----

----

----

| x      | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|---------------------------------------------------------------------------------------------------|
|   |                                                                                              |
|   | For      the quarterly period ended September 30,2008                                             |

| 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 |
|--------|--------------------------------------|

----

| 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)                           |

----

----

| Large      accelerated filer o                     | Accelerated      filer x         |
|----------------------------------------------------|----------------------------------|
| Non-accelerated      filer o                       | Smaller      reporting company o |
| (Do      not check if a smaller reporting company) |                             |

----

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|                                      |                                                                                                                            | Page   |
|-------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|--------|
| PART      I – FINANCIAL INFORMATION |                                                                                                                            |
|                                      |                                                                                                                            |   |
|                                      | ITEM      1. FINANCIAL STATEMENTS                                                                                               |   |
|                                      |                                                                                                                            |   |
|                                      | Unaudited      Consolidated Statements of Financial Condition as of September 30, 2008      and December 31, 2007               | 1      |
|                                      |                                                                                                                            |   |
|                                      | Unaudited      Consolidated Statements of Income for the Three and Nine Months Ended      September 30, 2008 and 2007           | 2      |
|                                      |                                                                                                                            |   |
|                                      | Unaudited      Consolidated Statements of Stockholders’ Equity for the Nine Months Ended      September 30, 2008 and 2007 | 3      |
|                                      |                                                                                                                            |   |
|                                      | Unaudited      Consolidated Statements of Cash Flows for the Nine Months Ended September      30, 2008 and 2007                 | 5      |
|                                      |                                                                                                                            |   |
|                                      | Notes      to Unaudited Consolidated Financial Statements                                                                       | 6      |
|                                      |                                                                                                                            |   |
|                                      | ITEM      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS      OF OPERATIONS                   | 28     |
|                                      |                                                                                                                            |   |
|                                      | ITEM      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET    RISK                                                      | 45     |
|                                      |                                                                                                                            |   |
|                                      | ITEM      4. CONTROLS AND PROCEDURES                                                                                            | 48     |
|                                      |                                                                                                                            |   |
| PART      II – OTHER INFORMATION    |                                                                                                                            |
|                                      |                                                                                                                            |   |
|                                      | ITEM      1. Legal Proceedings                                                                                                  | 48     |
|                                      |                                                                                                                            |   |
|                                      | ITEM      1A. Risk Factors                                                                                                      | 48     |
|                                      |                                                                                                                            |   |
|                                      | ITEM      2. Unregistered Sales of Equity Securities and Use of    Proceeds                                                     | 48     |
|                                      |                                                                                                                            |   |
|                                      | ITEM      3. Defaults upon Senior Securities                                                                                    | 49     |
|                                      |                                                                                                                            |   |
|                                      | ITEM      4. Submission of Matters to a Vote of Security Holders                                                                | 49     |
|                                      |                                                                                                                            |   |
|                                      | ITEM      5. Other Information                                                                                                  | 49     |
|                                      |                                                                                                                            |   |
|                                      | ITEM      6. Exhibits                                                                                                           | 49     |
|                                      |                                                                                                                            |   |
|                                      | SIGNATURES                                                                                                                      | 50     |
|                                      |                                                                                                                            |   |
|                                      | CERTIFICATIONS                                                                                                                  |   |

----

| ABINGTON      BANCORP, INC.                                                         |   |
|-------------------------------------------------------------------------------------|--------|
|                                                                                |   |   |   |   |   |   |
| UNAUDITED      CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                       |   |
|                                                                                |   |   |   |   |   |   |
|                                                                                |   | September      30, 2008 |   |   | December      31, 2007 |   |
|                                                                                |   |   |   |   |   |   |
| ASSETS                                                                              |   |   |   |   |   |   |
|                                                                                |   |   |   |   |   |   |
| Cash      and due from banks                                                        |   | $ | 22,135,061 |   |   | $ | 22,342,499 |   |
| Interest-bearing      deposits in other banks                                       |   |   | 32,945,397 |   |   |   | 45,712,962 |   |
| Total      cash and cash equivalents                                                |   |   | 55,080,458 |   |   |   | 68,055,461 |   |
| Investment      securities held to maturity (estimated fair                         |   |   |   |   |   |   |   |   |
| value—2008,      $19,462,561; 2007, $20,656,427)                              |   |   | 20,389,646 |   |   |   | 20,391,268 |   |
| Investment      securities available for sale (amortized cost—                |   |   |   |   |   |   |   |   |
| $2008,      78,871,230; 2007, $98,202,711)                                          |   |   | 78,441,097 |   |   |   | 98,780,774 |   |
| Mortgage-backed      securities held to maturity (estimated fair                    |   |   |   |   |   |   |   |   |
| value—2008,      $83,418,180; 2007, $45,627,107)                              |   |   | 85,276,643 |   |   |   | 46,891,843 |   |
| Mortgage-backed      securities available for sale (amortized cost—           |   |   |   |   |   |   |   |   |
| $2008,      119,866,050; 2007, $94,400,607)                                         |   |   | 119,886,015 |   |   |   | 94,124,123 |   |
| Loans      receivable, net of allowance for loan losses                             |   |   |   |   |   |   |   |   |
| $(2008,      2,890,189; 2007, $1,811,121)                                           |   |   | 725,055,200 |   |   |   | 682,038,113 |   |
| Accrued      interest receivable                                                    |   |   | 5,354,823 |   |   |   | 4,977,909 |   |
| Federal      Home Loan Bank stock—at cost                                     |   |   | 14,238,300 |   |   |   | 10,958,700 |   |
| Cash      surrender value - bank owned life insurance                               |   |   | 38,734,507 |   |   |   | 37,298,126 |   |
| Property      and equipment, net                                                    |   |   | 11,049,861 |   |   |   | 10,759,799 |   |
| Real      estate owned                                                              |   |   | 3,080,714 |   |   |   | 1,558,000 |   |
| Deferred      tax asset                                                             |   |   | 2,750,271 |   |   |   | 1,892,051 |   |
| Prepaid      expenses and other assets                                              |   |   | 1,243,247 |   |   |   | 1,942,454 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| TOTAL      ASSETS                                                                   |   | $ | 1,160,580,782 |   |   | $ | 1,079,668,621 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                           |   |   |   |   |   |   |   |   |
|                                                                                |   |   |   |   |   |   |   |   |
| LIABILITIES:                                                                        |   |   |   |   |   |   |   |   |
| Deposits:                                                                           |   |   |   |   |   |   |   |   |
| Noninterest-bearing                                                                 |   | $ | 38,485,392 |   |   | $ | 37,027,767 |   |
| Interest-bearing                                                                    |   |   | 592,783,386 |   |   |   | 572,584,934 |   |
| Total      deposits                                                                 |   |   | 631,268,778 |   |   |   | 609,612,701 |   |
| Advances      from Federal Home Loan Bank                                           |   |   | 252,043,267 |   |   |   | 189,557,572 |   |
| Other      borrowed money                                                           |   |   | 20,407,203 |   |   |   | 17,453,060 |   |
| Accrued      interest payable                                                       |   |   | 4,799,387 |   |   |   | 3,498,235 |   |
| Advances      from borrowers for taxes and insurance                                |   |   | 921,354 |   |   |   | 2,978,650 |   |
| Accounts      payable and accrued expenses                                          |   |   | 6,937,534 |   |   |   | 6,653,343 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| Total      liabilities                                                              |   |   | 916,377,523 |   |   |   | 829,753,561 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| COMMITMENTS      AND CONTINGENCIES                                                  |   |   |   |   |   |   |   |   |
|                                                                                |   |   |   |   |   |   |   |   |
| STOCKHOLDERS'      EQUITY                                                           |   |   |   |   |   |   |   |   |
| Preferred      stock, $0.01 par value, 20,000,000 shares authorized,                |   |   |   |   |   |   |   |   |
| none      issued                                                                    |   |   | - |   |   |   | - |   |
| Common      stock, $0.01 par value, 80,000,000 shares authorized;                   |   |   |   |   |   |   |   |   |
| issued:      24,460,240 shares in 2008 and 2007; outstanding:                       |   |   |   |   |   |   |   |   |
| 23,924,084      shares in 2008, 24,449,526 shares in 2007                           |   |   | 244,602 |   |   |   | 244,602 |   |
| Additional      paid-in capital                                                     |   |   | 201,291,747 |   |   |   | 200,634,467 |   |
| Treasury      stock—at cost, 536,156 shares in 2008, 10,714 shares in    2007 |   |   | (5,174,638 | ) |   |   | (104,997 | ) |
| Unallocated      common stock held by:                                              |   |   |   |   |   |   |   |   |
| Employee      Stock Ownership Plan (ESOP)                                           |   |   | (15,348,178 | ) |   |   | (15,977,458 | ) |
| Recognition      & Retention Plan Trust (RRP)                                   |   |   | (6,013,327 | ) |   |   | (1,867,065 | ) |
| Deferred      compensation plans trust                                              |   |   | (1,179,476 | ) |   |   | (1,149,610 | ) |
| Retained      earnings                                                              |   |   | 71,017,326 |   |   |   | 68,360,520 |   |
| Accumulated      other comprehensive loss                                           |   |   | (634,797 | ) |   |   | (225,399 | ) |
|                                                                                |   |   |   |   |   |   |   |   |
| Total      stockholders' equity                                                     |   |   | 244,203,259 |   |   |   | 249,915,060 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY                                     |   | $ | 1,160,580,782 |   |   | $ | 1,079,668,621 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| See      notes to unaudited consolidated financial statements                       |   |   |   |   |   |   |   |   |

----

| ABINGTON      BANCORP, INC.                                   |   |                                  |       |   |                                 |   |       |   |   |   |       |   |
|---------------------------------------------------------------|--------|---------------------------------------|------------|--------|--------------------------------------|--------|------------|--------|--------|--------|------------|--------|
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |
| UNAUDITED      CONSOLIDATED STATEMENTS OF INCOME              |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |
|                                                          |   | Three      Months Ended September 30, |       |   | Nine      Months Ended September 30, |   |
|                                                          |   | 2008                                  |       |   | 2007                                 |   |       | 2008   |   |   | 2007       |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |
| INTEREST      INCOME:                                         |   |                                  |       |   |                                 |   |       |   |   |   |       |   |
| Interest      on loans                                        |   | $                                     | 10,266,825 |   |                                 | $      | 11,141,193 |   |   | $      | 31,582,679 |   |   | $ | 32,170,905 |   |
| Interest      and dividends on investment and                 |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| mortgage-backed      securities:                              |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| Taxable                                                       |   |                                  | 3,158,686  |   |                                 |   | 2,445,120  |   |   |   | 8,600,152  |   |   |   | 7,064,251 |   |
| Tax-exempt                                                    |   |                                  | 374,661    |   |                                 |   | 219,851    |   |   |   | 1,010,059  |   |   |   | 645,304 |   |
| Interest      and dividends on other interest-earning assets  |   |                                  | 206,824    |   |                                 |   | 1,088,405  |   |   |   | 1,031,230  |   |   |   | 1,903,061 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| Total      interest income                                    |   |                                  | 14,006,996 |   |                                 |   | 14,894,569 |   |   |   | 42,224,120 |   |   |   | 41,783,521 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| INTEREST      EXPENSE:                                        |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| Interest      on deposits                                     |   |                                  | 3,842,347  |   |                                 |   | 5,424,299  |   |   |   | 13,015,386 |   |   |   | 16,052,944 |   |
| Interest      on Federal Home Loan Bank advances              |   |                                  | 2,342,205  |   |                                 |   | 2,053,327  |   |   |   | 6,755,223  |   |   |   | 6,529,007 |   |
| Interest      on other borrowed money                         |   |                                  | 91,429     |   |                                 |   | 263,146    |   |   |   | 321,002    |   |   |   | 682,278 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| Total      interest expense                                   |   |                                  | 6,275,981  |   |                                 |   | 7,740,772  |   |   |   | 20,091,611 |   |   |   | 23,264,229 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| NET      INTEREST INCOME                                      |   |                                  | 7,731,015  |   |                                 |   | 7,153,797  |   |   |   | 22,132,509 |   |   |   | 18,519,292 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| PROVISION      FOR LOAN LOSSES                                |   |                                  | 309,372    |   |                                 |   | 163,390    |   |   |   | 1,035,360  |   |   |   | 272,935 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| NET      INTEREST INCOME AFTER                                |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| PROVISION      FOR LOAN LOSSES                                |   |                                  | 7,421,643  |   |                                 |   | 6,990,407  |   |   |   | 21,097,149 |   |   |   | 18,246,357 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| NON-INTEREST      INCOME                                      |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| Service      charges                                          |   |                                  | 416,449    |   |                                 |   | 398,880    |   |   |   | 1,222,899  |   |   |   | 1,202,522 |   |
| Income      on bank owned life insurance                      |   |                                  | 476,406    |   |                                 |   | 287,294    |   |   |   | 1,436,381  |   |   |   | 646,676 |   |
| Gain      on sale of securities                               |   |                                  | -          |   |                                 |   | -          |   |   |   | 146,375    |   |   |   | - |   |
| Impairment      charge on investment securities               |   |                                  | -          |   |                                 |   | -          |   |   |   | (330,527   | )      |   |   | - |   |
| Other      income                                             |   |                                  | 91,564     |   |                                 |   | 97,215     |   |   |   | 308,388    |   |   |   | 331,501 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| Total      non-interest income                                |   |                                  | 984,419    |   |                                 |   | 783,389    |   |   |   | 2,783,516  |   |   |   | 2,180,699 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| NON-INTEREST      EXPENSES                                    |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| Salaries      and employee benefits                           |   |                                  | 2,668,866  |   |                                 |   | 2,585,302  |   |   |   | 8,487,776  |   |   |   | 7,319,200 |   |
| Occupancy                                                     |   |                                  | 553,075    |   |                                 |   | 538,268    |   |   |   | 1,594,913  |   |   |   | 1,412,046 |   |
| Depreciation                                                  |   |                                  | 214,231    |   |                                 |   | 197,524    |   |   |   | 612,572    |   |   |   | 581,249 |   |
| Professional      services                                    |   |                                  | 302,437    |   |                                 |   | 307,643    |   |   |   | 888,585    |   |   |   | 765,924 |   |
| Data      processing                                          |   |                                  | 358,183    |   |                                 |   | 361,965    |   |   |   | 1,119,805  |   |   |   | 1,069,943 |   |
| Advertising      and promotions                               |   |                                  | 156,828    |   |                                 |   | 163,092    |   |   |   | 375,299    |   |   |   | 398,053 |   |
| Director      compensation                                    |   |                                  | 224,867    |   |                                 |   | 115,814    |   |   |   | 634,096    |   |   |   | 355,642 |   |
| Other                                                         |   |                                  | 673,037    |   |                                 |   | 554,089    |   |   |   | 1,985,819  |   |   |   | 1,661,537 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| Total      non-interest expenses                              |   |                                  | 5,151,524  |   |                                 |   | 4,823,697  |   |   |   | 15,698,865 |   |   |   | 13,563,594 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| INCOME      BEFORE INCOME TAXES                               |   |                                  | 3,254,538  |   |                                 |   | 2,950,099  |   |   |   | 8,181,800  |   |   |   | 6,863,462 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| PROVISION      FOR INCOME TAXES                               |   |                                  | 876,629    |   |                                 |   | 876,731    |   |   |   | 2,138,847  |   |   |   | 1,918,751 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| NET      INCOME                                               |   | $                                     | 2,377,909  |   |                                 | $      | 2,073,368  |   |   | $      | 6,042,953  |   |   | $ | 4,944,711 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| BASIC      EARNINGS PER COMMON SHARE                          |   | $                                     | 0.11       |   |                                 | $      | 0.09       |   |   | $      | 0.27       |   |   | $ | 0.21 |   |
| DILUTED      EARNINGS PER COMMON SHARE                        |   | $                                     | 0.10       |   |                                 | $      | 0.09       |   |   | $      | 0.26       |   |   | $ | 0.21 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| BASIC      AVERAGE COMMON SHARES OUTSTANDING:                 |   |                                  | 21,855,861 |   |                                 |   | 22,386,157 |   |   |   | 22,112,239 |   |   |   | 23,033,868 |   |
| DILUTED      AVERAGE COMMON SHARES OUTSTANDING:               |   |                                  | 22,668,249 |   |                                 |   | 22,745,007 |   |   |   | 22,908,703 |   |   |   | 23,539,206 |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
|                                                          |   |                                  |       |   |                                 |   |       |   |   |   |       |   |   |   |   |   |
| See      notes to unaudited consolidated financial statements |   |

----

| ABINGTON      BANCORP, INC.                                    |   |
|----------------------------------------------------------------|--------|
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| UNAUDITED      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   | Common |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   | Stock |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                           |   | Common |   |   |   |   |   | Additional |   |   |   |   |   | Acquired      by |   |   |   |   |   | Other |   |   | Total |   |
|                                                           |   | Stock |   |   | Common |   |   | Paid-in |   |   | Treasury |   |   | Benefit |   |   | Retained |   |   | Comprehensive |   |   | Stockholders' |   |
|                                                           |   | Shares |   |   | Stock |   |   | Capital |   |   | Stock |   |   | Plans |   |   | Earnings |   |   | Loss |   |   | Equity |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE—JANUARY      1, 2008                             |   |   | 24,460,240 |   |   | $ | 244,602 |   |   | $ | 200,634,467 |   |   | $ | (104,997 | ) |   | $ | (18,994,133 | ) |   | $ | 68,360,520 |   |   | $ | (225,399 | ) |   | $ | 249,915,060 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,042,953 |   |   |   | - |   |   |   | 6,042,953 |   |
| Net      unrealized holding loss on                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available      for sale securities                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| arising      during the period, net                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of      tax benefit of $241,996                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (469,751 | ) |   |   | (469,751 | ) |
| Amortization      of unrecognized                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| prior      service costs on defined                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit      pension plan, net                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of      tax expense of $31,091                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 60,353 |   |   |   | 60,353 |   |
| Comprehensive      income                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 5,633,555 |   |
| Cash      dividends declared,                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ($0.15      per share)                                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3,386,147 | ) |   |   | - |   |   |   | (3,386,147 | ) |
| Treasury      stock purchased                                  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,069,641 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,069,641 | ) |
| Excess      tax benefit on stock-based                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| compensation                                                   |   |   | - |   |   |   | - |   |   |   | 50,474 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 50,474 |   |
| Stock      options expense                                     |   |   | - |   |   |   | - |   |   |   | 638,335 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 638,335 |   |
| Common      stock released from                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit      plans                                             |   |   | - |   |   |   | - |   |   |   | (31,529 | ) |   |   | - |   |   |   | 1,847,406 |   |   |   | - |   |   |   | - |   |   |   | 1,815,877 |   |
| Common      stock acquired by                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit      plans                                             |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,394,254 | ) |   |   | - |   |   |   | - |   |   |   | (5,394,254 | ) |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE—                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SEPTEMBER      30, 2008                                        |   |   | 24,460,240 |   |   | $ | 244,602 |   |   | $ | 201,291,747 |   |   | $ | (5,174,638 | ) |   | $ | (22,540,981 | ) |   | $ | 71,017,326 |   |   | $ | (634,797 | ) |   | $ | 244,203,259 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See      notes to unaudited consolidated financial statements. |   |

----

| ABINGTON      BANCORP, INC.                                               |   |
|---------------------------------------------------------------------------|--------|
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| UNAUDITED      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(continued) |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   | Common |   |   |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   | Stock |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                      |   | Common |   |   |   |   |   | Additional |   |   |   |   |   | Acquired      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                                                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,944,711 |   |   |   | - |   |   |   | 4,944,711 |   |
| Net      unrealized holding gain on                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available      for sale securities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| arising      during the period, net                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of      tax expense of $578,037                                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,122,071 |   |   |   | 1,122,071 |   |
| Amortization      of unrecognized                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| prior      service costs on defined                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit      pension plan, net                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of      tax expense of $31,091                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 60,353 |   |   |   | 60,353 |   |
| Comprehensive      income                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 6,127,135 |   |
| Cash      dividends declared,                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ($0.13      per share)                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,940,767 | ) |   |   | - |   |   |   | (2,940,767 | ) |
| Cancellation      of common stock                                         |   |   | (15,870,000 | ) |   |   | (158,700 | ) |   |   | 158,700 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Issuance      of common stock, net                                        |   |   | 24,460,240 |   |   |   | 244,602 |   |   |   | 134,440,983 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 134,685,585 |   |
| Dissolution      of Abington Mutual                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Holding      Company                                                      |   |   | - |   |   |   | - |   |   |   | 4,123,098 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,123,098 |   |
| Cancellation      of treasury stock                                       |   |   | - |   |   |   | - |   |   |   | (8,317,848 | ) |   |   | 8,317,848 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Treasury      stock purchased                                             |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (101,214 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (101,214 | ) |
| Excess      tax benefit on stock-based                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| compensation                                                              |   |   | - |   |   |   | - |   |   |   | 71,275 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 71,275 |   |
| Stock      options expense                                                |   |   | - |   |   |   | - |   |   |   | 296,434 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 296,434 |   |
| Common      stock released from                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit      plans                                                        |   |   | - |   |   |   | - |   |   |   | 88,555 |   |   |   | - |   |   |   | 1,109,272 |   |   |   | - |   |   |   | - |   |   |   | 1,197,827 |   |
| Common      stock acquired by                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit      plans                                                        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (10,526,310 | ) |   |   | - |   |   |   | - |   |   |   | (10,526,310 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE—                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SEPTEMBER      30, 2007                                                   |   |   | 24,460,240 |   |   | $ | 244,602 |   |   | $ | 200,535,440 |   |   | $ | (101,214 | ) |   | $ | (19,471,723 | ) |   | $ | 67,256,158 |   |   | $ | (1,427,976 | ) |   | $ | 247,035,287 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See      notes to unaudited consolidated financial statements.            |   |

----

| ABINGTON      BANCORP, INC.                                                     |   |                                 |         |   |   |   |
|---------------------------------------------------------------------------------|--------|--------------------------------------|--------------|--------|--------|--------|
|                                                                            |   |                                 |         |   |   |   |
| UNAUDITED      CONSOLIDATED STATEMENTS OF CASH FLOWS                            |   |
|                                                                            |   |                                 |         |   |   |   |
|                                                                            |   | Nine      Months Ended September 30, |         |
|                                                                            |   | 2008                                 |         |   | 2007   |   |
| OPERATING      ACTIVITIES:                                                      |   |                                 |         |   |   |   |
| Net      income                                                                 |   | $                                    | 6,042,953    |   |   | $      | 4,944,711 |   |
| Adjustments      to reconcile net income to net cash                            |   |                                 |         |   |   |   |   |   |
| provided      by operating activities:                                          |   |                                 |         |   |   |   |   |   |
| Provision      for loan losses                                                  |   |                                 | 1,035,360    |   |   |   | 272,935 |   |
| Depreciation                                                                    |   |                                 | 612,572      |   |   |   | 581,249 |   |
| Share-based      compensation expense                                           |   |                                 | 2,446,412    |   |   |   | 1,482,158 |   |
| Gain      on sale of mortgage-backed securities                                 |   |                                 | (146,375     | )      |   |   | - |   |
| Impairment      charge on investment securities                                 |   |                                 | 330,527      |   |   |   | - |   |
| Deferred      income tax benefit                                                |   |                                 | (647,315     | )      |   |   | (179,266 | ) |
| Amortization      of:                                                           |   |                                 |         |   |   |   |   |   |
| Deferred      loan fees                                                         |   |                                 | (653,811     | )      |   |   | (610,793 | ) |
| Premiums      and discounts, net                                                |   |                                 | (43,479      | )      |   |   | 17,399 |   |
| Income      from bank owned life insurance                                      |   |                                 | (1,436,381   | )      |   |   | (646,676 | ) |
| Changes      in assets and liabilities which (used) provided cash:              |   |                                 |         |   |   |   |   |   |
| Accrued      interest receivable                                                |   |                                 | (376,914     | )      |   |   | (958,043 | ) |
| Prepaid      expenses and other assets                                          |   |                                 | 699,207      |   |   |   | (3,593,191 | ) |
| Accrued      interest payable                                                   |   |                                 | 1,301,152    |   |   |   | 4,570,275 |   |
| Accounts      payable and accrued expenses                                      |   |                                 | 345,769      |   |   |   | 6,170,303 |   |
|                                                                            |   |                                 |         |   |   |   |   |   |
| Net      cash provided by operating activities                                  |   |                                 | 9,509,677    |   |   |   | 12,051,061 |   |
|                                                                            |   |                                 |         |   |   |   |   |   |
| INVESTING      ACTIVITIES:                                                      |   |                                 |         |   |   |   |   |   |
| Principal      collected on loans                                               |   |                                 | 149,395,643  |   |   |   | 100,661,599 |   |
| Disbursements      for loans                                                    |   |                                 | (193,771,665 | )      |   |   | (165,398,514 | ) |
| Purchases      of:                                                              |   |                                 |         |   |   |   |   |   |
| Mortgage-backed      securities held to maturity                                |   |                                 | (44,779,804  | )      |   |   | - |   |
| Mortgage-backed      securities available for sale                              |   |                                 | (52,261,898  | )      |   |   | (8,270,728 | ) |
| Investments      available for sale                                             |   |                                 | (29,689,384  | )      |   |   | (44,949,137 | ) |
| Federal      Home Loan Bank stock                                               |   |                                 | (4,876,400   | )      |   |   | (2,146,400 | ) |
| Property      and equipment                                                     |   |                                 | (902,634     | )      |   |   | (1,876,131 | ) |
| Bank      owned life insurance                                                  |   |                                 | -            |   |   |   | (20,000,000 | ) |
| Additions      to real estate owned                                             |   |                                 | (545,328     | )      |   |   | - |   |
| Proceeds      from:                                                             |   |                                 |         |   |   |   |   |   |
| Sales      and maturities of mortgage-backed securities available for      sale |   |                                 | 10,043,930   |   |   |   | - |   |
| Sales      and maturities of investments available for sale                     |   |                                 | 48,771,425   |   |   |   | 32,700,000 |   |
| Principal      repayments of mortgage-backed securities held to maturity        |   |                                 | 6,348,995    |   |   |   | 7,052,148 |   |
| Principal      repayments of mortgage-backed securities available forsale       |   |                                 | 16,908,923   |   |   |   | 10,289,132 |   |
| Redemption      of Federal Home Loan Bank stock                                 |   |                                 | 1,596,800    |   |   |   | 2,270,300 |   |
|                                                                            |   |                                 |         |   |   |   |   |   |
| Net      cash used in investing activities                                      |   |                                 | (93,761,397  | )      |   |   | (89,667,731 | ) |
|                                                                            |   |                                 |         |   |   |   |   |   |
| FINANCING      ACTIVITIES:                                                      |   |                                 |         |   |   |   |   |   |
| Net      increase (decrease) in demand deposits and savingsaccounts             |   |                                 | 38,497,334   |   |   |   | (10,019,393 | ) |
| Net      (decrease) increase in certificate accounts                            |   |                                 | (16,841,257  | )      |   |   | 24,567,540 |   |
| Net      increase in other borrowed money                                       |   |                                 | 2,954,143    |   |   |   | 2,626,105 |   |
| Advances      from Federal Home Loan Bank                                       |   |                                 | 573,415,000  |   |   |   | 414,480,000 |   |
| Repayments      of advances from Federal Home Loan Bank                         |   |                                 | (510,929,305 | )      |   |   | (417,567,026 | ) |
| Net      decrease in advances from borrowers for taxes andinsurance             |   |                                 | (2,057,296   | )      |   |   | (1,971,667 | ) |
| Excess      tax benefit from stock-based compensation                           |   |                                 | 50,474       |   |   |   | 71,275 |   |
| Purchase      of treasury stock                                                 |   |                                 | (5,069,641   | )      |   |   | (101,214 | ) |
| Acquisition      of stock for benefit plans                                     |   |                                 | (5,356,588   | )      |   |   | (10,427,710 | ) |
| Proceeds      from stock issuance, net                                          |   |                                 | -            |   |   |   | 134,685,585 |   |
| Dissolution      of Abington Mutual Holding Company                             |   |                                 | -            |   |   |   | 4,123,098 |   |
| Payment      of cash dividends                                                  |   |                                 | (3,386,147   | )      |   |   | (2,940,767 | ) |
|                                                                            |   |                                 |         |   |   |   |   |   |
| Net      cash provided by financing activities                                  |   |                                 | 71,276,717   |   |   |   | 137,525,826 |   |
|                                                                            |   |                                 |         |   |   |   |   |   |
| NET  (DECREASE)      INCREASE IN CASH AND CASH EQUIVALENTS            |   |                                 | (12,975,003  | )      |   |   | 59,909,156 |   |
|                                                                            |   |                                 |         |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS—Beginning of period                        |   |                                 | 68,055,461   |   |   |   | 44,565,252 |   |
|                                                                            |   |                                 |         |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS—End of period                              |   | $                                    | 55,080,458   |   |   | $      | 104,474,408 |   |
|                                                                            |   |                                 |         |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURES OF CASH FLOW INFORMATION:                         |   |                                 |         |   |   |   |   |   |
|                                                                            |   |                                 |         |   |   |   |   |   |
| Cash      paid during the year for:                                             |   |                                 |         |   |   |   |   |   |
| Interest      on deposits and other borrowings                                  |   | $                                    | 18,790,459   |   |   | $      | 18,693,954 |   |
| Income      taxes                                                               |   | $                                    | 2,475,000    |   |   | $      | 2,050,000 |   |
| Cancellation      of treasury stock                                             |   | $                                    | -            |   |   | $      | 8,317,848 |   |
| Non-cash      transfer of loans to real estate owned                            |   | $                                    | 977,386      |   |   | $      | - |   |
|                                                                            |   |                                 |         |   |   |   |   |   |
|                                                                            |   |                                 |         |   |   |   |   |   |
| See      notes to unaudited consolidated financial statements.                  |   |                                 |         |   |   |   |   |   |

----

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| 1.     | FINANCIAL      STATEMENT PRESENTATION AND SIGNIFICANT ACCOUNTING  POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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|   | Basis of      Financial Statement Presentation— Abington Bancorp, Inc. (the      “Company”) is a Pennsylvania corporation which was 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,      which is 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”). As a      result of 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 twelve      other branches and seven 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 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 $134.7 million, net      of offering costs of approximately $5.0 million. As part of the      conversion, each outstanding public share of Abington Community Bancorp,      Inc. (that is, shares owned by stockholders other than Abington Mutual      Holding Company) was exchanged for 1.6 shares of Company Common Stock. The      exchange resulted in an additional 10,494,640 outstanding shares of common      stock of the Company for a total of 24,460,240 outstanding shares as of      the closing of the second-step conversion. 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 Bancorp, Inc. and the accompanying notes thereto for the year      ended December 31, 2007, which are included in the Company’s Annual Report      on Form 10-K for the year ended December 31, 2007. The results for the      nine months ended September 30, 2008 are not necessarily indicative of the      results that may be expected for the fiscal year ending December 31, 2008,      or any other period.                                                                                                                                                                                                                                                                                                                          |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Use of      Estimates in the Preparation of Financial Statements—The      preparation of financial statements in conformity with accounting      principles generally accepted in the United States of America requires      management to make estimates and assumptions that affect the reported      amounts of assets and liabilities and disclosure of contingent assets and      liabilities at the date of the financial statements and the reported      amounts of income and expenses during the reporting period. Actual results      could differ from those estimates. The Company’s most significant      estimates are the allowance for loan losses, the assessment of      other-than-temporary impairment of investment and mortgage-backed      securities and deferred income taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Other-Than-Temporary      Impairment of Securities—Securities are evaluated on at least a      quarterly basis, and more frequently when market conditions warrant such      an evaluation, to determine whether a decline in their value is      other-than-temporary. To determine whether a loss in value is      other-than-temporary, management utilizes criteria such as the reasons      underlying the decline, the magnitude and duration of the decline and the      intent and ability of the Company to retain its investment in the security      for a period of time sufficient to allow for an anticipated recovery in      the fair value. The term “other-than-temporary” is not intended to      indicate that the decline is permanent, but indicates that the prospects      for a near-term recovery of value is not necessarily favorable, or that      there is a lack of evidence to support a realizable value equal to or      greater than the carrying value of the investment. Once a decline in value      is determined to be other-than-temporary, the value of the security is      reduced and a corresponding charge to earnings is recognized. No      impairment charge was recognized during the three months ended September      30, 2008. An impairment charge on certain investment securities of      approximately $331,000 was recognized during the nine months ended      September 30, 2008. No impairment charge was recognized during the nine      months ended September 30, 2007. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | 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 theportfolio.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

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|   | 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 or losses on available for sale securities and amortization      of unrecognized deferred costs of the Company’s defined benefit pension      plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The      components of other comprehensive (loss) income are as      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

|                                            |   | Three      Months Ended |     |   | Nine      Months Ended |   |
|-------------------------------------------------|--------|-------------------------|----------|--------|------------------------|--------|
|                                            |   | September      30,      |     |   | September      30,     |   |
|                                            |   | 2008                    |     |   | 2007                   |   |   | 2008 |   |   | 2007 |   |
|                                            |   |                    |     |   |                   |   |   |   |   |   |   |   |
| Net      unrealized (loss) gain on securities   |   |                    |     |   |                   |   |   |   |   |   |   |   |
| arising      during the period                  |   | $                       | (461,515 | )      |                   | $      | 1,141,325 |   |   | $ | (591,291 | ) |   | $ | 1,122,071 |   |
| Plus:      reclassification adjustment for net  |   |                    |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| losses      included in net income, net of tax  |   |                    | -        |   |                   |   | - |   |   |   | 121,540 |   |   |   | - |   |
|                                            |   |                    |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net      unrealized loss on securities          |   | $                       | (461,515 | )      |                   | $      | 1,141,325 |   |   | $ | (469,751 | ) |   | $ | 1,122,071 |   |
|                                            |   |                    |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization      of unrecognized prior service |   |                    |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| cost      on defined benefit pension plan,      |   |                    |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| net      of tax                                 |   |                    | 20,118   |   |                   |   | 20,119 |   |   |   | 60,353 |   |   |   | 60,353 |   |
|                                            |   |                    |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Total      other comprehensive (loss) income    |   | $                       | (441,397 | )      |                   | $      | 1,161,444 |   |   | $ | (409,398 | ) |   | $ | 1,182,424 |   |

|   | The      components of accumulated other comprehensive loss are as      follows: |
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|                                                             |   | September      30, |     |   | December      31, |   |
|------------------------------------------------------------------|--------|--------------------|----------|--------|-------------------|--------|
|                                                             |   | 2008               |     |   | 2007              |   |
|                                                             |   |               |     |   |              |   |
| Net      unrealized gain on securities                           |   | $                  | (270,710 | )      |              | $      | 199,041 |   |
| Unrecognized      deferred costs of defined benefit pension plan |   |               | (364,087 | )      |              |   | (424,440 | ) |
|                                                             |   |               |     |   |              |   |   |   |
| Total      accumulated other comprehensive loss                  |   | $                  | (634,797 | )      |              | $      | (225,399 | ) |

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|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | At      September 30, 2008, the Company has four share-based compensation plans,      the 2005 and the 2007 Recognition and Retention Plans and the 2005 and      2007 Stock Option Plans. Share awards were first issued under the 2005      plans in July 2005. Share awards were issued under the 2007 plans in      January 2008. These plans are more fully described in Note    6.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
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|   | The      Company also has an employee stock ownership plan (“ESOP”). This plan is      more fully described in Note 6. Shares held 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 nine months ended September 30, 2008, there      were 1,252,240 and 109,740 antidilutive CSEs, respectively. For the three      and nine months ended September 30, 2007, there were no antidilutive CSEs.      Earnings per share were calculated asfollows: |

|                                       |   | Three      Months Ended September 30, |       |
|--------------------------------------------|--------|---------------------------------------|------------|
|                                       |   | 2008                                  |       |   | 2007 |   |
|                                       |   | Basic                                 |       |   | Diluted |   |   | Basic |   |   | Diluted |   |
|                                       |   |                                  |       |   |   |   |   |   |   |   |   |   |
| Net      income                            |   | $                                     | 2,377,909  |   |   | $ | 2,377,909 |   |   | $ | 2,073,368 |   |   | $ | 2,073,368 |   |
| Weighted      average shares outstanding   |   |                                  | 21,855,861 |   |   |   | 21,855,861 |   |   |   | 22,386,157 |   |   |   | 22,386,157 |   |
| Effect      of common stock equivalents    |   |                                  | -          |   |   |   | 812,388 |   |   |   | - |   |   |   | 358,850 |   |
| Adjusted      weighted average shares used |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| in      earnings per share computation     |   |                                  | 21,855,861 |   |   |   | 22,668,249 |   |   |   | 22,386,157 |   |   |   | 22,745,007 |   |
|                                       |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      per share                    |   | $                                     | 0.11       |   |   | $ | 0.10 |   |   | $ | 0.09 |   |   | $ | 0.09 |   |

|                                       |   | Nine      Months Ended September 30, |       |
|--------------------------------------------|--------|--------------------------------------|------------|
|                                       |   | 2008                                 |       |   | 2007 |   |
|                                       |   | Basic                                |       |   | Diluted |   |   | Basic |   |   | Diluted |   |
|                                       |   |                                 |       |   |   |   |   |   |   |   |   |   |
| Net      income                            |   | $                                    | 6,042,953  |   |   | $ | 6,042,953 |   |   | $ | 4,944,711 |   |   | $ | 4,944,711 |   |
| Weighted      average shares outstanding   |   |                                 | 22,112,239 |   |   |   | 22,112,239 |   |   |   | 23,033,868 |   |   |   | 23,033,868 |   |
| Effect      of common stock equivalents    |   |                                 | -          |   |   |   | 796,464 |   |   |   | - |   |   |   | 505,338 |   |
| Adjusted      weighted average shares used |   |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| in      earnings per share computation     |   |                                 | 22,112,239 |   |   |   | 22,908,703 |   |   |   | 23,033,868 |   |   |   | 23,539,206 |   |
|                                       |   |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      per share                    |   | $                                    | 0.27       |   |   | $ | 0.26 |   |   | $ | 0.21 |   |   | $ | 0.21 |   |

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|   | Recent      Accounting Pronouncements—In March 2008, the FASB issued SFAS No.      161, Disclosures About      Derivative Instruments and Hedging Activities – an amendment of FASB      Statements No. 133. This statement changes the disclosure      requirements for derivative instruments and hedging activities. Entities      are required to provide enhanced disclosures about (a) how and why an      entity uses derivative instruments, (b) how derivative instruments and      related hedged items are accounted for under Statement 133 and its related      interpretations, and (c) how derivative instruments and related hedged      items affect an entity’s financial positions, financial performance, and      cash flows. This statement is effective for financial statements issued      for periods beginning after November 15, 2008. The Company is continuing      to evaluate the impact of this statement, but does not expect that the      guidance will have any effect on our consolidated financial position or      results of operations. |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | In      May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally      Accepted Accounting Principles. This statement identifies the      sources of accounting principles and the framework for selecting the      principles to be used in the preparation of financial statements of      nongovernmental entities that are presented in conformity with generally      accepted accounting principles (“GAAP”) in the United States (the “GAAP      hierarchy”). This statement is effective 60 days following the SEC’s      approval of the Public Company Accounting Oversight Board amendments to AU      Section 411, The Meaning      of Present Fairly in Conformity With Generally Accepted Accounting      Principles. The Company does not expect this statement to have any      effect on our consolidated financial position or results of      operations.                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | Reclassifications—Certain items in the      2007 consolidated financial statements have been reclassified to conform      to the presentation in the 2008 consolidated financial statements. Such      reclassifications did not have a material impact on the presentation of      the overall financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| 2.     | INVESTMENT      SECURITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The      amortized cost and estimated fair value of investment securities are      summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

|                       |   | Held      to Maturity   |       |
|----------------------------|--------|-------------------------|------------|
|                       |   | September      30, 2008 |       |
|                       |   |                    |       |   | Gross |   |   | Gross |   |   | Estimated |   |
|                       |   | Amortized               |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                       |   | Cost                    |       |   | Gains |   |   | Losses |   |   | Value |   |
|                       |   |                    |       |   |   |   |   |   |   |   |   |   |
| Debt      securities:      |   |                    |       |   |   |   |   |   |   |   |   |   |
| Municipal      bonds       |   | $                       | 20,389,646 |   |   | $ | - |   |   | $ | (927,085 | ) |   | $ | 19,462,561 |   |
|                       |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      debt securities |   | $                       | 20,389,646 |   |   | $ | - |   |   | $ | (927,085 | ) |   | $ | 19,462,561 |   |

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|                         |   | Available      for Sale |       |
|------------------------------|--------|-------------------------|------------|
|                         |   | September      30, 2008 |       |
|                         |   |                    |       |   | Gross |   |   | Gross |   |   | Estimated |   |
|                         |   | Amortized               |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                         |   | Cost                    |       |   | Gains |   |   | Losses |   |   | Value |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |
| Debt      securities:        |   |                    |       |   |   |   |   |   |   |   |   |   |
| Agency      bonds            |   | $                       | 52,459,885 |   |   | $ | 400,538 |   |   | $ | (19,720 | ) |   | $ | 52,840,703 |   |
| Corporate      bonds and     |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| commercial      paper        |   |                    | 3,472,537  |   |   |   | 5,251 |   |   |   | (259,658 | ) |   |   | 3,218,130 |   |
| Municipal      bonds         |   |                    | 19,665,310 |   |   |   | 55,428 |   |   |   | (352,693 | ) |   |   | 19,368,045 |   |
| Certificates      of deposit |   |                    | 288,000    |   |   |   | - |   |   |   | - |   |   |   | 288,000 |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      debt securities   |   |                    | 75,885,732 |   |   |   | 461,217 |   |   |   | (632,071 | ) |   |   | 75,714,878 |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity      securities:      |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common      stock            |   |                    | 10         |   |   |   | 2 |   |   |   | - |   |   |   | 12 |   |
| Mutual      funds            |   |                    | 2,985,488  |   |   |   | - |   |   |   | (259,281 | ) |   |   | 2,726,207 |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      equity securities |   |                    | 2,985,498  |   |   |   | 2 |   |   |   | (259,281 | ) |   |   | 2,726,219 |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        |   | $                       | 78,871,230 |   |   | $ | 461,219 |   |   | $ | (891,352 | ) |   | $ | 78,441,097 |   |

|                       |   | Held      to Maturity  |       |
|----------------------------|--------|------------------------|------------|
|                       |   | December      31, 2007 |       |
|                       |   |                   |       |   | Gross |   |   | Gross |   |   | Estimated |   |
|                       |   | Amortized              |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                       |   | Cost                   |       |   | Gains |   |   | Losses |   |   | Value |   |
|                       |   |                   |       |   |   |   |   |   |   |   |   |   |
| Debt      securities:      |   |                   |       |   |   |   |   |   |   |   |   |   |
| Municipal      bonds       |   | $                      | 20,391,268 |   |   | $ | 265,159 |   |   | $ | - |   |   | $ | 20,656,427 |   |
|                       |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      debt securities |   | $                      | 20,391,268 |   |   | $ | 265,159 |   |   | $ | - |   |   | $ | 20,656,427 |   |

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|                         |   | Available      for Sale |       |
|------------------------------|--------|-------------------------|------------|
|                         |   | December      31, 2007  |       |
|                         |   |                    |       |   | Gross |   |   | Gross |   |   | Estimated |   |
|                         |   | Amortized               |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                         |   | Cost                    |       |   | Gains |   |   | Losses |   |   | Value |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |
| Debt      securities:        |   |                    |       |   |   |   |   |   |   |   |   |   |
| Agency      bonds            |   | $                       | 84,882,467 |   |   | $ | 675,585 |   |   | $ | (70,210 | ) |   | $ | 85,487,842 |   |
| Corporate      bonds and     |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| commercial      paper        |   |                    | 3,483,768  |   |   |   | 6,446 |   |   |   | (11,449 | ) |   |   | 3,478,765 |   |
| Municipal      bonds         |   |                    | 6,035,410  |   |   |   | 71,374 |   |   |   | (280 | ) |   |   | 6,106,504 |   |
| Certificates      of deposit |   |                    | 585,000    |   |   |   | - |   |   |   | - |   |   |   | 585,000 |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      debt securities   |   |                    | 94,986,645 |   |   |   | 753,405 |   |   |   | (81,939 | ) |   |   | 95,658,111 |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity      securities:      |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common      stock            |   |                    | 10         |   |   |   | 310 |   |   |   | - |   |   |   | 320 |   |
| Mutual      funds            |   |                    | 3,216,056  |   |   |   | - |   |   |   | (93,713 | ) |   |   | 3,122,343 |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      equity securities |   |                    | 3,216,066  |   |   |   | 310 |   |   |   | (93,713 | ) |   |   | 3,122,663 |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        |   | $                       | 98,202,711 |   |   | $ | 753,715 |   |   | $ | (175,652 | ) |   | $ | 98,780,774 |   |

|   | There      were no sales of debt or equity securities during the three months ended      September 30, 2008. During the nine months ended September 30, 2008, a      gross gain of approximately $74,000 was recognized on the sale of certain      agency bonds. Proceeds from these sales were approximately $4.1 million.      There were no sales of debt or equity securities during the three or nine      months ended September 30, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | No      impairment charge was recognized during the three months ended September      30, 2008. An impairment charge of approximately $331,000 was recognized      during the nine months ended September 30, 2008. The impairment charge was      taken to write-down the carrying value of our investment in a      mortgage-backed securities based mutual fund to its fair value of $3.0      million at June 30, 2008, based on our determination that the investment,      the AMF Ultra Short Mortgage Fund, was other-than-temporarily impaired. At      the time, there had been recent credit rating downgrades in certain of the      private label mortgage-backed securities held by the fund. During the      third quarter, the fair value of the fund continued to decline, and at      September 30, 2008, the fair value of our investment in the fund had      decreased to $2.7 million. Although our investment in this fund is      recorded at fair value in our balance sheet, no additional impairment      charge was recognized during the third quarter of 2008. Based on our      evaluation of the fund at September 30, 2008, we determined that the      additional decrease in the value of the fund since June 30, 2008 was      recoverable should the securities held by the fund continue to perform. We      believe that the majority of these securities will continue to perform,      however, we are continuing to monitor this fund, and it is possible that      additional impairment charges will be recorded in subsequent quarters. No      impairment charge was recognized on investment securities during the three      or nine months ended September 30, 2007. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | 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 redeem 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. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                        |   | September      30, 2008 |       |
|---------------------------------------------|--------|-------------------------|------------|
|                                        |   | Available      for Sale |       |   | Held      to Maturity |   |
|                                        |   |                    |       |   | Estimated |   |   |   |   |   | Estimated |   |
|                                        |   | Amortized               |       |   | Fair |   |   | Amortized |   |   | Fair |   |
|                                        |   | Cost                    |       |   | Value |   |   | Cost |   |   | Value |   |
|                                        |   |                    |       |   |   |   |   |   |   |   |   |   |
| Due      in one year or less                |   | $                       | 1,687,505  |   |   | $ | 1,673,380 |   |   | $ | - |   |   | $ | - |   |
| Due      after one year through five years  |   |                    | 58,034,566 |   |   |   | 58,141,651 |   |   |   | - |   |   |   | - |   |
| Due      after five years through ten years |   |                    | 15,904,752 |   |   |   | 15,652,306 |   |   |   | - |   |   |   | - |   |
| Due      after ten years                    |   |                    | 258,909    |   |   |   | 247,541 |   |   |   | 20,389,646 |   |   |   | 19,462,561 |   |
|                                        |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                       |   | $                       | 75,885,732 |   |   | $ | 75,714,878 |   |   | $ | 20,389,646 |   |   | $ | 19,462,561 |   |

|   | The      table below sets forth investment securities which had an unrealized loss      position as of September 30, 2008: |
|--------|----------------------------------------------------------------------------------------------------------------------------|

|                                     |   | 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                     |   | $                        | (927,085   | )      |                     | $      | 19,462,560 |   |   | $ | - |   |   | $ | - |   |
|                                     |   |                     |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities held to maturity   |   |                     | (927,085   | )      |                     |   | 19,462,560 |   |   |   | - |   |   |   | - |   |
|                                     |   |                     |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Securities      available for sale:      |   |                     |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Agency      bonds                        |   | $                        | (19,720    | )      |                     | $      | 11,973,180 |   |   | $ | - |   |   | $ | - |   |
| Corporate      bonds and                 |   |                     |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| commercial      paper                    |   |                     | (14,125    | )      |                     |   | 1,484,380 |   |   |   | (245,533 | ) |   |   | 750,850 |   |
| Municipal      bonds                     |   |                     | (352,693   | )      |                     |   | 14,020,460 |   |   |   | - |   |   |   | - |   |
| Equity      securities                   |   |                     | -          |   |                     |   | - |   |   |   | (259,281 | ) |   |   | 2,726,207 |   |
|                                     |   |                     |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities available for sale |   |                     | (386,538   | )      |                     |   | 27,478,020 |   |   |   | (504,814 | ) |   |   | 3,477,057 |   |
|                                     |   |                     |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total                                    |   | $                        | (1,313,623 | )      |                     | $      | 46,940,580 |   |   | $ | (504,814 | ) |   | $ | 3,477,057 |   |

----

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

|                                     |   | Less      than 12 months |   |   | More      than 12 months |   |
|------------------------------------------|--------|--------------------------|--------|--------|--------------------------|--------|
|                                     |   | Gross                    |   |   | Estimated                |   |   | Gross |   |   | Estimated |   |
|                                     |   | Unrealized               |   |   | Fair                     |   |   | Unrealized |   |   | Fair |   |
|                                     |   | Losses                   |   |   | Value                    |   |   | Losses |   |   | Value |   |
|                                     |   |                     |   |   |                     |   |   |   |   |   |   |   |
| Securities      available for sale:      |   |                     |   |   |                     |   |   |   |   |   |   |   |
| Agency      bonds                        |   | $                        | -      |   |                     | $      | - |   |   | $ | (70,210 | ) |   | $ | 14,429,790 |   |
| Corporate      bonds and                 |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| commercial      paper                    |   |                     | (7,218 | )      |                     |   | 987,130 |   |   |   | (4,231 | ) |   |   | 495,665 |   |
| Municipal      bonds                     |   |                     | (280   | )      |                     |   | 254,535 |   |   |   | - |   |   |   | - |   |
| Equity      securities                   |   |                     | -      |   |                     |   | - |   |   |   | (93,713 | ) |   |   | 3,122,343 |   |
|                                     |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities available for sale |   | $                        | (7,498 | )      |                     | $      | 1,241,665 |   |   | $ | (168,154 | ) |   | $ | 18,047,798 |   |

|   | 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 September 30, 2008, investment      securities in a gross unrealized loss position for twelve months or longer      consisted of three securities having an aggregate depreciation of 12.7%      from the Company’s amortized cost basis. Investment securities in a gross      unrealized loss position for less than twelve months at September 30,      2008, consisted of 108 securities having an aggregate depreciation of 2.7%      from the Company’s amortized cost basis. Management has concluded that the      unrealized losses above are temporary in nature. The unrealized losses on      our debt securities 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 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 and the current market environment improves. The Company has the      intent and ability to hold each of these investments for the time      necessary to recover its cost. The unrealized losses on our equity      securities relate to our investment in the AMF Ultra Short Mortgage Fund.      As previously discussed, an impairment charge was taken during the second      quarter of 2008 to write-down the carrying value of our investment in this      fund to its fair value of $3.0 million at June 30, 2008. Based on our      evaluation of the fund at September 30, 2008, we determined that the      additional decrease in the value of the fund since June 30, 2008 was      recoverable should the securities held by the fund continue to perform. We      believe that the majority of these securities will continue to perform,      and we have the intent and ability to hold this investment for the time      necessary to recover its currentcost. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

|                         |   | Held      to Maturity   |       |
|------------------------------|--------|-------------------------|------------|
|                         |   | September      30, 2008 |       |
|                         |   |                    |       |   | Gross |   |   | Gross |   |   | Estimated |   |
|                         |   | Amortized               |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                         |   | Cost                    |       |   | Gains |   |   | Losses |   |   | Value |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |
| GNMA      pass-through       |   |                    |       |   |   |   |   |   |   |   |   |   |
| certificates                 |   | $                       | 19,947,963 |   |   | $ | - |   |   | $ | - |   |   | $ | 19,947,963 |   |
| FNMA      pass-through       |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| certificates                 |   |                    | 36,903,795 |   |   |   | 18,552 |   |   |   | (541,206 | ) |   |   | 36,381,141 |   |
| FHLMC      pass-through      |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| certificates                 |   |                    | 17,233,218 |   |   |   | - |   |   |   | (590,808 | ) |   |   | 16,642,410 |   |
| Collateralized      mortgage |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations                  |   |                    | 11,191,667 |   |   |   | - |   |   |   | (745,001 | ) |   |   | 10,446,666 |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        |   | $                       | 85,276,643 |   |   | $ | 18,552 |   |   | $ | (1,877,015 | ) |   | $ | 83,418,180 |   |

|                         |   | Available      for sale |        |
|------------------------------|--------|-------------------------|-------------|
|                         |   | September      30, 2008 |        |
|                         |   |                    |        |   | Gross |   |   | Gross |   |   | Estimated |   |
|                         |   | Amortized               |        |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                         |   | Cost                    |        |   | Gains |   |   | Losses |   |   | Value |   |
|                         |   |                    |        |   |   |   |   |   |   |   |   |   |
| GNMA      pass-through       |   |                    |        |   |   |   |   |   |   |   |   |   |
| certificates                 |   | $                       | 3,069       |   |   | $ | 397 |   |   | $ | - |   |   | $ | 3,466 |   |
| FNMA      pass-through       |   |                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| certificates                 |   |                    | 46,171,971  |   |   |   | 192,854 |   |   |   | (355,288 | ) |   |   | 46,009,537 |   |
| FHLMC      pass-through      |   |                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| certificates                 |   |                    | 65,194,466  |   |   |   | 516,574 |   |   |   | (394,632 | ) |   |   | 65,316,408 |   |
| Collateralized      mortgage |   |                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations                  |   |                    | 8,496,544   |   |   |   | 88,023 |   |   |   | (27,963 | ) |   |   | 8,556,604 |   |
|                         |   |                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        |   | $                       | 119,866,050 |   |   | $ | 797,848 |   |   | $ | (777,883 | ) |   | $ | 119,886,015 |   |

----

|                         |   | Held      to Maturity  |       |
|------------------------------|--------|------------------------|------------|
|                         |   | December      31, 2007 |       |
|                         |   |                   |       |   | Gross |   |   | Gross |   |   | Estimated |   |
|                         |   | Amortized              |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                         |   | Cost                   |       |   | Gains |   |   | Losses |   |   | Value |   |
|                         |   |                   |       |   |   |   |   |   |   |   |   |   |
| FNMA      pass-through       |   |                   |       |   |   |   |   |   |   |   |   |   |
| certificates                 |   | $                      | 20,236,408 |   |   | $ | - |   |   | $ | (479,332 | ) |   | $ | 19,757,076 |   |
| FHLMC      pass-through      |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| certificates                 |   |                   | 14,284,056 |   |   |   | - |   |   |   | (431,116 | ) |   |   | 13,852,940 |   |
| Collateralized      mortgage |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations                  |   |                   | 12,371,379 |   |   |   | 19,205 |   |   |   | (373,493 | ) |   |   | 12,017,091 |   |
|                         |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        |   | $                      | 46,891,843 |   |   | $ | 19,205 |   |   | $ | (1,283,941 | ) |   | $ | 45,627,107 |   |

|                         |   | Available      for sale |       |
|------------------------------|--------|-------------------------|------------|
|                         |   | December      31, 2007  |       |
|                         |   |                    |       |   | Gross |   |   | Gross |   |   | Estimated |   |
|                         |   | Amortized               |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                         |   | Cost                    |       |   | Gains |   |   | Losses |   |   | Value |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |
| GNMA      pass-through       |   |                    |       |   |   |   |   |   |   |   |   |   |
| certificates                 |   | $                       | 318,366    |   |   | $ | 12,954 |   |   | $ | (239 | ) |   | $ | 331,081 |   |
| FNMA      pass-through       |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| certificates                 |   |                    | 21,441,471 |   |   |   | 155,943 |   |   |   | (105,997 | ) |   |   | 21,491,417 |   |
| FHLMC      pass-through      |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| certificates                 |   |                    | 60,765,390 |   |   |   | 239,573 |   |   |   | (637,497 | ) |   |   | 60,367,466 |   |
| Collateralized      mortgage |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations                  |   |                    | 11,875,380 |   |   |   | 112,742 |   |   |   | (53,963 | ) |   |   | 11,934,159 |   |
|                         |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        |   | $                       | 94,400,607 |   |   | $ | 521,212 |   |   | $ | (797,696 | ) |   | $ | 94,124,123 |   |

|   | There      were no sales of mortgage-backed securities during the three months ended      September 30, 2008. During the nine months ended September 30, 2008, a      gross gain of approximately $100,000 and a gross loss of approximately      $28,000 were recognized on the sale of certain mortgage-backed securities.      Proceeds from these sales were approximately $5.1 million. There were no      sales of mortgage-backed securities during the three or nine months ended      September 30, 2007. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | No      impairment charges were recognized on mortgage-backed securities during      the three or nine months ended September 30, 2008 and  2007.                                                                                                                                                                                                                                                                                                                                                                  |

----

|   | The      table below sets forth mortgage-backed securities which had an unrealized      loss position as of September 30,2008: |
|--------|--------------------------------------------------------------------------------------------------------------------------------|

|                                     |   | 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                             |   | $                        | (87,319  | )      |                     | $      | 15,195,109 |   |   | $ | (453,887 | ) |   | $ | 11,275,959 |   |
| FHLMC      pass-through                  |   |                     |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| certificates                             |   |                     | (22,049  | )      |                     |   | 932,173 |   |   |   | (568,759 | ) |   |   | 15,710,237 |   |
| Collateralized      mortgage             |   |                     |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| obligations                              |   |                     | (190,107 | )      |                     |   | 747,714 |   |   |   | (554,894 | ) |   |   | 9,698,952 |   |
|                                     |   |                     |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities held to maturity   |   |                     | (299,475 | )      |                     |   | 16,874,996 |   |   |   | (1,577,540 | ) |   |   | 36,685,148 |   |
|                                     |   |                     |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Securities      available for sale:      |   |                     |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| FNMA      pass-through                   |   |                     |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| certificates                             |   | $                        | (353,329 | )      |                     | $      | 27,641,019 |   |   | $ | (1,959 | ) |   | $ | 59,750 |   |
| FHLMC      pass-through                  |   |                     |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| certificates                             |   |                     | (132,233 | )      |                     |   | 21,768,331 |   |   |   | (262,399 | ) |   |   | 7,996,764 |   |
| Collateralized      mortgage             |   |                     |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| obligations                              |   |                     | (21,283  | )      |                     |   | 2,862,001 |   |   |   | (6,680 | ) |   |   | 256,906 |   |
|                                     |   |                     |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities available for sale |   |                     | (506,845 | )      |                     |   | 52,271,351 |   |   |   | (271,038 | ) |   |   | 8,313,420 |   |
|                                     |   |                     |     |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total                                    |   | $                        | (806,320 | )      |                     | $      | 69,146,347 |   |   | $ | (1,848,578 | ) |   | $ | 44,998,568 |   |

----

|   | The      table below sets forth mortgage-backed securities which had an unrealized      loss position as of December 31,2007: |
|--------|-------------------------------------------------------------------------------------------------------------------------------|

|                                     |   | Less      than 12 months |    |   | More      than 12 months |   |
|------------------------------------------|--------|--------------------------|---------|--------|--------------------------|--------|
|                                     |   | Gross                    |    |   | Estimated                |   |   | Gross |   |   | Estimated |   |
|                                     |   | Unrealized               |    |   | Fair                     |   |   | Unrealized |   |   | Fair |   |
|                                     |   | Losses                   |    |   | Value                    |   |   | Losses |   |   | Value |   |
|                                     |   |                     |    |   |                     |   |   |   |   |   |   |   |
| Securities      held to maturity:        |   |                     |    |   |                     |   |   |   |   |   |   |   |
| FNMA      pass-through                   |   |                     |    |   |                     |   |   |   |   |   |   |   |
| certificates                             |   | $                        | -       |   |                     | $      | - |   |   | $ | (479,332 | ) |   | $ | 19,757,076 |   |
| FHLMC      pass-through                  |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| certificates                             |   |                     | -       |   |                     |   | - |   |   |   | (431,116 | ) |   |   | 13,852,940 |   |
| Collateralized      mortgage             |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| obligations                              |   |                     | -       |   |                     |   | - |   |   |   | (373,493 | ) |   |   | 11,060,065 |   |
|                                     |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities held to maturity   |   |                     | -       |   |                     |   | - |   |   |   | (1,283,941 | ) |   |   | 44,670,081 |   |
|                                     |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Securities      available for sale:      |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| GNMA      pass-through                   |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| certificates                             |   |                     | (239    | )      |                     |   | 48,119 |   |   |   | - |   |   |   | - |   |
| FNMA      pass-through                   |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| certificates                             |   |                     | (71,928 | )      |                     |   | 7,898,284 |   |   |   | (34,069 | ) |   |   | 5,342,063 |   |
| FHLMC      pass-through                  |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| certificates                             |   |                     | (9,753  | )      |                     |   | 5,321,623 |   |   |   | (627,744 | ) |   |   | 37,492,936 |   |
| Collateralized      mortgage             |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| obligations                              |   |                     | -       |   |                     |   | - |   |   |   | (53,963 | ) |   |   | 4,140,352 |   |
|                                     |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities available for sale |   |                     | (81,920 | )      |                     |   | 13,268,026 |   |   |   | (715,776 | ) |   |   | 46,975,351 |   |
|                                     |   |                     |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total                                    |   | $                        | (81,920 | )      |                     | $      | 13,268,026 |   |   | $ | (1,999,717 | ) |   | $ | 91,645,432 |   |

|   | 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 September 30, 2008, mortgage-backed      securities in a gross unrealized loss position for twelve months or longer      consisted of 22 securities having an aggregate depreciation of 3.9% from      the Company’s amortized cost basis. Mortgage-backed securities in a gross      unrealized loss position for less than twelve months at September 30,      2008, consisted of 27 securities having an aggregate depreciation of 1.2%      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 and the current market      environment. 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 and the market environment improves. The      Company has the intent and ability to hold each of these investments for      the time necessary to recover itscost. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 4.     | LOANS      RECEIVABLE - NET                    |
|--------|------------------------------------------------|
|   |                                           |
|   | Loans      receivable consist of thefollowing: |

|                                         |   | September      30, 2008 |        |   | December      31, 2007 |   |
|----------------------------------------------|--------|-------------------------|-------------|--------|------------------------|--------|
|                                         |   |                    |        |   |                   |   |
|                                         |   |                    |        |   |                   |   |
| One-to      four-family residential          |   | $                       | 450,256,262 |   |                   | $      | 424,141,281 |   |
| Multi-family      residential and commercial |   |                    | 88,829,229  |   |                   |   | 77,137,944 |   |
| Construction                                 |   |                    | 203,263,894 |   |                   |   | 168,711,266 |   |
| Home      equity lines of credit             |   |                    | 23,109,943  |   |                   |   | 33,091,306 |   |
| Commercial      business loans               |   |                    | 20,482,563  |   |                   |   | 29,373,909 |   |
| Consumer      non-real estate loans          |   |                    | 2,598,848   |   |                   |   | 7,913,758 |   |
|                                         |   |                    |        |   |                   |   |   |   |
| Total      loans                             |   |                    | 788,540,739 |   |                   |   | 740,369,464 |   |
|                                         |   |                    |        |   |                   |   |   |   |
| Less:                                        |   |                    |        |   |                   |   |   |   |
| Construction      loans in process           |   |                    | (60,090,071 | )      |                   |   | (55,798,973 | ) |
| Deferred      loan fees, net                 |   |                    | (505,279    | )      |                   |   | (721,257 | ) |
| Allowance      for loan losses               |   |                    | (2,890,189  | )      |                   |   | (1,811,121 | ) |
|                                         |   |                    |        |   |                   |   |   |   |
| Loans      receivable—net              |   | $                       | 725,055,200 |   |                   | $      | 682,038,113 |   |

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

|                                 |   | Nine      Months Ended  |      |   | Year      Ended        |   |
|--------------------------------------|--------|-------------------------|-----------|--------|------------------------|--------|
|                                 |   | September      30, 2008 |      |   | December      31, 2007 |   |
|                                 |   |                    |      |   |                   |   |
| Balance—beginning      of year |   | $                       | 1,811,121 |   |                   | $      | 1,602,613 |   |
| Provision      for loan losses       |   |                    | 1,035,360 |   |                   |   | 457,192 |   |
| Charge-offs                          |   |                    | (43,624   | )      |                   |   | (275,321 | ) |
| Recoveries                           |   |                    | 87,332    |   |                   |   | 26,637 |   |
| Recoveries/(charge-offs)—net   |   |                    | 43,708    |   |                   |   | (248,684 | ) |
|                                 |   |                    |      |   |                   |   |   |   |
| Balance—end      of period     |   | $                       | 2,890,189 |   |                   | $      | 1,811,121 |   |

|   | 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. Loans collectively evaluated for impairment include      smaller balance commercial real estate loans, residential real estate      loans and consumer loans. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | As      of September 30, 2008 and December 31, 2007, the recorded investment in      loans that were considered to be impaired was as  follows. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|                                     |   | September      30, |       |   | December      31, |   |
|------------------------------------------|--------|--------------------|------------|--------|-------------------|--------|
|                                     |   | 2008               |       |   | 2007              |   |
|                                     |   |               |       |   |              |   |
| Impaired      collateral-dependent loans |   | $                  | 21,262,518 |   |              | $      | 1,445,255 |   |
|                                     |   |               |       |   |              |   |   |   |
| Average      balance of impaired loans   |   | $                  | 12,218,293 |   |              | $      | 3,996,347 |   |
|                                     |   |               |       |   |              |   |   |   |
| Interest      income recognized on       |   |               |       |   |              |   |   |   |
| impaired      loans                      |   | $                  | 278,550    |   |              | $      | 175,950 |   |

|   | Our      impaired loans at September 30, 2008 consist of six construction loans and      two commercial real estate loans to three borrowers with a combined      balance of $21.3 million. At September 30, 2008, our largest single group      of impaired loans was comprised of three construction loans with an      aggregate outstanding balance to the Bank of $15.1 million at such      date.  These three loans, which were more than 90 days past due      and on non-accrual status at September 30, 2008, are for the construction      of a 40-unit, high rise residential condominium project in Center City,      Philadelphia. As of September 30, 2008, $836,000 of our allowance for loan      losses was allocated to these loans. Subsequent to September 30, 2008,      based on a recently completed examination by the FDIC and management’s      further review of this loan relationship, we determined to increase our      allowance for loan losses allocated to these loans by $2.5 million through      a provision for loan losses to be recognized in the quarter ending      December 31, 2008.  Our second largest impaired loan at      September 30, 2008 is a $3.6 million construction loan secured by a second      mortgage on a 10-unit condominium project located in Philadelphia. This      loan was also more than 90 days past due at September 30, 2008, but      remained on accrual status, because all past due interest was brought      current in October. Based on a recently received appraisal update on this      project, we have determined to increase our allowance for loan losses      allocated to this loan by an additional $3.4 million through a provision      for loan losses in the quarter ending December 31, 2008.  We had      allocated $180,000 of our allowance for loan losses to this project as of      September 30, 2008. At September 30, 2008 and December 31, 2007, our      non-performing loans amounted to 3.02% and 0.23% of loans receivable,      respectively, and our allowance for loan losses amounted to 13.1% and      116.8% of non-performing loans, respectively. In light of current economic      and market conditions, we expect that an additional provision for loan      losses will be required in the fourth quarter of 2008 as a result of the      ongoing review of the credit quality and loss characteristics of our loan      portfolio. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Non-accrual      loans at September 30, 2008 and December 31, 2007, amounted to      approximately $15.8 million and $1.4 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 120 days delinquent and not      well secured and in the process of collection. Other consumer loans are      typically charged off when they become 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 September 30, 2008 and December 31, 2007, amounted to      approximately $22.0 million and $1.6 million, respectively. Our      non-performing loans at September 30, 2008 consist primarily of the four      construction loans discussed above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

----

|   | 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      nine months ended September 30, 2008, $279,000 in cash basis interest      income was recognized on impaired and non-accrual loans. For the nine      months ended September 30, 2007, no cash basis interest income was      recognized on impaired and non-accrual loans. Interest income foregone on      non-accrual loans for the nine months ended September 30, 2008 and 2007      was approximately $308,000 in each period. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 5.     | DEFERRED      INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Items      that gave rise to significant portions of the deferred tax balances are as      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|                                                  |   | September      30, 2008 |      |   | December      31, 2007 |   |
|-------------------------------------------------------|--------|-------------------------|-----------|--------|------------------------|--------|
|                                                  |   |                    |      |   |                   |   |
| Deferred      tax assets:                             |   |                    |      |   |                   |   |
| Allowance      for loan losses                        |   | $                       | 982,664   |   |                   | $      | 615,781 |   |
| Deferred      compensation                            |   |                    | 1,728,183 |   |                   |   | 1,624,419 |   |
| Unrealized      loss on securities available-for-sale |   |                    | 139,457   |   |                   |   | - |   |
| Write-down      of impaired investments               |   |                    | 112,379   |   |                   |   | - |   |
| Property      and equipment                           |   |                    | 123,819   |   |                   |   | 90,375 |   |
|                                                  |   |                    |      |   |                   |   |   |   |
| Total      deferred tax assets                        |   |                    | 3,086,502 |   |                   |   | 2,330,575 |   |
|                                                  |   |                    |      |   |                   |   |   |   |
| Deferred      tax liabilities:                        |   |                    |      |   |                   |   |   |   |
| Unrealized      gain on securities available-for-sale |   |                    | -         |   |                   |   | (102,538 | ) |
| Deferred      loan fees, net                          |   |                    | (321,295  | )      |                   |   | (319,199 | ) |
| Other                                                 |   |                    | (14,936   | )      |                   |   | (16,787 | ) |
|                                                  |   |                    |      |   |                   |   |   |   |
| Total      deferred tax liabilities                   |   |                    | (336,231  | )      |                   |   | (438,524 | ) |
|                                                  |   |                    |      |   |                   |   |   |   |
| Net      deferred tax asset                           |   | $                       | 2,750,271 |   |                   | $      | 1,892,051 |   |

| 6.     | PENSION,      PROFIT SHARING AND STOCK COMPENSATION 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, a defined benefit pension plan      for directors and selected executive officers and a 401(k) retirement plan      for substantially all of its employees. Further detail of these plans can      be obtained from the Company’s Annual Report on Form 10-K for the year      ended December 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | 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, during 2004 and 2005 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). 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 September 30, 2008, the      ESOP held approximately 1.7 million unallocated shares of Company common      stock with a fair value of $17.6 million and approximately 218,000      allocated shares with a fair value of $2.2 million. During the three-month      periods ended September 30, 2008 and 2007, approximately 24,000 and 33,000      shares, respectively, were committed to be released to participants,      resulting in recognition of approximately $234,000 and $310,000 in      compensation expense, respectively. During the nine-month periods ended      September 30, 2008 and 2007, approximately 72,000 and 63,000 shares,      respectively, were committed to be released to participants, resulting in      recognition of approximately $711,000 and $669,000 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 “2005 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 2005 RRP were converted to shares of Company common stock. Certain      senior officers of the Bank have been designated as Trustees of the 2005      RRP. The 2005 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 2005 RRP, the 2005 Recognition Plan Trust (the “2005 RRP      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 2005 RRP Trust to fund the purchase      of these shares. No additional purchases are expected to be made by the      2005 RRP Trust under this plan. As of September 30, 2008, pursuant to the      terms of the plan, 452,856 shares acquired by the 2005 RRP Trust have been      granted to certain officers, employees and directors of the Company, with      4,200 shares remaining available for future grant. 2005 RRP shares      generally vest at the rate of 20% per year over five  years. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In      January 2008, the shareholders of the Company approved the adoption of the      2007 Recognition and Retention Plan (the “2007 RRP”). In order to fund the      2007 RRP, the 2007 Recognition Plan Trust (the “2007 RRP Trust”) acquired      520,916 shares of the Company’s common stock in the open market for      approximately $5.4 million, an average price of $10.28 per share. As of      September 30, 2008, pursuant to the terms of the plan, 485,700 shares      acquired by the 2007 RRP Trust have been granted to certain officers,      employees and directors of the Company, with 35,216 shares remaining      available for future grant. 2007 RRP shares generally vest at the rate of      20% per year over five years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | A      summary of the status of the shares under the 2005 and 2007 RRP as of      September 30, 2008 and 2007, and changes during the nine months ended      September 30, 2008 and 2007 are presented below. The number of shares and      weighted average grant date fair value for the prior period have been      adjusted for the exchange ratio as a result of our second-step      conversion:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

----

|                                        |   | Nine      Months Ended September 30, |    |
|---------------------------------------------|--------|--------------------------------------|---------|
|                                        |   | 2008                                 |    |   | 2007 |   |
|                                        |   | Number      ofshares                 |    |   | Weightedaverage      grantdate      fair value |   |   | Number      ofshares |   |   | Weightedaverage      grantdate      fair value |   |
|                                        |   |                                 |    |   |   |   |   |   |   |   |   |   |
| Nonvested      at the beginning of the year |   |                                 | 274,874 |   |   | $ | 7.54 |   |   |   | 366,285 |   |   | $ | 7.54 |   |
| Granted                                     |   |                                 | 524,200 |   |   |   | 9.12 |   |   |   | - |   |   |   | - |   |
| Vested                                      |   |                                 | (89,971 | ) |   |   | 7.51 |   |   |   | (89,971 | ) |   |   | 7.51 |   |
| Forfeited                                   |   |                                 | (42,700 | ) |   |   | 8.69 |   |   |   | - |   |   |   | - |   |
|                                        |   |                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonvested      at the end of the period     |   |                                 | 666,403 |   |   | $ | 8.71 |   |   |   | 276,314 |   |   | $ | 7.55 |   |

|   | 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 nine-month periods ended      September 30, 2008, approximately 46,000 and 86,000 shares, respectively,      were amortized to expense, based on the proportional vesting of the      awarded shares, resulting in recognition of approximately $384,000 and      $1.1 million in compensation expense, respectively. A tax benefit of      approximately $181,000 and $423,000, respectively, was recognized during      these periods. During the three- and nine-month periods ended September      30, 2007, approximately 23,000 and 69,000 shares, respectively, were      amortized to expense, based on the proportional vesting of the awarded      shares, resulting in recognition of approximately $172,000 and $516,000 in      compensation expense, respectively. A tax benefit of approximately      $130,000 and $247,000, respectively, was recognized during these periods.      As of September 30, 2008, approximately $4.9 million in additional      compensation expense will be recognized over the remaining lives of the      RRP awards. At September 30, 2008, the weighted average remaining lives of      the RRP awards was approximately 3.7 years. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Stock      Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | In      June 2005, the shareholders of Abington Community Bancorp also approved      the adoption of the 2005 Stock Option Plan (the “2005 Option Plan”). As a      result of the second-step conversion, the 2005 Option Plan became a stock      benefit plan of the Company. Unexercised options which were previously      granted under the 2005 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 2005 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 September 30, 2008, a total of 1,142,640 shares of      common stock have been reserved for future issuance pursuant to the 2005      Option Plan of which 19,900 shares remain available for    grant.                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | In      January 2008, the shareholders of the Company also approved the adoption      of the 2007 Stock Option Plan (the “2007 Option Plan”). 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 September 30, 2008, a total of 1,302,990 shares of      common stock have been reserved for future issuance pursuant to the 2007      Option Plan of which 160,490 shares remain available for future      grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | A      summary of the status of the Company’s stock options under the 2005 and      2007 Option Plans as of September 30, 2008 and 2007, and changes during      the nine months ended September 30, 2008 and 2007 are presented below. The      number of options and weighted average exercise price for the prior period      have been adjusted for the exchange ratio as a result of our second-step      conversion:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

----

|                                          |   | Nine      Months Ended September 30, |      |
|-----------------------------------------------|--------|--------------------------------------|-----------|
|                                          |   | 2008                                 |      |   | 2007 |   |
|                                          |   | Number      ofshares                 |      |   | Weightedaverageexercise      price |   |   | Number      ofshares |   |   | Weightedaverageexercise      price |   |
|                                          |   |                                 |      |   |   |   |   |   |   |   |   |   |
| Outstanding      at the beginning of the year |   |                                 | 1,135,180 |   |   | $ | 7.74 |   |   |   | 1,065,680 |   |   | $ | 7.62 |   |
| Granted                                       |   |                                 | 1,272,500 |   |   |   | 9.12 |   |   |   | 69,500 |   |   |   | 10 |   |
| Exercised                                     |   |                                 | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Forfeited                                     |   |                                 | (142,440  | ) |   |   | 8.69 |   |   |   | - |   |   |   | - |   |
|                                          |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding      at the end of the period     |   |                                 | 2,265,240 |   |   | $ | 8.19 |   |   |   | 1,135,180 |   |   | $ | 7.74 |   |
|                                          |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercisable      at the end of the period     |   |                                 | 635,772   |   |   | $ | 7.59 |   |   |   | 408,736 |   |   | $ | 7.51 |   |

|   | The      following table summarizes all stock options outstanding (as adjusted for      the exchange ratio) under the Option Plan as of September 30,      2008: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                 |   |   | Options      Outstanding |      |   | Options      Exercisable           |   |
|----------------------|--------|--------|--------------------------|-----------|--------|------------------------------------|--------|
| Exercise      Price  |   |   | Number      ofShares     |      |   | WeightedAverageExercise      Price |   |   | Weighted      Average RemainingContractual      Life |   |   | Number      ofShares |   |   | WeightedAverageExercise      Price |   |
|                 |   |   |                     |      |   |                               |   |   | (in      years) |   |   |   |   |   |   |   |
|                 |   |   |                     |      |   |                               |   |   |   |   |   |   |   |   |   |   |
| $7.51                |   |   |                     | 980,800   |   |                               | $      | 7.51 |   |   |   | 7.0 |   |   |   | 610,944 |   |   | $ | 7.51 |   |
| 8.35                 |   |   |                     | 7,200     |   |                               |   | 8.35 |   |   |   | 7.4 |   |   |   | 2,880 |   |   |   | 8.35 |   |
| 9.11                 |   |   |                     | 1,142,500 |   |                               |   | 9.11 |   |   |   | 9.6 |   |   |   | - |   |   |   | - |   |
| 9.63                 |   |   |                     | 94,500    |   |                               |   | 9.63 |   |   |   | 9.2 |   |   |   | 13,900 |   |   |   | 9.63 |   |
| 10.18                |   |   |                     | 40,240    |   |                               |   | 10.18 |   |   |   | 8.4 |   |   |   | 8,048 |   |   |   | 10.18 |   |
|                 |   |   |                     |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                |   |   |                     | 2,265,240 |   |                               | $      | 8.19 |   |   |   | 8.4 |   |   |   | 635,772 |   |   | $ | 7.59 |   |
|                 |   |   |                     |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Intrinsic      value |   |   | $                        | 3,772,862 |   |                               |   |   |   |   |   |   |   |   | $ | 1,606,472 |   |   |   |   |   |

|   | The      estimated fair value of options granted in January 2008 was $2.13 per      share. The fair value was estimated on the date of grant in accordance      with SFAS No. 123R using the Black-Scholes Single Option Pricing Model      with the following weighted average assumptions  used: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Dividend      yield           | 1.88%             |
|-------------------------------|-------------------|
| Expected      volatility      | 23.25%            |
| Risk-free      interest rate  | 3.13      - 3.49% |
| Expected      life of options | 4 -      7 years  |

|   | The      dividend yield was calculated based on the dividend amount and stock price      existing at the grant date taking into consideration expected increases in      the dividend and stock price over the lives of the options. The actual      dividend yield may differ from this assumption. The risk-free interest      rate used was based on the rates of treasury securities with maturities      equal to the expected lives of theoptions. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | As      the Company has a limited history of granting option awards, management      made certain assumptions regarding the exercise behavior of recipients      without the use of any prior exercise behavior as a      basis.  Assumptions of exercise behavior were made on an      individual basis for directors and executive officers and general      assumptions were made for the remainder of employees. In making these      assumptions, management considered the age and financial status of      recipients in addition to other qualitative factors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The      expected volatility was based on and calculated from the historical      volatility of our stock, as it was determined that this would be the most      reliable estimate of future stock volatility. The actual future volatility      may differ from our historical volatility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | During      the three and nine months ended September 30, 2008, approximately $221,000      and $638,000, respectively, was recognized in compensation expense for the      Option Plans. A tax benefit of approximately $22,000 and $62,000,      respectively, was recognized during each of these periods. During the      three and nine months ended September 30, 2007, approximately $101,000 and      $296,000, respectively, was recognized in compensation expense for the      Option Plans. A tax benefit of approximately $9,000 and $27,000,      respectively, was recognized during each of these periods. At September      30, 2008, approximately $3.0 million in additional compensation expense      for awarded options remained unrecognized. The weighted average period      over which this expense will be recognized is approximately 3.2      years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 7.     | COMMITMENTS      AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The      Bank had approximately $5.5 million in outstanding mortgage loan      commitments at September 30, 2008. The commitments are expected to be      funded within 90 days with all $5.5 million in fixed rate loans with      interest rates ranging from 5.75% to 6.50%. The Bank had approximately      $5.0 million in outstanding mortgage loan commitments at December 31,      2007. These loans were not originated for resale. Also outstanding at      September 30, 2008 and December 31, 2007, were unused lines of credit      totaling approximately $92.2 million and $65.2 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 September 30, 2008 and December 31, 2007, the Bank had      letters of credit outstanding of approximately $14.1 million and $17.2      million, respectively, of which $12.8 million and $15.8 million,      respectively, were standby letters of credit.  At September 30,      2008 and December 31, 2007, the uncollateralized portion of the letters of      credit extended by the Bank was approximately $24,000 and $97,000,      respectively. At September 30, 2008 and December 31, 2007, all of the      uncollateralized letters of credit were 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 Bank’s sales of whole loans and      participation interests. At September 30, 2008, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 8.     | FAIR      VALUE MEASUREMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The      Company uses fair value measurements to record fair value adjustments to      certain assets to determine fair value disclosures. Investment and      mortgage-backed securities available for sale are recorded at fair value      on a recurring basis. Additionally, from time to time, the Company may be      required to record at fair value other assets on a nonrecurring basis,      such as impaired loans, real estate owned and certain other assets. These      nonrecurring fair value adjustments typically involve application of      lower-of-cost-or-market accounting or write-downs of individual      assets.                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | Under      SFAS No. 157, Fair Value      Measurements, the Company groups its assets at fair value in      three  levels, based on the markets in which the assets are      traded and the reliability of the assumptions used to determine fair      value. These levels are:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | ●                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Level      1 – Valuation is based upon quoted prices for identical instruments traded      in active markets. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|   | ●                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Level      2 – Valuation is based upon quoted prices for similar instruments in      active markets, quoted prices for identical or similar instruments in      markets that are not active, and model-based valuation techniques for      which all significant assumptions are observable in the      market. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|   | ●                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Level      3 – Valuation is generated from model-based techniques that use      significant assumptions not observable in the market. These unobservable      assumptions reflect the Company’s own estimates of assumptions that market      participants would use in pricing the asset. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|   | Under      SFAS No. 157, the Company bases its fair values on the price that would be      received to sell an asset or paid to transfer a liability in an orderly      transaction between market participants at the measurement date. It is our      policy to maximize the use of observable inputs and minimize the use of      unobservable inputs when developing fair value measurements, in accordance      with the fair value hierarchy in SFAS No. 157.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | Fair      value measurements for assets where there exists limited or no observable      market data and, therefore, are based primarily upon the Company’s or      other third-party’s estimates, are often calculated based on the      characteristics of the asset, the economic and competitive environment and      other such factors. Therefore, the results cannot be determined with      precision and may not be realized in an actual sale or immediate      settlement of the asset. Additionally, there may be inherent weaknesses in      any calculation technique, and changes in the underlying assumptions used,      including discount rates and estimates of future cash flows, that could      significantly affect the results of current or future valuations. At      September 30, 2008, the Company did not have any assets that were measured      at fair value on a recurring basis that use Level 3      measurements. |

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|   | Following      is a description of valuation methodologies used for assets recorded at      fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Investment      and Mortgage-backed Securities Available for Sale—Investment      and mortgage-backed securities available for sale are recorded at fair      value on a recurring basis. Fair value measurements for these securities      are typically obtained from independent pricing services that we have      engaged for this purpose. When available, we, or our independent pricing      service, use quoted market prices to measure fair value. If market prices      are not available, fair value measurement is based upon models that      incorporate available trade, bid and other market information and for      structured securities, cash flow and, when available, loan performance      data. Because many fixed income securities do not trade on a daily basis,      our independent pricing service’s applications apply available information      as applicable through processes such as benchmark curves, benchmarking of      like securities, sector groupings and matrix pricing to prepare      evaluations. For each asset class, pricing applications and models are      based on information from market sources and integrate relevant credit      information. All of our securities available for sale are valued using      either of the foregoing methodologies to determine fair value adjustments      recorded to our financial statements. Level 1 securities include equity      securities such as common stock and mutual funds traded on active      exchanges. Level 2 securities include corporate bonds, agency bonds,      municipal bonds, certificates of deposit, mortgage-backed securities, and      collateralized mortgage obligations. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | 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. We      establish an allowance on certain impaired loans 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. Fair value is generally based upon independent      market prices or appraised value of the collateral. Our appraisals are      typically performed by independent third party appraisers. For appraisals      of commercial and construction properties, comparable properties within      the area may not be available. In such circumstances, our appraisers will      rely on certain judgments in determining how a specific property compares      in value to other properties that are not identical in design or in      geographic area. Our impaired loans at September 30, 2008, are secured by      commercial and construction properties for which there are no comparable      properties available and, accordingly, we classify impaired loans as Level      3. The valuation allowances recognized during the quarter are discussed in      Note 4.                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Real Estate      Owned—Real estate owned includes foreclosed properties securing      commercial and construction loans. Real estate properties acquired through      foreclosure are initially recorded at the fair value of the property at      the date of foreclosure. After foreclosure, valuations are periodically      performed by management and the real estate is carried at the lower of      cost or fair value less estimated costs to sell. As is the case for      collateral of impaired loans, fair value is generally based upon      independent market prices or appraised value of the collateral. Our      appraisal process for real estate owned is identical to our appraisal      process for the collateral of impaired loans. Our current portfolio of      real estate owned is comprised of commercial and construction properties      for which comparable properties within the area are not available. Our      appraisers have relied on certain judgments in determining how our      specific properties compare in value to other properties that are not      identical in design or in geographic area and, accordingly, we classify      real estate owned as Level 3. Our increase in real estate owned during the      quarter was due solely to additions to that category of asset. No      valuation allowances or changes in value were recognized during the      quarter.                                                                                                                                                                                                                                                                                     |

----

|   | The      table below presents the balances of asset measured at fair value on a      recurring basis: |
|--------|-------------------------------------------------------------------------------------------------------|

|                            |   | September      30, 2008 |        |
|---------------------------------|--------|-------------------------|-------------|
|                            |   |                    |        |   |   |   |   |   |   |   |   |   |
|                            |   | Total                   |        |   | Level      1 |   |   | Level      2 |   |   | Level      3 |   |
|                            |   |                    |        |   |   |   |   |   |   |   |   |   |
| Investments      securities     |   |                    |        |   |   |   |   |   |   |   |   |   |
| available      for sale         |   | $                       | 78,441,097  |   |   | $ | 2,726,219 |   |   | $ | 75,714,878 |   |   | $ | - |   |
| Mortgage-backed      securities |   |                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available      for sale         |   |                    | 119,886,015 |   |   |   | - |   |   |   | 119,886,015 |   |   |   | - |   |
|                            |   |                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                           |   | $                       | 198,327,112 |   |   | $ | 2,726,219 |   |   | $ | 195,600,893 |   |   | $ | - |   |

|   | For      assets measured at fair value on a nonrecurring basis in 2008 that were      still held at the end of the period, the following table provides the      level of valuation assumptions used to determine each adjustment an the      carrying value of the related individual assets or portfolios at September      30, 2008: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                   |   | September      30, 2008 |       |
|------------------------|--------|-------------------------|------------|
|                   |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
|                   |   |                    |       |   |   |   |   |   |   |   |   |   |   | Total |   |
|                   |   |                    |       |   |   |   |   |   |   |   |   |   |   | Gains |   |
|                   |   | Total                   |       |   | Level      1 |   |   | Level      2 |   |   | Level      3 |   |   | (Losses) |   |
|                   |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired      loans    |   | $                       | 21,262,518 |   |   | $ | - |   |   | $ | - |   |   | $ | 21,262,518 |   |   | $ | - |   |
| Real      estate owned |   |                    | 3,080,714  |   |   |   | - |   |   |   | - |   |   |   | 3,080,714 |   |   |   | - |   |
|                   |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  |   | $                       | 24,343,232 |   |   | $ | - |   |   | $ | - |   |   | $ | 24,343,232 |   |   | $ | - |   |

----

----

----

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|   | ● | Level      1 – Valuation is based upon quoted prices for identical instruments traded      in active markets.                                                                                                                                                                                                   |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                  |
|   | ● | Level      2 – Valuation is based upon quoted prices for similar instruments in      active markets, quoted prices for identical or similar instruments in      markets that are not active, and model-based valuation techniques for      which all significant assumptions are observable in the      market. |
|   |    |                                                                                                                                                                                                                                                                                                                  |
|   | ● | Level      3 – Valuation is generated from model-based techniques that use      significant assumptions not observable in the market. These unobservable      assumptions reflect the Company’s own estimates of assumptions that market      participants would use in pricing theasset.                 |

----

----

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|                                 |   | Actual Ratios At       |   |   |                  |   |   |                    |   |
|--------------------------------------|--------|------------------------|--------|--------|-----------------------|--------|--------|-------------------------|--------|
|                                 |   | September      30,2008 |   |   | December      31,2007 |   |   | Regulatory      Minimum |   |   | To      Be Well Capitalized |   |
| Capital      Ratios:                 |   |                   |   |   |                  |   |   |                    |   |   |   |   |
| Tier      1 leverage ratio           |   |                   | 15.03  | %      |                  |   | 15.45  | %                       |   |   | 4.00 | % |   |   | 5.00 | % |
| Tier      1 risk-based capital ratio |   |                   | 23.11  |   |                  |   | 24.22  |                    |   |   | 4.00 |   |   |   | 6.00 |   |
| Total      risk-based capital ratio  |   |                   | 23.50  |   |                  |   | 24.49  |                    |   |   | 8.00 |   |   |   | 10.00 |   |

----

----

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|                                                      |   |                        |    |   | Amount      of Commitment Expiration - Per Period |   |
|-----------------------------------------------------------|--------|-----------------------------|---------|--------|---------------------------------------------------|--------|
|                                                      |   | Total      AmountsCommitted |    |   | To1      Year                                     |   |   | Over      1 to3      Years |   |   | Over      4 to5      Years |   |   | After      5Years |   |
|                                                      |   | (In      Thousands)         |    |
| Letters      of credit                                    |   | $                           | 14,086  |   |                                              | $      | 13,564 |   |   | $ | 517 |   |   | $ | -- |   |   | $ | 5 |   |
| Recourse      obligations on loans sold              |   |                        | 185     |   |                                              |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 185 |   |
| Commitments      to originate loans                       |   |                        | 5,532   |   |                                              |   | 5,532 |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Unused      portion of home equity lines of credit        |   |                        | 23,651  |   |                                              |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 23,651 |   |
| Unused      portion of commercial lines of credit         |   |                        | 68,524  |   |                                              |   | 68,524 |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Undisbursed      portion of construction loans in process |   |                        | 60,090  |   |                                              |   | 19,177 |   |   |   | 40,913 |   |   |   | -- |   |   |   | -- |   |
| Total      commitments                                    |   | $                           | 172,068 |   |                                              | $      | 106,797 |   |   | $ | 41,430 |   |   | $ | -- |   |   | $ | 23,841 |   |

|                               |   |                |    |   | Payments      Due By Period |   |
|------------------------------------|--------|---------------------|---------|--------|-----------------------------|--------|
|                               |   | Total               |    |   | To1      Year               |   |   | Over      1 to3      Years |   |   | Over      4 to5      Years |   |   | After      5Years |   |
|                               |   | (In      Thousands) |    |
| Certificates      of deposit       |   | $                   | 397,801 |   |                        | $      | 311,797 |   |   | $ | 56,637 |   |   | $ | 14,293 |   |   | $ | 15,074 |   |
| FHLB      advances                 |   |                | 252,043 |   |                        |   | 113,128 |   |   |   | 65,651 |   |   |   | 23,867 |   |   |   | 49,397 |   |
| Repurchase      agreements         |   |                | 20,407  |   |                        |   | 20,407 |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Total      debt                    |   |                | 272,450 |   |                        |   | 133,535 |   |   |   | 65,651 |   |   |   | 23,867 |   |   |   | 49,397 |   |
| Operating      lease obligations   |   |                | 7,360   |   |                        |   | 845 |   |   |   | 1,745 |   |   |   | 1,512 |   |   |   | 3,258 |   |
| Total      contractual obligations |   | $                   | 677,611 |   |                        | $      | 446,177 |   |   | $ | 124,033 |   |   | $ | 39,672 |   |   | $ | 67,729 |   |

----

----

|                                                   |   | Three      Months Ended September 30, |      |
|--------------------------------------------------------|--------|---------------------------------------|-----------|
|                                                   |   | 2008                                  |      |   | 2007 |   |
|                                                   |   | AverageBalance                        |      |   | Interest |   |   | AverageYield/Rate |   |   | AverageBalance |   |   | Interest |   |   | AverageYield/Rate |   |
|                                                   |   | (Dollars      in Thousands)           |      |
| Interest-earning      assets:                          |   |                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment      securities(1)                          |   | $                                     | 102,286   |   |   | $ | 1,158 |   |   |   | 4.53 | % |   | $ | 105,447 |   |   | $ | 1,307 |   |   |   | 4.96 | % |
| Mortgage-backed      securities                        |   |                                  | 197,102   |   |   |   | 2,375 |   |   |   | 4.82 |   |   |   | 125,382 |   |   |   | 1,359 |   |   |   | 4.34 |   |
| Loans      receivable(2)                               |   |                                  | 699,101   |   |   |   | 10,267 |   |   |   | 5.87 |   |   |   | 660,290 |   |   |   | 11,141 |   |   |   | 6.75 |   |
| Other      interest-earning assets                     |   |                                  | 36,102    |   |   |   | 207 |   |   |   | 2.29 |   |   |   | 98,616 |   |   |   | 1,088 |   |   |   | 4.41 |   |
| Total      interest-earning assets                     |   |                                  | 1,034,591 |   |   |   | 14,007 |   |   |   | 5.42 |   |   |   | 989,735 |   |   |   | 14,895 |   |   |   | 6.02 |   |
| Cash      and non-interest bearing balances            |   |                                  | 22,782    |   |   |   |   |   |   |   |   |   |   |   | 24,488 |   |   |   |   |   |   |   |   |   |
| Other      non-interest-earning assets                 |   |                                  | 70,247    |   |   |   |   |   |   |   |   |   |   |   | 43,229 |   |   |   |   |   |   |   |   |   |
| Total      assets                                      |   | $                                     | 1,127,620 |   |   |   |   |   |   |   |   |   |   | $ | 1,057,452 |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                     |   |                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                              |   |                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings      and money market accounts                 |   | $                                     | 125,169   |   |   |   | 518 |   |   |   | 1.66 |   |   | $ | 95,429 |   |   |   | 321 |   |   |   | 1.35 |   |
| Checking      accounts                                 |   |                                  | 64,096    |   |   |   | 5 |   |   |   | 0.03 |   |   |   | 59,928 |   |   |   | 10 |   |   |   | 0.07 |   |
| Certificate      accounts                              |   |                                  | 401,901   |   |   |   | 3,320 |   |   |   | 3.30 |   |   |   | 405,204 |   |   |   | 5,093 |   |   |   | 5.03 |   |
| Total      deposits                                    |   |                                  | 591,166   |   |   |   | 3,843 |   |   |   | 2.60 |   |   |   | 560,561 |   |   |   | 5,424 |   |   |   | 3.87 |   |
| FHLB      advances                                     |   |                                  | 210,680   |   |   |   | 2,342 |   |   |   | 4.45 |   |   |   | 170,770 |   |   |   | 2,053 |   |   |   | 4.81 |   |
| Other      borrowings                                  |   |                                  | 21,705    |   |   |   | 91 |   |   |   | 1.68 |   |   |   | 23,584 |   |   |   | 264 |   |   |   | 4.48 |   |
| Total      interest-bearing liabilities                |   |                                  | 823,551   |   |   |   | 6,276 |   |   |   | 3.05 |   |   |   | 754,915 |   |   |   | 7,741 |   |   |   | 4.10 |   |
| Non-interest-bearing      liabilities:                 |   |                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing      demand accounts              |   |                                  | 43,111    |   |   |   |   |   |   |   |   |   |   |   | 40,772 |   |   |   |   |   |   |   |   |   |
| Real      estate tax escrow accounts                   |   |                                  | 3,085     |   |   |   |   |   |   |   |   |   |   |   | 2,672 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                                 |   |                                  | 11,310    |   |   |   |   |   |   |   |   |   |   |   | 13,408 |   |   |   |   |   |   |   |   |   |
| Total      liabilities                                 |   |                                  | 881,057   |   |   |   |   |   |   |   |   |   |   |   | 811,767 |   |   |   |   |   |   |   |   |   |
| Stockholders’      equity                        |   |                                  | 246,563   |   |   |   |   |   |   |   |   |   |   |   | 245,685 |   |   |   |   |   |   |   |   |   |
| Total      liabilities and stockholders’ equity  |   | $                                     | 1,127,620 |   |   |   |   |   |   |   |   |   |   | $ | 1,057,452 |   |   |   |   |   |   |   |   |   |
| Net      interest-earning assets                       |   | $                                     | 211,040   |   |   |   |   |   |   |   |   |   |   | $ | 234,820 |   |   |   |   |   |   |   |   |   |
| Net      interest income; average Interest rate spread |   |                                  |      |   |   | $ | 7,731 |   |   |   | 2.37 | % |   |   |   |   |   | $ | 7,154 |   |   |   | 1.92 | % |
| Net      interest margin(3)                            |   |                                  |      |   |   |   |   |   |   |   | 2.99 | % |   |   |   |   |   |   |   |   |   |   | 2.89 | % |

| (1) | Investment      securities for the 2008 period include 126 tax-exempt municipal bonds with      an aggregate average balance of $38.6 million and an average yield of      3.9%. Investment securities for the 2007 period include 54 tax-exempt      municipal bonds with an aggregate average balance of $20.8 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.                                                                                                                                                                                                                                                                                                                                                                              |

----

----

----

|                                                   |   | Nine      Months Ended September 30, |      |
|--------------------------------------------------------|--------|--------------------------------------|-----------|
|                                                   |   | 2008                                 |      |   | 2007 |   |
|                                                   |   | AverageBalance                       |      |   | Interest |   |   | AverageYield/Rate |   |   | AverageBalance |   |   | Interest |   |   | AverageYield/Rate |   |
|                                                   |   | (Dollars      in Thousands)          |      |
| Interest-earning      assets:                          |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment      securities(1)                          |   | $                                    | 107,868   |   |   | $ | 3,690 |   |   |   | 4.56 | % |   | $ | 101,968 |   |   | $ | 3,550 |   |   |   | 4.64 | % |
| Mortgage-backed      securities                        |   |                                 | 172,752   |   |   |   | 5,920 |   |   |   | 4.57 |   |   |   | 128,998 |   |   |   | 4,160 |   |   |   | 4.30 |   |
| Loans      receivable(2)                               |   |                                 | 695,546   |   |   |   | 31,583 |   |   |   | 6.05 |   |   |   | 636,958 |   |   |   | 32,171 |   |   |   | 6.73 |   |
| Other      interest-earning assets                     |   |                                 | 49,570    |   |   |   | 1,031 |   |   |   | 2.77 |   |   |   | 62,483 |   |   |   | 1,903 |   |   |   | 4.06 |   |
| Total      interest-earning assets                     |   |                                 | 1,025,736 |   |   |   | 42,224 |   |   |   | 5.49 |   |   |   | 930,407 |   |   |   | 41,784 |   |   |   | 5.99 |   |
| Cash      and non-interest bearing balances            |   |                                 | 22,826    |   |   |   |   |   |   |   |   |   |   |   | 20,484 |   |   |   |   |   |   |   |   |   |
| Other      non-interest-earning assets                 |   |                                 | 63,104    |   |   |   |   |   |   |   |   |   |   |   | 35,392 |   |   |   |   |   |   |   |   |   |
| Total      assets                                      |   | $                                    | 1,111,666 |   |   |   |   |   |   |   |   |   |   | $ | 986,283 |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                     |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                              |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings      and money market accounts                 |   | $                                    | 111,498   |   |   |   | 1,278 |   |   |   | 1.53 |   |   | $ | 94,917 |   |   |   | 900 |   |   |   | 1.26 |   |
| Checking      accounts                                 |   |                                 | 62,470    |   |   |   | 14 |   |   |   | 0.03 |   |   |   | 58,575 |   |   |   | 18 |   |   |   | 0.04 |   |
| Certificate      accounts                              |   |                                 | 415,225   |   |   |   | 11,723 |   |   |   | 3.76 |   |   |   | 403,160 |   |   |   | 15,135 |   |   |   | 5.01 |   |
| Total      deposits                                    |   |                                 | 589,193   |   |   |   | 13,015 |   |   |   | 2.95 |   |   |   | 556,652 |   |   |   | 16,053 |   |   |   | 3.85 |   |
| FHLB      advances                                     |   |                                 | 196,684   |   |   |   | 6,755 |   |   |   | 4.58 |   |   |   | 181,004 |   |   |   | 6,529 |   |   |   | 4.81 |   |
| Other      borrowings                                  |   |                                 | 21,126    |   |   |   | 321 |   |   |   | 2.03 |   |   |   | 20,765 |   |   |   | 683 |   |   |   | 4.39 |   |
| Total      interest-bearing liabilities                |   |                                 | 807,003   |   |   |   | 20,091 |   |   |   | 3.32 |   |   |   | 758,421 |   |   |   | 23,265 |   |   |   | 4.09 |   |
| Non-interest-bearing      liabilities:                 |   |                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing      demand accounts              |   |                                 | 41,425    |   |   |   |   |   |   |   |   |   |   |   | 42,836 |   |   |   |   |   |   |   |   |   |
| Real      estate tax escrow accounts                   |   |                                 | 3,529     |   |   |   |   |   |   |   |   |   |   |   | 3,105 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                                 |   |                                 | 11,093    |   |   |   |   |   |   |   |   |   |   |   | 11,146 |   |   |   |   |   |   |   |   |   |
| Total      liabilities                                 |   |                                 | 863,050   |   |   |   |   |   |   |   |   |   |   |   | 815,508 |   |   |   |   |   |   |   |   |   |
| Stockholders’      equity                        |   |                                 | 248,616   |   |   |   |   |   |   |   |   |   |   |   | 170,775 |   |   |   |   |   |   |   |   |   |
| Total      liabilities and stockholders’ equity  |   | $                                    | 1,111,666 |   |   |   |   |   |   |   |   |   |   | $ | 986,283 |   |   |   |   |   |   |   |   |   |
| Net      interest-earning assets                       |   | $                                    | 218,733   |   |   |   |   |   |   |   |   |   |   | $ | 171,986 |   |   |   |   |   |   |   |   |   |
| Net      interest income; average Interest rate spread |   |                                 |      |   |   | $ | 22,133 |   |   |   | 2.17 | % |   |   |   |   |   | $ | 18,519 |   |   |   | 1.90 | % |
| Net      interest margin(3)                            |   |                                 |      |   |   |   |   |   |   |   | 2.88 | % |   |   |   |   |   |   |   |   |   |   | 2.65 | % |

| (4) | Investment      securities for the 2008 period include 126 tax-exempt municipal bonds with      an aggregate average balance of $34.2 million and an average yield of      3.9%. Investment securities for the 2007 period include 54 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. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | Includes      non-accrual loans during the respective periods.  Calculated net      of deferred fees and discounts and loans in process.                                                                                                                                                                                                                                                                                                            |
| (6) | Equals      net interest income divided by average interest-earning      assets.                                                                                                                                                                                                                                                                                                                                                                              |

----

----

|   | ● | 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.                                                                                                 |

----

----

|                                                                                                                               |   | 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                                                                                                              |   | $                           | 273,667  |   |                                      | $      | 57,170   |                                     |   | $      | 159,255                                   |   |   | $                          | 90,058  |   |        | $      | 132,489 |   |   | $ | 712,639 |   |
| Mortgage-backed      securities                                                                                                    |   |                        | 29,143   |   |                                      |   | 20,498   |                                     |   |   | 47,912                                    |   |   |                       | 29,825  |   |        |   | 77,765 |   |   |   | 205,143 |   |
| Investment      securities                                                                                                         |   |                        | 11,484   |   |                                      |   | --       |                                     |   |   | 8,255                                     |   |   |                       | 42,645  |   |        |   | 36,877 |   |   |   | 99,261 |   |
| Other      interest-earning assets                                                                                                 |   |                        | 47,184   |   |                                      |   | --       |                                     |   |   | --                                        |   |   |                       | --      |   |        |   | -- |   |   |   | 47,184 |   |
| Total      interest-earning assets                                                                                            |   | $                           | 361,478  |   |                                      | $      | 77,668   |                                     |   | $      | 215,422                                   |   |   | $                          | 162,528 |   |        | $      | 247,131 |   |   | $ | 1,064,227 |   |
| Interest-bearing      liabilities:                                                                                                 |   |                        |     |   |                                      |   |     |                                     |   |   |                                      |   |   |                       |    |   |        |   |   |   |   |   |   |   |
| Savings      and money market accounts                                                                                             |   | $                           | 19,937   |   |                                      | $      | 19,937   |                                     |   | $      | 49,384                                    |   |   | $                          | 22,716  |   |        | $      | 19,739 |   |   | $ | 131,713 |   |
| Checking      accounts                                                                                                             |   |                        | --       |   |                                      |   | --       |                                     |   |   | --                                        |   |   |                       | --      |   |        |   | 63,269 |   |   |   | 63,269 |   |
| Certificate      accounts                                                                                                          |   |                        | 283,356  |   |                                      |   | 50,448   |                                     |   |   | 34,630                                    |   |   |                       | 14,293  |   |        |   | 15,074 |   |   |   | 397,801 |   |
| FHLB      advances                                                                                                                 |   |                        | 144,146  |   |                                      |   | 35,708   |                                     |   |   | 28,523                                    |   |   |                       | 12,889  |   |        |   | 30,777 |   |   |   | 252,043 |   |
| Other      borrowed money                                                                                                          |   |                        | 20,407   |   |                                      |   | --       |                                     |   |   | --                                        |   |   |                       | -       |   |        |   | -- |   |   |   | 20,407 |   |
| Total      interest-bearing liabilities                                                                                       |   | $                           | 467,846  |   |                                      | $      | 106,093  |                                     |   | $      | 112,537                                   |   |   | $                          | 49,898  |   |        | $      | 128,859 |   |   | $ | 865,233 |   |
|                                                                                                                               |   |                        |     |   |                                      |   |     |                                     |   |   |                                      |   |   |                       |    |   |        |   |   |   |   |   |   |   |
| Interest-earning      assets less interest-bearing liabilities                                                                |   | $                           | (106,368 | )      |                                      | $      | (28,425  | )                                        |   | $      | 102,885                                   |   |   | $                          | 112,630 |   |        | $      | 118,272 |   |   | $ | 198,994 |   |
|                                                                                                                               |   |                        |     |   |                                      |   |     |                                     |   |   |                                      |   |   |                       |    |   |        |   |   |   |   |   |   |   |
| Cumulative      interest-rate sensitivity gap(2)                                                                              |   | $                           | (106,368 | )      |                                      | $      | (134,793 | )                                        |   | $      | (31,908                                   | )      |   | $                          | 80,722  |   |        | $      | 198,994 |   |   |   |   |   |
|                                                                                                                               |   |                        |     |   |                                      |   |     |                                     |   |   |                                      |   |   |                       |    |   |        |   |   |   |   |   |   |   |
| Cumulative      interest-rate gap as a percentage of total assets at September 30,      2008                                       |   |                        | (9.17    | )%     |                                      |   | (11.61   | )%                                       |   |   | (2.75                                     | )%     |   |                       | 6.96    | %      |        |   | 17.15 | % |   |   |   |   |
|                                                                                                                               |   |                        |     |   |                                      |   |     |                                     |   |   |                                      |   |   |                       |    |   |        |   |   |   |   |   |   |   |
| Cumulative      interest-earning assets as a percentage of cumulative      interest-bearing liabilities at September 30, 2008 |   |                        | 77.26    | %      |                                      |   | 76.51    | %                                        |   |   | 95.35                                     | %      |   |                       | 110.96  | %      |        |   | 123.00 | % |   |   |   |   |

|   | (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-bearingliabilities.                                                                                               |

----

| PART      II | OTHER      INFORMATION |   |
|--------------|------------------------|--------|
|         |                   |
| ITEM      1. | LEGAL      PROCEEDINGS |

|   | Not      applicable. |
|--------|----------------------|

| ITEM      1A. | RISK      FACTORS |
|---------------|-------------------|

|   | There      have been no material changes from the risk factors disclosed in the      Company’s Annual Report on Form 10-K for the year ended December 31,      2007. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM      2. | UNREGISTERED      SALES OF EQUITY SECURITIES AND USE OFPROCEEDS |
|--------------|-----------------------------------------------------------------|

| (a)    | Not      applicable.                |
|--------|-------------------------------------|
|   |                                |
| (b)    | Not      applicable.                |
|   |                                |
| (c)    | Purchases      of Equity Securities |

----

| Period                                      |   | TotalNumber      ofSharesPurchased |    |   | AveragePrice      Paidper      Share |   |   | Total      Number of Shares Purchasedas      Part of Publicly Announced Plansor      Programs |   |   | Maximum      Numberof      Shares that MayYet      be Purchased Under the Plan or Programs (2) |   |
|---------------------------------------------|--------|------------------------------------|---------|--------|--------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------|--------|
| July      1 – July 31, 2008 (1)       |   |                               | 14,090  |   |                                 |   | 9.16   |                                                                                          |   |   | --                                                                                             |   |   |   | 1,221,772 |   |
| August      1 – August 31, 2008       |   |                               | 390,257 |   |                                 |   | 9.53   |                                                                                          |   |   | 390,257                                                                                        |   |   |   | 831,515 |   |
| September      1 – September 30, 2008 |   |                               | 121,095 |   |                                 |   | 9.88   |                                                                                          |   |   | 121,095                                                                                        |   |   |   | 710,420 |   |
|                                        |   |                               |    |   |                                 |   |   |                                                                                          |   |   |                                                                                           |   |   |   |   |   |
| Total                                       |   |                               | 525,442 |   |                                 | $      | 9.60   |                                                                                          |   |   | 511,352                                                                                        |   |   |   | 710,420 |   |

| (1) | Shares      purchased during the month of July were acquired as part of the Company’s      recognition and retention plan. In conjunction with the plan, participants      may elect to have a portion of their awarded shares withheld upon vesting      solely to pay for any related tax liabilities on these    awards. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | On  July      31, 2008, the Company announced a stock repurchase program to repurchase      up to 5% of its outstanding shares, or 1,221,772 shares. The repurchase      program is scheduled to terminate as of July 31,  2009.                                                                                        |

| ITEM      3. | DEFAULTS      UPON SENIOR SECURITIES |
|--------------|--------------------------------------|

|   | Not      applicable. |
|--------|----------------------|

| ITEM      4. | SUBMISSION      OF MATTERS TO A VOTE OF SECURITYHOLDERS |
|--------------|---------------------------------------------------------|

|   | Not      applicable. |
|--------|----------------------|

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

|   | Not      applicable. |
|--------|----------------------|

| ITEM      6. | EXHIBITS |
|--------------|----------|

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

----

|                         | ABINGTON      BANCORP, INC. |                           |
|------------------------------|-----------------------------|--------------------------------|
|                         |                        |                           |   |
|                         |                        |                           |   |
|                         |                        |                           |   |
| Date:      November 10, 2008 | By:                         | /s/      Robert W. White       |   |
|                         |                        | Robert      W. White           |   |
|                         |                        | Chairman,      President and   |   |
|                         |                        | Chief      Executive Officer   |   |
|                         |                        |                           |   |
|                         |                        |                           |   |
|                         |                        |                           |   |
|                         |                        |                           |   |
| Date:      November 10, 2008 | By:                         | /s/      Jack J. Sandoski      |   |
|                         |                        | Jack      J. Sandoski          |   |
|                         |                        | Senior      Vice President and |   |
|                         |                        | Chief      Financial Officer   |   |