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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 June 30,                  2007 |

| 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: 0-52705 |

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| Pennsylvania                                                                    |   | 20-8613037                                            |
|---------------------------------------------------------------------------------|--------|-------------------------------------------------------|
| (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)                           |

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| 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 June 30, 2007                  and                  December 31, 2006 | 1 |
|                                              |                                                                                                                                  |   |   |
|                                              |                                                                                                                                  | Unaudited                  Consolidated Statements of Income for the Three Months and Six                  Months                  Ended June 30, 2007 and 2006 | 2 |
|                                              |                                                                                                                                  |   |   |
|                                              |                                                                                                                                  | Unaudited                  Consolidated Statements of Stockholders’ Equity for the Six Months Ended                  June 30, 2007 and 2006 | 3 |
|                                              |                                                                                                                                  |   |   |
|                                              |                                                                                                                                  | Unaudited                  Consolidated Statements of Cash Flows for the Six Months Ended                  June 30,                  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                                  | 40 |
|                                              |                                                                                                                                  |   |   |
|                                              | ITEM                  4. CONTROLS AND PROCEDURES                                                                                      | 43 |
|                                              |                                                                                                                                  |   |   |
| PART                  II - OTHER INFORMATION      |                                                                                                                                  |
|                                              |                                                                                                                                  |   |   |
|                                              | ITEM                  1. Legal Proceedings                                                                                            | 43 |
|                                              |                                                                                                                                  |   |   |
|                                              | ITEM                  1A. Risk Factors                                                                                                | 43 |
|                                              |                                                                                                                                  |   |   |
|                                              | ITEM                  2. Unregistered Sales of Equity Securities and Use of                  Proceeds                                 | 43 |
|                                              |                                                                                                                                  |   |   |
|                                              | ITEM                  3. Defaults upon Senior Securities                                                                              | 45 |
|                                              |                                                                                                                                  |   |   |
|                                              | ITEM                  4. Submission of Matters to a Vote of Security Holders                                                          | 45 |
|                                              |                                                                                                                                  |   |   |
|                                              | ITEM                  5. Other Information                                                                                            | 46 |
|                                              |                                                                                                                                  |   |   |
|                                              | ITEM                  6. Exhibits                                                                                                     | 46 |
|                                              |                                                                                                                                  |   |   |
|                                              | SIGNATURES                                                                                                                            | 47 |
|                                              |                                                                                                                                  |   |   |
|                                              | CERTIFICATIONS                                                                                                                        |   |

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| **ABINGTON                    BANCORP, INC.**                                                                    |   |                                 |          |                                     |   |
|------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------------|------------------------------------------|--------|
|                                                                                                             |   |                                 |          |                                     |   |
| **CONSOLIDATED                    STATEMENTS OF FINANCIAL CONDITION (unaudited)**                                |   |                                 |
|                                                                                                             |   |                                 |          |                                     |   |
|                                                                                                             |   | **June                    30, 2007** |          | **December                    31, 2006** |   |
|                                                                                                             |   |                                 |          |                                     |   |
| **ASSETS**                                                                                                       |   |                                 |          |                                     |   |   |   |
|                                                                                                             |   |                                 |          |                                     |   |   |   |
| Cash                    and due from banks                                                                       |   | $                                    | 22,023,049    |                                     | $      | 22,136,438 |   |
| Interest-bearing                    deposits in other banks                                                      |   |                                 | 66,028,401    |                                     |   | 22,428,814 |   |
| Securities                    purchased under agreements to resell                                               |   |                                 | 51,000,000    |                                     |   | - |   |
| Total                    cash and cash equivalents                                                               |   |                                 | 139,051,450   |                                     |   | 44,565,252 |   |
| Investment                    securities held to maturity (estimated fair                                        |   |                                 |          |                                     |   |   |   |
| value—2007,                    $20,247,497; 2006, $20,429,576)                                             |   |                                 | 20,392,349    |                                     |   | 20,393,430 |   |
| Investment                    securities available for sale (amortized cost—                               |   |                                 |          |                                     |   |   |   |
| 2007,                    $80,313,170; 2006, $75,834,898)                                                         |   |                                 | 78,960,275    |                                     |   | 74,489,055 |   |
| Mortgage-backed                    securities held to maturity (estimated fair                                   |   |                                 |          |                                     |   |   |   |
| value—2007,                    $48,858,933; 2006, $53,957,015)                                             |   |                                 | 51,531,663    |                                     |   | 56,143,619 |   |
| Mortgage-backed                    securities available for sale (amortized cost—                          |   |                                 |          |                                     |   |   |   |
| 2007,                    $73,366,884; 2006, $79,831,266)                                                         |   |                                 | 71,536,292    |                                     |   | 78,022,794 |   |
| Loans                    receivable, net of allowance for loan losses                                            |   |                                 |          |                                     |   |   |   |
| (2007,                    $1,683,539; 2006, $1,602,613)                                                          |   |                                 | 639,075,786   |                                     |   | 605,062,980 |   |
| Accrued                    interest receivable                                                                   |   |                                 | 4,673,795     |                                     |   | 4,365,535 |   |
| Federal                    Home Loan Bank stock—at cost                                                    |   |                                 | 10,394,400    |                                     |   | 11,240,700 |   |
| Cash                    surrender value - bank owned life insurance                                              |   |                                 | 16,543,638    |                                     |   | 16,184,256 |   |
| Property                    and equipment, net                                                                   |   |                                 | 9,905,398     |                                     |   | 8,908,910 |   |
| Deferred                    tax asset                                                                            |   |                                 | 3,042,212     |                                     |   | 2,808,716 |   |
| Prepaid                    expenses and other assets                                                             |   |                                 | 4,966,764     |                                     |   | 3,001,035 |   |
|                                                                                                             |   |                                 |          |                                     |   |   |   |
| TOTAL                    ASSETS                                                                                  |   | $                                    | 1,050,074,022 |                                     | $      | 925,186,282 |   |
|                                                                                                             |   |                                 |          |                                     |   |   |   |
| **LIABILITIES                    AND STOCKHOLDERS' EQUITY**                                                      |   |                                 |          |                                     |   |   |   |
|                                                                                                             |   |                                 |          |                                     |   |   |   |
| LIABILITIES:                                                                                                     |   |                                 |          |                                     |   |   |   |
| Deposits:                                                                                                        |   |                                 |          |                                     |   |   |   |
| Noninterest-bearing                                                                                              |   | $                                    | 45,804,195    |                                     | $      | 45,186,397 |   |
| Interest-bearing                                                                                                 |   |                                 | 562,570,566   |                                     |   | 541,815,163 |   |
| Total                    deposits                                                                                |   |                                 | 608,374,761   |                                     |   | 587,001,560 |   |
| Advances                    from Federal Home Loan Bank                                                          |   |                                 | 158,364,457   |                                     |   | 196,293,273 |   |
| Other                    borrowed money                                                                          |   |                                 | 22,536,646    |                                     |   | 17,781,260 |   |
| Accrued                    interest payable                                                                      |   |                                 | 6,227,047     |                                     |   | 2,504,270 |   |
| Advances                    from borrowers for taxes and insurance                                               |   |                                 | 4,753,194     |                                     |   | 2,624,310 |   |
| Accounts                    payable and accrued expenses                                                         |   |                                 | 5,347,056     |                                     |   | 4,879,385 |   |
|                                                                                                             |   |                                 |          |                                     |   |   |   |
| Total                    liabilities                                                                             |   |                                 | 805,603,161   |                                     |   | 811,084,058 |   |
|                                                                                                             |   |                                 |          |                                     |   |   |   |
| COMMITMENTS                    AND CONTINGENCIES                                                                 |   |                                 |          |                                     |   |   |   |
| STOCKHOLDERS'                    EQUITY                                                                          |   |                                 |          |                                     |   |   |   |
| Preferred                    stock, $0.01 par value; authorized: 20,000,000 shares in                    2007,   |   |                                 |          |                                     |   |   |   |
| 10,000,000                    shares in 2006; none issued                                                        |   |                                 | -             |                                     |   | - |   |
| Common                    stock, $0.01 par value; authorized: 80,000,000 shares in 2007,                         |   |                                 |          |                                     |   |   |   |
| 40,000,000                    shares in 2006; issued: 24,460,240 in 2007, 15,870,000 in                    2006; |   |                                 |          |                                     |   |   |   |
| outstanding:                    24,460,240 in 2007, 15,288,154 in 2006                                           |   |                                 | 244,602       |                                     |   | 158,700 |   |
| Additional                    paid-in capital                                                                    |   |                                 | 200,564,221   |                                     |   | 69,674,243 |   |
| Treasury                    stock—at cost, 581,846 shares in 2006                                          |   |                                 | -             |                                     |   | (8,317,848 | ) |
| Unallocated                    common stock held by:                                                             |   |                                 |          |                                     |   |   |   |
| Employee                    Stock Ownership Plan (ESOP)                                                          |   |                                 | (16,570,774   | )                                        |   | (6,388,788 | ) |
| Recognition                    & Retention Plan Trust (RRP)                                                  |   |                                 | (2,236,923    | )                                        |   | (2,606,781 | ) |
| Deferred                    compensation plans trust                                                             |   |                                 | (1,141,310    | )                                        |   | (1,059,116 | ) |
| Retained                    earnings                                                                             |   |                                 | 66,200,465    |                                     |   | 65,252,214 |   |
| Accumulated                    other comprehensive loss                                                          |   |                                 | (2,589,420    | )                                        |   | (2,610,400 | ) |
|                                                                                                             |   |                                 |          |                                     |   |   |   |
| Total                    stockholders' equity                                                                    |   |                                 | 244,470,861   |                                     |   | 114,102,224 |   |
|                                                                                                             |   |                                 |          |                                     |   |   |   |
| TOTAL                    LIABILITIES AND STOCKHOLDERS' EQUITY                                                    |   | $                                    | 1,050,074,022 |                                     | $      | 925,186,282 |   |
|                                                                                                             |   |                                 |          |                                     |   |   |   |
|                                                                                                             |   |                                 |          |                                     |   |   |   |
| See                    notes to unaudited consolidated financial statements                                      |   |                                 |          |                                     |   |   |   |

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| **ABINGTON                  BANCORP, INC.**                                                                                                                                                                                                                                                                                       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                  STATEMENTS OF INCOME (unaudited)**                                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                              |   | **Three                  Months Ended June 30,** |   | **Six                  Months Ended June 30,** |   |
|                                                                                                                                                                                                                                                                                                                              |   | **2007** |   | **2006** |   | **2007** |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |
| INTEREST                  INCOME:                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  on loans                                                                                                                                                                                                                                                                                                |   | $ | 10,661,233 |   | $ | 9,457,145 |   | $ | 21,029,712 |   | $ | 18,174,928 |   |
| Interest                  and dividends on investment and                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| mortgage-backed                  securities:                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                                                                                                                                                                                                                                           |   |   | 2,794,990 |   |   | 2,538,558 |   |   | 5,433,787 |   |   | 4,884,370 |   |
| Tax-exempt                                                                                                                                                                                                                                                                                                                        |   |   | 212,726 |   |   | 212,726 |   |   | 425,453 |   |   | 427,208 |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  interest income                                                                                                                                                                                                                                                                                            |   |   | 13,668,949 |   |   | 12,208,429 |   |   | 26,888,952 |   |   | 23,486,506 |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST                  EXPENSE:                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  on deposits                                                                                                                                                                                                                                                                                             |   |   | 5,450,068 |   |   | 3,847,817 |   |   | 10,628,645 |   |   | 7,146,477 |   |
| Interest                  on Federal Home Loan Bank advances                                                                                                                                                                                                                                                                      |   |   | 2,120,703 |   |   | 2,382,909 |   |   | 4,475,680 |   |   | 4,672,337 |   |
| Interest                  on other borrowed money                                                                                                                                                                                                                                                                                 |   |   | 234,572 |   |   | 207,690 |   |   | 419,132 |   |   | 351,817 |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  interest expense                                                                                                                                                                                                                                                                                           |   |   | 7,805,343 |   |   | 6,438,416 |   |   | 15,523,457 |   |   | 12,170,631 |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                  INTEREST INCOME                                                                                                                                                                                                                                                                                              |   |   | 5,863,606 |   |   | 5,770,013 |   |   | 11,365,495 |   |   | 11,315,875 |   |
| PROVISION                  FOR LOAN LOSSES                                                                                                                                                                                                                                                                                        |   |   | 105,938 |   |   | 8,000 |   |   | 109,545 |   |   | 8,000 |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                  INTEREST INCOME AFTER                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PROVISION                  FOR LOAN LOSSES                                                                                                                                                                                                                                                                                        |   |   | 5,757,668 |   |   | 5,762,013 |   |   | 11,255,950 |   |   | 11,307,875 |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NON-INTEREST                  INCOME                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                  charges                                                                                                                                                                                                                                                                                                  |   |   | 405,926 |   |   | 437,788 |   |   | 803,642 |   |   | 846,423 |   |
| Rental                  income                                                                                                                                                                                                                                                                                                    |   |   | 7,536 |   |   | 7,536 |   |   | 15,072 |   |   | 15,172 |   |
| Income                  on bank owned life insurance                                                                                                                                                                                                                                                                              |   |   | 180,915 |   |   | 166,564 |   |   | 359,382 |   |   | 333,251 |   |
| Loss                  on sale of investment securities                                                                                                                                                                                                                                                                            |   |   | - |   |   | - |   |   | - |   |   | (601 | ) |
| Other                  income                                                                                                                                                                                                                                                                                                     |   |   | 115,483 |   |   | 138,748 |   |   | 219,214 |   |   | 251,379 |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  non-interest income                                                                                                                                                                                                                                                                                        |   |   | 709,860 |   |   | 750,636 |   |   | 1,397,310 |   |   | 1,445,624 |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NON-INTEREST                  EXPENSES                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries                  and employee benefits                                                                                                                                                                                                                                                                                   |   |   | 2,406,354 |   |   | 2,122,290 |   |   | 4,733,898 |   |   | 4,243,698 |   |
| Occupancy                                                                                                                                                                                                                                                                                                                         |   |   | 436,968 |   |   | 386,946 |   |   | 873,778 |   |   | 774,691 |   |
| Depreciation                                                                                                                                                                                                                                                                                                                      |   |   | 199,543 |   |   | 168,232 |   |   | 383,725 |   |   | 317,151 |   |
| Professional                  services                                                                                                                                                                                                                                                                                            |   |   | 296,667 |   |   | 225,229 |   |   | 458,281 |   |   | 385,860 |   |
| Data                  processing                                                                                                                                                                                                                                                                                                  |   |   | 357,302 |   |   | 309,727 |   |   | 707,978 |   |   | 634,075 |   |
| ATM                  expense                                                                                                                                                                                                                                                                                                      |   |   | 89,256 |   |   | 81,545 |   |   | 176,815 |   |   | 164,038 |   |
| Deposit                  insurance premium                                                                                                                                                                                                                                                                                        |   |   | 37,678 |   |   | 34,802 |   |   | 74,510 |   |   | 69,278 |   |
| Advertising                  and promotions                                                                                                                                                                                                                                                                                       |   |   | 139,199 |   |   | 138,424 |   |   | 234,961 |   |   | 231,405 |   |
| Other                                                                                                                                                                                                                                                                                                                             |   |   | 580,108 |   |   | 543,300 |   |   | 1,095,951 |   |   | 982,170 |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  non-interest expenses                                                                                                                                                                                                                                                                                      |   |   | 4,543,075 |   |   | 4,010,495 |   |   | 8,739,897 |   |   | 7,802,366 |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                  BEFORE INCOME TAXES                                                                                                                                                                                                                                                                                       |   |   | 1,924,453 |   |   | 2,502,154 |   |   | 3,913,363 |   |   | 4,951,133 |   |
| PROVISION                  FOR INCOME TAXES                                                                                                                                                                                                                                                                                       |   |   | 515,542 |   |   | 731,092 |   |   | 1,042,020 |   |   | 1,433,560 |   |
| NET                  INCOME                                                                                                                                                                                                                                                                                                       |   | $ | 1,408,911 |   | $ | 1,771,062 |   | $ | 2,871,343 |   | $ | 3,517,573 |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BASIC                  EARNINGS PER COMMON SHARE                                                                                                                                                                                                                                                                                  |   | $ | 0.06 |   | $ | 0.07* |   | $ | 0.12 |   | $ | 0.15* |   |
| DILUTED                  EARNINGS PER COMMON SHARE                                                                                                                                                                                                                                                                                |   | $ | 0.06 |   | $ | 0.07* |   | $ | 0.12 |   | $ | 0.14* |   |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BASIC                  AVERAGE COMMON SHARES OUTSTANDING:                                                                                                                                                                                                                                                                         |   |   | 23,364,693 |   |   | 23,746,058* |   |   | 23,362,864 |   |   | 23,885,378* |   |
| DILUTED                  AVERAGE COMMON SHARES OUTSTANDING:                                                                                                                                                                                                                                                                       |   |   | 23,907,173 |   |   | 24,127,669* |   |   | 23,931,605 |   |   | 24,278,351* |   |
|                                                                                                                                                                                                                                                                                                                              |   |
| *                  Earnings per share and average common shares outstanding for the                  prior                  periods have been adjusted to reflect the impact of the second-step                  conversion and reorganization of the Company, which occurred on                  June 27,                  2007. |
|                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                  notes to unaudited consolidated financial                  statements                                                                                                                                                                                                                                        |

----

| **ABINGTON                  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                                                    |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 2,871,343 |   |   | - |   |   | 2,871,343 |   |
| Net                  realized holding loss on                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available                  for sale securities                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| arising                  during the period, net                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  tax benefit of $9,918                                      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (19,254 | ) |   | (19,254 | ) |
| Amortization                  of unrecognized                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| prior                  service costs on defined                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit                  pension plan, net                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  tax expense of $20,728                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 40,234 |   |   | 40,234 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,892,323 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  dividends declared,                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ($.08                  per share)*                                             |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (1,923,092 | ) |   | - |   |   | (1,923,092 | ) |
| Cancellation                  of common stock                                  |   |   | (15,870,000 | ) |   | (158,700 | ) |   | 158,700 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Issuance                  of common stock, net                                 |   |   | 24,460,240 |   |   | 244,602 |   |   | 134,642,301 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 134,886,903 |   |
| Dissolution                  of Abington Mutual                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Holding                  Company                                               |   |   | - |   |   | - |   |   | 4,123,098 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 4,123,098 |   |
| Cancellation                  of treasury stock                                |   |   | - |   |   | - |   |   | (8,317,848 | ) |   | 8,317,848 |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Stock                  options expense                                         |   |   | - |   |   | - |   |   | 195,480 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 195,480 |   |
| Common                  stock released from                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit                  plans                                                 |   |   | - |   |   | - |   |   | 88,247 |   |   | - |   |   | 620,782 |   |   | - |   |   | - |   |   | 709,029 |   |
| Common                  stock acquired by                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit                  plans                                                 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (10,515,104 | ) |   | - |   |   | - |   |   | (10,515,104 | ) |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE—                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| JUNE                  30, 2007                                                 |   |   | 24,460,240 |   | $ | 244,602 |   | $ | 200,564,221 |   | $ | - |   | $ | (19,949,007 | ) | $ | 66,200,465 |   | $ | (2,589,420 | ) | $ | 244,470,861 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                            |   |   |       |   |   |       |   |   |           |   |   |         |   |   | **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                     |   |   | -          |   |   | -          |   |   | -              |   |   | -            |   |   | -            |   |   | 3,517,573    |   |   | -                 |   |   | 3,517,573         |   |
| Net                  realized holding loss on   |   |   |       |   |   |       |   |   |           |   |   |         |   |   |         |   |   |         |   |   |              |   |   |              |   |
| available                  for sale securities  |   |   |       |   |   |       |   |   |           |   |   |         |   |   |         |   |   |         |   |   |              |   |   |              |   |
| arising                  during the period, net |   |   |       |   |   |       |   |   |           |   |   |         |   |   |         |   |   |         |   |   |              |   |   |
| of                  tax benefit of $607,453     |   |   | -          |   |   | -          |   |   | -              |   |   | -            |   |   | -            |   |   | -            |   |   | (1,179,176        | )      |   | (1,179,176        | )      |
|                                            |   |   |       |   |   |       |   |   |           |   |   |         |   |   |         |   |   |         |   |   |              |   |   |              |   |
| Comprehensive                  income           |   |   |       |   |   |       |   |   |           |   |   |         |   |   |         |   |   |         |   |   |              |   |   | 2,338,397         |   |
|                                            |   |   |       |   |   |       |   |   |           |   |   |         |   |   |         |   |   |         |   |   |              |   |   |              |   |
| Treasury                  stock purchased       |   |   | -          |   |   | -          |   |   | -              |   |   | (8,240,427   | )      |   | -            |   |   | -            |   |   | -                 |   |   | (8,240,427        | )      |
| Cash                  dividends declared,       |   |   |       |   |   |       |   |   |           |   |   |         |   |   |         |   |   |         |   |   |              |   |   |              |   |
| ($.07                  per share)*              |   |   | -          |   |   | -          |   |   | -              |   |   | -            |   |   | -            |   |   | (1,668,617   | )      |   | -                 |   |   | (1,668,617        | )      |
| Stock                  options expense          |   |   | -          |   |   | -          |   |   | 183,163        |   |   | -            |   |   | -            |   |   | -            |   |   | -                 |   |   | 183,163           |   |
| Common                  stock released from     |   |   |       |   |   |       |   |   |           |   |   |         |   |   |         |   |   |         |   |   |              |   |   |              |   |
| benefit                  plans                  |   |   | -          |   |   | -          |   |   | (10,388        | )      |   | -            |   |   | 610,457      |   |   | -            |   |   | -                 |   |   | 600,069           |   |
| Common                  stock acquired by       |   |   |       |   |   |       |   |   |           |   |   |         |   |   |         |   |   |         |   |   |              |   |   |              |   |
| benefit                  plans                  |   |   | -          |   |   | -          |   |   | -              |   |   | -            |   |   | (9,876       | )      |   | -            |   |   | -                 |   |   | (9,876            | )      |
|                                            |   |   |       |   |   |       |   |   |           |   |   |         |   |   |         |   |   |         |   |   |              |   |   |              |   |
| BALANCE—                                  |   |   |       |   |   |       |   |   |           |   |   |         |   |   |         |   |   |         |   |   |              |   |   |              |   |
| JUNE                  30, 2006                  |   |   | 15,870,000 |   | $      | 158,700    |   | $      | 69,407,739     |   | $      | (8,240,427   | )      | $      | (10,669,068  | )      | $      | 63,738,136   |   | $      | (3,961,604        | )      | $      | 110,433,476       |   |

|                                                                                                                                                                                                                                                                  |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| *                  Dividends per share for all periods have been adjusted to reflect                  the                  impact of the second-step conversion and reorganization of the                  Company,                  which occurred on June 27, 2007. |
|                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                  notes to unaudited consolidated financial                  statements.                                                                                                                                                                           |

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| **ABINGTON                  BANCORP, INC.**                                                             |   |   |                                           |   |   |         |   |
|---------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------|--------|--------|--------------|--------|
|                                                                                                    |   |
| **UNAUDITED                  CONSOLIDATED STATEMENTS OF CASH FLOWS**                                    |   |
|                                                                                                    |   |   | **Six                  Months Ended June 30,** |   |
|                                                                                                    |   |   | **2007**                                       |   |   | **2006**     |   |
| OPERATING                  ACTIVITIES:                                                                  |   |   |                                           |   |   |         |   |
| Net                  income                                                                             |   | $      | 2,871,343                                      |   | $      | 3,517,573    |   |
| Adjustments                  to reconcile net income to net cash                                        |   |   |                                           |   |   |         |   |
| provided                  by operating activities:                                                      |   |   |                                           |   |   |         |   |
| Provision                  for loan losses                                                              |   |   | 109,545                                        |   |   | 8,000        |   |
| Depreciation                                                                                            |   |   | 383,725                                        |   |   | 317,151      |   |
| Share-based                  compensation expense                                                       |   |   | 899,309                                        |   |   | 783,232      |   |
| Loss                  on sale of investment securities                                                  |   |   | -                                              |   |   | 601          |   |
| Deferred                  income tax benefit                                                            |   |   | (244,306                                       | )      |   | (115,293     | )      |
| Amortization                  of:                                                                       |   |   |                                           |   |   |         |   |
| Deferred                  loan fees                                                                     |   |   | (410,043                                       | )      |   | (427,182     | )      |
| Premiums                  and discounts, net                                                            |   |   | 31,529                                         |   |   | 67,803       |   |
| Income                  from bank owned life insurance                                                  |   |   | (359,382                                       | )      |   | (333,251     | )      |
| Changes                  in assets and liabilities which (used) provided cash:                          |   |   |                                           |   |   |         |   |
| Accrued                  interest receivable                                                            |   |   | (308,260                                       | )      |   | (259,476     | )      |
| Prepaid                  expenses and other assets                                                      |   |   | (1,965,729                                     | )      |   | 378,256      |   |
| Accrued                  interest payable                                                               |   |   | 3,722,777                                      |   |   | 3,216,878    |   |
| Accounts                  payable and accrued expenses                                                  |   |   | 446,439                                        |   |   | 2,011,593    |   |
|                                                                                                    |   |   |                                           |   |   |         |   |
| Net                  cash provided by operating activities                                              |   |   | 5,176,947                                      |   |   | 9,165,885    |   |
|                                                                                                    |   |   |                                           |   |   |         |   |
| INVESTING                  ACTIVITIES:                                                                  |   |   |                                           |   |   |         |   |
| Principal                  collected on loans                                                           |   |   | 75,645,956                                     |   |   | 74,378,611   |   |
| Disbursements                  for loans                                                                |   |   | (109,358,264                                   | )      |   | (124,798,646 | )      |
| Purchases                  of:                                                                          |   |   |                                           |   |   |         |   |
| Mortgage-backed                  securities available for sale                                          |   |   | -                                              |   |   | (10,064,597  | )      |
| Investments                  available for sale                                                         |   |   | (19,077,531                                    | )      |   | (10,062,371  | )      |
| Federal                  Home Loan Bank stock                                                           |   |   | (381,400                                       | )      |   | (1,416,191   | )      |
| Property                  and equipment                                                                 |   |   | (1,380,213                                     | )      |   | (1,954,098   | )      |
| Proceeds                  from:                                                                         |   |   |                                           |   |   |         |   |
| Sales                  and maturities of investments available for sale                                 |   |   | 14,600,000                                     |   |   | 11,179,688   |   |
| Principal                  repayments of mortgage-backed securities held to maturity                    |   |   | 4,566,363                                      |   |   | 5,690,564    |   |
| Principal                  repayments of mortgage-backed securities available for                  sale |   |   | 6,478,786                                      |   |   | 7,200,885    |   |
| Redemption                  of Federal Home Loan Bank stock                                             |   |   | 1,227,700                                      |   |   | 998,691      |   |
|                                                                                                    |   |   |                                           |   |   |         |   |
| Net                  cash used in investing activities                                                  |   |   | (27,678,603                                    | )      |   | (48,847,464  | )      |
|                                                                                                    |   |   |                                           |   |   |         |   |
| FINANCING                  ACTIVITIES:                                                                  |   |   |                                           |   |   |         |   |
| Net                  increase (decrease) in demand deposits and savings                  accounts       |   |   | 2,386,976                                      |   |   | (15,757,779  | )      |
| Net                  increase in certificate accounts                                                   |   |   | 18,986,225                                     |   |   | 56,595,528   |   |
| Net                  increase in other borrowed money                                                   |   |   | 4,755,386                                      |   |   | 6,884,912    |   |
| Advances                  from Federal Home Loan Bank                                                   |   |   | 372,610,000                                    |   |   | 476,200,000  |   |
| Repayments                  of advances from Federal Home Loan Bank                                     |   |   | (410,538,816                                   | )      |   | (474,024,698 | )      |
| Net                  increase in advances from borrowers for taxes and                  insurance       |   |   | 2,128,884                                      |   |   | 1,840,260    |   |
| Purchase                  of treasury stock                                                             |   |   | -                                              |   |   | (8,240,427   | )      |
| Acquisition                  of stock for benefit plans                                                 |   |   | (10,427,710                                    | )      |   | -            |   |
| Proceeds                  from stock issuance, net                                                      |   |   | 134,886,903                                    |   |   | -            |   |
| Dissolution                  of Abington Mutual Holding Company                                         |   |   | 4,123,098                                      |   |   | -            |   |
| Payment                  of cash dividend                                                               |   |   | (1,923,092                                     | )      |   | (1,668,617   | )      |
|                                                                                                    |   |   |                                           |   |   |         |   |
| Net                  cash provided by financing activities                                              |   |   | 116,987,854                                    |   |   | 41,829,179   |   |
|                                                                                                    |   |   |                                           |   |   |         |   |
| NET                  INCREASE IN CASH AND CASH EQUIVALENTS                                              |   |   | 94,486,198                                     |   |   | 2,147,600    |   |
|                                                                                                    |   |   |                                           |   |   |         |   |
| CASH                  AND CASH EQUIVALENTS—Beginning of period                                    |   |   | 44,565,252                                     |   |   | 27,714,241   |   |
|                                                                                                    |   |   |                                           |   |   |         |   |
| CASH                  AND CASH EQUIVALENTS—End of period                                          |   | $      | 139,051,450                                    |   | $      | 29,861,841   |   |
|                                                                                                    |   |   |                                           |   |   |         |   |
| SUPPLEMENTAL                  DISCLOSURES OF CASH FLOW INFORMATION:                                     |   |   |                                           |   |   |         |   |
|                                                                                                    |   |   |                                           |   |   |         |   |
| Cash                  paid during the year for:                                                         |   |   |                                           |   |   |         |   |
|                                                                                                    |   |   |                                           |   |   |         |   |
| Interest                  on deposits and other borrowings                                              |   | $      | 11,800,680                                     |   | $      | 8,953,753    |   |
| Income                  taxes                                                                           |   | $      | 1,300,000                                      |   | $      | 1,475,000    |   |
|                                                                                                    |   |   |                                           |   |   |         |   |
| Cancellation                  of treasury stock                                                         |   | $      | 8,317,848                                      |   | $      | -            |   |
|                                                                                                    |   |   |                                           |   |   |         |   |
| See                  notes to unaudited consolidated financial statements.                              |   |   |                                           |   |   |         |   |

----

**ABINGTON      BANCORP, INC.**

**NOTES      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

| **1.** | **FINANCIAL                STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING                POLICIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | ***Basis                of Financial Statement Presentation—***                Abington Bancorp, Inc. (the “Company”) is a Pennsylvania corporation which                was recently organized to be the stock holding company for Abington                Savings Bank in connection with our second-step conversion and                reorganization completed on June 27, 2007, discussed further below.                Abington Savings Bank is a Pennsylvania-chartered, FDIC-insured savings                bank, which conducts business under the name “Abington Bank” (the “Bank”                or “Abington Bank”). Pursuant to the Bank’s election pursuant to Section                10(l) of the Home Owners’ Loan Act, the Company is a savings and loan                holding company regulated by the Office of Thrift Supervision (the“OTS”).                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 subsidiary, ASB Investment Co. 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 currently inactive                subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Abington                Community Bancorp, Inc., a Pennsylvania corporation, was the former                mid-tier holding company for the Bank. Abington Community Bancorp                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, was                the                mutual holding company parent of Abington Community Bancorp, Inc.                and                originally owned 55% of Abington Community Bancorp’s outstanding stock. As                a result of treasury stock purchases, this stake increased to                approximately 57% of Abington Community Bancorp’s outstanding stock at the                time of the Bank’s second-step conversion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | On                June 27, 2007, a second-step conversion was completed after which                Abington                Mutual Holding Company and Abington Community Bancorp, Inc. ceased                to                exist and were replaced by Abington Bancorp, Inc. was organized as                the new                stock-form holding company for the Bank and successor to Abington                Community Bancorp. A total of 13,965,600 new shares of the Company                were                sold at $10 per share in the subscription, community and syndicated                community offerings through which the Company received proceeds of                approximately $134.9 million, net of offering costs of approximately                $4.8                million. The Company contributed $67.4 million or approximately 50%                of the                net proceeds to the Bank in the form of a capital contribution. The                Company loaned $10.4 million to the Bank’s Employee Stock Ownership Plan                (the “ESOP”) and the ESOP used those funds to acquire 1,042,771 shares of                the Company’s common stock at $10 per share. As part of the conversion,                outstanding public shares of Abington Community Bancorp, Inc. were                exchanged for exactly 1.6 shares of the new holding company of the                Bank.                No fractional shares were issued. Instead, cash was paid to shareholders                at $10 per share for any fractional shares that would otherwise be                issued.                The exchange resulted in an additional 10,494,640 outstanding shares                of                the Company for a total of 24,460,240 outstanding shares as of the                closing                of the second-step conversion on June 27, 2007. Treasury stock held                was                cancelled. |

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|   | 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 condition, 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 Abington Community Bancorp, Inc. and the accompanying notes thereto                for                the year ended December 31, 2006, included in the Company's prospectus,                dated May 14, 2007, as filed with the Securities and Exchange Commission                ("SEC"), pursuant to Rule 424(b)(3) on May 23, 2007 (File No. 333-142543).                The results for the six months ended June 30, 2007 are not necessarily                indicative of the results that may be expected for the fiscal year                ending                December 31, 2007, or any other period.    |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | ***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 six months                ended June 30, 2007 or 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. |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | ***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 June 30,** |     | **Six                  Months Ended June 30,** |   |
|-------------------------------------------------------------|--------|--------------------------------------------------|----------|------------------------------------------------|--------|
|                                                        |   | **2007**                                         |     | **2006**                                       |   | **2007** |   | **2006** |   |
|                                                        |   |                                             |     |                                           |   |   |   |   |   |
| Net                  unrealized loss on securities arising  |   |                                             |     |                                           |   |   |   |   |   |   |   |   |   |
| during                  the year                            |   | $                                                | (475,661 | )                                              | $      | (619,793 | ) | $ | (19,254 | ) | $ | (1,179,573 | ) |
| Plus:                  reclassification adjustment for net  |   |                                             |     |                                           |   |   |   |   |   |   |   |   |   |
| losses                  included in net income, net of tax  |   |                                             |     |                                           |   |   |   |   |   |   |   |   |   |
| benefit                  of $204 in 2006                    |   |                                             | -        |                                           |   | - |   |   | - |   |   | 397 |   |
|                                                        |   |                                             |     |                                           |   |   |   |   |   |   |   |   |   |
| Net                  unrealized loss on securities          |   | $                                                | (475,661 | )                                              | $      | (619,793 | ) | $ | (19,254 | ) | $ | (1,179,176 | ) |
|                                                        |   |                                             |     |                                           |   |   |   |   |   |   |   |   |   |
| Amortization                  of unrecognized prior service |   |                                             |     |                                           |   |   |   |   |   |   |   |   |   |
| cost                  on defined benefit pension plan,      |   |                                             |     |                                           |   |   |   |   |   |   |   |   |   |
| net                  of tax                                 |   |                                             | 20,117   |                                           |   | - |   |   | 40,234 |   |   | - |   |
|                                                        |   |                                             |     |                                           |   |   |   |   |   |   |   |   |   |
| Total                  other comprehensive income (loss)    |   | $                                                | (455,544 | )                                              | $      | (619,793 | ) | $ | 20,980 |   | $ | (1,179,176 | ) |

|   | The                components of accumulated other comprehensive loss are as                follows: |
|--------|------------------------------------------------------------------------------------------------------|

|                                                                 |   | **June                  30,** |       | **December                  31,** |   |
|----------------------------------------------------------------------|--------|-------------------------------|------------|-----------------------------------|--------|
|                                                                 |   | **2007**                      |       | **2006**                          |   |
|                                                                 |   |                          |       |                              |   |
| Net                  unrealized loss on securities                   |   | $                             | (2,101,102 | )                                 | $      | (2,081,848 | ) |
| Unrecognized                  deferred costs of defined benefit plan |   |                          | (488,318   | )                                 |   | (528,552 | ) |
|                                                                 |   |                          |       |                              |   |   |   |
| Total                  accumulated other comprehensive loss          |   | $                             | (2,589,420 | )                                 | $      | (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                  June 30, 2007, the Company has two share-based compensation plans,                  the                  2005 Recognition and Retention Plan and the 2005 Stock Option Plan                  of                  Abington Community Bancorp, each of which was assumed by the Company                  as                  part of the second-step conversion. Share awards were first issued                  under                  these plans in July 2005 and have been adjusted for the exchange                  ratio.                  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 and                  six months ended June 30, 2007, there were no antidilutive CSEs.                  For the                  three and six months ended June 30, 2006, there were 1,025,440                  antidilutive CSEs, representing 100% of the outstanding options.                  Earnings                  per share and average common shares outstanding for the prior periods                  have                  been adjusted to reflect the impact of the second-step conversion                  and                  reorganization of the Company, which occurred on June 27, 2007.                  Earnings                  per share were calculated as                  follows: |

|                                                     |   | **Three                    Months Ended June 30,** |       |
|----------------------------------------------------------|--------|----------------------------------------------------|------------|
|                                                     |   | **2007**                                           |       | **2006** |   |
|                                                     |   | **Basic**                                          |       | **Diluted** |   | **Basic** |   | **Diluted** |   |
|                                                     |   |                                               |       |   |   |   |   |   |   |
| Net                    income                            |   | $                                                  | 1,408,911  |   | $ | 1,408,911 |   | $ | 1,771,062 |   | $ | 1,771,062 |   |
| Weighted                    average shares outstanding   |   |                                               | 23,364,693 |   |   | 23,364,693 |   |   | 23,746,058 |   |   | 23,746,058 |   |
| Effect                    of common share equivalents    |   |                                               | -          |   |   | 542,480 |   |   | - |   |   | 381,611 |   |
| Adjusted                    weighted average shares used |   |                                               |       |   |   |   |   |   |   |   |   |   |   |
| in                    earnings per share computation     |   |                                               | 23,364,693 |   |   | 23,907,173 |   |   | 23,746,058 |   |   | 24,127,669 |   |
|                                                     |   |                                               |       |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |                                               |       |   |   |   |   |   |   |   |   |   |   |
| Earnings                    per share                    |   | $                                                  | 0.06       |   | $ | 0.06 |   | $ | 0.07 |   | $ | 0.07 |   |

----

|                                                     |   | **Six                    Months Ended June 30,** |       |
|----------------------------------------------------------|--------|--------------------------------------------------|------------|
|                                                     |   | **2007**                                         |       | **2006** |   |
|                                                     |   | **Basic**                                        |       | **Diluted** |   | **Basic** |   | **Diluted** |   |
|                                                     |   |                                             |       |   |   |   |   |   |   |
| Net                    income                            |   | $                                                | 2,871,343  |   | $ | 2,871,343 |   | $ | 3,517,573 |   | $ | 3,517,573 |   |
| Weighted                    average shares outstanding   |   |                                             | 23,362,864 |   |   | 23,362,864 |   |   | 23,885,378 |   |   | 23,885,378 |   |
| Effect                    of common share equivalents    |   |                                             | -          |   |   | 568,741 |   |   | - |   |   | 392,973 |   |
| Adjusted                    weighted average shares used |   |                                             |       |   |   |   |   |   |   |   |   |   |   |
| in                    earnings per share computation     |   |                                             | 23,362,864 |   |   | 23,931,605 |   |   | 23,885,378 |   |   | 24,278,351 |   |
|                                                     |   |                                             |       |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |                                             |       |   |   |   |   |   |   |   |   |   |   |
| Earnings                    per share                    |   | $                                                | 0.12       |   | $ | 0.12 |   | $ | 0.15 |   | $ | 0.14 |   |

|   | ***Recent                  Accounting Pronouncements***—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. |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | 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                  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.                                        |

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|   | ***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** |       |
|----------------------------------------|--------|---------------------------------------|------------|
|                                   |   | **June                  30, 2007**    |       |
|                                   |   |                                  |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                   |   | **Amortized**                         |       | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                   |   | **Cost**                              |       | **Gains** |   | **Losses** |   | **Value** |   |
|                                   |   |                                  |       |   |   |   |   |   |   |
| Debt                  securities:      |   |                                  |       |   |   |   |   |   |   |   |   |   |   |
| Municipal                  bonds       |   | $                                     | 20,392,349 |   | $ | 7,012 |   | $ | (151,864 | ) | $ | 20,247,497 |   |
|                                   |   |                                  |       |   |   |   |   |   |   |   |   |   |   |
| Total                  debt securities |   | $                                     | 20,392,349 |   | $ | 7,012 |   | $ | (151,864 | ) | $ | 20,247,497 |   |

|                                     |   | **Available                  for Sale** |       |
|------------------------------------------|--------|-----------------------------------------|------------|
|                                     |   | **June                  30, 2007**      |       |
|                                     |   |                                    |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                     |   | **Amortized**                           |       | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                     |   | **Cost**                                |       | **Gains** |   | **Losses** |   | **Value** |   |
|                                     |   |                                    |       |   |   |   |   |   |   |
| Debt                  securities:        |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Agency                  bonds            |   | $                                       | 75,992,723 |   | $ | 12,305 |   | $ | (1,270,137 | ) | $ | 74,734,891 |   |
| Corporate                  bonds and     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| commercial                  paper        |   |                                    | 499,771    |   |   | - |   |   | (1,876 | ) |   | 497,895 |   |
| Certificates                  of deposit |   |                                    | 685,000    |   |   | - |   |   | - |   |   | 685,000 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                  debt securities   |   |                                    | 77,177,494 |   |   | 12,305 |   |   | (1,272,013 | ) |   | 75,917,786 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Equity                  securities:      |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Common                  stock            |   |                                    | 10         |   |   | 513 |   |   | - |   |   | 523 |   |
| Mutual                  funds            |   |                                    | 3,135,666  |   |   | - |   |   | (93,700 | ) |   | 3,041,966 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                  equity securities |   |                                    | 3,135,676  |   |   | 513 |   |   | (93,700 | ) |   | 3,042,489 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                                    |   | $                                       | 80,313,170 |   | $ | 12,818 |   | $ | (1,365,713 | ) | $ | 78,960,275 |   |

----

|                                   |   | **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 six months ended June 30, 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 six months ended June 30,                2007. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | No                impairment charge was recognized on investment securities during                the six                months ended June 30, 2007 or 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. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                      |   | **June                    30, 2007**      |       |
|-----------------------------------------------------------|--------|-------------------------------------------|------------|
|                                                      |   | **Available                    for Sale** |       | **Held                    to Maturity** |   |
|                                                      |   |                                      |       | **Estimated** |   |   |   | **Estimated** |   |
|                                                      |   | **Amortized**                             |       | **Fair** |   | **Amortized** |   | **Fair** |   |
|                                                      |   | **Cost**                                  |       | **Value** |   | **Cost** |   | **Value** |   |
|                                                      |   |                                      |       |   |   |   |   |   |   |
| Due                    in one year or less                |   | $                                         | 15,585,772 |   | $ | 15,447,666 |   | $ | - |   | $ | - |   |
| Due                    after one year through five years  |   |                                      | 51,599,000 |   |   | 51,154,520 |   |   | - |   |   | - |   |
| Due                    after five years through ten years |   |                                      | 9,992,722  |   |   | 9,315,600 |   |   | - |   |   | - |   |
| Due                    after ten years                    |   |                                      | -          |   |   | - |   |   | 20,392,349 |   |   | 20,247,497 |   |
|                                                      |   |                                      |       |   |   |   |   |   |   |   |   |   |   |
| Total                                                     |   | $                                         | 77,177,494 |   | $ | 75,917,786 |   | $ | 20,392,349 |   | $ | 20,247,497 |   |

|   | The                  table below sets forth investment securities which had an unrealized                  loss                  position as of June 30, 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                     |   | $                                          | (145,413 | )                                          | $      | 17,653,422 |   | $ | (6,451 | ) | $ | 498,830 |   |
|                                                   |   |                                       |     |                                       |   |   |   |   |   |   |   |   |   |
| Total                    securities held to maturity   |   |                                       | (145,413 | )                                          |   | 17,653,422 |   |   | (6,451 | ) |   | 498,830 |   |
|                                                   |   |                                       |     |                                       |   |   |   |   |   |   |   |   |   |
| Securities                    available for sale:      |   |                                       |     |                                       |   |   |   |   |   |   |   |   |   |
| Government                    agency securities        |   | $                                          | (131,865 | )                                          | $      | 21,873,755 |   | $ | (1,138,272 | ) | $ | 41,854,450 |   |
| Other                    securities                    |   |                                       | -        |                                       |   | - |   |   | (95,576 | ) |   | 3,539,861 |   |
|                                                   |   |                                       |     |                                       |   |   |   |   |   |   |   |   |   |
| Total                    securities available for sale |   |                                       | (131,865 | )                                          |   | 21,873,755 |   |   | (1,233,848 | ) |   | 45,394,311 |   |
|                                                   |   |                                       |     |                                       |   |   |   |   |   |   |   |   |   |
| Total                                                  |   | $                                          | (277,278 | )                                          | $      | 39,527,177 |   | $ | (1,240,299 | ) | $ | 45,893,141 |   |

----

|   | The                  table below sets forth investment securities which had 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 June 30, 2007, investment securities                  in a gross unrealized loss position for twelve months or longer                  consisted                  of 20 securities having an aggregate depreciation of 2.6% from                  the                  Company’s amortized cost basis. Investment securities in a gross                  unrealized loss position for less than twelve months at June 30,                  2007,                  consisted of 52 securities having an aggregate depreciation of                  0.7% 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** |       |
|------------------------------------------|--------|---------------------------------------|------------|
|                                     |   | **June                  30, 2007**    |       |
|                                     |   |                                  |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                     |   | **Amortized**                         |       | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                     |   | **Cost**                              |       | **Gains** |   | **Losses** |   | **Value** |   |
|                                     |   |                                  |       |   |   |   |   |   |   |
| FNMA                  pass-through       |   |                                  |       |   |   |   |   |   |   |   |   |   |   |
| certificates                             |   | $                                     | 22,263,307 |   | $ | - |   | $ | (1,266,901 | ) | $ | 20,996,406 |   |
| FHLMC                  pass-through      |   |                                  |       |   |   |   |   |   |   |   |   |   |   |
| certificates                             |   |                                  | 15,891,545 |   |   | - |   |   | (1,022,694 | ) |   | 14,868,851 |   |
| Collateralized                  mortgage |   |                                  |       |   |   |   |   |   |   |   |   |   |   |
| obligations                              |   |                                  | 13,376,811 |   |   | 460 |   |   | (383,595 | ) |   | 12,993,676 |   |
|                                     |   |                                  |       |   |   |   |   |   |   |   |   |   |   |
| Total                                    |   | $                                     | 51,531,663 |   | $ | 460 |   | $ | (2,673,190 | ) | $ | 48,858,933 |   |

|                                     |   | **Available                  for sale** |       |
|------------------------------------------|--------|-----------------------------------------|------------|
|                                     |   | **June                  30, 2007**      |       |
|                                     |   |                                    |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                     |   | **Amortized**                           |       | **Unrealized** |   | **Unrealized** |   | **Fair** |   |
|                                     |   | **Cost**                                |       | **Gains** |   | **Losses** |   | **Value** |   |
|                                     |   |                                    |       |   |   |   |   |   |   |
| GNMA                  pass-through       |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| certificates                             |   | $                                       | 361,294    |   | $ | 10,330 |   | $ | (57 | ) | $ | 371,567 |   |
| FNMA                  pass-through       |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| certificates                             |   |                                    | 8,953,940  |   |   | 17,617 |   |   | (233,209 | ) |   | 8,738,348 |   |
| FHLMC                  pass-through      |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| certificates                             |   |                                    | 59,396,627 |   |   | 92,298 |   |   | (1,544,737 | ) |   | 57,944,188 |   |
| Collateralized                  mortgage |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| obligations                              |   |                                    | 4,655,023  |   |   | 2,459 |   |   | (175,293 | ) |   | 4,482,189 |   |
|                                     |   |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Total                                    |   | $                                       | 73,366,884 |   | $ | 122,704 |   | $ | (1,953,296 | ) | $ | 71,536,292 |   |

----

|                                     |   | **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 six months                  ended                  June 30, 2007 and 2006. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | No                  impairment charge was recognized on mortgage-backed securities                  during the                  six months ended June 30, 2007 and 2006. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                     |
|   | The                  table below sets forth mortgage-backed securities which had an                  unrealized                  loss position as of June 30, 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                                           |   | $                                          | -      |                                       | $      | - |   | $ | (1,266,901 | ) | $ | 20,996,406 |   |
| FHLMC                    pass-through                  |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| certificates                                           |   |                                       | -      |                                       |   | - |   |   | (1,022,694 | ) |   | 14,868,851 |   |
| Real                    estate mortgage                |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| investment                    conduits                 |   |                                       | -      |                                       |   | - |   |   | (383,595 | ) |   | 12,055,395 |   |
|                                                   |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| Total                    securities held to maturity   |   |                                       | -      |                                       |   | - |   |   | (2,673,190 | ) |   | 47,920,652 |   |
|                                                   |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| Securities                    available for sale:      |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| GNMA                    pass-through                   |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| certificates                                           |   | $                                          | (57    | )                                          | $      | 61,633 |   | $ | - |   | $ | - |   |
| FNMA                    pass-through                   |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| certificates                                           |   |                                       | (146   | )                                          |   | 23,157 |   |   | (233,063 | ) |   | 5,886,193 |   |
| FHLMC                    pass-through                  |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| certificates                                           |   |                                       | (6,960 | )                                          |   | 1,458,206 |   |   | (1,537,777 | ) |   | 48,665,463 |   |
| Real                    estate mortgage                |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| investment                    conduits                 |   |                                       | -      |                                       |   | - |   |   | (175,293 | ) |   | 4,404,709 |   |
|                                                   |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| Total                    securities available for sale |   |                                       | (7,163 | )                                          |   | 1,542,996 |   |   | (1,946,133 | ) |   | 58,956,365 |   |
|                                                   |   |                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| Total                                                  |   | $                                          | (7,163 | )                                          | $      | 1,542,996 |   | $ | (4,619,323 | ) | $ | 106,877,017 |   |

----

|   | The                table below sets forth mortgage-backed securities which had 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 | ) | $ | 23,329,061 |   |
| 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 | ) |   | 49,418,836 |   |
|                                                 |   |                                     |     |                                     |   |   |   |   |   |   |   |   |   |
| 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 | ) | $ | 113,661,248 |   |

|   | 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 June 30, 2007, mortgage-backed                securities in a gross unrealized loss position for twelve months                or longer                consisted of 47 securities having an aggregate depreciation of 4.1%                from                the Company’s amortized cost basis. Mortgage-backed securities in a gross                unrealized loss position for less than twelve months at June 30,                2007,                consisted of five securities having an aggregate depreciation of                0.5% 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: |

|                                                     |   | **June                  30, 2007** |        | **December                  31, 2006** |   |
|----------------------------------------------------------|--------|------------------------------------|-------------|----------------------------------------|--------|
|                                                     |   |                               |        |                                   |   |
| One-to                  four-family residential          |   | $                                  | 410,249,223 |                                   | $      | 375,743,476 |   |
| Multi-family                  residential and commercial |   |                               | 77,703,093  |                                   |   | 92,427,910 |   |
| Construction                                             |   |                               | 138,461,829 |                                   |   | 134,976,214 |   |
| Home                  equity lines of credit             |   |                               | 31,740,996  |                                   |   | 33,953,399 |   |
| Commercial                  business loans               |   |                               | 19,822,667  |                                   |   | 11,416,252 |   |
| Consumer                  non-real estate loans          |   |                               | 5,224,921   |                                   |   | 4,399,778 |   |
|                                                     |   |                               |        |                                   |   |   |   |
| Total                  loans                             |   |                               | 683,202,729 |                                   |   | 652,917,029 |   |
|                                                     |   |                               |        |                                   |   |   |   |
| Less:                                                    |   |                               |        |                                   |   |   |   |
| Construction                  loans in process           |   |                               | (41,672,043 | )                                      |   | (45,338,523 | ) |
| Deferred                  loan fees                      |   |                               | (771,361    | )                                      |   | (912,913 | ) |
| Allowance                  for loan losses               |   |                               | (1,683,539  | )                                      |   | (1,602,613 | ) |
|                                                     |   |                               |        |                                   |   |   |   |
| Loans                  receivable—net              |   | $                                  | 639,075,786 |                                   | $      | 605,062,980 |   |

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

|                                             |   | **Six                  Meonths Ended** |      | **Year                  Ended**        |   |
|--------------------------------------------------|--------|----------------------------------------|-----------|----------------------------------------|--------|
|                                             |   | **June                  30, 2007**     |      | **December                  31, 2006** |   |
|                                             |   |                                   |      |                                   |   |
| Balance—beginning                  of year |   | $                                      | 1,602,613 |                                   | $      | 1,454,510 |   |
| Provision                  for loan losses       |   |                                   | 109,545   |                                   |   | 185,521 |   |
| Charge-offs                                      |   |                                   | (36,224   | )                                      |   | (55,460 | ) |
| Recoveries                                       |   |                                   | 7,605     |                                   |   | 18,042 |   |
| (Charge-offs)/recoveries—net               |   |                                   | (28,619   | )                                      |   | (37,418 | ) |
|                                             |   |                                   |      |                                   |   |   |   |
| Balance—end                  of period     |   | $                                      | 1,683,539 |                                   | $      | 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 June 30, 2007 and December 31, 2006, the recorded investment                  in loans                  that were considered to be impaired was as                  follows. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                   |   | **June                    30,** |      | **December                    31,** |   |
|--------------------------------------------------------|--------|---------------------------------|-----------|-------------------------------------|--------|
|                                                   |   | **2007**                        |      | **2006**                            |   |
|                                                   |   |                            |      |                                |   |
| Impaired                    collateral-dependent loans |   | $                               | 4,904,329 |                                | $      | 2,346,896 |   |
| Average                    balance of impaired loans   |   | $                               | 3,633,348 |                                | $      | 709,639 |   |
| Interest                    income recognized on       |   |                            |      |                                |   |   |   |
| impaired                    loans                      |   | $                               | -         |                                | $      | 65,955 |   |

|   | As                  a result of the Company’s measurement of impaired loans, an allowance of                  $105,000 was established for impaired loans at June 30, 2007. No                  allowance                  for loan losses was established for impaired loans at December                  31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Non-accrual                  loans at June 30, 2007 and December 31, 2006, amounted to approximately                  $4.9 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 June 30, 2007 and December 31, 2006, amounted to approximately                  $4.9 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                  six months ended June 30, 2007 and 2006, no cash basis interest                  income was                  recognized. Interest income foregone on non-accrual loans was $196,000                  for                  the six months ended June 30, 2007. No interest income was foregone                  on                  non-accrual loans for the six months ended June 30,                  2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

----

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

|                                                              |   | **June                  30, 2007** |      | **December                  31, 2006** |   |
|-------------------------------------------------------------------|--------|------------------------------------|-----------|----------------------------------------|--------|
|                                                              |   |                               |      |                                   |   |
| Deferred                  tax assets:                             |   |                               |      |                                   |   |   |   |
| Allowance                  for loan losses                        |   | $                                  | 572,403   |                                   | $      | 544,888 |   |
| Deferred                  compensation                            |   |                               | 1,683,798 |                                   |   | 1,503,835 |   |
| Unrealized                  loss on securities available-for-sale |   |                               | 1,082,385 |                                   |   | 1,072,467 |   |
| Property                  and equipment                           |   |                               | 41,248    |                                   |   | 19,157 |   |
|                                                              |   |                               |      |                                   |   |   |   |
| Total                  deferred tax assets                        |   |                               | 3,379,834 |                                   |   | 3,140,347 |   |
|                                                              |   |                               |      |                                   |   |   |   |
| Deferred                  tax liabilities:                        |   |                               |      |                                   |   |   |   |
| Deferred                  loan fees                               |   |                               | (319,746  | )                                      |   | (313,063 | ) |
| Other                                                             |   |                               | (17,876   | )                                      |   | (18,568 | ) |
|                                                              |   |                               |      |                                   |   |   |   |
| Total                  deferred tax liabilities                   |   |                               | (337,622  | )                                      |   | (331,631 | ) |
|                                                              |   |                               |      |                                   |   |   |   |
| Net                  deferred tax asset                           |   | $                                  | 3,042,212 |                                   | $      | 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 prospectus, dated May 14, 2007, as filed with                the SEC pursuant to Rule 424(b)(3) on May 23,                2007. |

----

|   | **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: |

|                                                               |   |                                                 |    |
|--------------------------------------------------------------------|--------|------------------------------------------------------|---------|
|                                                               |   | **Six                  Months Ended June 30, ** |    |
|                                                               |   | **2007**                                             |    | **2006** |   |
|                                                               |   |                                                 |    |   |   |
| Components                  of net periodic pension cost:          |   |                                                 |    |   |   |   |   |
| Service                  cost                                      |   | $                                                    | 71,172  |   | $ | 53,728 |   |
| Interest                  cost                                     |   |                                                 | 71,866  |   |   | 65,479 |   |
| Expected                  return on assets                         |   |                                                 | -       |   |   | - |   |
| Amortization                  of prior service cost                |   |                                                 | 60,962  |   |   | 60,793 |   |
|                                                               |   |                                                 |    |   |   |   |   |
| Net                  periodic pension cost                         |   | $                                                    | 204,000 |   | $ | 180,000 |   |
|                                                               |   |                                                 |    |   |   |   |   |
| Other                  changes in plan assets and benefit          |   |                                                 |    |   |   |   |   |
| obligations                  recognized in accumulated             |   |                                                 |    |   |   |   |   |
| other                  comprehensive loss:                         |   |                                                 |    |   |   |   |   |
| Amortization                  of prior service cost                |   |                                                 | (40,234 | ) |   | - |   |
| Total                  recognized in accumulated other             |   |                                                 |    |   |   |   |   |
| comprehensive                  income                              |   |                                                 | (40,234 | ) |   | - |   |
| Total                  recognized in net periodic pension cost and |   |                                                 |    |   |   |   |   |
| accumulated                  other comprehensive loss              |   | $                                                    | 163,766 |   | $ | 180,000 |   |

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

|                                                                   |   | **Six                    Months Ended June 30,** |   |
|------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                   |   | **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: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                              |   | **June                  30,** |    | **December                  31,** |   |
|---------------------------------------------------|--------|-------------------------------|---------|-----------------------------------|--------|
|                                              |   | **2007**                      |    | **2006**                          |   |
|                                              |   |                          |    |                              |   |
| Amount                  recognized in accumulated |   |                          |    |                              |   |   |   |
| other                  comprehensive loss for:    |   |                          |    |                              |   |   |   |
| Net                  actuarial loss               |   | $                             | 70,968  |                              | $      | 70,968 |   |
| Prior                  service cost               |   |                          | 417,350 |                              |   | 457,584 |   |
| Total                  recognized in accumulated  |   |                          |    |                              |   |   |   |
| other                  comprehensive loss         |   | $                             | 488,318 |                              | $      | 528,552 |   |

|   | **Employee                    Stock Ownership Plan**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | In                    2004, the Bank 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                    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 acquired 914,112 shares (as adjusted                    for the                    exchange ratio as part of the June 2007 second-step conversion)                    of common                    stock for approximately $7.4 million, an average price of $8.06                    per share                    (as adjusted). All of these purchases were completed by December                    31, 2005.                    These shares are expected to be released over a 15-year period.                    In June                    2007, the ESOP acquired an additional 1,042,771 shares of the                    Company’s                    common stock for approximately $10.4 million, an average price                    of $10.00                    per share. These shares are expected to be released over a 30-year                    period.                    No additional purchases are expected to be made by the ESOP.                    At June 30,                    2007, the ESOP held approximately 1.8 million unallocated shares                    of                    Company common stock with a fair value of $17.5 million and approximately                    122,000 allocated shares with a fair value of $1.2 million. During                    each of                    the three-month periods ended June 30, 2007 and 2006, approximately                    15,200                    shares were committed to be released to participants, resulting                    in                    recognition of approximately $175,000 and $135,000 in compensation                    expense, respectively. During each of the six-month periods ended                    June 30,                    2007 and 2006, approximately 30,500 shares were committed to                    be released                    to participants, resulting in recognition of approximately $360,000                    and                    $261,000 in compensation expense, respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | **Recognition                    and Retention Plan**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | In                    June 2005, the shareholders of Abington Community Bancorp approved                    the                    adoption of the 2005 Recognition and Retention Plan (the “RRP”). As a                    result of the second-step conversion, the 2005 RRP became a stock                    benefit                    plan of the Company and the shares of Abington Community Bancorp                    held by                    the RRP were converted to shares of Company common stock. 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”) acquired 457,056 shares                    (adjusted for the second-step conversion exchange ratio) of common                    stock                    in the open market for approximately $3.7 million, an average                    price of                    $8.09 per share (as adjusted). The Company made sufficient contributions                    to the Trust to fund the purchase of these shares. No additional                    purchases                    are expected to be made by the Trust under this plan. Pursuant                    to the                    terms of the plan, all 457,056 shares acquired by the Trust have                    been                    granted to certain officers, employees and directors of the Company.                    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 June 30,                2007 and                2006, and changes during the six months ended June 30, 2007 and 2006                are                presented below. The number of shares and weighted average grant                date fair                value for both periods have been adjusted for the exchange ratio                as a                result of our second-step conversion: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                      |   | **Six                    Months Ended June 30,** |    |
|-----------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                      |   | **2007**                                         |    | **2006** |   |
|                                                      |   |                                             |    | **Weighted** |   |   |   | **Weighted** |   |
|                                                      |   | **Number                    of**                 |    | **average                    grant** |   | **Number                    of** |   | **average                    grant** |   |
|                                                      |   | **shares**                                       |    | **date                    fair value** |   | **shares** |   | **date                    fair value** |   |
|                                                      |   |                                             |    |   |   |   |   |   |   |
| Nonvested                    at the beginning of the year |   |                                             | 366,285 |   | $ | 7.54 |   |   | 457,056 |   | $ | 7.51 |   |
| Granted                                                   |   |                                             | -       |   |   | - |   |   | - |   |   | - |   |
| Vested                                                    |   |                                             | -       |   |   | - |   |   | - |   |   | - |   |
| Forfeited                                                 |   |                                             | -       |   |   | - |   |   | (3,200 | ) |   | 7.51 |   |
|                                                      |   |                                             |    |   |   |   |   |   |   |   |   |   |   |
| Nonvested                    at the end of the period     |   |                                             | 366,285 |   | $ | 7.54 |   |   | 453,856 |   | $ | 7.51 |   |

|   | 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                common                stock at the date of grant. During the three- and six-month periods                ended                June 30, 2007, approximately 23,000 and 46,000 shares, respectively,                were                amortized to expense, based on the proportional vesting of the awarded                shares, resulting in recognition of approximately $172,000 and $344,000                in                compensation expense, respectively. A deferred tax benefit of                approximately $59,000 and $117,000, respectively, was recognized                during                these periods. During the three- and six-month periods ended June                30,                2006, approximately 23,000 and 45,000 shares, respectively, were                amortized                to expense, based on the proportional vesting of the awarded shares,                resulting in recognition of approximately $171,000 and $339,000 in                compensation expense, respectively. A deferred tax benefit of                approximately $58,000 and $115,000, respectively, was recognized                during                these periods. As of June 30, 2007, approximately $2.1 million in                additional compensation expense will be recognized over the remaining                lives of the RRP awards. At June 30, 2007, the weighted average remaining                lives of the RRP awards was approximately 3.0 years. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | **Stock                Options**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In                June 2005, the shareholders of Abington Community Bancorp also approved                the adoption of the 2005 Stock Option Plan (the “Option Plan”). As a                result of the second-step conversion, the Option Plan became a stock                benefit plan of the Company. Unexercised options which were previously                granted under the Option Plan were adjusted by the 1.6 exchange ratio                as a                result of the second-step conversion and have been converted into                options                to acquire Company common stock. 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 June 30, 2007, a total of 1,142,640 shares of common                stock                have been reserved for future issuance pursuant to the Option Plan                of                which 76,960 shares remain available for                grant.                                                                                                                                                                                                                 |

----

|   | A                summary of the status of the Company’s stock options under the Option Plan                as of June 30, 2007 and 2006, and changes during the six months ended                June                30, 2007 and 2006 are presented below. The number of options and                weighted                average exercise price for both periods have been adjusted for the                exchange ratio as a result of our second-step                conversion: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                      |   | **Six                  Months Ended June 30,** |      |
|-----------------------------------------------------------|--------|------------------------------------------------|-----------|
|                                                      |   | **2007**                                       |      | **2006** |   |
|                                                      |   |                                           |      | **Weighted** |   |   |   | **Weighted** |   |
|                                                      |   | **Number                  of**                 |      | **average** |   | **Number                  of** |   | **average** |   |
|                                                      |   | **shares**                                     |      | **exercise                  price** |   | **shares** |   | **exercise                  price** |   |
|                                                      |   |                                           |      |   |   |   |   |   |   |
| Outstanding                  at the beginning of the year |   |                                           | 1,065,680 |   | $ | 7.62 |   |   | 1,029,200 |   | $ | 7.52 |   |
| Granted                                                   |   |                                           | -         |   |   | - |   |   | - |   |   | - |   |
| Exercised                                                 |   |                                           | -         |   |   | - |   |   | - |   |   | - |   |
| Forfeited                                                 |   |                                           | -         |   |   | - |   |   | (3,760 | ) |   | 7.51 |   |
|                                                      |   |                                           |      |   |   |   |   |   |   |   |   |   |   |
| Outstanding                  at the end of the period     |   |                                           | 1,065,680 |   | $ | 7.62 |   |   | 1,025,440 |   | $ | 7.52 |   |
|                                                      |   |                                           |      |   |   |   |   |   |   |   |   |   |   |
| Exercisable                  at the end of the period     |   |                                           | 205,088   |   | $ | 7.52 |   |   | - |   | $ | - |   |

|   | The                  following table summarizes all stock options outstanding (as adjusted                  for                  the exchange ratio) under the Option Plan as of June 30,                  2007: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                     |                             | **Options                  Outstanding** |   | **Options                  Exercisable** |   |
|-------------------------------------|----------------------------------|------------------------------------------|--------|------------------------------------------|--------|
|                                |                             |                                     |   | **Weighted**                             |   | **Weighted                  Average** |   |   |   | **Weighted** |   |
|                                |                             | **Number                  of**           |   | **Average**                              |   | **Remaining** |   | **Number                  of** |   | **Average** |   |
| **Exercise                  Price** |                             | **Shares**                               |   | **Exercise                  Price**      |   | **Contractual                  Life** |   | **Shares** |   | **Exercise                  Price** |   |
|                                |                                  |                                     |   | (in                  years)              |   |
|                                |                             |                                     |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                | $7.51                            |                                     |   | 1,018,240                                |   | $ | 7.51 |   |   | 8.0 |   |   | 203,648 |   | $ | 7.51 |   |
|                                | 8.35                             |                                     |   | 7,200                                    |   |   | 8.35 |   |   | 8.4 |   |   | 1,440 |   |   | 8.35 |   |
|                                | 10.18                            |                                     |   | 40,240                                   |   |   | 10.18 |   |   | 9.4 |   |   | - |   |   | - |   |
|                                |                             |                                     |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                | Total                            |                                     |   | 1,065,680                                |   | $ | 7.62 |   |   | 8.1 |   |   | 205,088 |   | $ | 7.52 |   |
|                                |                             |                                     |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                | Intrinsic                  value |                                     | $      | 2,085,850                                |   |   |   |   |   |   |   | $ | 417,170 |   |   |   |   |

|   | During                the three and six months ended June 30, 2007, approximately $98,000                and                $195,000, respectively, was recognized in compensation expense for                the                Option Plan. A deferred tax benefit of approximately $9,000 and $19,000,                respectively, was recognized during each of these periods. During                the                three and six months ended June 30, 2006, approximately $92,000 and                $183,000, respectively, was recognized in compensation expense for                the                Option Plan. A deferred tax benefit of approximately $9,000 and $18,000,                respectively, was recognized during each of these periods. At June                30,                2007, approximately $1.2 million in additional compensation expense                for                awarded options remained unrecognized. The weighted average period                over                which this expense will be recognized is approximately 3.1                years. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **7.** | **COMMITMENTS                AND CONTINGENCIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | The                Bank had approximately $7.4 million in outstanding mortgage loan                commitments at June 30, 2007. The commitments are expected to be                funded                within 90 days with approximately $7.2 million in fixed rate loans                with                interest rates ranging from 5.625% to 6.500%. 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 June                30, 2007 and December 31, 2006, were unused lines of credit totaling                approximately $67.2 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 June 30, 2007 and December                31, 2006, the Bank had letters of credit outstanding of approximately                $19.5 million and $16.3 million, respectively, of which $18.1 million                and                $14.8 million, respectively, were standby letters of credit. At June                30,                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 June 30, 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 June 30, 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 JUNE 30, 2007 AND DECEMBER 31,      2006**

----

**LIQUIDITY      AND CAPITAL RESOURCES**

----

|                                           |   | Actual                Ratios At   |   | RegulatoryMinimum               |   | To                Be WellCapitalized |   |
|------------------------------------------------|--------|-----------------------------------|--------|---------------------------------|--------|--------------------------------------|--------|
|                                           |   | June                30, 2007 |   | December                31,2006 |   |
| **Capital                Ratios**:             |   |                              |   |                            |   |                                 |   |   |   |
| Tier                1 leverage ratio           |   |                              |   |                            |   |                                 |   |   |   |   |   |   |   |
| The                Company                     |   |                              | N/A    |                            |   | 12.80                                | %      |   | 4.00 | % |   | N/A |   |
| The                Bank                        |   |                              | 16.61  | %                               |   | 10.54                                |   |   | 4.00 |   |   | 5.00 | % |
| Tier                1 risk-based capital ratio |   |                              |   |                            |   |                                 |   |   |   |   |   |   |   |
| The                Company                     |   |                              | N/A    |                            |   | 20.01                                |   |   | 4.00 |   |   | N/A |   |
| The                Bank                        |   |                              | 25.93  |                            |   | 16.49                                |   |   | 4.00 |   |   | 6.00 |   |
| Total                risk-based capital ratio  |   |                              |   |                            |   |                                 |   |   |   |   |   |   |   |
| The                Company                     |   |                              | N/A    |                            |   | 20.29                                |   |   | 8.00 |   |   | N/A |   |
| The                Bank                        |   |                              | 26.20  |                            |   | 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                                     |   | Over                1 to 3                Years |   | Over                4 to5                Years |   | After                5Years |   |
|                                                                               |   | (In                Thousands)         |    |
| Letters                of credit                                                   |   | $                                     | 19,537  |                                                        | $      | 18,935 |   | $ | 597 |   | $ | -- |   | $ | 5 |   |
| Recourse                obligations on loans sold                                  |   |                                  | 185     |                                                        |   | -- |   |   | -- |   |   | -- |   |   | 185 |   |
| Commitments                to originate loans                                      |   |                                  | 7,387   |                                                        |   | 7,387 |   |   | -- |   |   | -- |   |   | -- |   |
| Unused                portion of home equity lines                of credit        |   |                                  | 23,201  |                                                        |   | -- |   |   | -- |   |   | -- |   |   | 23,201 |   |
| Unused                portion of commercial lines                of credit         |   |                                  | 44,027  |                                                        |   | 44,027 |   |   | -- |   |   | -- |   |   | -- |   |
| Undisbursed                portion of construction                loans in process |   |                                  | 41,672  |                                                        |   | 31,357 |   |   | 10,315 |   |   | -- |   |   | -- |   |
| Total                commitments                                                   |   | $                                     | 136,009 |                                                        | $      | 101,706 |   | $ | 10,912 |   | $ | -- |   | $ | 23,391 |   |

|                                         |   |                          |    | Payments                Due By Period |   |
|----------------------------------------------|--------|-------------------------------|---------|---------------------------------------|--------|
|                                         |   |  Total                   |    | To1                Year               |   | Over                1 to 3                Years |   | Over                4 to 5Years |   | After                5Years |   |
|                                         |   | (In                Thousands) |    |
| Certificates                of deposit       |   | $                             | 409,464 |                                  | $      | 319,482 |   | $ | 67,797 |   | $ | 8,496 |   | $ | 13,689 |   |
| FHLB                advances                 |   |                          | 158,364 |                                  |   | 28,242 |   |   | 31,789 |   |   | 72,926 |   |   | 25,407 |   |
| Repurchase                agreements         |   |                          | 22,537  |                                  |   | 22,537 |   |   | -- |   |   | -- |   |   | -- |   |
| Total                debt                    |   |                          | 180,901 |                                  |   | 50,779 |   |   | 31,789 |   |   | 72,926 |   |   | 25,407 |   |
| Operating                lease obligations   |   |                          | 6,800   |                                  |   | 740 |   |   | 1,251 |   |   | 1,202 |   |   | 3,607 |   |
| Total                contractual obligations |   | $                             | 597,165 |                                  | $      | 371,001 |   | $ | 100,837 |   | $ | 82,624 |   | $ | 42,703 |   |

**COMPARISON      OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2007 AND      2006**

**General.      **

----

**Interest      Income.**

**Interest      Expense.**

----

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

|                                                                            |   | Three                Months Ended June 30, |    |
|---------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                                            |   | 2007                                       |    | 2006 |   |
|                                                                            |   | AverageBalance                             |    |  Interest |   | AverageYield/Rate |   | AverageBalance |   |  Interest |   | AverageYield/Rate |   |
|                                                                            |   | (Dollars                in Thousands)      |    |
| Interest-earning                assets:                                         |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                securities(1)                                         |   | $                                          | 100,211 |   | $ | 1,130 |   |   | 4.51 | % | $ | 100,082 |   | $ | 955 |   |   | 3.82 | % |
| Mortgage-backed                securities                                       |   |                                       | 128,026 |   |   | 1,392 |   |   | 4.35 |   |   | 146,745 |   |   | 1,537 |   |   | 4.19 |   |
| Loans                receivable(2)                                              |   |                                       | 633,082 |   |   | 10,662 |   |   | 6.74 |   |   | 558,452 |   |   | 9,457 |   |   | 6.77 |   |
| Other                interest-earning assets                                    |   |                                       | 58,231  |   |   | 485 |   |   | 3.33 |   |   | 25,335 |   |   | 260 |   |   | 4.10 |   |
| Total                interest-earning assets                                    |   |                                       | 919,550 |   |   | 13,669 |   |   | 5.95 | % |   | 830,614 |   |   | 12,209 |   |   | 5.88 | % |
| Cash                and non-interest bearing balances                           |   |                                       | 19,147  |   |   |   |   |   |   |   |   | 20,834 |   |   |   |   |   |   |   |
| Other                non-interest-earning assets                                |   |                                       | 31,484  |   |   |   |   |   |   |   |   | 24,605 |   |   |   |   |   |   |   |
| Total                assets                                                     |   | $                                          | 970,181 |   |   |   |   |   |   |   | $ | 876,053 |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:                                    |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                       |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                and money market accounts                                |   | $                                          | 95,500  |   |   | 298 |   |   | 1.25 | % | $ | 104,554 |   |   | 284 |   |   | 1.09 | % |
| Checking                accounts                                                |   |                                       | 60,040  |   |   | 4 |   |   | 0.03 |   |   | 54,211 |   |   | 3 |   |   | 0.02 |   |
| Certificate                accounts                                             |   |                                       | 409,464 |   |   | 5,148 |   |   | 5.03 |   |   | 322,155 |   |   | 3,561 |   |   | 4.42 |   |
| Total                deposits                                                   |   |                                       | 565,004 |   |   | 5,450 |   |   | 3.86 |   |   | 480,920 |   |   | 3,848 |   |   | 3.20 |   |
| FHLB                advances                                                    |   |                                       | 175,223 |   |   | 2,121 |   |   | 4.84 |   |   | 203,175 |   |   | 2,383 |   |   | 4.69 |   |
| Other                borrowings                                                 |   |                                       | 21,123  |   |   | 234 |   |   | 4.45 |   |   | 21,070 |   |   | 208 |   |   | 3.95 |   |
| Total                interest-bearing liabilities                               |   |                                       | 761,350 |   |   | 7,805 |   |   | 4.10 | % |   | 705,165 |   |   | 6,439 |   |   | 3.65 | % |
| Non-interest-bearing                liabilities:                                |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing                demand accounts                             |   |                                       | 45,773  |   |   |   |   |   |   |   |   | 44,159 |   |   |   |   |   |   |   |
| Real                estate tax escrow accounts                                  |   |                                       | 3,727   |   |   |   |   |   |   |   |   | 3,291 |   |   |   |   |   |   |   |
| Other                liabilities                                           |   |                                       | 11,055  |   |   |   |   |   |   |   |   | 8,833 |   |   |   |   |   |   |   |
| Total                liabilities                                                |   |                                       | 821,905 |   |   |   |   |   |   |   |   | 761,448 |   |   |   |   |   |   |   |
| Stockholders’                equity                                       |   |                                       | 148,276 |   |   |   |   |   |   |   |   | 114,605 |   |   |   |   |   |   |   |
| Total                liabilities and stockholders’ equity                 | $      | 970,181                                    |    |   |   |   |   |   |   | $ | 876,053 |   |   |   |   |   |   |   |
| Net                interest-earning assets                                      |   | $                                          | 158,200 |   |   |   |   |   |   |   |   | 125,449 |   |   |   |   |   |   |   |
| Net                interest income; average Interest                rate spread |   |                                       |    |   | $ | 5,864 |   |   | 1.85 | % |   |   |   | $ | 5,770 |   |   | 2.23 | % |
| Net                interest margin(3)                                           |   |                                       |    |   |   |   |   |   | 2.55 | % |   |   |   |   |   |   |   | 2.78 | % |

| (1) | Investment                securities for the 2007 and 2006 periods include 46 tax-exempt municipal                bonds with an aggregate average balance of $20.4 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                non-accrual 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.**

----

**COMPARISON      OF OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND      2006**

**General.      **

**Interest      Income.**

**Interest      Expense.**

----

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

|                                                                            |   | Six                Months Ended June 30, |    |
|---------------------------------------------------------------------------------|--------|------------------------------------------|---------|
|                                                                            |   | 2007                                     |    | 2006 |   |
|                                                                            |   | AverageBalance                           |    |  Interest |   | AverageYield/Rate |   | AverageBalance |   |  Interest |   | AverageYield/Rate |   |
|                                                                            |   | (Dollars                in Thousands)    |    |
| Interest-earning                assets:                                         |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                securities(1)                                         |   | $                                        | 99,652  |   | $ | 2,243 |   |   | 4.50 | % | $ | 100,410 |   | $ | 1,836 |   |   | 3.66 | % |
| Mortgage-backed                securities                                       |   |                                     | 130,619 |   |   | 2,801 |   |   | 4.29 |   |   | 146,972 |   |   | 3,061 |   |   | 4.17 |   |
| Loans                receivable(2)                                              |   |                                     | 623,624 |   |   | 21,030 |   |   | 6.74 |   |   | 548,505 |   |   | 18,175 |   |   | 6.63 |   |
| Other                interest-earning assets                                    |   |                                     | 46,391  |   |   | 815 |   |   | 3.51 |   |   | 23,334 |   |   | 415 |   |   | 3.56 |   |
| Total                interest-earning assets                                    |   |                                     | 900,286 |   |   | 26,889 |   |   | 5.97 | % |   | 819,221 |   |   | 23,487 |   |   | 5.73 | % |
| Cash                and non-interest bearing balances                           |   |                                     | 18,422  |   |   |   |   |   |   |   |   | 20,413 |   |   |   |   |   |   |   |
| Other                non-interest-earning assets                                |   |                                     | 30,626  |   |   |   |   |   |   |   |   | 24,378 |   |   |   |   |   |   |   |
| Total                assets                                                     |   | $                                        | 949,334 |   |   |   |   |   |   |   | $ | 864,012 |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:                                    |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                       |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                and money market accounts                                |   | $                                        | 94,445  |   |   | 579 |   |   | 1.23 | % | $ | 108,068 |   |   | 588 |   |   | 1.09 | % |
| Checking                accounts                                                |   |                                     | 57,674  |   |   | 8 |   |   | 0.03 |   |   | 54,238 |   |   | 7 |   |   | 0.03 |   |
| Certificate                accounts                                             |   |                                     | 402,892 |   |   | 10,042 |   |   | 4.98 |   |   | 309,164 |   |   | 6,552 |   |   | 4.24 |   |
| Total                deposits                                                   |   |                                     | 555,011 |   |   | 10,629 |   |   | 3.83 |   |   | 471,470 |   |   | 7,147 |   |   | 3.03 |   |
| FHLB                advances                                                    |   |                                     | 183,853 |   |   | 4,476 |   |   | 4.87 |   |   | 203,629 |   |   | 4,672 |   |   | 4.59 |   |
| Other                borrowings                                                 |   |                                     | 19,256  |   |   | 419 |   |   | 4.35 |   |   | 19,310 |   |   | 352 |   |   | 3.65 |   |
| Total                interest-bearing liabilities                               |   |                                     | 758,120 |   |   | 15,524 |   |   | 4.10 | % |   | 694,409 |   |   | 12,171 |   |   | 3.51 | % |
| Non-interest-bearing                liabilities:                                |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing                demand accounts                             |   |                                     | 43,893  |   |   |   |   |   |   |   |   | 42,848 |   |   |   |   |   |   |   |
| Real                estate tax escrow accounts                                  |   |                                     | 3,521   |   |   |   |   |   |   |   |   | 3,114 |   |   |   |   |   |   |   |
| Other                liabilities                                           |   |                                     | 9,877   |   |   |   |   |   |   |   |   | 7,776 |   |   |   |   |   |   |   |
| Total                liabilities                                                |   |                                     | 815,411 |   |   |   |   |   |   |   |   | 748,147 |   |   |   |   |   |   |   |
| Stockholders’                equity                                       |   |                                     | 133,923 |   |   |   |   |   |   |   |   | 115,865 |   |   |   |   |   |   |   |
| Total                liabilities and stockholders’ equity                 |   | $                                        | 949,334 |   |   |   |   |   |   |   | $ | 864,012 |   |   |   |   |   |   |   |
| Net                interest-earning assets                                      |   | $                                        | 142,166 |   |   |   |   |   |   |   | $ | 124,812 |   |   |   |   |   |   |   |
| Net                interest income; average Interest                rate spread |   |                                     |    |   | $ | 11,365 |   |   | 1.87 | % |   |   |   | $ | 11,316 |   |   | 2.22 | % |
| Net                interest margin(3)                                           |   |                                     |    |   |   |   |   |   | 2.52 | % |   |   |   |   |   |   |   | 2.76 | % |

| (1) | Investment                securities for the 2007 period include 46 tax-exempt 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 tax-exempt                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                non-accrual 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 |   | TotalAmount |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|-------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|---------|------------------------------------------------|--------|-------------|--------|
|                                                                                                                                                        |   | (Dollars                in Thousands)         |    |
| Interest-earning                assets(1):                                                                                                                  |   |                                          |    |                                                                    |   |                                                                   |   |                                                                    |    |                                           |   |        |   |   |   |   |   |   |   |
| Loans                receivable                                                                                                                             |   | $                                             | 242,336 |                                                                    | $      | 46,028                                                                 |   | $                                                                       | 134,081 |                                           | $      | 79,155      |   | $ | 139,159 |   | $ | 640,759 |   |
| Mortgage-backed                 securities                                                                                                             |   |                                          | 25,398  |                                                                    |   | 18,013                                                                 |   |                                                                    | 40,986  |                                           |   | 17,141      |   |   | 23,361 |   |   | 124,899 |   |
| Investment                securities                                                                                                                        |   |                                          | 9,235   |                                                                    |   | 9,486                                                                  |   |                                                                    | 18,599  |                                           |   | 33,000      |   |   | 30,386 |   |   | 100,706 |   |
| Other                interest-earning  assets                                                                                                          |   |                                          | 127,423 |                                                                    |   | --                                                                     |   |                                                                    | --      |                                           |   | --          |   |   | -- |   |   | 127,423 |   |
| Total                interest-earning assets                                                                                                                |   |                                          | 404,392 |                                                                    |   | 73,527                                                                 |   |                                                                    | 193,666 |                                           |   | 129,296     |   |   | 192,906 |   |   | 993,787 |   |
| Interest-bearing                liabilities:                                                                                                                |   |                                          |    |                                                                    |   |                                                                   |   |                                                                    |    |                                           |   |        |   |   |   |   |   |   |   |
| Savings                and money market accounts                                                                                                            |   | $                                             | 14,140  |                                                                    | $      | 14,140                                                                 |   | $                                                                       | 35,539  |                                           | $      | 16,351      |   | $ | 14,361 |   | $ | 94,531 |   |
| Checking                accounts                                                                                                                            |   |                                          | --      |                                                                    |   | --                                                                     |   |                                                                    | --      |                                           |   | --          |   |   | 60,080 |   |   | 60,080 |   |
| Certificate                accounts                                                                                                                         |   |                                          | 333,553 |                                                                    |   | 33,217                                                                 |   |                                                                    | 19,005  |                                           |   | 8,496       |   |   | 13,688 |   |   | 407,959 |   |
| FHLB                advances                                                                                                                                |   |                                          | 87,916  |                                                                    |   | 16,718                                                                 |   |                                                                    | 23,284  |                                           |   | 10,293      |   |   | 20,153 |   |   | 158,364 |   |
| Other                borrowed money                                                                                                                         |   |                                          | 22,537  |                                                                    |   | --                                                                     |   |                                                                    | --      |                                           |   | --          |   |   | -- |   |   | 22,537 |   |
| Total                interest-bearing liabilities                                                                                                           |   |                                          | 458,146 |                                                                    |   | 64,075                                                                 |   |                                                                    | 77,828  |                                           |   | 35,140      |   |   | 108,282 |   |   | 743,471 |   |
|                                                                                                                                                        |   |                                          |    |                                                                    |   |                                                                   |   |                                                                    |    |                                           |   |        |   |   |   |   |   |   |   |
| Interest-earning                assets lessinterest-bearing                liabilities                                                                      |   | $                                             | (53,754 | )                                                                       | $      | 9,452                                                                  |   | $                                                                       | 115,838 |                                           | $      | 94,156      |   | $ | 84,624 |   | $ | 250,316 |   |
|                                                                                                                                                        |   |                                          |    |                                                                    |   |                                                                   |   |                                                                    |    |                                           |   |        |   |   |   |   |   |   |   |
| Cumulative                interest-ratesensitivity                gap(2)                                                                                    |   | $                                             | (53,754 | )                                                                       | $      | (44,302                                                                | )      | $                                                                       | 71,536  |                                           | $      | 165,692     |   | $ | 250,316 |   |   |   |   |
|                                                                                                                                                        |   |                                          |    |                                                                    |   |                                                                   |   |                                                                    |    |                                           |   |        |   |   |   |   |   |   |   |
| Cumulative                interest-rate gap as a percentage of total assets at June 30,                2007                                                 |   |                                          | (5.12)% |                                                                         |   | (4.22)%                                                                |        |                                                                    | 6.81    | %                                              |   | 15.78       | %      |   | 23,84 | % |   |   |   |
|                                                                                                                                                        |   |                                          |    |                                                                    |   |                                                                   |   |                                                                    |    |                                           |   |        |   |   |   |   |   |   |   |
| Cumulative                interest-earning assets                as a percentage of cumulative                interest-bearing liabilities at June 30, 2007 |   |                                          | 88.27   | %                                                                       |   | 91.52                                                                  | %      |                                                                    | 111.92  | %                                              |   | 126.09      | %      |   | 133.67 | % |   |   |   |

| (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.                                                 |

----

| (c) | **Purchases                of Equity Securities** |
|-----|---------------------------------------------------|

|    **Period**            |   |  **Total                Number****of                Shares****Purchased** |      |   **Average                Price****Paid                per Share** |   | **Total                Number of****Shares                Purchased****as                Part of Publicly****Announced                Plans****or                Programs** |   | **Maximum                Number****of                Shares that May****Yet                be Purchased****Under                the Plan or****Programs(1)** |      |
|-----------------------------------------|--------|--------------------------------------------------------------------------------|-----------|-------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
| April                1 - April 30, 2007 |   |                                                                           | --        |                                                                          |   | --                                                                                                                                                                          |   |                                                                                                                                                         | --        |   |   | 1,042,771 |   |
| May                1 - May 31, 2007     |   |                                                                           | --        |                                                                          |   | --                                                                                                                                                                          |   |                                                                                                                                                         | --        |   |   | 1,042,771 |   |
| June                1 - June 30, 2007   |   |                                                                           | 1,042,771 |                                                                          |   | 10.00                                                                                                                                                                       |   |                                                                                                                                                         | 1,042,771 |   |   | -- |   |
|                                    |   |                                                                           |      |                                                                          |   |                                                                                                                                                                        |   |                                                                                                                                                         |      |   |   |   |   |
| Total                                   |   |                                                                           | 1,042,771 |                                                                          | $      | 10.00                                                                                                                                                                       |   |                                                                                                                                                         | 1,042,771 |   |   | -- |   |

----

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

| 1.                The following directors were elected by the requisite plurality of                the                votes cast to serve on Abington Community Bancorp, Inc.’s Board of                Directors: |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | For*   |       | Withheld |   |    |   |   |   |
|---------------------------------------|--------|--------|------------|----------|--------|---------|--------|--------|--------|
| G.                  Price Wilson, Jr. |   |   | 14,744,658 |     |   | 106,909 |   |   |   |   |   |   |   |
| Joseph                  B. McHugh     |   |   | 14,761,147 |     |   | 90,420  |   |   |   |   |   |   |   |

|                                                                                                                                                                                        |   | For*   |       | Against |   | Abstain |   | Broker                Non-Votes |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|---------|--------|---------|--------|---------------------------------|--------|
| 2.                To ratify the appointment of Beard Miller Company LLP as independent                registered public accounting firm for the year ended December 31,                2007 |   |   | 14,820,685 |    |   | 27,803  |   |                            | 3,079  |   |   | n/a |   |

| ***** | Includes                8,728,500 shares owned by Abington Mutual Holding Company (the “MHC”)                which were voted for these                proposals. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                               |   | For*   |       | Against |   | Abstain |   | Broker                Non-Votes |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|---------|--------|---------|--------|---------------------------------|--------|
| 1.                To ratify the amended Plan of Conversion and reorganization of Abington                Mutual Holding Company, Abington Bank and Abington Community Bancorp,                Inc. |   |   | 14,073,728 |    |   | 13,866  |   |                            | --     |   |   | n/a |   |

| ***** | Includes                8,728,500 shares owned by the MHC which were voted for these                proposals. |
|-------|----------------------------------------------------------------------------------------------------------------|

----

| **ITEM                5.** | **OTHER                INFORMATION** |
|----------------------------|--------------------------------------|

| **ITEM                6.** | **EXHIBITS** |
|----------------------------|--------------|
|                       |         |   |
|                       | No.          | Description |
|                       | 10.1         | Employment                Agreement between Abington Savings Bank and Eric L. Golden, dated                August                8, 2007 |
|                       |         |   |
|                       | 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                BANCORP, INC.** |                                                                                                                                                                                                |
|----------------------|--------|-------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |   |                                      |                                                                                                                                                                                                |   |
|                 |   |                                      |                                                                                                                                                                                                |   |
| Date: August 9, 2007 |   | By:                                       | /s/              Robert W.              White                          |
|                 |   |                                      | Robert                W. White                                                                                                                                                                      |   |
|                 |   |                                      | Chairman,                President and                                                                                                                                                              |   |
|                 |   |                                      | Chief                Executive Officer                                                                                                                                                              |   |
|                 |   |                                      |                                                                                                                                                                                                |   |
| Date: August 9, 2007 |   | By:                                       | /s/ Jack J.              Sandoski                            |
|                 |   |                                      | Jack                J. Sandoski                                                                                                                                                                     |   |
|                 |   |                                      | Senior                Vice President and                                                                                                                                                            |   |
|                 |   |                                      | Chief                Financial Officer                                                                                                                                                              |   |