EXHIBIT 10.20


2007 EXECUTIVE ANNUAL INCENTIVE PLAN TARGETS






Pursuant
      to the terms of the Executive Annual Incentive Plan, as amended as of September
      26, 2005 (the "Plan"), the Compensation Committee of the Board of Directors
      (the
“Committee”) of KNBT Bancorp, Inc. (the “Company”) which administers the Plan
      established performance targets for the annual cash bonuses for fiscal year
      2007
      to be earned by Scott V. Fainor, the Company’s President and Chief Executive
      Officer; Eugene T. Sobol, Senior Executive Vice President and Chief Financial
      Officer, and Sandra L. Bodnyk, Senior Executive Vice President, Chief Risk
      Officer. The Committee also established performance targets for other senior
      officers for fiscal year 2007: John T. Andreacio, Executive Vice President,
      Regional President of Northeast Pennsylvania; Deborah R. Goldsmith, Executive
      Vice President, Retail Lending and Administration; David B. Kennedy, Executive
      Vice President, Regional President of Greater Lehigh Valley; Carl F. Kovacs,
      Executive Vice President, Chief Information Officer; and G. Allen Weiss,
      Executive Vice President, President of KNBT Wealth Management
      Group.





Under
      the
      terms of the Plan, the Committee establishes a performance matrix for each
      participant which sets forth the quantitative measures used to determine the
      amount of a participant's possible bonus, the relative weight accorded each
      quantitative measure, the minimum and maximum amount of the participant's bonus
      as a percentage of his base salary as in effect at the beginning of the fiscal
      year with respect to each quantitative measure and the minimum threshold targets
      necessary to be achieved in order for any bonus to be awarded.





For
      fiscal year 2007, the Committee has established targets for the eight executives
      referenced above based on the Company's (i) earnings per share, as calculated
      in
      accordance with the terms of the Plan; (ii) efficiency ratio; and (iii) return
      on average equity. Under the terms of the targets for fiscal year 2007, the
      relative weight accorded each of the targets is 40% each for earnings per share
      and return on average equity and 20% for the efficiency ratio. The amount of
      the
      cash bonus for each executive ranges from a minimum of 30% for the chief
      executive officer, 25% for the chief financial officer, 20% for the chief risk
      officer and 15% for the other executive officers (if all the minimum threshold
      targets are achieved) to a maximum of 90% (in the case of the chief executive
      officer), 75% (in the case of the chief financial officer), 60% (in the case
      of
      the chief risk officer) and 45% (in the case of the other executive officers)
      of
      the executive's 2007 base salary if the “superior performance” targets are
      achieved with a target bonus of 60% (in the case of the chief executive
      officer), 50% (in the case of the chief financial officer), 40% (in the case
      of
      the chief risk officer) and 30% (in the case of the other executive officers)
      of
      base salary. Since
      the
      bonuses can be partially earned if one or more of the targets are achieved,
      if
      only the efficiency ratio target was achieved, the executive's bonus could
      be as
      low as 6% (in the case of the chief executive officer), 5% (in the case of
      the
      chief financial officer), 4% (in the case of the chief risk officer) and 3%
      (in
      the case of the other executive officers) of the executive's 2007 annual base
      salary. As
      result, the range of the amounts of the bonuses that could potentially be earned
      by the executives will be as follows: Mr. Fainor, $25,338 to $380,070; Mr.
      Sobol, $13,133 to $196,988; Ms. Bodnyk, $8,240 to $123,600; Mr. Andreacio,
      $5,516 to $82,735; Ms. Goldsmith, $4,542 to $68,135; Mr. Kennedy, $5,562 to
      $83,430; Mr. Kovacs, $4,249 to $63,731; and Mr. Weiss, $4,944 to
      $74,160.