UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



FORM 10-QSB



|                                                  |                                                                                   |                        |  |  |  |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------- | ---------------------- |  |  |  |  |  |  |  |  | 
|(Mark One)                                        |                                                                                   |                        |  |  |  |  |  | 
|[ X ]                                             | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                  |                                                                                   |                        |  | 
|For the quarterly period ended                    | September 30, 2007                                                                |                        |  | 
|                                                  |                                                                                  
|[     ]                                           | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT                  
|For the transition period from __________________ | to                                                                                | ______________________
|                                                  |                                                                                   |                       
|Commission File Number:   000-52839               |                                                                                   |                       



NORTH PENN BANCORP, INC.

(Exact name of small business issuer as specified in its charter)



|                                         |                                                                |  |                                   |  |  |  |  |  |  | 
|---------------------------------------- | -------------------------------------------------------------- |  | --------------------------------- |  |  |  |  |  |  | 
|                                         | Pennsylvania                                                   |  | 26-0261305                        | 
|                                         | (State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.) | 
|                                         |                                                                |  |                                   |  |  |  |  | 
|216 Adams Avenue, Scranton, PA  18503   
|(Address of principal executive offices)
|                                         |                                                                |  |                                   |  |  |  |  | 
|(570) 344-6113                          
|(Issuers telephone number)             
|                                        



Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  [ X ]  No [     ]



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [   ]  No [  X ]



State the number of shares outstanding of each of the issuers classes of common equity, as of the last practical date:  1,581,571 as of November 14, 2007.



Transitional Small Business Disclosure Format (Check One):  Yes ___

No _X_











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EXPLANATORY NOTE



North Penn Bancorp, Inc., a Pennsylvania corporation (formerly known as New North Penn Bancorp, Inc. and referred to as the Company), was organized by North Penn Bank (the Bank) to facilitate the second-step conversion of the Bank from the mutual holding company structure to the stock holding company structure (the Conversion). The Conversion was consummated on October 1, 2007, at which time the Company became the holding company for the Bank .  As part of the Conversion, shares of the Companys common stock were issued and sold in an offering to certain depositors of the Bank and others and also were issued in exchange for the then issued and outstanding shares of prior North Penn Bancorp, Inc., the mid-tier holding company for the Bank, held by persons other than North Penn Mutual Holding Company. As a result of the Conversion, the Company is the successor to the prior North Penn Bancorp.  The financial information presented in this report is for the prior North Penn Bancorp.  Separate financial statements for the Company have not been included in this report because the Company, which had not issued any shares and had engaged only in organizational activities as of September 30, 2007, had no significant assets, contingent or other liabilities, revenues or expenses as of such date.



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PART I.              FINANCIAL INFORMATION



Item 1.

Financial Statements



Consolidated Balance Sheets at September 30, 2007 and December 31, 2006



Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2007 and 2006



Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006



Notes to Unaudited Consolidated Financial Statements



Item 2.

Managements Discussion and Analysis or Plan of Operation.



Item 3.

Controls and Procedures.



PART II.            OTHER INFORMATION



Item 1.

Legal Proceedings.



Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.



Item 3.

Defaults Upon Senior Securities.



Item 4.

Submission of Matters to a Vote of Security Holders.



Item 5.

Other Information.



Item 6.

Exhibits.







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ITEM I.

FINANCIAL STATEMENTS



North Penn Bancorp, Inc. and Subsidiary

Consolidated Balance Sheets



|                                                                                                 |                    |                   |  |  |          | 
|------------------------------------------------------------------------------------------------ | ------------------ | ----------------- |  |  | -------- | 
|                                                                                                 | September 30, 2007 | December 31, 2006
|                                                                                                 | (Unaudited)        | (Audited)        
|                                                                                                 |                    | (In thousands)    | 
|ASSETS:                                                                                          |                    |                   | 
|Cash and due from banks                                                                          |                    | $1,765            |  |  | $4,029   | 
|Interest bearing deposits                                                                        |                    | 105               |  |  | 87       | 
|Total cash and cash equivalents                                                                  |                    | 1,870             |  |  | 4,116    | 
|Investment securities, available for sale                                                        |                    | 13,492            |  |  | 14,227   | 
|Equity securities at cost, substantially restricted                                              |                    | 1,222             |  |  | 1,236    | 
|Loans, net of allowance for loan losses                                                          |                    | 93,987            |  |  | 95,154   | 
|Bank premises and equipment  net                                                                |                    | 4,213             |  |  | 4,342    | 
|Accrued interest receivable                                                                      |                    | 650               |  |  | 638      | 
|Cash surrender value of life insurance                                                           |                    | 2,118             |  |  | 2,094    | 
|Deferred income taxes                                                                            |                    | 443               |  |  | 417      | 
|Other real estate owned                                                                          |                    | 100               |  |  | 100      | 
|Other assets                                                                                     |                    | 685               |  |  | 132      | 
|TOTAL ASSETS                                                                                     |                    | $118,780          |  |  | $122,456 | 
|                                                                                                 |                    |                   |  |  |          | 
|LIABILITIES:                                                                                     |                    |                   |  |  |          | 
|Deposits:                                                                                        |                    |                   |  |  |          | 
|Non-interest bearing deposits                                                                    |                    | $8,185            |  |  | $6,993   | 
|Interest bearing demand deposits                                                                 |                    | 29,651            |  |  | 26,026   | 
|Interest bearing time deposits                                                                   |                    | 47,615            |  |  | 53,727   | 
|Total deposits                                                                                   |                    | 85,451            |  |  | 86,746   | 
|Other borrowed funds                                                                             |                    | 18,995            |  |  | 21,741   | 
|Accrued interest and other liabilities                                                           |                    | 1,085             |  |  | 843      | 
|TOTAL LIABILITIES                                                                                |                    | 105,531           |  |  | 109,330  | 
|                                                                                                 |                    |                   |  |  |          | 
|STOCKHOLDERS EQUITY                                                                             |                    |                   |  |  |          | 
|Preferred stock, no par; 20,000,000 authorized; issued and outstanding, none                     |                    | -                 |  |  | -        | 
|Common stock, par value $0.10; 80,000,000 authorized; issued and outstanding, 1,443,555 (Note 5) |                    | 144               |  |  | 144      | 
|Additional paid-in capital                                                                       |                    | 5,891             |  |  | 5,870    | 
|Retained earnings                                                                                |                    | 7,774             |  |  | 7,623    | 
|Unearned ESOP shares                                                                             |                    | (460)             |  |  | (460)    | 
|Accumulated other comprehensive income                                                           |                    | (100)             |  |  | (51)     | 
|TOTAL STOCKHOLDERS EQUITY                                                                       |                    | 13,249            |  |  | 13,126   | 
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                       |                    | $118,780          |  |  | $122,456 | 



See notes to unaudited consolidated financial statements.



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North Penn Bancorp, Inc. and Subsidiary

Unaudited Consolidated Statements of Income

For the Three and Nine Months Ended September 30, 2007 and 2006

(In thousands)



|                                                                        |                   |                    |           |   |           |  |           |       |  |   |       | 
|----------------------------------------------------------------------- | ----------------- | ------------------ | --------- | - | --------- |  | --------- | ----- |  | - | ----- | 
|                                                                        | Nine Months Ended | Three Months Ended
|                                                                        | September 30,     | September 30,     
|                                                                        |                   | 2007               |           |   | 2006      |  |           | 2007  |  |   | 2006  | 
|INTEREST INCOME                                                         |                   |                    |           |   |           |  |           |       |  |   |       | 
|Interest on loans                                                       | $                 | 5,077              |           | $ | 4,594     |  | $         | 1,678 |  | $ | 1,633 | 
|Interest and dividends on investments                                   |                   | 494                |           |   | 517       |  |           | 161   |  |   | 166   | 
|Total interest income                                                   |                   | 5,571              |           |   | 5,111     |  |           | 1,839 |  |   | 1,799 | 
|INTEREST EXPENSE                                                        |                   |                    |           |   |           |  |           |       |  |   |       | 
|Interest on deposits                                                    |                   | 2,123              |           |   | 1,899     |  |           | 703   |  |   | 744   | 
|Interest on borrowed funds                                              |                   | 825                |           |   | 627       |  |           | 281   |  |   | 194   | 
|Total interest expense                                                  |                   | 2,948              |           |   | 2,526     |  |           | 984   |  |   | 938   | 
|                                                                        |                   |                    |           |   |           |  |           |       |  |   |       | 
|NET INTEREST INCOME                                                     |                   | 2,623              |           |   | 2,585     |  |           | 855   |  |   | 861   | 
|                                                                        |                   |                    |           |   |           |  |           |       |  |   |       | 
|PROVISION FOR LOAN LOSSES                                               |                   | 66                 |           |   | 90        |  |           | 6     |  |   | 30    | 
|                                                                        |                   |                    |           |   |           |  |           |       |  |   |       | 
|NET INTEREST INCOME  AFTER PROVISION FOR LOAN LOSSES                    |                   | 2,557              |           |   | 2,495     |  |           | 849   |  |   | 831   | 
|                                                                        |                   |                    |           |   |           |  |           |       |  |   |       | 
|OTHER INCOME                                                            |                   |                    |           |   |           |  |           |       |  |   |       | 
|Service charges on deposit accounts                                     |                   | 102                |           |   | 94        |  |           | 30    |  |   | 28    | 
|Other operating income                                                  |                   | 156                |           |   | 151       |  |           | 50    |  |   | 44    | 
|Gain on sale of loans                                                   |                   | 79                 |           |   | -         |  |           | -     |  |   | -     | 
|Gain on sale of securities                                              |                   | 41                 |           |   | 11        |  |           | 7     |  |   | -     | 
|TOTAL OTHER INCOME                                                      |                   | 378                |           |   | 256       |  |           | 87    |  |   | 72    | 
|                                                                        |                   |                    |           |   |           |  |           |       |  |   |       | 
|OTHER EXPENSE                                                           |                   |                    |           |   |           |  |           |       |  |   |       | 
|Salaries and employee benefits                                          |                   | 1,442              |           |   | 1,350     |  |           | 498   |  |   | 470   | 
|Occupancy and equipment expense                                         |                   | 459                |           |   | 479       |  |           | 155   |  |   | 168   | 
|Other operating expenses                                                |                   | 692                |           |   | 611       |  |           | 253   |  |   | 220   | 
|TOTAL OTHER EXPENSE                                                     |                   | 2,593              |           |   | 2,440     |  |           | 906   |  |   | 858   | 
|                                                                        |                   |                    |           |   |           |  |           |       |  |   |       | 
|INCOME BEFORE INCOME TAXES                                              |                   | 342                |           |   | 311       |  |           | 30    |  |   | 45    | 
|                                                                        |                   |                    |           |   |           |  |           |       |  |   |       | 
|INCOME TAX EXPENSE                                                      |                   | 104                |           |   | 41        |  |           | 7     |  |   | (7)   | 
|                                                                        |                   |                    |           |   |           |  |           |       |  |   |       | 
|NET INCOME                                                              |                   | 238                |           |   | 270       |  |           | 23    |  |   | 52    | 
|OTHER COMPREHENSIVE INCOME (LOSS):                                      |                   |                    |           |   |           |  |           |       |  |   |       | 
|Unrealized holding gain (loss) arising during period, net of income tax |                   | (49)               |           |   | 68        |  |           | 105   |  |   | 290   | 
|COMPREHENSIVE INCOME                                                    | $                 | 189                |           | $ | 338       |  | $         | 128   |  | $ | 342   | 
|                                                                        |                   |                    |           |   |           |  |           |       |  |   |       | 
|Weighted average number of shares outstanding                           | 1,398,562         |                    | 1,393,844 |   | 1,398,562 |  | 1,393,844 |      
|Earnings per share, basic and diluted                                   | $                 | 0.17               |           | $ | 0.19      |  | $         | 0.02  |  | $ | 0.04  | 
|Dividends per share                                                     | $                 | 0.06               |           | $ | 0.06      |  | $         | 0.03  |  | $ | 0.03  | 



See notes to unaudited consolidated financial statements.



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North Penn Bancorp, Inc. and Subsidiary

Unaudited Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2007 and 2006

(In thousands)



|                                                               |   |         |  |   |          | 
|-------------------------------------------------------------- | - | ------- |  | - | -------- | 
|                                                               |   | 2007    |  |   | 2006     | 
|Operating Activities:                                          |   |         |  |   |          | 
|Net income                                                     | $ | 238     |  | $ | 270      | 
|Items not requiring (providing) cash                           |   |         |  |   |          | 
|Depreciation                                                   |   | 206     |  |   | 222      | 
|Provision for loan losses                                      |   | 66      |  |   | 90       | 
|Amortization of securities (net of accretion)                  |   | 11      |  |   | 20       | 
|Increase in cash surrender value of life insurance             |   | 24      |  |   | (57)     | 
|Net realized gain on securities                                |   | (41)    |  |   | (11)     | 
|Net realized gain on other real estate owned                   |   | (6)     |  |   | (29)     | 
|Net realized gain on sale of loans                             |   | (79)    |  |   | -        | 
|Changes in:                                                    |   |         |  |   |          | 
|Accrued interest income and other assets                       |   | (566)   |  |   | (213)    | 
|Accrued interest expense and other liabilities                 |   | 258     |  |   | 312      | 
|Net Cash Provided by  Operating Activities                     |   | 111     |  |   | 604      | 
|                                                               |   |         |  |   |          | 
|Investing Activities:                                          |   |         |  |   |          | 
|Purchase bank premises and equipment                           |   | (77)    |  |   | (1,031)  | 
|Proceeds from sale of other real estate owned                  |   | 427     |  |   | 134      | 
|Proceeds from sale of securities available for sale          |   | 213     |  |   | 48       | 
|Purchase of securities available for sale                    |   | (223)   |  |   | (290)    | 
|Redemptions of securities available for sale                 |   | -       |  |   | 500      | 
|Redemptions of mortgage-backed securities available for sale |   | 701     |  |   | 876      | 
|Net sale (purchase) of restricted stock                        |   | 14      |  |   | (6)      | 
|Net increase in loans to customers                             |   | (3,681) |  |   | (10,579) | 
|Proceeds from sale of loans                                    |   | 4,440   |  |   | -        | 
|Net Cash Provided by (Used in) Investing Activities            |   | 1,814   |  |   | (10,348) | 
|                                                               |   |         |  |   |          | 
|Financing Activities:                                          |   |         |  |   |          | 
|Net (decrease) increase in deposits                            |   | (1,295) |  |   | 13,977   | 
|Decrease in borrowed funds                                     |   | (2,746) |  |   | (1,951)  | 
|Cash dividends paid                                            |   | (130)   |  |   | (87)     | 
|Net Cash (Used In) Provided by Financing Activities            |   | (4,171) |  |   | 11,939   | 
|Net (Decrease) Increase in Cash and Cash Equivalents           |   | (2,246) |  |   | 2,195    | 
|                                                               |   |         |  |   |          | 
|Cash and Cash Equivalents, January 1                           | $ | 4,116   |  | $ | 2,353    | 
|Cash and Cash Equivalents, September 30                        | $ | 1,870   |  | $ | 4,548    | 
|                                                               |   |         |  |   |          | 
|Supplementary Schedule of Cash Flow Information:               |   |         |  |   |          | 
|Cash paid during the period for:                               |   |         |  |   |          | 
|Interest                                                       | $ | 3,072   |  | $ | 2,526    | 
|Income taxes                                                   |   | 64      |  |   | 36       | 
|                                                               |   |         |  |   |          | 
|Non-cash investing and financing activities:                   |   |         |  |   |          | 
|None                                                           |   |         |  |   |          | 
|                                                               |   |         |  |   |          | 



See notes to unaudited consolidated financial statements.







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Notes to Unaudited Consolidated Financial Statements



1.

Nature Of Operations And Summary Of

Significant Accounting Policies



Nature of Operations



North Penn Bancorp, Inc. (Company) is the bank holding company for North Penn Bank (Bank).  The Companys common stock is quoted on the OTC Bulletin Board under the symbol NPBP.OB.  The Bank operates from five offices under a state savings bank charter and provides financial services to individuals and corporate customers primarily in Northeastern Pennsylvania.  The Banks primary deposit products are savings and demand deposit accounts and certificates of deposit.  Its primary lending products are real estate, commercial and consumer loans.



Principles Of Consolidation



The accompanying consolidated financial statements include the accounts of North Penn Bancorp, Inc., its wholly-owned subsidiary, North Penn Bank and North Penn Banks wholly-owned subsidiaries, Norpenco, Inc. and North Penn Settlement Services, LLC. These entities are collectively referred to herein as the Company.  All significant intercompany accounts and transactions have been eliminated in consolidation. Norpenco, Inc.s sole activities are purchasing bank stocks and receiving dividends on such stocks. North Penn Settlement Services, LLC, receives non interest income from providing title search work.



The accounting policies of the Company conform with accounting principles generally accepted in the United States of America and with general practices within the banking industry.



Basis of Presentation



The unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principals for interim financial information.  In the opinion of management, all adjustments that are of a normal recurring nature and are considered necessary for a fair presentation have been included.  They are not, however, necessarily indicative of the results of consolidated operations for a full year.



Use Of Estimates



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 revenue and expenses during the reporting period.  Actual results could differ from those estimates.



Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses on loans and the valuation of real estate acquired in connection with foreclosures or in the satisfaction of loans.  In connection with the determination of the allowances for losses on loans and foreclosed real estate, management periodically obtains independent appraisals for significant properties.



Mortgage Partnership Finance Program

The Bank participates in the Mortgage Partnership Finance (MPF) Program of the Federal Home Loan Bank of Pittsburgh (FHLB).  The program is intended to provide member



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institutions with an alternative to holding fixed-rate mortgages in their loan portfolios or selling them in the secondary market.  An institution participates in the MPF Program by either originating individual loans on a flow basis as an agent for the FHLB pursuant to the MPF 100 Program or by selling, as a principal, closed loans owned by an institution to the FHLB pursuant to one of the FHLBs closed-loan programs.  Under the MPF Program(s), credit risk is shared by the participating institution and the FHLB by structuring the loss exposure in several layers, with the participating institution being liable for losses after application of an initial layer of losses (after any private mortgage insurance) is absorbed by the FHLB, subject to an agreed-upon maximum amount of such secondary credit enhancement which is intended to be in an amount equivalent to a AA credit risk rating by a rating agency.  The participating institution may also be liable for certain first layer losses after a specified period of time.  The participating institution receives credit enhancement fees from the FHLB for providing this credit enhancement and continuing to manage the credit risk of the MPF Program loans.  Participating institutions are also paid specified servicing fees for servicing the loans.

Transfers involving sales with the Bank acting as principal are accounted for in accordance with SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities(SFAS 140), with the recognition of gains and losses on the sale and related mortgage servicing rights.

The credit enhancement feature of the MPF Program is accounted for by the Bank as a financial guarantee in accordance with FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others(FIN 45) and reported on the balance sheet at its initial fair value.  Subsequent changes in the recorded guarantee amount would result from termination of any portion or all of the guarantee, additional guarantees being issued or increases in the expected losses resulting from the guarantee.  Such changes in recorded amounts are recognized in the consolidated statements of income or as an increase in the offsetting guarantee fees receivable account in the case of additional guarantees being issued.



2.

Investment Securities



The Banks investments in securities are classified in two categories and accounted for as follows:



Securities Held-to-Maturity.  Bonds, notes and debentures for which the Bank has the positive intent and ability to hold to maturity are reported at cost, adjusted for amortization of premiums and accretion of discounts.



Securities Available-for-Sale.  Securities available-for-sale consist of bonds, notes, debentures and equity securities not classified to be held-to-maturity and are carried at fair value with unrealized holding gains and losses, net of tax, reported as a separate component of other comprehensive income until realized.



Purchase premiums and discounts are recognized in interest income on the straight-line basis over the terms of the securities, which approximates the interest method.  Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses.  Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method and are reported as other income in the statement of income.



The amortized cost and fair value of investment securities at September 30, 2007 and December 31, 2006 are as follows:





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Available-for-Sale

September 30, 2007

(In thousands)



|                           |                 |                          |                          |             |    |  |   |     |  |   |       
|-------------------------- | --------------- | ------------------------ | ------------------------ | ----------- | -- |  | - | --- |  | - | ------
|                           | Amortized 
Cost | Gross 
Unrealized 
Gains | Gross
Unrealized 
Losses | Fair 
Value
|U.S. Agency securities     | $               | 385                      |                          | $           | -  |  | $ | 1   |  | $ | 384   
|Mortgage-backed securities |                 | 4,682                    |                          |             | 4  |  |   | 109 |  |   | 4,577 
|Municipal securities       |                 | 7,025                    |                          |             | 15 |  |   | 5   |  |   | 7,035 
|Other securities           |                 | 501                      |                          |             | -  |  |   | 2   |  |   | 499   
|Total debt securities      |                 | 12,593                   |                          |             | 19 |  |   | 117 |  |   | 12,495
|Equity securities          |                 | 1,050                    |                          |             | 54 |  |   | 107 |  |   | 997   
|Total Available for Sale   | $               | 13,643                   |                          | $           | 73 |  | $ | 224 |  | $ | 13,492



Available-for-Sale

December 31, 2006

(In thousands)



|                           |                 |                          |                           |             |     |  |   |     |  |   |       
|-------------------------- | --------------- | ------------------------ | ------------------------- | ----------- | --- |  | - | --- |  | - | ------
|                           | Amortized 
Cost | Gross 
Unrealized 
Gains | Gross 
Unrealized 
Losses | Fair 
Value
|U.S. Agency securities     | $               | 385                      |                           | $           | -   |  | $ | 7   |  | $ | 378   
|Mortgage-backed securities |                 | 5,391                    |                           |             | 2   |  |   | 113 |  |   | 5,280 
|Municipal securities       |                 | 7,026                    |                           |             | 51  |  |   | -   |  |   | 7,077 
|Other securities           |                 | 503                      |                           |             | -   |  |   | 8   |  |   | 495   
|Total debt securities      |                 | 13,305                   |                           |             | 53  |  |   | 128 |  |   | 13,230
|Equity securities          |                 | 999                      |                           |             | 51  |  |   | 53  |  |   | 997   
|Total Available for Sale   | $               | 14,304                   |                           | $           | 104 |  | $ | 181 |  | $ | 14,227





The gross fair value and unrealized losses of the Banks investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2007 is as follows:



|                  |                     |                     |            |                   |            |                   |     |     |       |       |     |     | 
|----------------- | ------------------- | ------------------- | ---------- | ----------------- | ---------- | ----------------- | --- | --- | ----- | ----- | --- | --- | 
|                  | Less than 12 months | 12 months or longer | Total     
|                  | Fair Value          | Unrealized Losses   | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses
|U.S. Agencies     | $                   | -                   | $          | -                 | $          | 384               | $   | 1   | $     | 384   | $   | 1  
|Mortgage-backed   | -                   |                     | -          |                   | 4,222      |                   | 109 |     | 4,222 |       | 109
|Municipal         |                     | 1,701               |            | 3                 |            | 432               |     | 2   |       | 2,133 |     | 5  
|Other securities  | -                   |                     | -          |                   | 499        |                   | 2   |     | 499   |       | 2  
|Equity securities | 452                 |                     | 52         |                   | 240        |                   | 55  |     | 692   |       | 107
|                  | $                   | 2,153               | $          | 55                | $          | 5,777             | $   | 169 | $     | 7,930 | $   | 224





The above table at September 30, 2007 includes 29 securities that have unrealized losses for less than 12 months and 24 securities that have been in an unrealized loss position for 12 or more months.



The Bank invests in debt securities of the U.S. government, U.S. agencies, U.S. sponsored agencies, obligations of states and political subdivisions and corporate obligations.  Changes in market value of all debt securities can result from changes in interest rates.  Changes in credit quality can affect securities of states and political subdivisions and corporate obligations.  The changes in market value of the debt securities held by the Bank have been due to changes in



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interest rates, and because the Bank has the ability to hold these investments until maturity, the Bank does not consider these investments to be other-than-temporarily impaired at September 30, 2007.



The Bank invests in equity securities of other banks through its subsidiary, Norpenco, Inc.  Management has evaluated the near-term prospects of the issuers with unrealized losses, in relation to the severity and duration of the impairment.  Based on that evaluation, and the Banks ability to hold these stocks for a reasonable period of time sufficient for a forecasted recovery of fair value, the management does not consider these investments to be other-than-temporarily impaired at September 30, 2007.



3.

Loans



|                                  |                    |        |                   |   |       
|--------------------------------- | ------------------ | ------ | ----------------- | - | ------
|                                  | September 30,
2007 |        | December 31,
2006
|Real estate mortgages:            | (In thousands)    
|Construction and land development | $                  | 147    |                   | $ | 1,186 
|Residential, 1  4 family         |                    | 44,106 |                   |   | 42,323
|Residential, multi-family         |                    | 1,457  |                   |   | 2,449 
|Commercial                        |                    | 39,154 |                   |   | 37,711
|Total real estate mortgages       |                    | 84,864 |                   |   | 83,669
|Commercial                        |                    | 1,965  |                   |   | 1,742 
|Consumer                          |                    | 8,306  |                   |   | 10,864
|Total loans                       |                    | 95,135 |                   |   | 96,275
|Allowance for loan loss           |                    | 1,148  |                   |   | 1,121 
|Total loans, net                  | $                  | 93,987 |                   | $ | 95,154



Loans are stated at the principal amount outstanding, net of any unearned income, deferred loan fees and the allowance for loan losses. Interest on mortgage and commercial loans is calculated at the time of payment based on the current outstanding balance of the loan.  Interest on consumer loans is recognized on the simple interest method.



The allowance for loan losses is increased by charges to income and decreased by charge-offs (net of recoveries).  Managements periodic evaluation of the adequacy of the allowance is based on the banks past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers ability to pay, the estimated value of any underlying collateral and current economic conditions.



Uncollectible interest on loans that are contractually past due 90 days or more is credited to an allowance established through managements periodic evaluation.  The allowance is established by a charge to interest income equal to all interest previously accrued, and income is subsequently recognized only to the extent that cash payments are received until, in managements judgment, the borrowers ability to make periodic interest and principal payments is back to normal, in which case the loan is returned to accrual status.





4.

Other Borrowings



The Bank has a line of credit agreement with FHLBank of Pittsburgh for short term borrowings varying from one day to three years.  Advances on this line must be secured by qualifying collateral as defined in the agreement and bear interest at fixed or variable rates as determined at the date advances are made. The line expires in June, 2011. At September 30, 2007, the Bank borrowed $6,995,000 in overnight funds.





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The Bank also has a $5,000,000 borrowing with FHLBank of Pittsburgh at a fixed rate of 6.19%, which was issued in July of 2000, and matures July of 2010.  The loan requires monthly interest payments, with the principal due at maturity.



The Bank also has a $7,000,000 borrowing with FHLBank of Pittsburgh at a fixed rate of 4.34%, which was issued in July of 2005, and matures July of 2015.  The loan requires quarterly interest payments, with the principal due at maturity.





5.

Earnings Per Share



Basic earnings per share is computed on the weighted average number of common shares outstanding during each year, adjusted for unearned shares of the ESOP, as prescribed in Statement of Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128). Diluted earnings per share includes common shares issuable upon exercise of employee stock options as follows:



|                             |                                 |  |                                  |  |           |  |          
|---------------------------- | ------------------------------- |  | -------------------------------- |  | --------- |  | ---------
|                             | Nine Months Ended
September 30, |  | Three Months Ended
September 30,
|                             | 2007                            |  | 2006                             |  | 2007      |  | 2006     
|                             |                                 |  |                                  |  |           |  |          
|Numerator                    | $238,000                        |  | $270,000                         |  | $23,000   |  | $52,000  
|Denominator                  |                                 |  |                                  |  |           |  |          
|Basic shares outstanding     | 1,398,562                       |  | 1,393,844                        |  | 1,398,562 |  | 1,393,844
|Effective of dilutive shares | 1,000                           |  | -                                |  | 1,000     |  | -        
|Diluted shares outstanding   | 1,399,562                       |  | 1,393,844                        |  | 1,399,562 |  | 1,393,844
|                             |                                 |  |                                  |  |           |  |          
|Earnings per share           |                                 |  |                                  |  |           |  |          
|Basic                        | $0.17                           |  | $0.19                            |  | $0.02     |  | $0.04    
|Diluted                      | $0.17                           |  | $0.19                            |  | $0.02     |  | $0.04    





6.

Omnibus Stock Option Plan

Stock Grants. Restricted stock grants totaling 4,875 shares were awarded on September 26, 2006 having a fair value of $54,000.  The grants vest over five years.  The market value as of the grant date of the restricted stock grants is charged to expense as the grants vest.



Stock Options. Stock options covering 27,000 shares of common stock were awarded on September 26, 2006.  The option awards were granted with an exercise price equal to the average price on the last trade date.  The stock options vest and therefore become exercisable on a pro rata basis annually over five years from the date awarded, commencing September 26, 2007. The options are available to be exercised for a period of ten years after the date awarded.



The fair value of each option grant was estimated to be $3.86 on the date of grant using the Black-Scholes option pricing model with the following assumptions used for grants during the applicable period:





|                            |         
|--------------------------- | --------
|Dividend Yield (per share)  | $  0.12 
|Volatility (%)              | 3.76%   
|Risk-free Interest Rate (%) | 4.76%   
|Expected Life               | 10 years





---

During the quarter and nine months ended September 30, 2007, the Company recorded $5,000 and $21,000, respectively, in expense included in Salaries and employee benefits on the accompanying financial statements. As of September 30, 2007, there was approximately $130,000 of total unrecognized compensation cost related to unvested options and grants. That cost is expected to be recognized over a weighted-average period of 5 years. The Company plans on obtaining shares to be issued upon exercise of stock options through authorized common stock.



|                                |                  |                                  |  |  |                                              |  |  |    
|------------------------------- | ---------------- | -------------------------------- |  |  | -------------------------------------------- |  |  | ---
|                                | Number of Shares |                                  |  |  | Weighted Average Remaining Contractual Term
|                                |                  | Weighted -Average Exercise Price | 
|                                |                  |                                 
|Outstanding, January 1, 2007    |                  | 27,000                           |  |  | $  11.15                                     |  |  | -  
|Granted                         |                  | -                                |  |  | -                                            |  |  | -  
|Exercised                       |                  | -                                |  |  | -                                            |  |  | -  
|Forfeited  or expired           |                  | -                                |  |  | -                                            |  |  | -  
|Outstanding, September 30, 2007 |                  | 27,000                           |  |  | $  11.15                                     |  |  | 9.0



|                              |                  |  |                                         |  |                  |  |                                       
|----------------------------- | ---------------- |  | --------------------------------------- |  | ---------------- |  | --------------------------------------
|                              | Stock Options    |  | Restricted Stock                       
|                              | Number of Shares |  | Weighted-Average  Grant-Date Fair Value |  | Number of Shares |  | Weighted-Average Grant-Date Fair Value
|Nonvested shares              |                  |  |                                        
|Nonvested,  January 1, 2007   | 27,000           |  | $3.86                                   |  | 4,875            |  | $11.15                                
|Granted                       | -                |  | -                                       |  | -                |  | -                                     
|Vested                        | 5,400            |  | -                                       |  | 975              |  | -                                     
|Forfeited                     | -                |  | -                                       |  | -                |  | -                                     
|Nonvested, September 30, 2007 | 21,600           |  | $3.86                                   |  | 3,900            |  | $11.15                                





7.

Guarantees

FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45), requires certain guarantees to be recorded at fair value as a liability at inception and when a loss is probable and reasonably estimable, as those terms are defined in FASB Statement No. 5, Accounting for Contingencies (FAS 5).  FIN 45 also requires a guarantor to make significant new disclosures even when the likelihood of making any payments under the guarantee is remote.

In September 2006, the Bank executed a Mortgage Partnership Finance (MPF) Master Commitment (the Commitment) with the FHLBank of Pittsburgh (FHLB) to deliver $10.0 million of mortgage loans and to guarantee the payment of any realized losses that exceed the FHLBs first loss account for mortgages delivered under the Commitment.  The Bank receives credit enhancement fees from the FHLB for providing this guarantee and continuing to manage the credit risk of the MPF Program mortgage loans.  The term of the Commitment and guarantee per the Master Commitment is through September 25, 2008. The maximum potential amount of future payments that the Bank is required to make under the guarantee is $250,000. Under the Commitment, the Bank agrees to service the loans and therefore, is responsible for any necessary foreclosure proceedings.  Any future recoveries on any losses would not be paid by the FHLB under the Commitment.  The Bank has not experienced any losses under these guarantees.





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Item 2.

Managements Discussion and Analysis or Plan of Operation.



Forward-Looking Statements



North Penn Bancorp, Inc. makes forward-looking statements in this report.  These forward-looking statements may include: statements of goals, intentions and expectations; estimates of risks and of future costs and benefits; assessments of probable loan losses; assessments of market risk; and statements of the ability to achieve financial and other goals.  Forward-looking statements are typically identified by words such as believe, expect, anticipate, intend, outlook, estimate, forecast, project and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. The Company does not assume any duty and does not undertake to update its forward-looking statements.  Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that the Company anticipated in its forward-looking statements, and future results could differ materially from historical performance.



The Companys forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit and loan products and other financial services; changes in real estate values; changes in the quality or composition of the Companys loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Companys ability to retain key members of management; changes in legislation, regulation, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties.  The Company provides greater detail regarding some of these factors in its Form 10-KSB for the year ended December 31, 2006, including in the Risk Factors section of that report.  The Companys forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this report or in its other filings with the SEC.



Recent Developments



On April 24, 2007, the Boards of Directors of the Company, North Penn Mutual Holding Company and the Bank adopted a Plan of Conversion and Reorganization (the Plan) pursuant to which the Bank reorganized from the mutual holding company structure to the stock holding company structure.  Pursuant to the terms of the Plan, shares of the Companys common stock, other than those held by North Penn Mutual Holding Company, were converted on October 1, 2007 into 1.092 shares of a new Pennsylvania corporation. The exchange ratio was designed to preserve the aggregate percentage ownership interest of the existing public shareholders following the sale of 850,000 shares of the new holding companys common stock to the Banks eligible account holders, to the Banks tax-qualified employee benefit plans and to members of the general public.  The conversion was approved by the Banks depositors, the Companys shareholders (including the approval of a majority of the shares held by persons other than North Penn Mutual Holding Company) and regulatory agencies.





Financial Condition



Our total assets decreased $3.7 million, or 3.0%, to $118.8 million at September 30, 2007 from $122.5 million at December 31, 2006.  The decrease was primarily the result of paying down overnight borrowings and a reduction in deposits, which were funded by selling a



---

portion of our mortgage loan portfolio during the second quarter of 2007, a decrease in our cash and due from banks balances and payments on mortgage-backed securities.



Net loans decreased $1.2 million, or 1.3%, to $94.0 million at September 30, 2007, from $95.2 million at December 31, 2006. The bank sold $4.4 million of residential mortgages during the second quarter of 2007 to alleviate interest rate risk associated with individual mortgages and reinvested the funds in commercial loans. The reduction is also due to a decrease of $2.6 million in consumer loans as the bank has not been focusing on growing this portion of our loan portfolio.



Investment securities decreased $735,000, or 5.2%, to $13.5 million at September 30, 2007 from $14.2 million at December 31, 2006. The decrease was the result of pay downs on mortgage-backed securities. The Bank has not purchased any debt securities during 2007.



The Bank recorded $6,000 in loan loss provision expense for the three months and $66,000 for the nine months ended September 30, 2007. The Bank had three consumer loans totaling $39,000 charged off during the third quarter of 2007. Management assesses the adequacy of the allowance for loan losses based on evaluating known and inherent risks in the loan portfolio and upon managements continuing analysis of the factors underlying the quality of the loan portfolio.



While management believes that, based on information currently available, the allowance for loan losses is sufficient to cover losses inherent in its loan portfolio at this time, no assurance can be given that the level of the allowance for loan losses is sufficient to cover future possible loan losses incurred by the Bank or that future adjustments to the allowance for loan losses will not be necessary if economic and other conditions differ substantially from the economic and other conditions used by management to determine the current level of the allowance for loan losses.  Management may in the future increase the level of the allowance for loan losses as a percentage of total loans and non-performing loans in the event it increases the level of commercial or consumer lending as a percentage of its total loan portfolio.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses.  Such agencies may require the Bank to provide additions to the allowance based upon judgments different from management.



Non-performing loans, which are loans past due 90 days or more and non-accruing loans, totaled $442,000 at September 30, 2007, compared to $594,000 at December 31, 2006.  The improvement was primarily in non-accruing residential mortgages which decreased by $168,000, while non-accruing consumer loans increased by $16,000.  The ratio of the Banks allowance for loan losses to total loans was 1.21% at September 30, 2007 and 1.16% at December 31, 2006. The ratio of the Banks allowance for loan losses to non performing loans was 259.7% at September 30, 2007 and 188.7% at December 31, 2006.



Other assets increased $553,000, or 418.9%, to $685,000 at September 30, 2007, from $132,000 at September 30, 2006. This increase was directly related to a receivable held by the Bank in regards to the stock offering being conducted. After the offering was completed, the receivable was netted against the proceeds.



Total deposits decreased $1.2 million, or 1.4%, to $85.5 million at September 30, 2007 from $86.7 million at December 31, 2006. Non-interest bearing deposits increased $1.2 million or 17.1%, interest bearing demand deposits increased $3.6 million or 13.8%, and time deposits decreased $6.1 million, or 11.4%. Included in interest bearing demand deposits was $2.1 million in subscription funds that had been received in connection with the stock offering by our new holding company, which was still in process at quarter end. The increase is also due to a high yield savings account being offered at two of our branches in Monroe County. These



---

gains were offset by a loss of $6.1 million in time deposits over the nine months ended September 30, 2007.



Other borrowings decreased $2.7 million, or 12.4%, to $19.0 million at September 30, 2007 from $21.7 million at December 31, 2006, due to pay downs in overnight borrowings from FHLBank of Pittsburgh. Borrowings are primarily being used to fund loan growth when deposit growth is inadequate and repayment is made when deposit growth exceeds loan demand.



Results of Operations



Comparison of the Three and Nine Month Periods Ended September 30, 2007 and 2006



Net income for the third quarter of 2007 decreased $29,000, or 55.8%, to $23,000, compared to $52,000 in 2006. Net income for the nine months ended September 30, 2007 decreased $32,000, or 11.9%, to $238,000 compared to $270,000 in 2006. Although the bank experienced gains on loan and investment sales, as well as an increase in loan interest and fee income; net income decreased primarily from expenses incurred during testing for Sarbanes Oxley compliance and increased salary and benefits costs.



Net interest income for the third quarter decreased $6,000, or 0.7%, to $855,000 in 2007, from $861,000 in 2006. For the nine months ended September 30, 2007, net interest income increased $38,000 or 1.5%.



Interest income for the third quarter of 2007 increased $40,000, or 2.2%, compared to 2006.  Interest income for the nine months ended September 30, 2007 increased $460,000, or 9.0%, to $5.6 million compared to $5.1 million for September 30, 2006.  Interest on loans increased $45,000, or 2.8%, to $1.7 million in 2007 from $1.6 million during the third quarter in 2006.  For the nine months ended September 30, interest on loans increased $483,000, or 10.5%, to $5.1 million in 2007, from $4.6 million for 2006. Interest on investments decreased $5,000 or 3.0%, to $161,000 from $166,000 during the third quarter, and $23,000 or 4.4%, to $494,000 from $517,000 for the nine months ended September 30, 2007.



Interest expense during the third quarter increased $46,000, or 4.9%, to $984,000 in 2007 from $938,000 in 2006.  For the nine months ended September 30, 2007, interest expense increased $422,000, or 16.9%, to $2.9 million in 2007 from $2.5 million in 2006.  Interest on deposits for the third quarter decreased $41,000 or 5.5%, to $703,000 in 2007, from $744,000 in 2006, due to decreases in the average volume of time deposits. For the nine months ended September 30, interest on deposits increased $224,000, or 11.8%, to $2.1 million in 2007 from $1.9 in 2006.  Interest on borrowed funds increased $87,000, or 44.8%, for the third quarter of 2007 and $198,000, or 31.6%, for the nine months ended September 30, 2007 due to the increase in the average volume of overnight borrowings.



Other income for the third quarter increased $15,000, or 20.8%, to $87,000, in 2007, from $72,000 in 2006. The increase was due to a gain on the sale of securities in 2007, service fee income the Bank retained on sold loans and increased revenue generated from our ATM/debit card program. Total other expenses increased $48,000, or 5.6%, to $906,000 in 2007 from $858,000 in 2006.  Salaries and employee benefits increased $28,000, or 6.0%, to $498,000 in 2007, from $470,000 in 2006, primarily due to the addition of a Retail Banking Manager hired during the second quarter of 2007. Occupancy and equipment expense decreased $13,000 or 7.7%, to $155,000 in 2007, from $168,000 in 2006 and other operating expenses increased $33,000 or 15.0%, to $253,000 in 2007 from $220,000 in 2006. This increase was the result of expenses incurred during compliance testing for Sarbanes-Oxley.



For the nine months ended September 30, other income increased $122,000, or 47.7%, to $378,000 in 2007 from $256,000 in 2006, largely due to a gain of $79,000 from the sale of



---

loans and an increase of $30,000 in gains on security sales. Total other expenses increased $153,000, or 6.4%, to $2.6 million in 2007 from $2.4 million in 2006.  Salaries and employee benefits increased $92,000 or 6.8%, to $1.4 million in 2007 from $1.3 million in 2006, largely related to increased personnel. Occupancy and equipment expense decreased $20,000, or 4.2%, to $459,000 in 2007 from $479,000 in 2006, while other operating expenses increased $81,000, or 13.3%, to $692,000 in 2007 from $611,000 in 2006. The majority of the other operating expenses were fees paid to our internal auditors in conjunction with Sarbanes Oxley compliance testing.



Applicable taxes for the third quarter increased $14,000 or 200%, to $7,000 in 2007 from ($7,000) in 2006. For the nine months ended September 30, 2007, taxes increased $63,000 or 153.7%, to $104,000 in 2007 from $41,000 in 2006, largely due to an increase in federal and state taxable income from gains on the sale of securities and loans.



Liquidity and Capital Resources



The Banks primary sources of funds are deposits, principal and interest payments on loans and FHLBank advances. While maturities and scheduled amortization of loans are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions, and competition.  The Banks regulators require the Bank to maintain sufficient liquidity to ensure its safe and sound operation.



The Banks cash and cash equivalents decreased $2.2 million for the nine months ended September 30, 2007.  During that period, cash was primarily provided from earnings and customer deposits and primarily used to pay down overnight borrowings.



The Companys and North Penn Banks capital ratios at September 30, 2007 and December 31, 2006 as well as the required minimum ratios for capital adequacy purposes and to be well capitalized under the prompt corrective action provisions as defined by the FDIC are summarized as follows:



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|                                        |          |          |        |                               |         |                                                                  |       |       |         |         |        |       
|--------------------------------------- | -------- | -------- | ------ | ----------------------------- | ------- | ---------------------------------------------------------------- | ----- | ----- | ------- | ------- | ------ | ------
|                                        |          | Actual   |        | For capital adequacy purposes |         | To be well capitalized under prompt corrective action provisions
|                                        |          | Amount   |        | Ratio                         |         | Amount                                                           |       | Ratio |         | Amount  |        | Ratio 
|At September 30, 2007:                  |          |          |        |                               |         |                                                                  |       |       |         |        
|Total Capital to risk-weighted assets:  |          |          |        |                               |         |                                                                  |       |      
|Consolidated                            |          | $14,117  |        | 14.76%                        |         | >$7,652                                                          |       | >8.0% |         | >$9,565 |        | >10.0%
|North Penn Bank                         | $12,449  |          | 13.25% |                               | >$7,519 |                                                                  | >8.0% |       | >$9,398 |         | >10.0%
|Tier 1 Capital to risk-weighted assets: |          |          |        |                               |         |                                                                  |       |      
|Consolidated                            |          | $13,124  |        | 13.72%                        |         | >$3,826                                                          |       | >4.0% |         | >$5,739 |        | >6.0% 
|North Penn Bank                         | $11,301  |          | 12.02% |                               | >$3,759 |                                                                  | >4.0% |       | >$5,639 |         | >6.0% 
|Tier 1 Capital to total average assets: |          |          |        |                               |         |                                                                  |       |      
|Consolidated                            |          | $13,124  |        | 11.12%                        |         | >$4,721                                                          |       | >4.0% |         | >$5,902 |        | >5.0% 
|North Penn Bank                         | $11,301  |          | 9.71%  |                               | >$4,655 |                                                                  | >4.0% |       | >$5,818 |         | >5.0% 
|                                        |          |          |        |                               |         |                                                                  |       |       |         |         |        |       
|Risk-Weighted Assets:                   |          |          |        |                               |         |                                                                  |       |       |         |        
|Consolidated                            |          | $95,650  |        |                               |         |                                                                  |       |       |         |         |        |       
|North Penn Bank                         | $93,982  |          |        |                               |         |                                                                  |       |       |         |         |       
|Average Assets:                         |          |          |        |                               |         |                                                                  |       |       |         |         |        |       
|Consolidated                            |          | $118,034 |        |                               |         |                                                                  |       |       |         |         |        |       
|North Penn Bank                         | $116,366 |          |        |                               |         |                                                                  |       |       |         |         |       
|                                        |          |          |        |                               |         |                                                                  |       |       |         |         |        |       
|At December 31, 2006:                   |          |          |        |                               |         |                                                                  |       |       |         |        
|Total Capital to risk-weighted assets:  |          |          |        |                               |         |                                                                  |       |      
|Consolidated                            |          | $14,295  |        | 15.13%                        |         | >$7,560                                                          |       | >8.0% |         | >$9,450 |        | >10.0%
|North Penn Bank                         | $12,326  |          | 13.17% |                               | >$7,487 |                                                                  | >8.0% |       | >$9,359 |         | >10.0%
|Tier 1 Capital to risk-weighted assets: |          |          |        |                               |         |                                                                  |       |      
|Consolidated                            |          | $13,175  |        | 13.94%                        |         | >$3,780                                                          |       | >4.0% |         | >$5,670 |        | >6.0% 
|North Penn Bank                         | $11,206  |          | 11.97% |                               | >$3,744 |                                                                  | >4.0% |       | >$5,615 |         | >6.0% 
|Tier 1 Capital to total average assets: |          |          |        |                               |         |                                                                  |       |      
|Consolidated                            |          | $13,175  |        | 11.02%                        |         | >$4,782                                                          |       | >4.0% |         | >$5,977 |        | >5.0% 
|North Penn Bank                         | $11,206  |          | 9.45%  |                               | >$4,746 |                                                                  | >4.0% |       | >$5,932 |         | >5.0% 
|                                        |          |          |        |                               |         |                                                                  |       |       |         |        
|Risk-Weighted Assets:                   |          |          |        |                               |         |                                                                  |       |       |         |        
|Consolidated                            |          | $94,496  |        |                               |         |                                                                  |       |       |         |         |        |       
|North Penn Bank                         | $93,589  |          |        |                               |         |                                                                  |       |       |         |         |       
|Average Assets:                         |          |          |        |                               |         |                                                                  |       |       |         |         |        |       
|Consolidated                            |          | $119,548 |        |                               |         |                                                                  |       |       |         |         |        |       
|North Penn Bank                         | $118,641 |          |        |                               |         |                                                                  |       |       |         |         |       
|                                        |          |          |        |                               |         |                                                                  |       |       |         |         |        |       



Related Parties



The Company does not have any material transactions involving related persons or entities, other than traditional banking transactions, which are made on the same terms and conditions as those prevailing at the time for comparable transactions with unrelated parties.





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Item 3.

Controls and Procedures.



The Companys management, including the Companys principal executive officer and principal financial officer, have evaluated the effectiveness of the Companys disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the Exchange Act).  Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Companys disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the SEC) (1) is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and (2) is accumulated and communicated to the Companys management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.



PART II  OTHER INFORMATION



Item 1.

Legal Proceedings.



The Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business.  Such routine legal proceedings, in the aggregate, are believed by management to be immaterial to the Companys financial condition or results of operations.



Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.



The Company did not repurchase any shares of its common stock during the quarter ended September 30, 2007 and did not have any publicly announced repurchase plans or programs.



Item 3.

Defaults Upon Senior Securities.



None.



Item 4.

Submission of Matters to a Vote of Security Holders.



A special meeting of shareholders was held on September 26, 2007 to vote on a proposal to approve the Plan of Conversion and Reorganization pursuant to which the company conducted its second step conversion. The result of the vote was as follows:



For:  1,239,533



Against:    8,037



Abstain:   543



Broker Non-Votes: 195,442





Item 5

Other Information.



None





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Item 6.

Exhibits and Reports on Form 8-K.



Exhibits



31.1

Rule 13a-14(a) /15d-14(a) Chief Executive Officer Certification



31.2

Rule 13a-14(a) /15d-14(a) Principal Accounting Officer Certification



32.1

Section 1350 Certification of Chief Executive Officer



32.2

Section 1350 Certification of Principal Accounting Officer





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SIGNATURES



In accordance with the requirements of the Exchange Act, the registrant caused this report to be so signed on its behalf by the undersigned, thereunto duly authorized.



|       |                   |  |                                                                         
|------ | ----------------- |  | ------------------------------------------------------------------------
|       |                   |  | North Penn Bancorp, Inc                                                 
|       |                   |  |                                                                         
|Dated: | November 14, 2007 |  | /s/   Frederick L. Hickman                                              
|       |                   |  | Frederick L. Hickman
President and
Chief Executive Officer              
|       |                   |  |                                                                         
|Dated: | November 14, 2007 |  | /s/   Glenn J. Clark                                                    
|       |                   |  | Glenn J. Clark
Assistant Vice President and
Principal Accounting Officer