----

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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      DC 20549**

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**FORM      10-Q**

| x      | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                 |
|   | For                the quarterly period ended March 31, 2007                                                                         |
|   |                                                                                                                                 |
| OR     |
|   |                                                                                                                                 |
| o      | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF 1934               |
|   |                                                                                                                                 |
|   | For                the transition period from   to                                                               |
|   |                                                                                                                                 |
|   | Commission                file number: 0-51077                                                                                       |

| Pennsylvania                                                                  |   | 02-0724068                                          |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------|
| (State                or Other Jurisdiction of Incorporation or Organization) |   | (I.R.S.                Employer Identification No.) |

| 180                Old York Road                        |   |                      |
|---------------------------------------------------------|--------|---------------------------|
| Jenkintown,                Pennsylvania                 |   | 19046                     |
| (Address                of Principal Executive Offices) |   | (Zip                Code) |

| Large                accelerated filer o | Accelerated                filer o | Non-accelerated                filer x |
|------------------------------------------|------------------------------------|----------------------------------------|

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**ABINGTON      COMMUNITY BANCORP, INC.**

**TABLE      OF CONTENTS**

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|                                            | **Page**                                                                                                                          |
|-------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|
| PART                I - FINANANCIAL INFORMATION |                                                                                                                              |
|                                                 | ITEM 1. CONDENSED FINANCIAL                STATEMENTS                                                                             |   |
|                                            |                                                                                                                              |  |   |
|                                            |                                                                                                                              | Unaudited                    Consolidated Statements of Financial                    Condition as of March 31, 2007 and December 31, 2006 | 1 |
|                                            |                                                                                                                              |  |   |
|                                            |                                                                                                                              | Unaudited                    Consolidated Statements of Income for the Three                    Months Ended March 31, 2007 and 2006 | 2 |
|                                            |                                                                                                                              |   |   |
|                                            |                                                                                                                              | Unaudited                    Consolidated Statements of Stockholders’ Equity for                    the Three Months Ended March 31, 2007 and 2006 | 3 |
|                                            |                                                                                                                              |  |   |
|                                            |                                                                                                                              | Unaudited                    Consolidated Statements of Cash Flows for the                    Three Months Ended March 31, 2007 and 2006 | 4 |
|                                            |                                                                                                                              |   |   |
|                                            |                                                                                                                              | Notes                  to Unaudited Consolidated Financial                  Statements | 5 |
|                                            |                                                                                                                              |   |   |
|                                            | ITEM                2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND                RESULTS OF OPERATIONS | 25 |
|                                            |                                                                                                                              |   |   |
|                                            | ITEM                3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT                MARKET RISK                                  | 36 |
|                                            |                                                                                                                              |   |   |
|                                            | ITEM                4. CONTROLS AND PROCEDURES                                                                                    | 39 |
|                                            |                                                                                                                              |   |   |
|                                            |                                                                                                                              |   |   |
| 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. Submission of Matters to a Vote of Security                Holders                                         | 40 |
|                                            |                                                                                                                              |   |   |
|                                            | ITEM                5. Other Information                                                                                          | 40 |
|                                            |                                                                                                                              |   |   |
|                                            | ITEM                6. Exhibits                                                                                                   | 40 |
|                                            |                                                                                                                              |   |   |
|                                            | SIGNATURES                                                                                                                        | 41 |
|                                            |                                                                                                                              |   |   |
|                                            | CERTIFICATIONS                                                                                                                    |   |

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| **ABINGTON                  COMMUNITY BANCORP, INC.**                                 |   |                                |        |                                   |   |
|---------------------------------------------------------------------------------------|--------|-------------------------------------|-------------|----------------------------------------|--------|
|                                                                                  |   |                                |        |                                   |   |
| **UNAUDITED                  CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION**         |   |                                |        |                                   |   |
|                                                                                  |   |                                |        |                                   |   |
|                                                                                  |   | **March                  31, 2007** |        | **December                  31, 2006** |   |
| **ASSETS**                                                                            |   |                                |        |                                   |   |   |   |
| Cash                  and due from banks                                              |   | $                                   | 16,908,221  |                                   | $      | 22,136,438 |   |
| Interest-bearing                  bank balances                                       |   |                                | 30,480,176  |                                   |   | 22,428,814 |   |
| Total                  cash and cash equivalents                                      |   |                                | 47,388,397  |                                   |   | 44,565,252 |   |
| Investment                  securities held to maturity (estimated fair               |   |                                |        |                                   |   |   |   |
| value—2007,                  $20,509,646; 2006, $20,429,576)                    |   |                                | 20,392,890  |                                   |   | 20,393,430 |   |
| Investment                  securities available for sale (amortized cost—      |   |                                |        |                                   |   |   |   |
| 2007,                  $80,873,244; 2006, $75,834,898)                                |   |                                | 79,861,772  |                                   |   | 74,489,055 |   |
| Mortgage-backed                  securities held to maturity (estimated fair          |   |                                |        |                                   |   |   |   |
| value—2007,                  $52,247,321; 2006, $53,957,015)                    |   |                                | 54,138,914  |                                   |   | 56,143,619 |   |
| Mortgage-backed                  securities available for sale (amortized cost— |   |                                |        |                                   |   |   |   |
| 2007,                  $76,723,280; 2006, $79,831,266)                                |   |                                | 75,271,962  |                                   |   | 78,022,794 |   |
| Loans                  receivable, net of allowance for loan losses                   |   |                                |        |                                   |   |   |   |
| (2007,                  $1,598,633; 2006, $1,602,613)                                 |   |                                | 628,953,078 |                                   |   | 605,062,980 |   |
| Accrued                  interest receivable                                          |   |                                | 4,704,277   |                                   |   | 4,365,535 |   |
| Federal                  Home Loan Bank stock—at cost                           |   |                                | 10,867,100  |                                   |   | 11,240,700 |   |
| Cash                  surrender value - bank owned life insurance                     |   |                                | 16,362,723  |                                   |   | 16,184,256 |   |
| Property                  and equipment, net                                          |   |                                | 9,575,127   |                                   |   | 8,908,910 |   |
| Deferred                  tax asset                                                   |   |                                | 2,667,215   |                                   |   | 2,808,716 |   |
| Prepaid                  expenses and other assets                                    |   |                                | 976,079     |                                   |   | 3,001,035 |   |
|                                                                                  |   |                                |        |                                   |   |   |   |
| TOTAL                  ASSETS                                                         |   | $                                   | 951,159,534 |                                   | $      | 925,186,282 |   |
|                                                                                  |   |                                |        |                                   |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                             |   |                                |        |                                   |   |   |   |
|                                                                                  |   |                                |        |                                   |   |   |   |
| LIABILITIES:                                                                          |   |                                |        |                                   |   |   |   |
| Deposits:                                                                             |   |                                |        |                                   |   |   |   |
| Noninterest-bearing                                                                   |   | $                                   | 49,766,580  |                                   | $      | 45,186,397 |   |
| Interest-bearing                                                                      |   |                                | 566,087,837 |                                   |   | 541,815,163 |   |
| Total                  deposits                                                       |   |                                | 615,854,417 |                                   |   | 587,001,560 |   |
| Advances                  from Federal Home Loan Bank                                 |   |                                | 186,474,148 |                                   |   | 196,293,273 |   |
| Other                  borrowed money                                                 |   |                                | 19,824,758  |                                   |   | 17,781,260 |   |
| Accrued                  interest payable                                             |   |                                | 5,051,739   |                                   |   | 2,504,270 |   |
| Advances                  from borrowers for taxes and insurance                      |   |                                | 2,941,919   |                                   |   | 2,624,310 |   |
| Accounts                  payable and accrued expenses                                |   |                                | 5,410,349   |                                   |   | 4,879,385 |   |
|                                                                                  |   |                                |        |                                   |   |   |   |
| Total                  liabilities                                                    |   |                                | 835,557,330 |                                   |   | 811,084,058 |   |
|                                                                                  |   |                                |        |                                   |   |   |   |
| COMMITMENTS                  AND CONTINGENCIES                                        |   |                                |        |                                   |   |   |   |
|                                                                                  |   |                                |        |                                   |   |   |   |
| STOCKHOLDERS'                  EQUITY                                                 |   |                                |        |                                   |   |   |   |
| Preferred                  stock, $0.01 par value, 10,000,000 shares authorized,      |   |                                |        |                                   |   |   |   |
| none                  issued                                                          |   |                                | -           |                                   |   | - |   |
| Common                  stock, $0.01 par value, 40,000,000 shares authorized,         |   |                                |        |                                   |   |   |   |
| issued:                  15,870,000 shares, outstanding:                              |   |                                |        |                                   |   |   |   |
| 15,288,154                  shares                                                    |   |                                | 158,700     |                                   |   | 158,700 |   |
| Additional                  paid-in capital                                           |   |                                | 69,820,453  |                                   |   | 69,674,243 |   |
| Treasury                  stock—at cost, 581,846 shares                         |   |                                | (8,317,848  | )                                      |   | (8,317,848 | ) |
| Unallocated                  common stock held by:                                    |   |                                |        |                                   |   |   |   |
| Employee                  Stock Ownership Plan (ESOP)                                 |   |                                | (6,265,926  | )                                      |   | (6,388,788 | ) |
| Recognition                  & Retention Plan Trust (RRP)                         |   |                                | (2,421,852  | )                                      |   | (2,606,781 | ) |
| Deferred                  compensation plans trust                                    |   |                                | (1,062,227  | )                                      |   | (1,059,116 | ) |
| Retained                  earnings                                                    |   |                                | 65,824,780  |                                   |   | 65,252,214 |   |
| Accumulated                  other comprehensive loss                                 |   |                                | (2,133,876  | )                                      |   | (2,610,400 | ) |
|                                                                                  |   |                                |        |                                   |   |   |   |
| Total                  stockholders' equity                                           |   |                                | 115,602,204 |                                   |   | 114,102,224 |   |
|                                                                                  |   |                                |        |                                   |   |   |   |
| TOTAL                  LIABILITIES AND STOCKHOLDERS' EQUITY                           |   | $                                   | 951,159,534 |                                   | $      | 925,186,282 |   |
|                                                                                  |   |                                |        |                                   |   |   |   |
| See                  notes to unaudited consolidated financial statements.            |   |                                |        |                                   |   |   |   |

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| **ABINGTON                COMMUNITY BANCORP, INC.**                      |   |                                            |       |     |   |
|--------------------------------------------------------------------------|--------|-------------------------------------------------|------------|----------|--------|
|                                                                     |   |                                            |       |     |   |
| **UNAUDITED                CONSOLIDATED STATEMENTS OF INCOME**           |   |                                            |       |     |   |
|                                                                     |   |                                            |       |     |   |
|                                                                     |   | **Three                Months Ended March 31,** |       |
|                                                                     |   | **2007**                                        |       | **2006** |   |
| INTEREST                INCOME:                                          |   |                                            |       |     |   |   |   |
| Interest                on loans                                         |   | $                                               | 10,368,479 |     | $      | 8,717,783 |   |
| Interest                and dividends on investment and                  |   |                                            |       |     |   |   |   |
| mortgage-backed                securities:                               |   |                                            |       |     |   |   |   |
| Taxable                                                                  |   |                                            | 2,638,797  |     |   | 2,345,812 |   |
| Tax-exempt                                                               |   |                                            | 212,727    |     |   | 214,482 |   |
| Total                interest income                                     |   |                                            | 13,220,003 |     |   | 11,278,077 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| INTEREST                EXPENSE:                                         |   |                                            |       |     |   |   |   |
| Interest                on deposits                                      |   |                                            | 5,178,577  |     |   | 3,298,660 |   |
| Interest                on Federal Home Loan Bank advances               |   |                                            | 2,354,977  |     |   | 2,289,428 |   |
| Interest                on other borrowed money                          |   |                                            | 184,560    |     |   | 144,127 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| Total                interest expense                                    |   |                                            | 7,718,114  |     |   | 5,732,215 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| NET                INTEREST INCOME                                       |   |                                            | 5,501,889  |     |   | 5,545,862 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| PROVISION                FOR LOAN LOSSES                                 |   |                                            | 3,607      |     |   | - |   |
|                                                                     |   |                                            |       |     |   |   |   |
| NET                INTEREST INCOME AFTER                                 |   |                                            |       |     |   |   |   |
| PROVISION                FOR LOAN LOSSES                                 |   |                                            | 5,498,282  |     |   | 5,545,862 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| NON-INTEREST                INCOME                                       |   |                                            |       |     |   |   |   |
| Service                charges                                           |   |                                            | 397,716    |     |   | 408,635 |   |
| Rental                income                                             |   |                                            | 7,536      |     |   | 7,636 |   |
| Income                on bank owned life insurance                       |   |                                            | 178,467    |     |   | 166,687 |   |
| Loss                on sale of investment securities                     |   |                                            | -          |     |   | (601 | ) |
| Other                income                                              |   |                                            | 103,731    |     |   | 112,631 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| Total                non-interest income                                 |   |                                            | 687,450    |     |   | 694,988 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| NON-INTEREST                EXPENSES                                     |   |                                            |       |     |   |   |   |
| Salaries                and employee benefits                            |   |                                            | 2,327,544  |     |   | 2,121,408 |   |
| Occupancy                                                                |   |                                            | 436,810    |     |   | 387,745 |   |
| Depreciation                                                             |   |                                            | 184,182    |     |   | 148,919 |   |
| Professional                services                                     |   |                                            | 161,614    |     |   | 160,631 |   |
| Data                processing                                           |   |                                            | 350,676    |     |   | 324,348 |   |
| ATM                expense                                               |   |                                            | 87,559     |     |   | 82,493 |   |
| Deposit                insurance premium                                 |   |                                            | 36,832     |     |   | 34,476 |   |
| Advertising                and promotions                                |   |                                            | 95,762     |     |   | 92,981 |   |
| Other                                                                    |   |                                            | 515,843    |     |   | 438,870 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| Total                non-interest expenses                               |   |                                            | 4,196,822  |     |   | 3,791,871 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| INCOME                BEFORE INCOME TAXES                                |   |                                            | 1,988,910  |     |   | 2,448,979 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| PROVISION                FOR INCOME TAXES                                |   |                                            | 526,478    |     |   | 702,468 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| NET                INCOME                                                |   | $                                               | 1,462,432  |     | $      | 1,746,511 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| BASIC                EARNINGS PER COMMON SHARE                           |   | $                                               | 0.10       |     | $      | 0.12 |   |
| DILUTED                EARNINGS PER COMMON SHARE                         |   | $                                               | 0.10       |     | $      | 0.11 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| BASIC                AVERAGE COMMON SHARES OUTSTANDING:                  |   |                                            | 14,600,634 |     |   | 15,026,117 |   |
| DILUTED                AVERAGE COMMON SHARES OUTSTANDING:                |   |                                            | 14,972,741 |     |   | 15,278,905 |   |
|                                                                     |   |                                            |       |     |   |   |   |
| See                notes to unaudited consolidated financial statements. |   |                                            |       |     |   |   |   |

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| **ABINGTON                  COMMUNITY BANCORP, INC.**                          |   |
|--------------------------------------------------------------------------------|--------|
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **UNAUDITED                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY** |   |
|                                                                           |   |   |   |   |   |   |   |   |   | **Common** |   |   |   |   |   |   |   |
|                                                                           |   |   |   |   |   |   |   |   |   | **Stock** |   |   |   |   |   |   |   |
|                                                                           |   |   |   |   |   |   |   |   |   | **Acquired** |   |   |   | **Accumulated** |   |   |   |
|                                                                           |   | **Common** |   |   |   | **Additional** |   |   |   | **by** |   |   |   | **Other** |   | **Total** |   |
|                                                                           |   | **Stock** |   | **Common** |   | **Paid-in** |   | **Treasury** |   | **Benefit** |   | **Retained** |   | **Comprehensive** |   | **Stockholders'** |   |
|                                                                           |   | **Shares** |   | **Stock** |   | **Capital** |   | **Stock** |   | **Plans** |   | **Earnings** |   | **Loss** |   | **Equity** |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE—JANUARY                  1, 2007                                 |   |   | 15,870,000 |   | $ | 158,700 |   | $ | 69,674,243 |   | $ | (8,317,848 | ) | $ | (10,054,685 | ) | $ | 65,252,214 |   | $ | (2,610,400 | ) | $ | 114,102,224 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income:                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                                    |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 1,462,432 |   |   | - |   |   | 1,462,432 |   |
| Net                  realized holding gain on                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available                  for sale securities                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| arising                  during the period, net                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  tax expense of $235,118                                    |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 456,407 |   |   | 456,407 |   |
| Amortization                  of unrecognized                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| prior                  service costs on defined                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit                  pension plan, net                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  tax expense of $10,364                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 20,117 |   |   | 20,117 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,938,956 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Treasury                  stock purchased                                      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   |  |   |
| Cash                  dividends declared,                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ($.06                  per share)                                              |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (889,866 | ) |   | - |   |   | (889,866 | ) |
| Stock                  options expense                                         |   |   | - |   |   | - |   |   | 97,740 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 97,740 |   |
| Common                  stock released from                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit                  plans                                                 |   |   | - |   |   | - |   |   | 48,470 |   |   | - |   |   | 310,391 |   |   | - |   |   | - |   |   | 358,861 |   |
| Common                  stock acquired by                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit                  plans                                                 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (5,711 | ) |   | - |   |   | - |   |   | (5,711 | ) |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE—                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| MARCH                  31, 2007                                                |   |   | 15,870,000 |   | $ | 158,700 |   | $ | 69,820,453 |   | $ | (8,317,848 | ) | $ | (9,750,005 | ) | $ | 65,824,780 |   | $ | (2,133,876 | ) | $ | 115,602,204 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **Common** |   |   |   |   |   |   |   |   |   |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **Stock** |   |   |   |   |   |   |   |   |   |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **Acquired** |   |   |   |   |   | **Accumulated** |   |   |   |   |
|                                                                           |   |   | **Common** |   |   |   |   |   | **Additional** |   |   |   |   |   | **by** |   |   |   |   |   | **Other** |   |   | **Total** |   |
|                                                                           |   |   | **Stock** |   |   | **Common** |   |   | **Paid-in** |   |   | **Treasury** |   |   | **Benefit** |   |   | **Retained** |   |   | **Comprehensive** |   |   | **Stockholders'** |   |
|                                                                                |   |   | **Shares** |   |   | **Stock** |   |   | **Capital** |   |   | **Stock** |   |   | **Plans** |   |   | **Earnings** |   |   | **Loss** |   |   | **Equity** |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE—JANUARY                  1, 2006                                 |   |   | 15,870,000 |   | $ | 158,700 |   | $ | 69,234,964 |   | $ | - |   | $ | (11,269,649 | ) | $ | 61,889,180 |   | $ | (2,782,428 | ) | $ | 117,230,767 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income:                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                                    |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 1,746,511 |   |   | - |   |   | 1,746,511 |   |
| Net                  realized holding loss on                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available                  for sale securities                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| arising                  during the period, net                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  tax benefit of $288,167                                    |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (559,383 | ) |   | (559,383 | ) |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,187,128 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Treasury                  stock purchased                                      |   |   | - |   |   | - |   |   | - |   |   | (2,662,507 | ) |   | - |   |   | - |   |   | - |   |   | (2,662,507 | ) |
| Cash                  dividends declared,                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ($.05                  per share)                                              |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (761,121 | ) |   | - |   |   | (761,121 | ) |
| Stock                  options expense                                         |   |   | - |   |   | - |   |   | 90,826 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 90,826 |   |
| Common                  stock released from                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit                  plans                                                 |   |   | - |   |   | - |   |   | (8,975 | ) |   | - |   |   | 303,962 |   |   | - |   |   | - |   |   | 294,987 |   |
| Common                  stock acquired by                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit                  plans                                                 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (4,480 | ) |   | - |   |   | - |   |   | (4,480 | ) |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE—                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| MARCH                  31, 2006                                                |   |   | 15,870,000 |   | $ | 158,700 |   | $ | 69,316,815 |   | $ | (2,662,507 | ) | $ | (10,970,167 | ) | $ | 62,874,570 |   | $ | (3,341,811 | ) | $ | 115,375,600 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                  notes to unaudited consolidated financial statements.     |   |

----

| **ABINGTON                  COMMUNITY BANCORP,                  INC.**                                  |   |   |   |                                              |   |         |   |
|---------------------------------------------------------------------------------------------------------|--------|--------|--------|---------------------------------------------------|--------|--------------|--------|
|                                                                                                    |   |   |   |                                              |   |         |   |
| **UNAUDITED                  CONSOLIDATED STATEMENTS OF CASH FLOWS**                                    |   |
|                                                                                                    |   |   |   |                                              |   |         |   |
|                                                                                                    |   |        |   | **Three                  Months Ended March 31,** |   |
|                                                                                                    |   |   |   | **2007**                                          |   | **2006**     |   |
| OPERATING                  ACTIVITIES:                                                                  |   |   |   |                                              |   |         |   |   |   |   |
| Net                  income                                                                             |   |   |   |                                              | $      | 1,462,432    |   | $ | 1,746,511 |   |
| Adjustments                  to reconcile net income to net cash                                        |   |   |   |                                              |   |         |   |   |   |   |
| provided                  by operating activities:                                                      |   |   |   |                                              |   |         |   |   |   |   |
| Provision                  for loan losses                                                              |   |   |   |                                              |   | 3,607        |   |   | - |   |
| Depreciation                                                                                            |   |   |   |                                              |   | 184,182      |   |   | 148,919 |   |
| Share-based                  compensation expense                                                       |   |   |   |                                              |   | 454,001      |   |   | 385,813 |   |
| Loss                  on sale of investment securities                                                  |   |   |   |                                              |   | -            |   |   | 601 |   |
| Deferred                  income tax benefit                                                            |   |   |   |                                              |   | (103,981     | )      |   | (12,488 | ) |
| Amortization                  of:                                                                       |   |   |   |                                              |   |         |   |   |   |   |
| Deferred                  loan fees                                                                     |   |   |   |                                              |   | (174,832     | )      |   | (203,177 | ) |
| Premiums                  and discounts, net                                                            |   |   |   |                                              |   | 14,070       |   |   | 39,526 |   |
| Income                  from bank owned life insurance                                                  |   |   |   |                                              |   | (178,467     | )      |   | (166,687 | ) |
| Changes                  in assets and liabilities which (used) provided cash:                          |   |   |   |                                              |   |         |   |   |   |   |
| Accrued                  interest receivable                                                            |   |   |   |                                              |   | (338,742     | )      |   | (225,767 | ) |
| Prepaid                  expenses and other assets                                                      |   |   |   |                                              |   | 2,024,956    |   |   | 409,419 |   |
| Accrued                  interest payable                                                               |   |   |   |                                              |   | 2,547,469    |   |   | 1,483,766 |   |
| Accounts                  payable and accrued expenses                                                  |   |   |   |                                              |   | 558,334      |   |   | 498,381 |   |
|                                                                                                    |   |   |   |                                              |   |         |   |   |   |   |
| Net                  cash provided by operating activities                                              |   |   |   |                                              |   | 6,453,029    |   |   | 4,104,817 |   |
|                                                                                                    |   |   |   |                                              |   |         |   |   |   |   |
| INVESTING                  ACTIVITIES:                                                                  |   |   |   |                                              |   |         |   |   |   |   |
| Principal                  collected on loans                                                           |   |   |   |                                              |   | 29,835,261   |   |   | 48,853,972 |   |
| Disbursements                  for loans                                                                |   |   |   |                                              |   | (53,554,134  | )      |   | (49,218,422 | ) |
| Purchases                  of:                                                                          |   |   |   |                                              |   |         |   |   |   |   |
| Mortgage-backed                  securities available for sale                                          |   |   |   |                                              |   | -            |   |   | (4,588,086 | ) |
| Investments                  available for sale                                                         |   |   |   |                                              |   | (9,037,976   | )      |   | (2,029,827 | ) |
| Federal                  Home Loan Bank stock                                                           |   |   |   |                                              |   | (205,400     | )      |   | (651,391 | ) |
| Property                  and equipment                                                                 |   |   |   |                                              |   | (850,399     | )      |   | (1,538,537 | ) |
| Proceeds                  from:                                                                         |   |   |   |                                              |   |         |   |   |   |   |
| Sales                  and maturities of investments available for sale                                 |   |   |   |                                              |   | 4,000,000    |   |   | 2,999,688 |   |
| Principal                  repayments of mortgage-backed securities held to maturity                    |   |   |   |                                              |   | 1,978,898    |   |   | 3,019,079 |   |
| Principal                  repayments of mortgage-backed securities available for                  sale |   |   |   |                                              |   | 3,119,893    |   |   | 3,495,714 |   |
| Redemption                  of Federal Home Loan Bank stock                                             |   |   |   |                                              |   | 579,000      |   |   | 603,291 |   |
|                                                                                                    |   |   |   |                                              |   |         |   |   |   |   |
| Net                  cash (used in) provided by investing activities                                    |   |   |   |                                              |   | (24,134,857  | )      |   | 945,481 |   |
|                                                                                                    |   |   |   |                                              |   |         |   |   |   |   |
| FINANCING                  ACTIVITIES:                                                                  |   |   |   |                                              |   |         |   |   |   |   |
| Net                  increase (decrease) in demand deposits and savings                  accounts       |   |   |   |                                              |   | 11,375,937   |   |   | (7,418,285 | ) |
| Net                  increase in certificate accounts                                                   |   |   |   |                                              |   | 17,476,920   |   |   | 19,244,808 |   |
| Net                  increase in other borrowed money                                                   |   |   |   |                                              |   | 2,043,498    |   |   | 348,804 |   |
| Advances                  from Federal Home Loan Bank                                                   |   |   |   |                                              |   | 260,305,000  |   |   | 147,200,000 |   |
| Repayments                  of advances from Federal Home Loan Bank                                     |   |   |   |                                              |   | (270,124,125 | )      |   | (148,350,530 | ) |
| Net                  increase in advances from borrowers for taxes and                  insurance       |   |   |   |                                              |   | 317,609      |   |   | 213,222 |   |
| Purchase                  of treasury stock                                                             |   |   |   |                                              |   | -            |   |   | (2,662,507 | ) |
| Payment                  of cash dividend                                                               |   |   |   |                                              |   | (889,866     | )      |   | (761,121 | ) |
|                                                                                                    |   |   |   |                                              |   |         |   |   |   |   |
| Net                  cash provided by financing activities                                              |   |   |   |                                              |   | 20,504,973   |   |   | 7,814,391 |   |
|                                                                                                    |   |   |   |                                              |   |         |   |   |   |   |
| NET                  INCREASE  IN CASH AND CASH EQUIVALENTS                                        |   |   |   |                                              |   | 2,823,145    |   |   | 12,864,689 |   |
|                                                                                                    |   |   |   |                                              |   |         |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS—Beginning of period                                    |   |   |   |                                              |   | 44,565,252   |   |   | 27,714,241 |   |
|                                                                                                    |   |   |   |                                              |   |         |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS—End of period                                          |   |   |   |                                              | $      | 47,388,397   |   | $ | 40,578,930 |   |
|                                                                                                    |   |   |   |                                              |   |         |   |   |   |   |
| SUPPLEMENTAL                  DISCLOSURES OF CASH FLOW INFORMATION:                                     |   |   |   |                                              |   |         |   |   |   |   |
|                                                                                                    |   |   |   |                                              |   |         |   |   |   |   |
| Cash                  paid during the year for:                                                         |   |   |   |                                              |   |         |   |   |   |   |
| Interest                  on deposits and other borrowings                                              |   |   |   |                                              | $      | 5,170,645    |   | $ | 4,248,449 |   |
| Income                  taxes                                                                           |   |   |   |                                              | $      | -            |   | $ | - |   |
|                                                                                                    |   |   |   |                                              |   |         |   |   |   |   |
| See                  notes to unaudited consolidated financial statements.                              |   |   |   |                                              |   |         |   |   |   |   |

----

**ABINGTON      COMMUNITY BANCORP, INC.**

**NOTES      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

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| **1.** | **FINANCIAL                STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING                POLICIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | ***Basis                of Financial Statement Presentation—***                Abington Community Bancorp, Inc. (the “Company”) is a Pennsylvania                corporation which was organized to be a mid-tier holding company                for                Abington Savings Bank. Abington Savings Bank is a Pennsylvania-chartered,                FDIC-insured savings bank, which conducts business under the name                “Abington Bank” (the “Bank” or “Abington Bank”). The Company was organized                in conjunction with the Bank’s reorganization from the mutual savings bank                to the mutual holding company structure in December 2004. Abington                Mutual                Holding Company, a Pennsylvania corporation, is the mutual holding                company                parent of the Company. Abington Mutual Holding Company owns approximately                57% of the Company’s outstanding common stock and must continue to own at                least a majority of the voting stock of the Company. The Bank is                a wholly                owned subsidiary of the Company. The Company’s results of operations are                primarily dependent on the results of the Bank and the Bank’s wholly owned                subsidiaries, ASB Investment Co., Keswick Services II and its wholly                owned                subsidiaries, and Abington Corp. The consolidated financial statements                include the accounts of the Company and its wholly owned subsidiaries.                All                significant intercompany balances and transactions have been                eliminated. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The                Bank’s executive offices are in Jenkintown, Pennsylvania, with ten other                branches and six limited service facilities located in Montgomery,                Bucks                and Delaware Counties, Pennsylvania. The Bank is principally engaged                in                the business of accepting customer deposits and investing these funds                in                loans that include residential mortgage, commercial, consumer and                construction loans. The principal business of ASB Investment Co.                is to                hold certain investment securities for the Bank. Keswick Services                II and                its wholly owned subsidiaries and Abington Corp. are dormant                subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | On                November 30, 2006, the Company announced that the Company, the Bank                and                Abington Mutual Holding Company had adopted a plan to convert from                the                mutual holding company structure to a full stock-form holding company                structure. For further information, see Note 20 in the Notes to the                Consolidated Financial Statements of the Company’s Annual Report on Form                10-K for the period ended December 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The                accompanying unaudited consolidated financial statements were prepared                in                accordance with the instructions to Form 10-Q, and therefore, do                not                include all the information or footnotes necessary for a complete                presentation of financial position, results of operations, changes                in                equity and comprehensive income and cash flows in conformity with                accounting principles generally accepted in the United States of                America.                However, all normal recurring adjustments that, in the opinion of                management, are necessary for a fair presentation of the consolidated                financial statements have been included. These financial statements                should                be read in conjunction with the audited consolidated financial statements                of the Company and the accompanying notes thereto included in the                Company’s Annual Report on Form 10-K for the period ended December 31,                2006. The results for the three months ended March 31, 2007 are not                necessarily indicative of the results that may be expected for the                fiscal                year ending December 31, 2007, or any other                period.                                                                                                                                                                                                                                                                                                                                                                               |

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|   | ***Use                  of Estimates in the Preparation of Financial                  Statements—***The                  preparation of financial statements in conformity with accounting                  principles generally accepted in the United States of America requires                  management to make estimates and assumptions that affect the reported                  amounts of assets and liabilities and disclosure of contingent                  assets and                  liabilities at the date of the financial statements and the reported                  amounts of income and expenses during the reporting period. Actual                  results                  could differ from those estimates. The Company’s most significant                  estimates are the allowance for loan losses, the assessment of                  other-than-temporary impairment of investment and mortgage-backed                  securities and deferred income taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | ***Other-Than-Temporary                  Impairment of Securities—***Securities                  are evaluated on at least a quarterly basis, and more frequently                  when                  market conditions warrant such an evaluation, to determine whether                  a                  decline in their value is other-than-temporary. To determine whether                  a                  loss in value is other-than-temporary, management utilizes criteria                  such                  as the reasons underlying the decline, the magnitude and duration                  of the                  decline and the intent and ability of the Company to retain its                  investment                  in the security for a period of time sufficient to allow for an                  anticipated recovery in the fair value. The term “other-than-temporary” is                  not intended to indicate that the decline is permanent, but indicates                  that                  the prospects for a near-term recovery of value is not necessarily                  favorable, or that there is a lack of evidence to support a realizable                  value equal to or greater than the carrying value of the investment.                  Once                  a decline in value is determined to be other-than-temporary, the                  value of                  the security is reduced and a corresponding charge to earnings                  is                  recognized. No impairment charge was recognized during the quarters                  ended                  March 31, 2007 and 2006. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | ***Allowance                  for Loan Losses***—The                  allowance for loan losses is increased by charges to income through                  the                  provision for loan losses and decreased by charge-offs (net of                  recoveries). The allowance is maintained at a level that management                  considers adequate to provide for losses based upon evaluation                  of the                  known and inherent risks in the loan portfolio. Management’s periodic                  evaluation of the adequacy of the allowance is based on the Company’s past                  loan loss experience, the volume and composition of lending conducted                  by                  the Company, adverse situations that may affect a borrower’s ability to                  repay, the estimated value of any underlying collateral, current                  economic                  conditions and other factors affecting the known and inherent risk                  in the                  portfolio.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The                  allowance consists of specific allowances for impaired loans, a                  general                  allowance on all classified loans which are not impaired and a                  general                  allowance on the remainder of the portfolio. Although we determine                  the                  amount of each element of the allowance separately, the entire                  allowance                  for loan losses is available for the entire portfolio. The allowance                  on                  impaired loans is established for the amount by which the discounted                  cash                  flows, observable market price or fair value of collateral if the                  loan is                  collateral dependent is lower than the carrying value of the loan.                  The                  general valuation allowance on classified loans which are not impaired                  relates to loans that are classified as either doubtful, substandard                  or                  special mention. Such classifications are based on identified weaknesses                  that increase the credit risk of the loan. The general allowance                  on                  non-classified loans is established to recognize the inherent losses                  associated with lending activities, but which, unlike specific                  allowances,                  have not been allocated to particular problem loans. This allowance                  is                  based on historical loss experience adjusted for qualitative                  factors.          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The                  Company measures impaired loans based on the present value of expected                  future cash flows discounted at the loan’s effective interest rate, the                  loan’s observable market price, or the fair value of the collateral                  if the                  loan is collateral dependent. Impairment losses are included in                  the                  provision for loan losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

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|   | ***Comprehensive                  Income—***The                  Company presents as a component of comprehensive income the amounts                  from                  transactions and other events which currently are excluded from                  the                  consolidated statements of income and are recorded directly to                  stockholders’ equity. These amounts consist of unrealized holding gains                  (losses) on available for sale securities and unrecognized deferred                  costs                  of the Company’s defined benefit pension plan. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The                  components of other comprehensive income (loss) are as                  follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

|                                                                                                   |   | **Three                  Months Ended March 31,** |    |
|--------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|---------|
|                                                                                                   |   | **2007**                                          |    | **2006** |   |
|                                                                                                   |   |                                              |    |   |   |
|                                                                                                        |   |                                              |    |   |   |   |   |
| Net                    unrealized gain (loss) on securities arising during the                    year |   | $                                                 | 456,407 |   | $ | (559,780 | ) |
| Plus:                  reclassification adjustment for net losses                                      |   |                                              |    |   |   |   |   |
| included                    in net income, net of tax benefit of $204 in 2006                          |   |                                              | -       |   |   | 397 |   |
|                                                                                                   |   |                                              |    |   |   |   |   |
| Net                  unrealized gain (loss) on securities                                              |   | $                                                 | 456,407 |   | $ | (559,383 | ) |
|                                                                                                   |   |                                              |    |   |   |   |   |
| Amortization                  of unrecognized prior service cost on                                    |   |                                              |    |   |   |   |   |
| defined                  benefit pension plan, net of tax                                              |   |                                              | 20,117  |   |   | - |   |
|                                                                                                   |   |                                              |    |   |   |   |   |
| Total                  other comprehensive income (loss)                                               |   | $                                                 | 476,524 |   | $ | (559,383 | ) |
|                                                                                                   |   |                                              |    |   |   |   |   |

|                                                                 |   | **March                  31,** |       | **December                  31,** |   |
|----------------------------------------------------------------------|--------|--------------------------------|------------|-----------------------------------|--------|
|                                                                 |   | **2007**                       |       | **2006**                          |   |
|                                                                 |   |                           |       |                              |   |
| Net                  unrealized loss on securities                   |   | $                              | (1,625,441 | )                                 | $      | (2,081,848 | ) |
| Unrecognized                  deferred costs of defined benefit plan |   |                           | (508,435   | )                                 |   | (528,552 | ) |
|                                                                 |   |                           |       |                              |   |   |   |
| Total                  accumulated other comprehensive loss          |   | $                              | (2,133,876 | )                                 | $      | (2,610,400 | ) |

|   | ***Share-Based                  Compensation******—***The                  Company accounts for its share-based compensation awards in accordance                  with Statement of Financial Accounting Standards (“SFAS”) No. 123R                  (revised 2004), Share-Based                  Payment.                  This statement requires an entity to recognize the cost of employee                  services received in share-based payment transactions and measures                  the                  cost on the grant-date fair value of the award. That cost will                  be                  recognized over the period during which an employee is required                  to provide                  service in exchange for the award. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | At                  March 31, 2007, the Company has two share-based compensation plans,                  the                  2005 Recognition and Retention Plan and the 2005 Stock Option Plan.                  Share                  awards were first issued under these plans in July 2005. These                  plans are                  more fully described in Note 6.                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | The                  Company also has an employee stock ownership plan (“ESOP”). This plan is                  more fully described in Note 6. Shares awarded under the ESOP are                  accounted for in accordance with AICPA Statement of Position (“SOP”) 93-6,                  *Employers’                  Accounting for Employee Stock Ownership Plans*.                  As ESOP shares are committed to be released and allocated among                  participants, the Company recognizes compensation expense equal                  to the                  average market price of the shares over the period                  earned.                                                                                                   |

----

|   | ***Earnings                  per share—***Earnings                  per share ("EPS") consists of two separate components, basic EPS                  and                  diluted EPS. Basic EPS is computed based on the weighted average                  number of                  shares of common stock outstanding for each period presented. Diluted                  EPS                  is calculated based on the weighted average number of shares of                  common                  stock outstanding plus dilutive common stock equivalents ("CSEs").                  CSEs                  consist of shares that are assumed to have been purchased with                  the                  proceeds from the exercise of stock options, as well as unvested                  common                  stock awards. Common stock equivalents which are considered antidilutive                  are not included for the purposes of this calculation. For the                  three                  months ended March 31, 2007, there were no antidilutive CSEs. For                  the                  three months ended March 31, 2006, there were 640,900 antidilutive                  CSEs,                  representing 100% of the outstanding options. Earnings per share                  were                  calculated as follows: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                   |   | **Three                  Months Ended March 31,,** |       |
|--------------------------------------------------------|--------|----------------------------------------------------|------------|
|                                                   |   | **2007**                                           |       | **2006** |   |
|                                                   |   | **Basic**                                          |       | **Diluted** |   | **Basic** |   | **Diluted** |   |
|                                                   |   |                                               |       |   |   |   |   |   |   |
| Net                  income                            |   | $                                                  | 1,462,432  |   | $ | 1,462,432 |   | $ | 1,746,511 |   | $ | 1,746,511 |   |
| Weighted                  average shares outstanding   |   |                                               | 14,600,634 |   |   | 14,600,634 |   |   | 15,026,117 |   |   | 15,026,117 |   |
| Effect                  of common share equivalents    |   |                                               | -          |   |   | 372,107 |   |   | - |   |   | 252,788 |   |
| Adjusted                  weighted average shares used |   |                                               |       |   |   |   |   |   |   |   |   |   |   |
| in                  earnings per share computation     |   |                                               | 14,600,634 |   |   | 14,972,741 |   |   | 15,026,117 |   |   | 15,278,905 |   |
|                                                   |   |                                               |       |   |   |   |   |   |   |   |   |   |   |
|                                                   |   |                                               |       |   |   |   |   |   |   |   |   |   |   |
| Earnings                  per share                    |   | $                                                  | 0.10       |   | $ | 0.10 |   | $ | 0.12 |   | $ | 0.11 |   |

|   | ***Recent                  Accounting Pronouncements***—                  In February 2006, the FASB issued SFAS No. 155, *Accounting                  for Certain Hybrid Financial Instruments*.                  This statement amends FASB Statements No. 133, *Accounting                  for Derivative Instruments and Hedging Activities*,                  and No. 140, *Accounting                  for Transfers and Servicing of Financial Assets and Extinguishments                  of                  Liabilities*.                  This statement resolves issues addressed in Statement 133 Implementation                  Issue No. D1, *Application                  of Statement 133 to Beneficial Interest in Securitized Financial                  Assets*.                  This Statement 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 Company adopted this guidance on                  January 1,                  2007. The adoption did not have any effect on the Company’s financial                  position or results of operations.                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | In                  March 2006, the FASB issued SFAS No. 156, *Accounting                  for Servicing of Financial Asset- An Amendment of FASB Statement                  No.                  140*.                  This statement amends SFAS No. 140, *Accounting                  for Transfers and Servicing of Financial Assets and Extinguishment                  of                  Liabilities*,                  with respect to the accounting for separately recognized servicing                  assets                  and servicing liabilities. This statement requires that all separately                  recognized servicing assets and servicing liabilities be initially                  measured at fair value, if practicable. It also permits, but does                  not                  require, the subsequent measurement of servicing assets and servicing                  liabilities at fair value. The Company adopted this statement effective                  January 1, 2007. The adoption did not have a material effect on                  the                  Company’s financial position or results of operations.                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | In                  July 2006, the FASB issued FASB Interpretation (“FIN”) No. 48,                  *Accounting                  for Uncertainty in Income Taxes*. This                  Interpretation clarifies the accounting for uncertainty in income                  taxes                  recognized in an enterprise’s financial statements in accordance with SFAS                  No. 109, *Accounting                  for Income Taxes.*                  This Interpretation prescribes a recognition threshold and measurement                  attribute for the financial statement recognition and measurement                  of a tax                  position taken or expected to be taken in a tax return. This                  Interpretation also provides guidance on derecognition, classification,                  interest and penalties, accounting in interim periods, disclosure,                  and                  transition. This Interpretation is effective for fiscal years beginning                  after December 15, 2006. The Company adopted this Interpretation                  on                  January 1, 2007. The adoption did not have any effect on the Company’s                  financial position or results of                  operations. |

----

|   | In                  September 2006, the FASB ratified the consensus reached by the                  Emerging                  Issues Task Force (“EITF”) in Issue 06-4, *Accounting                  for Deferred Compensation and Postretirement Benefit Aspects of                  Endorsement Split-Dollar Life Insurance Arrangements*.                  EITF 06-4 applies to life insurance arrangements that provide an                  employee                  with a specified benefit that is not limited to the employee’s active                  service period, including certain bank-owned life insurance (“BOLI”)                  policies. EITF 06-4 requires an employer to recognize a liability                  and                  related compensation costs for future benefits that extend to                  postretirement periods. EITF 06-4 is effective for fiscal years                  beginning                  after December 15, 2007, with earlier application permitted. The                  Company                  is continuing to evaluate the impact of this consensus, which will                  require                  the Company to recognize an additional liability and compensation                  expense                  related to our BOLI policies.                                                                                                                                                                                                                                                                                                 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | In                  September 2006, the FASB ratified the consensus reached by the                  EITF in                  Issue 06-5, *Accounting                  for Purchases of Life Insurance - Determining the Amount That Could                  Be                  Realized in Accordance with FASB Technical Bulletin No. 85-4, Accounting                  for Purchases of Life Insurance*.                  Technical Bulletin No. 85-4 states that an entity should report                  as an                  asset in the statement of financial position the amount that could                  be                  realized under the insurance contract. EITF 06-5 clarifies certain                  factors                  that should be considered in the determination of the amount that                  could be                  realized. EITF 06-5 is effective for fiscal years beginning after                  December                  15, 2006, with earlier application permitted under certain circumstances.                  The                  Company adopted this consensus as of January 1, 2007. The adoption                  did not                  have a material effect on the Company’s financial position or results of                  operations.                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | In                  September 2006, the FASB issued FASB Statement No. 157, *Fair                  Value Measurements*,                  which defines fair value, establishes a framework for measuring                  fair value                  under GAAP, and expands disclosures about fair value measurements.                  FASB                  Statement No. 157 applies to other accounting pronouncements that                  require or permit fair value measurements. The new guidance is                  effective                  for financial statements issued for fiscal years beginning after                  November 15, 2007, and for interim periods within those fiscal years.                  We are currently evaluating the potential impact, if any, of the                  adoption                  of FASB Statement No. 157 on our consolidated financial position or                  results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | In                  September 2006, the FASB issued SFAS No. 158, *Employers’                  Accounting for Defined Benefit Pension and Other Postretirement                  Plans - an                  amendment of FASB Statements No. 87, 88, 106, and 132(R)*.                  This statement which amends SFAS No. 87 and SFAS No. 106 requires                  recognition of the overfunded or underfunded status of pension                  and other                  postretirement benefit plans on the balance sheet. Under SFAS No.                  158,                  gains and losses, prior service costs and credits, and any remaining                  transition amounts under SFAS No. 87 and SFAS No. 106 that were                  not yet                  recognized through net periodic benefit cost will be recognized                  in                  accumulated other comprehensive income, net of tax effects, until                  they are                  amortized as a component of net periodic cost. The measurement                  date — the                  date at which the benefit obligation and plan assets are measured— is                  required to be the company’s fiscal year end. SFAS No. 158 is effective                  for publicly-held companies for fiscal years ending after                  December 15, 2006, except for the measurement date provisions, which                  are effective for fiscal years ending after December 15, 2008. The                  Company adopted SFAS No. 158 as of December 31, 2006. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | In                  February 2007, the FASB issued SFAS No. 159, *The                  Fair Value Option for Financial Assets and Financial                  Liabilities*.                  This statement permits entities to choose to measure many financial                  instruments and certain other items at fair value. An entity shall                  report                  unrealized gains and losses on items for which the fair value option                  has                  been elected in earnings at each subsequent reporting date. This                  statement                  is effective as of the beginning of an entity’s first fiscal year that                  begins after November 15, 2007. Early adoption is permitted as                  of the                  beginning of a fiscal year that begins on or before November 15,                  2007,                  provided the entity also elects to apply the provisions of SFAS                  No.157. We                  elected not to early adopt the provisions of this statement, and                  we are                  currently evaluating the potential impact, if any, of the adoption                  of FASB                  Statement No. 159 on our consolidated financial position or results                  of operations.                                                                                                                                                                                                                                                                          |

----

|   | ***Reclassifications*****—**Certain                  items in the 2006 consolidated financial statements have been reclassified                  to conform to the presentation in the 2007 consolidated financial                  statements. Such reclassifications did not have a material impact                  on the                  presentation of the overall financial statements. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                   |
| **2.** | **INVESTMENT                  SECURITIES**                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The                  amortized cost and estimated fair value of investment securities                  are                  summarized as follows:                                                                                                                                                                                                                                                     |

|                                   |   | **Held                  to Maturity** |       |
|----------------------------------------|--------|---------------------------------------|------------|
|                                   |   | **March                  31, 2007**   |       |
|                                   |   |                                  |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                   |   | **Amortized**                         |       | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                   |   | **Cost**                              |       | **Gains** |   | **Losses** |   | **Value** |   |
|                                   |   |                                  |       |   |   |   |   |   |   |
| Debt                  securities:      |   |                                  |       |   |   |   |   |   |   |   |   |   |   |
| Municipal                  bonds       |   | $                                     | 20,392,890 |   | $ | 121,269 |   | $ | (4,513 | ) | $ | 20,509,646 |   |
|                                   |   |                                  |       |   |   |   |   |   |   |   |   |   |   |
| Total                  debt securities |   | $                                     | 20,392,890 |   | $ | 121,269 |   | $ | (4,513 | ) | $ | 20,509,646 |   |

|                                     |   | **Available                  for Sale** |       |
|------------------------------------------|--------|-----------------------------------------|------------|
|                                     |   | **March                  31, 2007**     |       |
|                                     |   |                                    |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                     |   | **Amortized**                           |       | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                     |   | **Cost**                                |       | **Gains** |   | **Losses** |   | **Value** |   |
|                                     |   |                                    |       |   |   |   |   |   |   |
| Debt                  securities:        |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Agency                  bonds            |   | $                                       | 76,492,415 |   | $ | 43,955 |   | $ | (975,330 | ) | $ | 75,561,040 |   |
| Corporate                  bonds and     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| commercial                  paper        |   |                                    | 499,708    |   |   | - |   |   | (2,493 | ) |   | 497,215 |   |
| Certificates                  of deposit |   |                                    | 785,000    |   |   | - |   |   | - |   |   | 785,000 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                  debt securities   |   |                                    | 77,777,123 |   |   | 43,955 |   |   | (977,823 | ) |   | 76,843,255 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Equity                  securities:      |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Common                  stock            |   |                                    | 10         |   |   | 427 |   |   | - |   |   | 437 |   |
| Mutual                  funds            |   |                                    | 3,096,111  |   |   | - |   |   | (78,031 | ) |   | 3,018,080 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                  equity securities |   |                                    | 3,096,121  |   |   | 427 |   |   | (78,031 | ) |   | 3,018,517 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                                    |   | $                                       | 80,873,244 |   | $ | 44,382 |   | $ | (1,055,854 | ) | $ | 79,861,772 |   |

----

|                                   |   | **Held                  to Maturity**  |       |
|----------------------------------------|--------|----------------------------------------|------------|
|                                   |   | **December                  31, 2006** |       |
|                                   |   |                                   |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                   |   | **Amortized**                          |       | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                   |   | **Cost**                               |       | **Gains** |   | **Losses** |   | **Value** |   |
|                                   |   |                                   |       |   |   |   |   |   |   |
| Debt                  securities:      |   |                                   |       |   |   |   |   |   |   |   |   |   |   |
| Municipal                  bonds       |   | $                                      | 20,393,430 |   | $ | 66,540 |   | $ | (30,394 | ) | $ | 20,429,576 |   |
|                                   |   |                                   |       |   |   |   |   |   |   |   |   |   |   |
| Total                  debt securities |   | $                                      | 20,393,430 |   | $ | 66,540 |   | $ | (30,394 | ) | $ | 20,429,576 |   |
|                                   |   |                                   |       |   |   |   |   |   |   |   |   |   |   |

|                                     |   | **Available                  for Sale** |       |
|------------------------------------------|--------|-----------------------------------------|------------|
|                                     |   | **December                  31, 2006**  |       |
|                                     |   |                                    |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                     |   | **Amortized**                           |       | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                     |   | **Cost**                                |       | **Gains** |   | **Losses** |   | **Value** |   |
|                                     |   |                                    |       |   |   |   |   |   |   |
| Debt                  securities:        |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Agency                  bonds            |   | $                                       | 71,492,107 |   | $ | 24,640 |   | $ | (1,286,913 | ) | $ | 70,229,834 |   |
| Corporate                  bonds and     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| commercial                  paper        |   |                                    | 499,646    |   |   | - |   |   | (2,926 | ) |   | 496,720 |   |
| Certificates                  of deposit |   |                                    | 785,000    |   |   | - |   |   | - |   |   | 785,000 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                  debt securities   |   |                                    | 72,776,753 |   |   | 24,640 |   |   | (1,289,839 | ) |   | 71,511,554 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Equity                  securities:      |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Common                  stock            |   |                                    | 10         |   |   | 465 |   |   | - |   |   | 475 |   |
| Mutual                  funds            |   |                                    | 3,058,135  |   |   | - |   |   | (81,109 | ) |   | 2,977,026 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                  equity securities |   |                                    | 3,058,145  |   |   | 465 |   |   | (81,109 | ) |   | 2,977,501 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                                    |   | $                                       | 75,834,898 |   | $ | 25,105 |   | $ | (1,370,948 | ) | $ | 74,489,055 |   |

|   | During                  the three months ended March 31, 2006 a gross loss of approximately                  $600                  was recognized on the sale of certain available for sale equity                  securities. Proceeds from this sale were approximately $500,000.                  There                  were no sales of debt or equity securities during the three months                  ended                  March 31, 2006. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | No                  impairment charge was recognized on investment securities during                  the three                  months ended March 31, 2007 and 2006.                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Included                  in debt securities are structured notes with federal agencies.                  These                  structured notes consist of step-up bonds which provide the agency                  with                  the right, but not the obligation, to call the bonds on the step-up                  date.                                                                                                                   |

----

|   | The                  amortized cost and estimated fair value of debt securities by contractual                  maturity are shown below. Expected maturities will differ from                  contractual                  maturities because borrowers may have the right to call or prepay                  obligations with or without call or prepayment                  penalties. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | **March                  31, 2007**     |       |
|---------------------------------------------------------|--------|-----------------------------------------|------------|
|                                                    |   | **Available                  for Sale** |       | **Held                  to Maturity** |   |
|                                                    |   |                                    |       | **Estimated** |   |   |   | **Estimated** |   |
|                                                    |   | **Amortized**                           |       | **Fair** |   | **Amortized** |   | **Fair** |   |
|                                                    |   | **Cost**                                |       | **Value** |   | **Cost** |   | **Value** |   |
|                                                    |   |                                    |       |   |   |   |   |   |   |
| Due                  in one year or less                |   | $                                       | 16,988,000 |   | $ | 16,843,080 |   | $ | - |   | $ | - |   |
| Due                  after one year through five years  |   |                                    | 48,796,708 |   |   | 48,473,915 |   |   | - |   |   | - |   |
| Due                  after five years through ten years |   |                                    | 9,992,415  |   |   | 9,525,000 |   |   | - |   |   | - |   |
| Due                  after ten years                    |   |                                    | 2,000,000  |   |   | 2,001,260 |   |   | 20,392,890 |   |   | 20,509,646 |   |
|                                                    |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                                                   |   | $                                       | 77,777,123 |   | $ | 76,843,255 |   | $ | 20,392,890 |   | $ | 20,509,646 |   |

|   | The                    table below sets forth investment securities which have an unrealized                    loss                    position as of March 31, 2007: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                     |   | **Less                      than 12 months** |   | **More                      than 12 months** |   |
|----------------------------------------------------------|--------|----------------------------------------------|--------|----------------------------------------------|--------|
|                                                     |   | **Gross**                                    |   | **Estimated**                                |   | **Gross** |   | **Estimated** |   |
|                                                     |   | **Unrealized**                               |   | **Fair**                                     |   | **Unrealized** |   | **Fair** |   |
|                                                     |   | **Losses**                                   |   | **Value**                                    |   | **Losses** |   | **Value** |   |
|                                                     |   |                                         |   |                                         |   |   |   |   |   |
| Securities                      held to maturity:        |   |                                         |   |                                         |   |   |   |   |   |   |   |   |   |
| Municipal                      bonds                     |   | $                                            | (3,953 | )                                            | $      | 2,062,648 |   | $ | (560 | ) | $ | 504,815 |   |
|                                                     |   |                                         |   |                                         |   |   |   |   |   |   |   |   |   |
| Total                      securities held to maturity   |   |                                         | (3,953 | )                                            |   | 2,062,648 |   |   | (560 | ) |   | 504,815 |   |
|                                                     |   |                                         |   |                                         |   |   |   |   |   |   |   |   |   |
| Securities                      available for sale:      |   |                                         |   |                                         |   |   |   |   |   |   |   |   |   |
| Government                      agency securities        |   | $                                            | (4,515 | )                                            | $      | 4,495,485 |   | $ | (970,815 | ) | $ | 48,521,600 |   |
| Other                      securities                    |   |                                         | -      |                                         |   | - |   |   | (80,524 | ) |   | 3,515,295 |   |
|                                                     |   |                                         |   |                                         |   |   |   |   |   |   |   |   |   |
| Total                      securities available for sale |   |                                         | (4,515 | )                                            |   | 4,495,485 |   |   | (1,051,339 | ) |   | 52,036,895 |   |
|                                                     |   |                                         |   |                                         |   |   |   |   |   |   |   |   |   |
| Total                                                    |   | $                                            | (8,468 | )                                            | $      | 6,558,133 |   | $ | (1,051,899 | ) | $ | 52,541,710 |   |
|                                                     |   |                                         |   |                                         |   |   |   |   |   |   |   |   |   |

----

|   | The                    table below sets forth investment securities which have an unrealized                    loss                    position as of December 31, 2006: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                     |   | **Less                      than 12 months** |    | **More                      than 12 months** |   |
|----------------------------------------------------------|--------|----------------------------------------------|---------|----------------------------------------------|--------|
|                                                     |   | **Gross**                                    |    | **Estimated**                                |   | **Gross** |   | **Estimated** |   |
|                                                     |   | **Unrealized**                               |    | **Fair**                                     |   | **Unrealized** |   | **Fair** |   |
|                                                     |   | **Losses**                                   |    | **Value**                                    |   | **Losses** |   | **Value** |   |
|                                                     |   |                                         |    |                                         |   |   |   |   |   |
| Securities                      held to maturity:        |   |                                         |    |                                         |   |   |   |   |   |   |   |   |   |
| Municipal                      bonds                     |   | $                                            | (26,015 | )                                            | $      | 5,877,674 |   | $ | (4,379 | ) | $ | 501,090 |   |
|                                                     |   |                                         |    |                                         |   |   |   |   |   |   |   |   |   |
| Total                      securities held to maturity   |   |                                         | (26,015 | )                                            |   | 5,877,674 |   |   | (4,379 | ) |   | 501,090 |   |
|                                                     |   |                                         |    |                                         |   |   |   |   |   |   |   |   |   |
| Securities                      available for sale:      |   |                                         |    |                                         |   |   |   |   |   |   |   |   |   |
| Agency                      bonds                        |   |                                         | (3,120  | )                                            |   | 3,996,880 |   |   | (1,283,793 | ) |   | 54,208,315 |   |
| Other                      securities                    |   |                                         | -       |                                         |   | - |   |   | (84,035 | ) |   | 3,473,746 |   |
|                                                     |   |                                         |    |                                         |   |   |   |   |   |   |   |   |   |
| Total                      securities available for sale |   |                                         | (3,120  | )                                            |   | 3,996,880 |   |   | (1,367,828 | ) |   | 57,682,061 |   |
|                                                     |   |                                         |    |                                         |   |   |   |   |   |   |   |   |   |
| Total                                                    |   | $                                            | (29,135 | )                                            | $      | 9,874,554 |   | $ | (1,372,207 | ) | $ | 58,183,151 |   |

|   | On                    a quarterly basis, management of the Company reviews the securities                    in its                    investment portfolio to identify any securities that might have                    an                    other-than-temporary impairment. At March 31, 2007, securities                    in a gross                    unrealized loss position for twelve months or longer consisted                    of 24                    securities having an aggregate depreciation of 2.0% from the                    Company’s                    amortized cost basis. Securities in a gross unrealized loss position                    for                    less than twelve months at March 31, 2007, consisted of 7 securities                    having an aggregate depreciation of 0.1% from the Company’s amortized cost                    basis. Management has concluded that the unrealized losses above                    are                    temporary in nature. They are not related to the underlying credit                    quality                    of the issuers, and (with the exception of equity securities)                    they are on                    securities that have contractual maturity dates. The principal                    and                    interest payments on our debt securities have been made as scheduled,                    and                    there is no evidence that the issuer will not continue to do                    so. The                    future principal payments will be sufficient to recover the current                    amortized cost of the securities. The unrealized losses above                    are                    primarily related to market interest rates. The current declines                    in market                    value are not significant, and management of the Company believes                    that                    these values will recover as market interest rates move. The                    Company has                    the intent and ability to hold these investments for the time                    necessary to                    recover its cost. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **3.** | **MORTGAGE-BACKED                SECURITIES**                                                                                                     |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                              |
|   | The                amortized cost and estimated fair value of mortgage-backed securities                are                summarized as follows: |

|                                                   |   | **Held                  to Maturity** |       |
|--------------------------------------------------------|--------|---------------------------------------|------------|
|                                                   |   | **March                  31, 2007**   |       |
|                                                   |   |                                  |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                                   |   | **Amortized**                         |       | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                                   |   | **Cost**                              |       | **Gains** |   | **Losses** |   | **Value** |   |
|                                                   |   |                                  |       |   |   |   |   |   |   |
| FNMA                    pass-through certificates      |   | $                                     | 23,514,240 |   | $ | - |   | $ | (872,386 | ) | $ | 22,641,854 |   |
| FHLMC                    pass-through certificates     |   |                                  | 16,604,570 |   |   | - |   |   | (758,344 | ) |   | 15,846,226 |   |
| Collateralized                    mortgage obligations |   |                                  | 14,020,104 |   |   | 28,520 |   |   | (289,383 | ) |   | 13,759,241 |   |
|                                                   |   |                                  |       |   |   |   |   |   |   |   |   |   |   |
| Total                                                  |   | $                                     | 54,138,914 |   | $ | 28,520 |   | $ | (1,920,113 | ) | $ | 52,247,321 |   |

|                                                   |   | **Available                  for sale** |       |
|--------------------------------------------------------|--------|-----------------------------------------|------------|
|                                                   |   | **March                  31, 2007**     |       |
|                                                   |   |                                    |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                                   |   | **Amortized**                           |       | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                                   |   | **Cost**                                |       | **Gains** |   | **Losses** |   | **Value** |   |
|                                                   |   |                                    |       |   |   |   |   |   |   |
| GNMA                    pass-through certificates      |   | $                                       | 395,958    |   | $ | 12,276 |   | $ | - |   | $ | 408,234 |   |
| FNMA                    pass-through certificates      |   |                                    | 9,320,062  |   |   | 43,118 |   |   | (156,623 | ) |   | 9,206,557 |   |
| FHLMC                    pass-through certificates     |   |                                    | 62,147,622 |   |   | 137,632 |   |   | (1,361,055 | ) |   | 60,924,199 |   |
| Collateralized                    mortgage obligations |   |                                    | 4,859,638  |   |   | 3,523 |   |   | (130,189 | ) |   | 4,732,972 |   |
|                                                   |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                                                  |   | $                                       | 76,723,280 |   | $ | 196,549 |   | $ | (1,647,867 | ) | $ | 75,271,962 |   |

----

|                                                   |   | **Held                  to Maturity**  |       |
|--------------------------------------------------------|--------|----------------------------------------|------------|
|                                                   |   | **December                  31, 2006** |       |
|                                                   |   |                                   |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                                   |   | **Amortized**                          |       | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                                   |   | **Cost**                               |       | **Gains** |   | **Losses** |   | **Value** |   |
|                                                   |   |                                   |       |   |   |   |   |   |   |
| FNMA                    pass-through certificates      |   | $                                      | 24,298,423 |   | $ | - |   | $ | (969,362 | ) | $ | 23,329,061 |   |
| FHLMC                    pass-through certificates     |   |                                   | 17,103,783 |   |   | - |   |   | (853,654 | ) |   | 16,250,129 |   |
| Collateralized                    mortgage obligations |   |                                   | 14,741,413 |   |   | 28,704 |   |   | (392,292 | ) |   | 14,377,825 |   |
|                                                   |   |                                   |       |   |   |   |   |   |   |   |   |   |   |
| Total                                                  |   | $                                      | 56,143,619 |   | $ | 28,704 |   | $ | (2,215,308 | ) | $ | 53,957,015 |   |

|                                                   |   | **Available                  for sale** |       |
|--------------------------------------------------------|--------|-----------------------------------------|------------|
|                                                   |   | **December                  31, 2006**  |       |
|                                                   |   |                                    |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                                   |   | **Amortized**                           |       | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                                   |   | **Cost**                                |       | **Gains** |   | **Losses** |   | **Value** |   |
|                                                   |   |                                    |       |   |   |   |   |   |   |
| GNMA                    pass-through certificates      |   | $                                       | 424,074    |   | $ | 10,308 |   | $ | (743 | ) | $ | 433,639 |   |
| FNMA                    pass-through certificates      |   |                                    | 9,726,032  |   |   | 37,334 |   |   | (184,091 | ) |   | 9,579,275 |   |
| FHLMC                    pass-through certificates     |   |                                    | 64,665,295 |   |   | 120,584 |   |   | (1,627,920 | ) |   | 63,157,959 |   |
| Collateralized                    mortgage obligations |   |                                    | 5,015,865  |   |   | 3,346 |   |   | (167,290 | ) |   | 4,851,921 |   |
|                                                   |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                                                  |   | $                                       | 79,831,266 |   | $ | 171,572 |   | $ | (1,980,044 | ) | $ | 78,022,794 |   |

|   | There                  were no sales of mortgage-backed securities during the three months                  ended                  March 31, 2007 and 2006. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | No                  impairment charge was recognized on mortgage-backed securities                  during the                  three months ended March 31, 2007 and 2006. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                        |
|   | The                  table below sets forth mortgage-backed securities which have an                  unrealized                  loss position as of March 31, 2007:       |

|                                                        |   | **Less                  than 12 months** |   | **More                  than 12 months** |   |
|-------------------------------------------------------------|--------|------------------------------------------|--------|------------------------------------------|--------|
|                                                        |   | **Gross**                                |   | **Estimated**                            |   | **Gross** |   | **Estimated** |   |
|                                                        |   | **Unrealized**                           |   | **Fair**                                 |   | **Unrealized** |   | **Fair** |   |
|                                                        |   | **Losses**                               |   | **Value**                                |   | **Losses** |   | **Value** |   |
|                                                        |   |                                     |   |                                     |   |   |   |   |   |
| Securities                  held to maturity:               |   |                                     |   |                                     |   |   |   |   |   |   |   |   |   |
| FNMA                    pass-through certificates           |   | $                                        | -      |                                     | $      | - |   | $ | (872,387 | ) | $ | 22,641,541 |   |
| FHLMC                    pass-through certificates          |   |                                     | -      |                                     |   | - |   |   | (758,344 | ) |   | 15,846,226 |   |
| Real                    estate mortgage investment conduits |   |                                     | -      |                                     |   | - |   |   | (289,382 | ) |   | 12,792,900 |   |
|                                                        |   |                                     |   |                                     |   |   |   |   |   |   |   |   |   |
| Total                  securities held to maturity          |   |                                     | -      |                                     |   | - |   |   | (1,920,113 | ) |   | 51,280,667 |   |
|                                                        |   |                                     |   |                                     |   |   |   |   |   |   |   |   |   |
| Securities                  available for sale:             |   |                                     |   |                                     |   |   |   |   |   |   |   |   |   |
| FNMA                    pass-through certificates           |   | $                                        | (100   | )                                        | $      | 23,654 |   | $ | (156,523 | ) | $ | 6,202,096 |   |
| FHLMC                    pass-through certificates          |   |                                     | -      |                                     |   | - |   |   | (1,361,055 | ) |   | 51,149,881 |   |
| Real                    estate mortgage investment conduits |   |                                     | -      |                                     |   | - |   |   | (130,189 | ) |   | 4,651,505 |   |
|                                                        |   |                                     |   |                                     |   |   |   |   |   |   |   |   |   |
| Total                  securities available for sale        |   |                                     | (100   | )                                        |   | 23,654 |   |   | (1,647,767 | ) |   | 62,003,482 |   |
|                                                        |   |                                     |   |                                     |   |   |   |   |   |   |   |   |   |
| Total                                                       |   | $                                        | (100   | )                                        | $      | 23,654 |   | $ | (3,567,880 | ) | $ | 113,284,149 |   |

----

|   | The                    table below sets forth mortgage-backed securities which have                    an unrealized                    loss position as of December 31,                    2006: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                   |   | **Less                  than 12 months** |     | **More                  than 12 months** |   |
|--------------------------------------------------------|--------|------------------------------------------|----------|------------------------------------------|--------|
|                                                   |   | **Gross**                                |     | **Estimated**                            |   | **Gross** |   | **Estimated** |   |
|                                                   |   | **Unrealized**                           |     | **Fair**                                 |   | **Unrealized** |   | **Fair** |   |
|                                                   |   | **Losses**                               |     | **Value**                                |   | **Losses** |   | **Value** |   |
|                                                   |   |                                     |     |                                     |   |   |   |   |   |
| Securities                  held to maturity:          |   |                                     |     |                                     |   |   |   |   |   |   |   |   |   |
| FNMA                    pass-through certificates      |   | $                                        | -        |                                     | $      | - |   | $ | (969,362 | ) | $ | 23,329,063 |   |
| FHLMC                    pass-through certificates     |   |                                     | -        |                                     |   | - |   |   | (853,654 | ) |   | 16,250,129 |   |
| Collateralized                    mortgage obligations |   |                                     | (111,660 | )                                        |   | 3,871,654 |   |   | (280,632 | ) |   | 9,839,646 |   |
|                                                   |   |                                     |     |                                     |   |   |   |   |   |   |   |   |   |
| Total                  securities held to maturity     |   |                                     | (111,660 | )                                        |   | 3,871,654 |   |   | (2,103,648 | ) |   | 49,418,838 |   |
|                                                   |   |                                     |     |                                     |   |   |   |   |   |   |   |   |   |
| Securities                  available for sale:        |   |                                     |     |                                     |   |   |   |   |   |   |   |   |   |
| GNMA                    pass-through certificates      |   |                                     | -        |                                     |   | - |   |   | (743 | ) |   | 80,548 |   |
| FNMA                    pass-through certificates      |   |                                     | (263     | )                                        |   | 34,026 |   |   | (183,828 | ) |   | 6,426,884 |   |
| FHLMC                    pass-through certificates     |   |                                     | (3,247   | )                                        |   | 1,644,371 |   |   | (1,624,673 | ) |   | 52,967,849 |   |
| Collateralized                    mortgage obligations |   |                                     | -        |                                     |   | - |   |   | (167,290 | ) |   | 4,767,131 |   |
|                                                   |   |                                     |     |                                     |   |   |   |   |   |   |   |   |   |
| Total                  securities available for sale   |   |                                     | (3,510   | )                                        |   | 1,678,397 |   |   | (1,976,534 | ) |   | 64,242,412 |   |
|                                                   |   |                                     |     |                                     |   |   |   |   |   |   |   |   |   |
| Total                                                  |   | $                                        | (115,170 | )                                        | $      | 5,550,051 |   | $ | (4,080,182 | ) | $ | 113,661,250 |   |

|   | On                    a quarterly basis, management of the Company reviews the securities                    in its                    investment portfolio to identify any securities that might have                    an                    other-than-temporary impairment. At March 31, 2007, mortgage-backed                    securities in a gross unrealized loss position for twelve months                    or longer                    consisted of 48 securities having an aggregate depreciation of                    3.1% from                    the Company’s amortized cost basis. Mortgage-backed securities in a gross                    unrealized loss position for less than twelve months at March                    31, 2007,                    consisted of one security having depreciation of 0.4% from the                    Company’s                    amortized cost basis. Management has concluded that the unrealized                    losses                    above are temporary in nature. There is no exposure to subprime                    loans in                    our mortgage-backed securities portfolio. The losses are not                    related to                    the underlying credit quality of the issuers, and they are on                    securities                    that have contractual maturity dates. The principal and interest                    payments                    on our mortgage-backed securities have been made as scheduled,                    and there                    is no evidence that the issuer will not continue to do so. The                    future                    principal payments will be sufficient to recover the current                    amortized                    cost of the securities. The unrealized losses above are primarily                    related                    to market interest rates. The current declines in market value                    are not                    significant, and management of the Company believes that these                    values will                    recover as market interest rates move. The Company has the intent                    and                    ability to hold these investments for the time necessary to recover                    its                    cost. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **4.** | **LOANS                RECEIVABLE - NET**                                |
|--------|--------------------------------------------------------------------------|
|   |                                                                     |
|   | Loans                receivable consist of the                following: |

|                                                     |   | **March                  31, 2007** |        | **December                  31, 2006** |   |
|----------------------------------------------------------|--------|-------------------------------------|-------------|----------------------------------------|--------|
|                                                     |   |                                |        |                                   |   |
|                                                     |   |                                |        |                                   |   |
| One-to                  four-family residential          |   | $                                   | 388,964,287 |                                   | $      | 375,743,476 |   |
| Multi-family                  residential and commercial |   |                                | 91,858,396  |                                   |   | 92,427,910 |   |
| Construction                                             |   |                                | 142,587,323 |                                   |   | 134,976,214 |   |
| Home                  equity lines of credit             |   |                                | 29,683,556  |                                   |   | 33,953,399 |   |
| Commercial                  business loans               |   |                                | 14,950,115  |                                   |   | 11,416,252 |   |
| Consumer                  non-real estate loans          |   |                                | 3,495,724   |                                   |   | 4,399,778 |   |
|                                                     |   |                                |        |                                   |   |   |   |
| Total                  loans                             |   |                                | 671,539,401 |                                   |   | 652,917,029 |   |
|                                                     |   |                                |        |                                   |   |   |   |
| Less:                                                    |   |                                |        |                                   |   |   |   |
| Construction                  loans in process           |   |                                | (40,133,326 | )                                      |   | (45,338,523 | ) |
| Deferred                  loan fees                      |   |                                | (854,364    | )                                      |   | (912,913 | ) |
| Allowance                  for loan losses               |   |                                | (1,598,633  | )                                      |   | (1,602,613 | ) |
|                                                     |   |                                |        |                                   |   |   |   |
| Loans                  receivable—net              |   | $                                   | 628,953,078 |                                   | $      | 605,062,980 |   |

|   | Following                is a summary of changes in the allowance for loan                losses: |
|--------|---------------------------------------------------------------------------------------------------|

|                                             |   | **Three                  Months Ended** |      | **Year                  Ended**        |   |
|--------------------------------------------------|--------|-----------------------------------------|-----------|----------------------------------------|--------|
|                                             |   | **March                  31, 2007**     |      | **December                  31, 2006** |   |
|                                             |   |                                    |      |                                   |   |
| Balance—beginning                  of year |   | $                                       | 1,602,613 |                                   | $      | 1,454,510 |   |
| Provision                  for loan losses       |   |                                    | 3,607     |                                   |   | 185,521 |   |
| Charge-offs                                      |   |                                    | (11,110   | )                                      |   | (55,460 | ) |
| Recoveries                                       |   |                                    | 3,523     |                                   |   | 18,042 |   |
| (Charge-offs)/recoveries—net               |   |                                    | (7,587    | )                                      |   | (37,418 | ) |
|                                             |   |                                    |      |                                   |   |   |   |
| Balance—end                  of period     |   | $                                       | 1,598,633 |                                   | $      | 1,602,613 |   |

|   | The                  provision for loan losses charged to expense is based upon past                  loan loss                  experience and an evaluation of losses in the current loan portfolio,                  including the evaluation of impaired loans. A loan is considered                  to be                  impaired when, based upon current information and events, it is                  probable                  that the Company will be unable to collect all amounts due according                  to                  the contractual terms of the loan. An insignificant delay or insignificant                  shortfall in amount of payments does not necessarily result in                  the loan                  being identified as impaired. For this purpose, delays less than                  90 days                  are considered to be insignificant. During the periods presented,                  loan                  impairment was evaluated based on the fair value of the loans’ collateral.                  Impairment losses are included in the provision for loan losses.                  Large                  groups of smaller balance, homogeneous loans are collectively evaluated                  for impairment, except for those loans restructured under a troubled                  debt                  restructuring. Loans collectively evaluated for impairment include                  smaller                  balance commercial real estate loans, residential real estate loans                  and                  consumer loans. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | As                  of March 31, 2007 and December 31, 2006, the recorded investment                  in loans                  that are considered to be impaired was as                  follows. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                              |   | **March                    31,** |      | **December                    31,** |   |
|-------------------------------------------------------------------|--------|----------------------------------|-----------|-------------------------------------|--------|
|                                                              |   | **2007**                         |      | **2006**                            |   |
|                                                              |   |                             |      |                                |   |
| Impaired                    collateral-dependent loans            |   | $                                | 2,354,329 |                                | $      | 2,346,896 |   |
| Average                    balance of impaired loans              |   | $                                | 2,348,292 |                                | $      | 709,639 |   |
| Interest                      income recognized on impaired loans |   | $                                | -         |                                | $      | 65,955 |   |

|   | As                  a result of the Company’s measurement of impaired loans, no allowance for                  loan losses was established for impaired loans at March 31, 2007                  or                  December 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Non-accrual                  loans at March 31, 2007 and December 31, 2006, amounted to approximately                  $2.4 million and $2.3 million, respectively. Commercial loans and                  commercial real estate loans are placed on non-accrual at the time                  the                  loan is 90 days delinquent unless the credit is well secured and                  in the                  process of collection. Commercial loans are charged off when the                  loan is                  deemed uncollectible. Residential real estate loans are typically                  placed                  on non-accrual only when the loan is 90 days delinquent and not                  well                  secured and in the process of collection. Other consumer loans                  are                  typically charged off at 90 days delinquent. In all cases, loans                  must be                  placed on non-accrual or charged off at an earlier date if collection                  of                  principal or interest is considered doubtful. Non-performing loans,                  which                  consist of non-accruing loans plus accruing loans 90 days or more                  past                  due, at March 31, 2007 and December 31, 2006, amounted to approximately                  $2.4 million and $2.6 million, respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Interest                  payments on impaired loans and non-accrual loans are typically                  applied to                  principal unless the ability to collect the principal amount is                  fully                  assured, in which case interest is recognized on the cash basis.                  For the                  three months ended March 31, 2007 and 2006, no cash basis interest                  income                  was recognized. Interest income foregone on non-accrual loans was                  $54,000                  and $56,000 for the three months ended March 31, 2007 and 2006,                  respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

----

| **5.** | **DEFERRED                INCOME TAXES**                                                                                               |
|--------|----------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                   |
|   | Items                that gave rise to significant portions of the deferred tax accounts                are as                follows: |

|                                                              |   | **March                  31, 2007** |      | **December                  31, 2006** |   |
|-------------------------------------------------------------------|--------|-------------------------------------|-----------|----------------------------------------|--------|
|                                                              |   |                                |      |                                   |   |
| Deferred                  tax assets:                             |   |                                |      |                                   |   |   |   |
| Allowance                  for loan losses                        |   | $                                   | 543,535   |                                   | $      | 544,888 |   |
| Deferred                  compensation                            |   |                                | 1,589,227 |                                   |   | 1,503,835 |   |
| Unrealized                  loss on securities available-for-sale |   |                                | 837,349   |                                   |   | 1,072,467 |   |
| Property                  and equipment                           |   |                                | 29,880    |                                   |   | 19,157 |   |
|                                                              |   |                                |      |                                   |   |   |   |
| Total                  deferred tax assets                        |   |                                | 2,999,991 |                                   |   | 3,140,347 |   |
|                                                              |   |                                |      |                                   |   |   |   |
| Deferred                  tax liabilities:                        |   |                                |      |                                   |   |   |   |
| Deferred                  loan fees                               |   |                                | (314,446  | )                                      |   | (313,063 | ) |
| Other                                                             |   |                                | (18,330   | )                                      |   | (18,568 | ) |
|                                                              |   |                                |      |                                   |   |   |   |
| Total                  deferred tax liabilities                   |   |                                | (332,776  | )                                      |   | (331,631 | ) |
|                                                              |   |                                |      |                                   |   |   |   |
| Net                  deferred tax asset                           |   | $                                   | 2,667,215 |                                   | $      | 2,808,716 |   |

| **6.** | **PENSION                AND PROFIT SHARING PLANS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | In                addition to the plans disclosed below, the Company also maintains                an                executive deferred compensation plan for selected executive officers,                which was frozen retroactive to January 1, 2005, a board of directors                deferred compensation plan for directors, and a 401(k) retirement                plan for                substantially all of its employees. Further detail of these plans                can be                obtained from the Company’s Annual Report on Form 10-K for the period                ended December 31, 2006. |

----

|   | **Supplemental                Retirement Plan**                                                                                                                                                                                                                                                                                                                                                       |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The                Company maintains a nonqualified, unfunded, defined benefit pension                plan                for the Board of Directors and certain officers. The components of                net                periodic pension cost and other changes in the amounts recognized                in                accumulated other comprehensive loss are as                follows: |

|                                                               |   |        |   | **Three                  Months Ended March 31,** |   |
|--------------------------------------------------------------------|--------|--------|--------|---------------------------------------------------|--------|
|                                                               |   |   |   | **2007**                                          |   | **2006** |   |
|                                                               |   |   |   |                                              |   |   |   |
| Components                  of net periodic pension cost:          |   |   |   |                                              |   |   |   |   |   |   |
| Service                  cost                                      |   |   |   |                                              | $      | 35,586 |   | $ | 26,864 |   |
| Interest                  cost                                     |   |   |   |                                              |   | 35,933 |   |   | 32,740 |   |
| Expected                  return on assets                         |   |   |   |                                              |   | - |   |   | - |   |
| Amortization                  of prior service cost                |   |   |   |                                              |   | 30,481 |   |   | 30,396 |   |
|                                                               |   |   |   |                                              |   |   |   |   |   |   |
| Net                  periodic pension cost                         |   |   |   |                                              | $      | 102,000 |   | $ | 90,000 |   |
|                                                               |   |   |   |                                              |   |   |   |   |   |   |
| Other                  changes in plan assets and benefit          |   |   |   |                                              |   |   |   |   |   |   |
| obligations                  recognized in accumulated             |   |   |   |                                              |   |   |   |   |   |   |
| other                  comprehensive loss:                         |   |   |   |                                              |   |   |   |   |   |   |
| Amortization                  of prior service cost                |   |   |   |                                              |   | (20,117 | ) |   | - |   |
| Total                  recognized in accumulated other             |   |   |   |                                              |   |   |   |   |   |   |
| comprehensive                  income                              |   |   |   |                                              |   | (20,117 | ) |   | - |   |
| Total                  recognized in net periodic pension cost and |   |   |   |                                              |   |   |   |   |   |   |
| accumulated                  other comprehensive loss              |   |   |   |                                              | $      | 81,883 |   | $ | 90,000 |   |
|                                                               |   |   |   |                                              |   |   |   |   |   |   |

|   | The                following weighted average assumptions were used in calculating the                net                periodic pension cost: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                 |   |        |   | **Three                  Months Ended March 31,** |   |
|----------------------------------------------------------------------|--------|--------|--------|---------------------------------------------------|--------|
|                                                                 |   |   |   | **2007**                                          |   | **2006** |   |
|                                                                 |   |   |   |                                              |   |   |   |
| Discount                  rate                                       |   |   |   |                                              |   | 5.75 | % |   | 5.55 | % |
| Rate                  of return on assets                            |   |   |   |                                              |   | n/a |   |   | n/a |   |
| Rate                  of increase in future board fees/salary levels |   |   |   |                                              |   | 4.00 | % |   | 4.00 | % |

----

|   | Amounts                  related to the plan have been recognized in the balance sheet in                  accumulated other comprehensive loss, net of tax, as follows: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                              |   | **March                  31,** |    | **December                  31,** |   |
|---------------------------------------------------|--------|--------------------------------|---------|-----------------------------------|--------|
|                                              |   | **2007**                       |    | **2006**                          |   |
|                                              |   |                           |    |                              |   |
| Amount                  recognized in accumulated |   |                           |    |                              |   |   |   |
| other                  comprehensive loss for:    |   |                           |    |                              |   |   |   |
| Net                  actuarial loss               |   | $                              | 70,968  |                              | $      | 70,968 |   |
| Prior                  service cost               |   |                           | 437,467 |                              |   | 457,584 |   |
| Total                  recognized in accumulated  |   |                           |    |                              |   |   |   |
| other                  comprehensive loss         |   | $                              | 508,435 |                              | $      | 528,552 |   |

|   | **Employee                    Stock Ownership Plan**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | In                    2004, the Company established an employee stock ownership plan                    (“ESOP”)                    for substantially all of its full-time employees. Certain senior                    officers                    of the Bank have been designated as Trustees of the ESOP. Shares                    of the                    Company’s common stock purchased by the ESOP are held in a suspense                    account until released for allocation to participants. Shares                    are expected                    to be released over a 15-year period. Shares released are allocated                    to                    each eligible participant based on the ratio of each such participant’s                    base compensation to the total base compensation of all eligible                    plan                    participants. As the unearned shares are committed to be released                    and                    allocated among participants, the Company recognizes compensation                    expense                    equal to the average market price of the shares. Under this plan,                    the ESOP                    purchased 571,320 shares of the Company’s common stock for approximately                    $7.4 million or $12.90 per share on average. All purchases were                    completed                    by December 31, 2005. No additional shares were purchased in                    the first                    quarter of 2007. At March 31, 2007, the ESOP held approximately                    495,000                    unallocated shares with a fair value of $9.5 million and approximately                    76,000 allocated shares with a fair value of $1.5 million. During                    each of                    the three-month periods ended March 31, 2007 and 2006, approximately                    9,500                    shares were committed to be released to participants, resulting                    in                    recognition of approximately $184,000 and $127,000 in compensation                    expense, respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | **Recognition                    and Retention Plan**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | In                    June 2005, the shareholders of the Company approved the adoption                    of the                    2005 Recognition and Retention Plan (the “RRP”). Certain senior officers                    of the Bank have been designated as Trustees of the RRP. The                    RRP provides                    for the grant of shares of common stock of the Company to certain                    officers, employees and directors of the Company. In order to                    fund the                    RRP, the Recognition Plan Trust (the “Trust”) purchased 285,660 shares of                    the Company’s common stock in the open market for approximately $3.7                    million, an average price of $12.95 per share. The Company made                    sufficient                    contributions to the Trust to fund these purchases. No additional                    purchases are expected to be made by the Trust under this plan.                    Pursuant                    to the terms of the plan, all 285,660 shares acquired by the                    Trust were                    granted to certain officers, employees and directors of the Company                    in                    July 2005. Approximately 3,000 forfeited shares were reallocated                    in                    December 2005. An additional 2,000 forfeited shares were reallocated                    in                    November 2006. RRP shares generally vest at the rate of 20% per                    year over                    five years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

----

|   | A                      summary of the status of the shares under the RRP as of March                      31, 2007 and                      2006, and changes during the three months ended March 31, 2007                      and                      2006 are presented below: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                            |   | **Three                          Months Ended March 31,** |    |
|-----------------------------------------------------------------|--------|-----------------------------------------------------------|---------|
|                                                            |   | **2007**                                                  |    | **2006** |   |
|                                                            |   | **Number                          of shares**             |    | **Weighted                          average****grant                          date fair value** |   | **Number                          of shares** |   | **Weighted                          average****grant                          date fair value** |   |
|                                                            |   |                                                      |    |   |   |   |   |   |   |
| Nonvested                          at the beginning of the year |   |                                                      | 228,928 |   | $ | 12.06 |   |   | 285,660 |   | $ | 12.02 |   |
| Granted                                                         |   |                                                      | -       |   |   | - |   |   | - |   |   | - |   |
| Vested                                                          |   |                                                      | -       |   |   | - |   |   | - |   |   | - |   |
| Forfeited                                                       |   |                                                      | -       |   |   | - |   |   | (2,000 | ) |   | 12.01 |   |
|                                                            |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |
| Nonvested                          at the end of the period     |   |                                                      | 228,928 |   | $ | 12.06 |   |   | 283,660 |   | $ | 12.02 |   |

|   | Compensation                        expense on RRP shares granted is recognized ratably over                        the five year                        vesting period in an amount which totals the market price                        of the Company’s                        stock at the date of grant. During both the three-month periods                        ended                        March 31, 2007 and 2006, approximately 14,000 shares were                        amortized to                        expense, based on the proportional vesting of the awarded                        shares,                        resulting in recognition of approximately $172,000 and $168,000                        in                        compensation expense, respectively. A deferred tax benefit                        of                        approximately $59,000 and $57,000, respectively, was recognized                        during                        these periods. As of March 31, 2007, approximately $2.3 million                        in                        additional compensation expense will be recognized over the                        remaining                        lives of the RRP awards. At March 31, 2007, the weighted                        average remaining                        lives of the RRP awards was approximately 3.3 years. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | **Stock                        Options**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | In                        June 2005, the shareholders of the Company also approved                        the adoption of                        the 2005 Stock Option Plan (the “Option Plan”). The Option Plan authorizes                        the grant of stock options to officers, employees and directors                        of the                        Company to acquire shares of common stock with an exercise                        price equal to                        the fair market value of the common stock on the grant date.                        Options will                        generally become vested and exercisable at the rate of 20%                        per year over                        five years and are generally exercisable for a period of                        ten years after                        the grant date. As of March 31, 2007, a total of 714,150                        shares of common                        stock have been reserved for future issuance pursuant to                        the Option Plan                        of which 48,100 shares remain available for                        grant.                                                                                                                                                                                                            |

----

|   | A                          summary of the status of the Company’s stock options under the Option Plan                          as of March 31, 2007 and changes during the three months                          ended March 31,                          2007 are presented                          below: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                      |   | **Three                  Months Ended March 31,** |    |
|-----------------------------------------------------------|--------|---------------------------------------------------|---------|
|                                                      |   | **2007**                                          |    | **2006** |   |
|                                                      |   | **Number                  of shares**             |    | **Weighted                  average****exercise                  price** |   | **Number                  of shares** |   | **Weighted                  average****exercise                  price** |   |
|                                                      |   |                                              |    |   |   |   |   |   |   |
| Outstanding                  at the beginning of the year |   |                                              | 666,050 |   | $ | 12.18 |   |   | 643,250 |   | $ | 12.02 |   |
| Granted                                                   |   |                                              | -       |   |   | - |   |   | - |   |   | - |   |
| Exercised                                                 |   |                                              | -       |   |   | - |   |   | - |   |   | - |   |
| Forfeited                                                 |   |                                              | -       |   |   | - |   |   | (2,350 | ) |   | 12.01 |   |
|                                                      |   |                                              |    |   |   |   |   |   |   |   |   |   |   |
| Outstanding                  at the end of the period     |   |                                              | 666,050 |   | $ | 12.18 |   |   | 640,900 |   | $ | 12.02 |   |
|                                                      |   |                                              |    |   |   |   |   |   |   |   |   |   |   |
| Exercisable                  at the end of the period     |   |                                              | 128,180 |   | $ | 12.02 |   |   | - |   | $ | - |   |

|   | The                  following table summarizes all stock options outstanding under                  the Option                  Plan as of March 31, 2007: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         |                                |   | **Options                  Outstanding** |      | **Options                  Exercisable**                   |   |
|--------------|-------------------------------------|--------|------------------------------------------|-----------|------------------------------------------------------------|--------|
|    | **Exercise                  Price** |   | **Number                  of****Shares** |      | **Weighted****Average****Exercise                  Price** |   | **Weighted                  Average Remaining****Contractual                  Life** |   | **Number                  of****Shares** |   | **Weighted****Average****Exercise                  Price** |   |
|         |                                |   |                                     |      |                                                       |   | (in                  years) |   |   |   |   |   |
|         |                                |   |                                     |      |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| $            | 12.01                               |   |                                     | 636,400   |                                                       | $      | 12.01 |   |   | 8.5 |   |   | 127,280 |   | $ | 12.01 |   |
|         | 13.35                               |   |                                     | 4,500     |                                                       |   | 13.35 |   |   | 8.9 |   |   | 900 |   |   | 13.35 |   |
|         | 16.28                               |   |                                     | 25,150    |                                                       |   | 16.28 |   |   | 9.9 |   |   | - |   |   | - |   |
|         | Total                               |   |                                     | 666,050   |                                                       | $      | 12.18 |   |   | 8.6 |   |   | 128,180 |   | $ | 12.02 |   |
|         | Intrinsic                  value    |   | $                                        | 5,115,072 |                                                       |   |   |   |   |   |   | $ | 1,005,007 |   |   |   |   |

|   | During                  the three months ended March 31, 2007 and 2006, approximately $98,000                  and                  $91,000, respectively, was recognized in compensation expense for                  the                  Option Plan. A deferred tax benefit of approximately $9,000 was                  recognized                  during each of these periods. At March 31, 2007, approximately                  $1.3                  million in additional compensation expense for awarded options                  remained                  unrecognized. The weighted average period over which this expense                  will be                  recognized is approximately 3.3                  years. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **7.** | **COMMITMENTS                AND CONTINGENCIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The                Bank had approximately $6.1 million in outstanding mortgage loan                commitments at March 31, 2007. The commitments are expected to be                funded                within 90 days with approximately $4.3 million in fixed rate loans                ranging                from 5.625% to 6.125%. The Bank had approximately $3.6 million in                outstanding mortgage loan commitments at December 31, 2006. These                loans                were not originated for resale. Also outstanding at March 31, 2007                and                December 31, 2006, were unused lines of credit totaling approximately                $58.3 million and $69.1 million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Letters                of credit are conditional commitments issued by the Bank guaranteeing                payments of drafts in accordance with the terms of the letter of                credit                agreements. Commercial letters of credit are used primarily to facilitate                trade or commerce and are also issued to support public and private                borrowing arrangements, bond financings and similar transactions.                Standby                letters of credit are conditional commitments issued by the Bank                to                guarantee the performance of a customer to a third party. Collateral                may                be required to support letters of credit based upon management's                evaluation of the creditworthiness of each customer. The credit risk                involved in issuing letters of credit is substantially the same as                that                involved in extending loan facilities to customers. Most of the Bank’s                letters of credit expire within one year. At March 31, 2007 and December                31, 2006, the Bank had letters of credit outstanding of approximately                $14.2 million and $16.3 million, respectively, of which $12.8 million                and                $14.8 million, respectively, were standby letters of credit. At March                31,                2007 and December 31, 2006, the uncollateralized portion of the letters                of                credit extended by the Bank was approximately $97,000 and $169,000,                respectively. At both March 31, 2007 and December 31, 2006, $97,000                of the                uncollateralized letters of credit was for standby letters of                credit. |

----

|   | The                Company is subject to various pending claims and contingent liabilities                arising in the normal course of business which are not reflected                in the                accompanying consolidated financial statements. Management considers                that                the aggregate liability, if any, resulting from such matters will                not be                material.                                                                                                              |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Among                the Company’s contingent liabilities, are exposures to limited recourse                arrangements with respect to the sales of whole loans and participation                interests. At March 31, 2007, the exposure, which represents a portion                of                credit risk associated with the sold interests, amounted to $185,000.                The                exposure is for the life of the related loans and payable, on our                proportional share, as losses are incurred. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

**ITEM      2. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION      AND RESULTS OF OPERATIONS**

***Overview—***

----

***Critical      Accounting Policies, Judgments and Estimates—***

***Allowance      for Loan Losses—***

----

----

***Other-Than-Temporary      Impairment of Securities—***

***Income      Taxes—***

**COMPARISON      OF FINANCIAL CONDITION AT MARCH 31, 2007 AND DECEMBER 31,      2006**

----

**LIQUIDITY      AND CAPITAL RESOURCES**

----

|                                         |                       |   | Actual                Ratios At |                                     | RegulatoryMinimum               |   | To                Be Well Capitalized    |   |
|----------------------------------------------|----------------------------|--------|---------------------------------|------------------------------------------|---------------------------------|--------|------------------------------------------|--------|
|                                         |                       |   | March                31, 2007   |                                     | December                31,2006 |   |
| **Capital              Ratios**:             |                       |   |                            |                                     |                            |   |                                     |   |   |   |   |   |   |
| Tier              1 leverage ratio           |                       |   |                            |                                     |                            |   |                                     |   |   |   |   |   |   |
|                                         | The                Company |   |                            |                    12.67% |                            |   |                    12.80% |   |   |                    4.00% |   |   | N/A |   |
|                                         | The                Bank    |   |                            | 10.55                                    |                            |   | 10.54                                    |   |   | 4.00 |   |   |                    5.00% |   |
| Tier              1 risk-based capital ratio |                       |   |                            |                                     |                            |   |                                     |   |   |   |   |   |   |
|                                         | The                Company |   |                            | 19.85                                    |                            |   | 20.01                                    |   |   | 4.00 |   |   | N/A |   |
|                                         | The                Bank    |   |                            | 16.54                                    |                            |   | 16.49                                    |   |   | 4.00 |   |   | 6.00 |   |
| Total              risk-based capital ratio  |                       |   |                            |                                     |                            |   |                                     |   |   |   |   |   |   |
|                                         | The                Company |   |                            | 20.12                                    |                            |   | 20.29                                    |   |   | 8.00 |   |   | N/A |   |
|                                         | The                Bank    |   |                            | 16.81                                    |                            |   | 16.77                                    |   |   | 8.00 |   |   | 10.00 |   |

**SHARE-BASED      COMPENSATION**

*Share-Based      Payment*

*Employers’      Accounting for Employee Stock Ownership Plans*

----

**COMMITMENTS      AND OFF-BALANCE SHEET ARRANGEMENTS**

----

|                                                                               |   |                                  |    | Amount                of Commitment Expiration - Per Period |   |
|------------------------------------------------------------------------------------|--------|---------------------------------------|---------|-------------------------------------------------------------|--------|
|                                                                               |   | Total                AmountsCommitted |    | To1                Year                                     |   | 1-3Years |   | 4-5Years |   | After                5Years |   |
|                                                                               |   | (In                Thousands)         |    |
| Letters                of credit                                                   |   | $                                     | 14,197  |                                                        | $      | 13,864 |   | $ | 328 |   | $ | -- |   | $ | 5 |   |
| Recourse                obligations on loans sold                                  |   |                                  | 185     |                                                        |   | -- |   |   | -- |   |   | -- |   |   | 185 |   |
| Commitments                to originate loans                                      |   |                                  | 6,112   |                                                        |   | 6,112 |   |   | -- |   |   | -- |   |   | -- |   |
| Unused                portion of home equity lines                of credit        |   |                                  | 23,363  |                                                        |   | -- |   |   | -- |   |   | -- |   |   | 23,363 |   |
| Unused                portion of commercial lines                of credit         |   |                                  | 34,892  |                                                        |   | 34,892 |   |   | -- |   |   | -- |   |   | -- |   |
| Undisbursed                portion of construction                loans in process |   |                                  | 40,133  |                                                        |   | 27,165 |   |   | 12,968 |   |   | -- |   |   | -- |   |
| Total                commitments                                                   |   | $                                     | 118,882 |                                                        | $      | 82,033 |   | $ | 13,296 |   | $ | -- |   | $ | 23,553 |   |

|                                         |   |                          |    | Payments                Due By Period |   |
|----------------------------------------------|--------|-------------------------------|---------|---------------------------------------|--------|
|                                         |   |  Total                   |    | To1                Year               |   | 1-3Years |   | 4-5Years |   | After                5Years |   |
|                                         |   | (In                Thousands) |    |
| Certificates                of deposit       |   | $                             | 406,450 |                                  | $      | 307,001 |   | $ | 77,999 |   | $ | 7,797 |   | $ | 13,653 |   |
| FHLB                advances                 |   |                          | 186,474 |                                  |   | 35,299 |   |   | 43,251 |   |   | 82,505 |   |   | 25,419 |   |
| Repurchase                agreements         |   |                          | 19,825  |                                  |   | 19,825 |   |   | -- |   |   | -- |   |   | -- |   |
| Total                debt                    |   |                          | 206,299 |                                  |   | 55,124 |   |   | 43,251 |   |   | 82,505 |   |   | 25,419 |   |
| Operating                lease obligations   |   |                          | 6,789   |                                  |   | 720 |   |   | 1,205 |   |   | 1,128 |   |   | 3,736 |   |
| Total                contractual obligations |   | $                             | 619,538 |                                  | $      | 362,845 |   | $ | 122,455 |   | $ | 91,430 |   | $ | 42,808 |   |

**COMPARISON      OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND      2006**

**General.      **

----

**Interest      Income.**

**Interest      Expense.**

----

**Average      Balances, Net Interest Income, and Yields Earned and Rates      Paid.**

|                                                                                      |   | Three                Months Ended March 31, |    |
|-------------------------------------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                                                      |   | 2007                                        |    | 2006 |   |
|                                                                                      |   | AverageBalance                              |    |  Interest |   | AverageYield/Rate |   | AverageBalance |   |  Interest |   | AverageYield/Rate |   |
|                                                                                      |   | (Dollars                in Thousands)       |    |
| Interest-earning                assets:                                                   |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                securities(1)                                                   |   | $                                           | 99,497  |   | $ | 1,113 |   |   | 4.47 | % | $ | 100,686 |   | $ | 881 |   |   | 3.50 | % |
| Mortgage-backed                securities                                                 |   |                                        | 133,274 |   |   | 1,409 |   |   | 4.23 |   |   | 147,371 |   |   | 1,524 |   |   | 4.14 |   |
| Loans                receivable(2)                                                        |   |                                        | 615,897 |   |   | 10,368 |   |   | 6.73 |   |   | 534,306 |   |   | 8,718 |   |   | 6.53 |   |
| Other                interest-earning assets                                              |   |                                        | 33,291  |   |   | 330 |   |   | 3.97 |   |   | 24,162 |   |   | 155 |   |   | 2.57 |   |
| Total                interest-earning assets                                              |   |                                        | 881,959 |   |   | 13,220 |   |   | 6.00 | % |   | 806,525 |   |   | 11,278 |   |   | 5.59 | % |
| Cash                and non-interest bearing balances                                     |   |                                        | 17,319  |   |   |   |   |   |   |   |   | 19,150 |   |   |   |   |   |   |   |
| Other                non-interest-earning assets                                          |   |                                        | 29,668  |   |   |   |   |   |   |   |   | 24,156 |   |   |   |   |   |   |   |
| Total                assets                                                               |   | $                                           | 928,946 |   |   |   |   |   |   |   | $ | 849,831 |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:                                              |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                 |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                and money marketaccounts                                           |   | $                                           | 93,463  |   |   | 281 |   |   | 1.20 | % | $ | 111,819 |   |   | 304 |   |   | 1.09 | % |
| Checking                accounts                                                          |   |                                        | 57,116  |   |   | 4 |   |   | 0.03 |   |   | 54,908 |   |   | 4 |   |   | 0.03 |   |
| Certificate                accounts                                                       |   |                                        | 397,210 |   |   | 4,894 |   |   | 4.93 |   |   | 295,224 |   |   | 2,991 |   |   | 4.05 |   |
| Total                deposits                                                             |   |                                        | 547,789 |   |   | 5,179 |   |   | 3.78 |   |   | 461,951 |   |   | 3,299 |   |   | 2.86 |   |
| FHLB                advances                                                              |   |                                        | 193,138 |   |   | 2,355 |   |   | 4.88 |   |   | 203,248 |   |   | 2,289 |   |   | 4.50 |   |
| Other                borrowings                                                           |   |                                        | 17,532  |   |   | 184 |   |   | 4.20 |   |   | 16,838 |   |   | 144 |   |   | 3.42 |   |
| Total                interest-bearing liabilities                                         |   |                                        | 758,459 |   |   | 7,718 |   |   | 4.07 | % |   | 682,037 |   |   | 5,732 |   |   | 3.36 | % |
| Non-interest-bearing                liabilities:                                          |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing                demand accounts                                       |   |                                        | 43,482  |   |   |   |   |   |   |   |   | 41,279 |   |   |   |   |   |   |   |
| Real                estate tax escrow accounts                                            |   |                                        | 3,170   |   |   |   |   |   |   |   |   | 2,809 |   |   |   |   |   |   |   |
| Other                liabilities                                                     |   |                                        | 8,846   |   |   |   |   |   |   |   |   | 6,703 |   |   |   |   |   |   |   |
| Total                liabilities                                                          |   |                                        | 813,957 |   |   |   |   |   |   |   |   | 732,828 |   |   |   |   |   |   |   |
| Stockholders’                equity                                                 |   |                                        | 114,989 |   |   |   |   |   |   |   |   | 117,003 |   |   |   |   |   |   |   |
| Total                liabilities and  stockholders’                equity |   | $                                           | 928,946 |   |   |   |   |   |   |   | $ | 849,831 |   |   |   |   |   |   |   |
| Net                interest-earning assets                                                |   | $                                           | 123,500 |   |   |   |   |   |   |   | $ | 124,488 |   |   |   |   |   |   |   |
| Net                interest income; average Interest                rate spread           |   |                                        |    |   | $ | 5,502 |   |   | 1.93 | % |   |   |   | $ | 5,546 |   |   | 2.23 | % |
| Net                interest margin(3)                                                     |   |                                        |    |   |   |   |   |   | 2.50 | % |   |   |   |   |   |   |   | 2.75 | % |

| (1) | Investment                  securities for the 2007 period include 46 non-taxable municipal                  bonds with                  an aggregate average balance of $20.4 million and an average yield                  of                  4.2%. Investment securities for the 2006 period include 47 non-taxable                  municipal bonds with an aggregate average balance of $20.5 million                  and an                  average yield of 4.2%. The tax-exempt income from such securities                  has not                  been presented on a tax equivalent basis. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Includes                  nonaccrual loans during the respective periods. Calculated net                  of deferred                  fees and discounts and loans in process.                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (3) | Equals                  net interest income divided by average interest-earning                  assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

----

**Provision      for Loan Losses.**

**Non-interest      Income.**

**Non-interest      Expenses.**

**Income      Tax Expense.**

----

**FORWARD      LOOKING STATEMENTS**

**ITEM      3. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

**Asset/Liability      Management and Market Risk.**

|   | ·  | we                  have increased our originations of shorter term loans and/or loans                  with                  adjustable rates of interest, particularly construction loans,                  commercial                  real estate and multi-family residential mortgage loans and home                  equity                  lines of credit; |
|--------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ·  | we                  have attempted to match fund a portion of our securities portfolio                  with                  borrowings having similar expected lives;                               |
|--------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |         |                                                                                                                                                                                                  |
|   | ·  | we                  have attempted, where possible, to extend the maturities of our                  deposits                  and borrowings; and                                                    |
|   |         |                                                                                                                                                                                                  |
|   | ·  | we                  have invested in securities with relatively short anticipated lives,                  generally three to five years, and increased our holding of liquid                  assets. |

**Gap      Analysis.**

----

|                                                                                                                                                                      |   |  6                Monthsor                Less |     | More                than6                Monthsto                1 Year |   | More                than1                Yearto                3 Years |   | More                than3                Yearsto                5 Years |    |  More                than5                Years |   |   Total                Amount |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|----------|-------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|---------|------------------------------------------------------|--------|-----------------------------------------|--------|
|                                                                                                                                                                      |   | (Dollars                in Thousands)               |     |
| Interest-earning                assets(1):                                                                                                                                |   |                                                |     |                                                                    |   |                                                                   |   |                                                                    |    |                                                 |   |                                    |   |   |   |   |   |   |   |
| Loans                receivable                                                                                                                                           |   | $                                                   | 263,143  |                                                                    | $      | 48,539                                                                 |   | $                                                                       | 135,953 |                                                 | $      | 74,904                                  |   | $ | 108,013 |   | $ | 630,552 |   |
| Mortgage-backed                securities                                                                                                                                 |   |                                                | 25,611   |                                                                    |   | 20,268                                                                 |   |                                                                    | 43,989  |                                                 |   | 18,141                                  |   |   | 22,853 |   |   | 130,862 |   |
| Investment                securities                                                                                                                                      |   |                                                | 13,396   |                                                                    |   | 6,288                                                                  |   |                                                                    | 21,797  |                                                 |   | 27,000                                  |   |   | 32,785 |   |   | 101,266 |   |
| Other                interest-earning  assets                                                                                                                        |   |                                                | 41,347   |                                                                    |   | --                                                                     |   |                                                                    | --      |                                                 |   | --                                      |   |   | -- |   |   | 41,347 |   |
| Total                interest-earningassets                                                                                                                               |   |                                                | 343,497  |                                                                    |   | 75,095                                                                 |   |                                                                    | 201,739 |                                                 |   | 120,045                                 |   |   | 163,651 |   |   | 904,027 |   |
| Interest-bearing                liabilities:                                                                                                                              |   |                                                |     |                                                                    |   |                                                                   |   |                                                                    |    |                                                 |   |                                    |   |   |   |   |   |   |   |
| Savings                and money market accounts                                                                                                                          |   | $                                                   | 14,139   |                                                                    | $      | 14,139                                                                 |   | $                                                                       | 35,634  |                                                 | $      | 16,396                                  |   | $ | 14,426 |   | $ | 94,734 |   |
| Checking                accounts                                                                                                                                          |   |                                                | --       |                                                                    |   | --                                                                     |   |                                                                    | --      |                                                 |   | --                                      |   |   | 64,904 |   |   | 64,904 |   |
| Certificate                accounts                                                                                                                                       |   |                                                | 333,024  |                                                                    |   | 33,366                                                                 |   |                                                                    | 18,609  |                                                 |   | 7,797                                   |   |   | 13,654 |   |   | 406,450 |   |
| FHLB                advances                                                                                                                                              |   |                                                | 112,664  |                                                                    |   | 7,463                                                                  |   |                                                                    | 35,330  |                                                 |   | 10,857                                  |   |   | 20,160 |   |   | 186,474 |   |
| Other                borrowed money                                                                                                                                       |   |                                                | 19,825   |                                                                    |   | --                                                                     |   |                                                                    | --      |                                                 |   | --                                      |   |   | -- |   |   | 19,825 |   |
| Total                interest-bearingliabilities                                                                                                                          |   |                                                | 479,652  |                                                                    |   | 54,968                                                                 |   |                                                                    | 89,573  |                                                 |   | 35,050                                  |   |   | 113,144 |   |   | 772,387 |   |
|                                                                                                                                                                      |   |                                                |     |                                                                    |   |                                                                   |   |                                                                    |    |                                                 |   |                                    |   |   |   |   |   |   |   |
| Interest-earning                assets lessinterest-bearing                liabilities                                                                                    |   | $                                                   | (136,155 | )                                                                       | $      | 20,127                                                                 |   | $                                                                       | 112,166 |                                                 | $      | 84,995                                  |   | $ | 50,507 |   | $ | 131,640 |   |
|                                                                                                                                                                      |   |                                                |     |                                                                    |   |                                                                   |   |                                                                    |    |                                                 |   |                                    |   |   |   |   |   |   |   |
| Cumulative                interest-ratesensitivity                gap(2)                                                                                                  |   | $                                                   | (136,155 | )                                                                       | $      | (116,028                                                               | )      | $                                                                       | (3,862  | )                                                    | $      | 81,133                                  |   | $ | 131,640 |   |   |   |   |
|                                                                                                                                                                      |   |                                                |     |                                                                    |   |                                                                   |   |                                                                    |    |                                                 |   |                                    |   |   |   |   |   |   |   |
| Cumulative                interest-rate gap as a percentage oftotal                assets at March 31, 2007                                                               |   |                                                | (14.31)% |                                                                         |   | (12.20)%                                                               |        |                                                                    | (0.41)% |                                                      |   | 8.53                                    | %      |   | 13,84 | % |   |   |   |
|                                                                                                                                                                      |   |                                                |     |                                                                    |   |                                                                   |   |                                                                    |    |                                                 |   |                                    |   |   |   |   |   |   |   |
| Cumulative                interest-earning assets                as a percentage ofcumulative                interest-bearing liabilities atMarch                31, 2007 |   |                                                | 71.61    | %                                                                       |   | 78.30                                                                  | %      |                                                                    | 99.38   | %                                                    |   | 112.31                                  | %      |   | 117.04 | % |   |   |   |

| (1)    | Interest-earning                  assets are included in the period in which the balances are expected                  to be                  redeployed and/or repriced as a result of anticipated prepayments,                  scheduled rate adjustments and contractual maturities. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                      |
| (2)    | Interest-rate                  sensitivity gap represents the difference between net interest-earning                  assets and interest-bearing                  liabilities.                                                                                                          |

----

**ITEM      4. - CONTROLS AND PROCEDURES**

| **PART                II** | **OTHER                INFORMATION** |   |
|----------------------------|--------------------------------------|--------|

| **ITEM                      1.**  |   | **LEGAL                    PROCEEDINGS** |
|-----------------------------------|--------|------------------------------------------|
|                              |   |                                     |
|                              |   | Not                      applicable.     |
|                              |   |                                     |
| **ITEM                      1A.** |   | **RISK                    FACTORS**      |

| **ITEM                  2.** |                                                             | **UNREGISTERED SALES OF EQUITY                SECURITIES AND USE OF PROCEEDS** |
|------------------------------|------------------------------------------------------------------|--------------------------------------------------------------------------------|
|                         |                                                             |                                                                           |
| (a) .                   | Not                applicable                                    |
|                         |                                                             |                                                                           |
| (b)                          | Not                applicable.                                   |
|                         |                                                             |                                                                           |
| (c)                          | **Purchases                of Equity                Securities** |

----

| **ITEM                    3.** |   | **DEFAULTS UPON SENIOR                  SECURITIES**                       |
|--------------------------------|--------|----------------------------------------------------------------------------|
|                           |   |                                                                       |
|                           |   | Not                    applicable.                                         |
|                           |   |                                                                       |
| **ITEM                  4.**   |   | **SUBMISSION                    OF MATTERS TO A VOTE OF SECURITY HOLDERS** |
|                           |   |                                                                       |
|                           |   | Not                    applicable.                                         |
|                           |   |                                                                       |
| **ITEM                    5.** |   | **OTHER                  INFORMATION**                                     |
|                           |   |                                                                       |
|                           |   | Not                    applicable.                                         |
|                           |   |                                                                       |
| **ITEM                    6.** |   | **EXHIBITS**                                                               |

|   |   | No.    | Description                                                                                                  |
|--------|--------|--------|--------------------------------------------------------------------------------------------------------------|
|   |   | 31.1   | Rule 13a-14(d) and 15d-14(d) Certification                  of                  the Chief Executive Officer. |
|   |   |   |                                                                                                         |
|   |   | 31.2   | Rule 13a-14(d) and 15d-14(d) Certification                  of                  the Chief Financial Officer. |
|   |   |   |                                                                                                         |
|   |   | 32.1   | Section                  1350 Certification.                                                                 |
|   |   |   |                                                                                                         |
|   |   | 32.2   | Section 1350                  Certification.                                                                 |

----

**SIGNATURES**

|                              |   |   | **ABINGTON                COMMUNITY BANCORP, INC.** |
|-----------------------------------|--------|--------|-----------------------------------------------------|
|                              |   |   |                                                |   |
|                              |   |   |                                                |   |
|                              |   |   |                                                |   |
| Date:                May 15, 2007 |   |   | By:                                                 | /s/                Robert W. White |
|                              |   |   |                                                | Robert                W. White |
|                              |   |   |                                                | Chairman,                President and Chief                Executive Officer |
|                              |   |   |                                                |   |
|                              |   |   |                                                |   |
|                              |   |   |                                                |   |
| Date:                May 15, 2007 |   |   | By:                                                 | /s/                Jack J. Sandoski |
|                              |   |   |                                                | Jack                J. Sandoski |
|                              |   |   |                                                | Senior                Vice President and Chief                Financial Officer |