional personnel to meet the demands of business
growth.

Occupancy and furniture/equipment expense for the second quarter of 2006
increased by $21,000 or 23.1% as compared to the second quarter of 2005. This
increase is mostly the result of maintenance/depreciation expenses related to
data processing and Internet related hardware and software purchases.

Other expenses increased by $28,000 or 17.3% throughout the second quarter of
2006 as compared to the second quarter of 2005. This increase was due to
increased accrual for professional services related to SEC filing requirements.

For the first six months of 2006, non-interest expense increased by $213,000 or
17.2% over the same period in 2005.

Salary expenses and employee benefits, which represents the largest component,
48.0%, of non-interest expenses, increased by $71,000 or 11.4%, over the first
six months of 2005. The increase was due to normal salary adjustments, hiring of
additional staff, and increases in health insurance premiums.

Occupancy and furniture/equipment expenses for the first six months of 2006
increased by $51,000 or 30.0% as compared to the first six months of 2005. This
increase was mostly the result of maintenance/depreciation expenses related to
data processing and Internet related hardware and software purchases.

Shares tax expense increased by $58,000 or 44% from the same period in 2005.
This increase was due mainly to the unavailability of tax credits for qualified
contributions to educational foundation made in 2005.

Net other expenses increased by $33,000 or 10.6% for the first six months ended
June 30, 2006 over the first half of 2005. This increase in net other expenses
is due to increased accrual for professional services related to SEC filing
requirements.

One key measure used to monitor progress in controlling overhead expenses is the
ratio of net non-interest expense to average assets. Net non-interest expenses
equal noninterest expenses (excluding foreclosed real estate expenses) less
non-interest income (exclusive of nonrecurring gains), divided by average
assets. This annualized ratio was 1.30% for the three months ended June 30,
2006, higher than the 1.11% for the three months ended June 30, 2005. It was
1.25% for the first six months of 2006, compared to 1.06% for the same period
one year ago. The increases were due in part to increase in salary and employee
benefits, occupancy and equipment expenses and increased professional services.

Another productivity measure is the operating efficiency ratio. This ratio
expresses the relationship of non-interest expenses (excluding foreclosed real
estate expenses) to net interest income plus noninterest income (excluding
nonrecurring gains). For the quarter ended June 30, 2006, the operating
efficiency ratio was 48.2%, which increased over the 41.9% for the same period
in 2005. For the six months ended June 30, 2006, this ratio was


                                       13

<PAGE>

47.2% compared to 39.1% for the six months ended June 30, 2005. The increases
were due in part to increase in salary and employee benefits, occupancy and
equipment expenses and increased professional services

PROVISION FOR FEDERAL INCOME TAXES

The provision for federal income taxes was $107,000 for the second quarter of
2006, as compared to $139,000 for the same period in 2005. For six months ended
June 30, the provision was $224,000 and $317,000 for 2006 and 2005,
respectively. The effective tax rate, which is the ratio of income tax expense
to income before income taxes, was 13.5% for the second quarter of 2006 and
15.3% for the second quarter of 2005. The effective tax rate for the first six
months of 2006 and 2005 were 13.8% and 16.5%, respectively. The effective tax
rate is lower than the statutory rate of 34% due to tax-exempt interest income
on securities and loans and is lower than same period for the previous year due
to tax-exempt investment income comprising a higher percentage of income before
income taxes.

NET INCOME

Net income for the second quarter of 2006 was $683,000, a decrease of $86,000 or
11.0% over the $769,000 recorded in the second quarter of 2005.

Net income for the first six months of 2006 decreased by $210,000 or 13.1% as
compared to June 30, 2005. This was mainly due to decreased net interest income
and increases in other expenses.

RETURN ON AVERAGE ASSETS

Return on average assets (ROA) measures the Corporation's net income in relation
to its total average assets. The Corporation's annualized ROA for the second
quarter of 2006 declined to 1.3% from 1.5% in the second quarter of 2005. The
ROA for the first six months of 2006 also declined to 1.3% from 1.5% in the same
period for 2005.

RETURN ON AVERAGE EQUITY

Return on average equity (ROE) indicates how effectively the Corporation can
generate net income on the capital invested by its stockholders. ROE is
calculated by dividing net income by average stockholders' equity. For purposes
of calculating ROE, average stockholders' equity includes the effect of
unrealized gains or losses, net of income taxes, on securities available for
sale. The annualized ROE for the second quarter of 2006 was 6.9% as compared to
8.1% for the second quarter of 2005. The ROE for the first six months of 2006
was 7.1% as compared to 8.6% for the same period of 2005.

FINANCIAL CONDITION

SECURITIES

During the first six months of 2006 securities available for sale decreased by
$3.2 million from $42.0 million as of December 31, 2005 to $38.8 million as of
June 30, 2006. This decrease was due mainly to the payments received on mortgage
backed securities. Securities held to maturity increased by $2.3 million from
$78.9 million to $80.2 million. This increase was due mainly to the purchase of
higher yielding government agency securities.


                                       14

<PAGE>

The securities available for sale portfolio had an unrealized loss of $1.5
million, net of taxes at the end of the second quarter of 2006, due to rising
interest rates throughout much of 2005 into 2006. Management considers the
unrealized losses to be temporary and primarily resulting from changes in the
interest rate environment.

Federal funds sold decreased by $2.3 million from $2.3 million to $0 during the
first six months of 2006 from December 31, 2005. The decrease in Federal Funds
was due to funding the increase in loans and reduction in deposits. Total
securities aggregated $119.1 million at June 30, 2006, and represented 56.0% of
total assets.

The weighted average life of the combined securities portfolio was
approximately10 years at June 30, 2006 with a weighted yield of 5.2% comparable
to that for the same period in 2005.

NET LOANS RECEIVABLE

During the first six months of 2006 net loans receivable increased by $3.1
million or 3.8% from $82.4 million at December 31, 2005, to $85.5 million on
June 30, 2006. Loans receivable represented 50.0% of total deposits and 40.2% of
total assets at June 30, 2006, as compared to 47.5% and 38.6%, respectively, at
December 31, 2005.

LOAN AND ASSET QUALITY AND ALLOWANCE FOR LOAN LOSSES

There were no non-accrual loans at June 30, 2006 and December 31, 2005. There
was no foreclosed real estate held by the Corporation as of June 30, 2006 and
December 31, 2005.


                                       15

<PAGE>

The following summary table presents information regarding non-performing loans
and assets as of June 30, 2006 and December 31, 2005.

                         NONPERFORMING LOANS AND ASSETS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                       June 30,   December 31,
                                         2006         2005
                                       --------   ------------
<S>                                    <C>        <C>
Nonaccrual loans:                        $  --        $  --
Commercial                                  --           --
Consumer                                    --           --
Real Estate:
   Construction                             --           --
   Mortgage                                 --           --
                                         -----        -----
      Total nonaccrual                      --           --
Loans past due 90 days or more              68           67
Restructured loans                          --           --
                                         -----        -----
      Total nonperforming loans             68           67
Foreclosed real estate                      --           --
                                         -----        -----
      Total nonperforming assets         $  68        $  67
                                         =====        =====
Nonperforming loans to total loans        0.08%        0.08%
Nonperforming assets to total assets      0.03%        0.03%
</TABLE>

The following table sets forth the Corporation's provision and allowance for
loan losses.

<TABLE>
<CAPTION>
                                                 Six Months       Six Months
                                               Ending 6/30/06   Ending 6/30/05
                                               --------------   --------------
<S>                                            <C>              <C>
Balance at beginning of period                      $ 657           $ 663
Provision for loan losses                              --              --
Recoveries of loans previously charged-off
   Commercial                                          --              --
   Consumer                                             1               6
   Real Estate                                         --              --
                                                    -----           -----
Total recoveries                                        1               6
Loans charged-off:
   Commercial                                          --              --
   Consumer                                            (1)             (7)
   Real Estate                                         --              --
                                                    -----           -----
Total charged-off                                      (1)             (7)
                                                    -----           -----
Net charge-offs                                        --              (1)
                                                    -----           -----
Balance at end of period                            $ 657           $ 662
                                                    =====           =====
Net charge-offs as a percentage of average
   loans outstanding                                 0.00%           0.00%
Allowance for loan losses as a percentage of
   period-end loans                                  0.76%           0.84%
</TABLE>


                                       16

<PAGE>

DEPOSITS

Total deposits at June 30, 2006, were $170.9 million, down $2.4 million, or
1.4%, over total deposits of $173.3 million at December 31, 2005. The average
balances for the first six months of 2006 and 2005 are presented in the
following table:

<TABLE>
<CAPTION>
                                Six Months Ended June 30,
                                  (Dollars in thousands)
                         ---------------------------------------
                                2006                 2005
                         ------------------   ------------------
                          Average   Average    Average   Average
                          Balance     Rate     Balance     Rate
                         --------   -------   --------   -------
<S>                      <C>        <C>       <C>        <C>
Demand Deposits:
   Noninterest-bearing   $ 17,250             $ 15,136
   Interest-bearing         8,209     1.60       8,485     .90%
Savings                    53,159     1.68      65,088    1.57%
Time deposits:
   <$100,000               62,768     4.00      56,593    3.68%
   >$100,000               30,666     4.42      26,973    4.11%
                         --------             --------
Total Deposits           $172,052             $172,275
                         ========             ========
</TABLE>

INTEREST RATE SENSITIVITY

The management of interest rate sensitivity seeks to avoid fluctuating net
interest margins and to provide consistent net interest income through periods
of changing interest rates.

The Corporation's risk of loss arising from adverse changes in the fair value of
financial instruments, or market risk, is composed primarily of interest rate
risk. The primary objective of the Corporation's asset/liability management
activities is to maximize net interest income while maintaining acceptable
levels of interest rate risk. The Bank's Asset/Liability Committee (ALCO) is
responsible for establishing policies to limit exposure to interest rate risk,
and to ensure procedures are established to monitor compliance with those
policies. The Corporation's Board of Directors approves the guidelines
established by ALCO.

An interest rate sensitive asset or liability is one that, within a defined
period, either matures or experiences an interest rate change in line with
general market interest rates. Historically, the most common method of
estimating interest rate risk was to measure the maturity and repricing
relationships between interest-earning assets and interest-bearing liabilities
at specific points in time (GAP), typically one year. Under this method, a
company is considered liability sensitive when the amount of its
interest-bearing liabilities exceeds the amount of its interest-earning assets
within the one-year horizon. However, assets and liabilities with similar
repricing characteristics may not reprice at the same time or to the same
degree. As a result, the Corporation's GAP does not necessarily predict the
impact of changes in general levels of interest rates on net interest income.

Management believes the simulation of net interest income in different interest
rate environments provides a more meaningful measure of interest rate risk.
Income simulation


                                       17

<PAGE>

analysis captures not only the potential of all assets and liabilities to mature
or reprice, but also the probability that they will do so. Income simulation
also attends to the relative interest rate sensitivities of these items, and
projects their behavior over an extended period of time. Finally, income
simulation permits management to assess the probable effects on the balance
sheet not only of changes in interest rates, but also of proposed strategies for
responding to them.

The Corporation's income simulation model analyzes interest rate sensitivity by
projecting net interest income over the next 12 months in a flat rate scenario
versus net income in alternative interest rate scenarios. Management continually
reviews and refines its interest rate risk management process in response to the
changing economic climate. Currently, the Corporation's model projects a
proportionate 200 basis point change during the next year.

The Corporation's ALCO policy has established that income sensitivity will be
considered acceptable if overall net income volatility in a plus or minus 200
basis point scenario is within 5% of net interest income in a flat rate
scenario. At June 30, 2006, the Corporation's simulation model indicates net
interest income would increase .46% within the first year if rates increased as
described above. The model projects that net interest income would decrease by
1.25% in the first year if rates decreased as described above. All of these
forecasts are within an acceptable level of interest rate risk per the policies
established by ALCO.

LIQUIDITY

Liquidity management involves the ability to generate cash or otherwise obtain
funds at reasonable rates to support asset growth and reduce assets to meet
deposit withdrawals, to maintain reserve requirements, and to otherwise operate
the Corporation on an ongoing basis. Liquidity needs are generally met by
converting assets into cash or obtaining sources of additional funds, mainly
deposits. Primarily cash and federal funds sold, and the cash flow from the
amortizing securities and loan portfolios provide liquidity sources from asset
categories. The primary source of liquidity from liability categories is the
generation of additional core deposit balances.

Additionally, the Corporation has established secondary sources of liquidity
consisting of federal funds lines of credit and borrowing capacity at the
Federal Home Loan Bank, which can be drawn upon if needed. In view of the
primary and secondary sources as previously mentioned, management believes that
the Corporation is capable of meeting its anticipated liquidity needs.


                                       18

<PAGE>

OFF-BALANCE SHEET ARRANGEMENTS

The Corporation's financial statements do not reflect off-balance sheet
arrangements that are made in the normal course of business. Those off-balance
sheet arrangements consist of unfunded loans and letters of credit made under
the same standards as on-balance sheet instruments. These commitments, at June
30, 2006 totaled $8.730 million. This consisted of $2.271 million in tax-exempt
loans, commercial real estate, construction, and land development loans, $4.123
million in home equity lines of credit, $336,000 in standby letters of credit
and the remainder in other unused commitments. Because these instruments have
fixed maturity dates, and because many of them will expire without being drawn
upon, they do not generally present any significant liquidity risk to the
Corporation.

Management believes that any amounts actually drawn upon can be funded in the
normal course of operations. The Corporation has no investment in or financial
relationship with any unconsolidated entities that are reasonably likely to have
a material effect on liquidity or the availability of capital resources.

CAPITAL ADEQUACY

At June 30, 2006, stockholders' equity totaled $39.7 million, up 1.0% over
stockholders' equity of $39.3 million at December 31, 2005. The increase in
stockholders' equity for the six months ended June 30, 2006 included a $613,000
unrealized loss, net of income taxes, on securities available for sale.
Excluding this unrealized loss, gross stockholders' equity changed by an
increase of $1,001,000 in retained net income.

Risk-based capital provides the basis for which all banks are evaluated in terms
of capital adequacy. The risk-based capital standards require all banks to have
Tier 1 capital of at least 4% and total capital, including Tier 1 capital, of at
least 8% of risk-adjusted assets. Tier 1 capital includes common stockholders'
equity together with related surpluses and retained earnings. Total capital may
be comprised of total Tier 1 capital plus qualifying debt instruments, and the
allowance for loan losses.

The following table provides a comparison of the Corporation's risk-based
capital ratios and leverage ratios to the minimum regulatory requirements for
the periods indicated:

<TABLE>
<CAPTION>
                                                       For Capital
                             June 30,   December 31,     Adequacy
                               2006         2005         Purposes
                             --------   ------------   -----------
<S>                          <C>        <C>            <C>
Risk-Based Capital Ratios:
   Tier 1 Capital              40.3%        40.6%         4.00%
   Total Capital               40.9%        41.2%         8.00%
   Leveraged Capital           19.3%        18.7%         4.00%
</TABLE>

The Bank's capital ratios are not materially different from that of the
Corporation. At June 30, 2006, the capital levels of the Bank met the definition
of a "well capitalized" institution.


                                       19

<PAGE>

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Corporation's exposure to market risk has not changed significantly since
December 31, 2005. The market risk principally includes interest rate risk,
which is discussed in the Management's Discussion and Analysis above.

ITEM 4.

CONTROLS AND PROCEDURES

The Corporation maintains controls and procedures designed to ensure that
information required to be disclosed in the reports that the Corporation files
or submits under the Securities and Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the SEC. Based upon their evaluation of those controls and procedures as of
June 30, 2006, the chief executive officer and principal financial officer of
the Corporation concluded that the Corporation's disclosure controls and
procedures were adequate.

The Corporation made no changes in its internal controls or in other factors
that has materially affected, or is reasonably likely to materially affect these
controls during the quarter ended June 30, 2006, including any corrective
actions with regard to significant deficiencies and material weaknesses.

PART II.

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     In the opinion of the management of the Corporation, there are no
     proceedings pending to which the Corporation or its subsidiary are a party
     or to which their property is subject, which, if determined adversely to
     the Corporation or its subsidiary, would be material in relation to the
     Corporation's or it subsidiary's financial condition. There are no
     proceedings pending other than ordinary routine litigation incident to the
     business of the Corporation or its subsidiary. In addition, no material
     proceedings are pending or are known to be threatened or contemplated
     against the Corporation or its subsidiary by government authorities.

ITEM 1A. RISK FACTORS

     There are no material changes to the risk factors set forth in Part 1, Item
     1A, "Risk Factors", of the Corporation's Form 10-K for the year ended
     December 31, 2005. Please refer to that section for disclosures regarding
     the risks and uncertainties related to the Corporation's business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     Not applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     Not applicable


                                       20

<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     a)   An annual meeting of shareholders was held on May 10, 2006, at The
          NOVA Building, Coplay, PA.

     b)   One matter was voted on at the May 10, 2006, meeting as follows:

<TABLE>
<CAPTION>
    ELECTION OF           TERM      VOTES CAST   VOTES AGAINST
     DIRECTORS          EXPIRES         FOR       OR WITHHELD*
    -----------       -----------   ----------   -------------
<S>                   <C>           <C>          <C>
John F. Simock        April, 2009     176,670          20
Mary Ann Wagner       April, 2009     176,670          20
Duane A. Schleicher   April, 2009     176,135         555
</TABLE>

*    Includes broker nonvotes

<TABLE>
<CAPTION>
Directors whose term continued after the meeting:   Term Expires
-------------------------------------------------   ------------
<S>                                                 <C>
Robert B. Heintzelman                               April, 2007
Kevin A. Schmidt                                    April, 2007
John J. Remaley                                     April, 2008
Herman P. Snyder                                    April, 2008
John F. Sharkey, Jr.                                April, 2008
</TABLE>

ITEM 5. OTHER INFORMATION

     Not applicable

ITEM 6. EXHIBITS

<TABLE>
<S>     <C>
3(i)    Amended and Restated Articles of Incorporation for Neffs Bancorp, Inc.
        (Incorporated by reference to Exhibit 3(i) to the Form 10 filed with the
        Commission on April 27, 2001, as amended on June 29, 2001 and July 20,
        2001.)

3(ii)   Amended and Restated By-laws of Neffs Bancorp, Inc. (Incorporated by
        reference to Exhibit 99.1 to the Form 8K filed with the Commission on
        February 27, 2002.)

31.1    Certification of Chief Executive Officer pursuant to Section 302 of the
        Sarbanes Oxley Act of 2002.

31.2    Certification of Principal Financial Officer pursuant to Section 302 of
        the Sarbanes Oxley Act of 2002.

32.1    Certification of Chief Executive Officer pursuant to Section 1350 of the
        Sarbanes Oxley Act of 2002.

32.2    Certification of Principal Financial Officer pursuant to Section 1350 of
        the Sarbanes Oxley Act of 2002.
</TABLE>


                                       21

<PAGE>

                                   SIGNATURES

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

                                        NEFFS BANCORP, INC.


Date: August 9, 2006                    /s/ John J. Remaley
                                        ----------------------------------------
                                        John J. Remaley, President


                                       22