SECURITIES AND EXCHANGE COMMISSION 
                              Washington, DC 20549
                                  FORM 10-Q
                   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) 
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended August 23, 1996

Commission File No. 1-5548

Penobscot Shoe Company
(Exact name of registrant as specified in its charter)

Maine
(State or other jurisdiction of incorporation or organization)

01-0139580
(IRS Employer identification no.)

450 North Main Street, Old Town Maine
(Address of principal executive offices)

04468
(Zip code)

Not Applicable
(Former name, former address and former fiscal year, 
if changed since last report)

Registrant's telephone number, including area code:  (207) 827-4431

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for the past 90
days.  Yes __X__
       No _____
Common stock of 1,459,817 shares, $1 par value, was outstanding at
August 23, 1996
<PAGE>
<TABLE>
                        PENOBSCOT SHOE COMPANY
                       CONDENSED BALANCE SHEET
                            (In thousands)
<CAPTION>
                                 August 23, 1996      November 24, 1995 
                                   (Unaudited)            (Note (a))
<S>                                   <C>                   <C>
CURRENT ASSETS:
  Cash & Cash Equivalents             $  379               $1,301
  Marketable Securities                3,219                3,271
  Refundable income taxes                  -                    -
  Accounts receivable                  3,157                3,492
  Inventories (Note 2)                 4,118                3,054
  Other current assets                   520                  341
                                     _______              _______
        TOTAL CURRENT ASSETS         $11,393              $11,459

PROPERTY AND EQUIPMENT, AT COST:
  Buildings                           $1,412               $1,413
  All Other                              725                1,617
  Less accumulated depreciation
    and amortization                   1,933                2,660
                                     _______              _______
        NET PROPERTY AND EQUIPMENT      $204                 $369
                                     _______              _______
  TOTAL ASSETS                       $11,598              $11,828
                                     =======              =======
LIABILITIES AND SHAREHOLDERS' EQUITY:

CURRENT LIABILITIES:
  Accounts payable                      $609                 $791
  Other current liabilities              458                  496
                                     _______              _______
        TOTAL CURRENT LIABILITIES     $1,067               $1,287

DEFERRED INCOME TAXES                   $146                 $146

SHAREHOLDERS' EQUITY:
  Common stock, $1 par value:
    authorized 2,000,000 shares:
    issued 1,533,042                  $1,533               $1,533
  Capital in excess of par value       1,109                1,109
  Retained earnings                    7,898                7,667
  Add net unrealized gain on available-
    for-sale securities (Note (b))       233                  356
  Less treasury stock at cost
    73,225 and 50,925 shares;            389                  270

         NET SHAREHOLDERS' EQUITY    _______              _______
           (Note 3)                  $10,384              $10,395
TOTAL LIABILITIES AND SHARE-         _______              _______
  HOLDERS' EQUITY                    $11,598              $11,828
                                     =======              =======
<FN>
Note: (a) The balance sheet at November 24, 1995, has been derived
          from the audited financial statements at that date.
      (b) The Company adopted Statement of Accounting Standard No.
          115 "Accounting for Certain Investments in Debt and Equity
          Securities" effective November 26, 1994.

See notes to the condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
                        PENOBSCOT SHOE COMPANY
                         STATEMENT OF INCOME
               (In thousands, except per share amounts)
                             (Unaudited)
<CAPTION>
                                   For the                  For the
                              Third Quarter Ended      Nine Months Ended
                              August       August      August     August                     
                             23, 1996     25, 1995    23, 1996   25, 1995
<S>                          <C>          <C>         <C>        <C>
Net Sales                     $3,865       $3,872      $11,114    $9,447

Cost and operating expenses:

  Cost of sales                2,697        2,587        7,610          6,282
  Selling and administrative
    expenses                     996        1,130        3,179          3,233
                             _______      _______      _______        _______
Operating income (loss)          172          156          325            (68)

Other income                     154           65          423            260
                             _______      _______      _______        _______
Income before income taxes       327          221          748            192

Income taxes                     131           88          297             72
                             _______      _______      _______        _______
Net income                      $196         $133         $451           $120
                             =======      =======      =======        =======

Per Common Share:

  Net income                   $0.13        $0.09        $0.31          $0.08

  Dividends                     0.05         0.05         0.15           0.15


Average number of common shares
  outstanding               1,461,833    1,482,117    1,472,605      1,482,117
<FN>
See notes to the condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
                             PENOBSCOT SHOE
                          COMPANY STATEMENT OF
                               CASH FLOWS
        For Nine months Ended August 23, 1996 and August 25, 1995
                            (In thousands)
<CAPTION>
                                        1996                 1995 
<S>                                     <C>                  <C>
Cash flows from operating
  activities:

  Net cash provided (used) by
    operating activities                   $(633)            ($311)
Cash flows from investing
  activities:

  Proceeds from sale of assets                67                 0

  Capital expenditures                       (16)              (12)
                                          _______           _______ 
Net cash provided (used) by
      investing activities                    51               (12)
  
Cash flows from financing activities:

  Dividends paid                            (221)             (222)

  Purchase of treasury stock                (119)                0

    Net cash provided (used) by           _______           _______
      financing activities                  (340)             (222)

    Net increase (decrease) in            _______           _______
      cash and cash equivalents             (922)             (546)

Cash and cash equivalent at
  beginning of period                      1,301             1,308

Cash and cash equivalent at               _______           _______
  end of period                           $  379             $ 762
                                          =======           =======


Supplemental Disclosure of Cash Flow Information
  Cash paid during the period for:

    Interest                                  $0                $0

    Income taxes                             444               117
</TABLE>
<PAGE>
                            PENOBSCOT SHOE COMPANY

                     NOTES TO CONDENSED FINANCIAL STATEMENTS 
                                 (Unaudited)
                             
1.  CONDENSED FINANCIAL STATEMENTS

    The condensed balance sheet as of August 23, 1996 the statements of
income for the third quarter periods ended August 23, 1996 and August
25, 1995, and the condensed statements of cash flows for the nine-month
periods then ended have been prepared by the Company, without audit.  In
the opinion of management, all necessary adjustments, which include normal 
recurring adjustments, have been made to present fairly the financial position,
results of operations, and cash flows at August 23, 1996 and for the other 
periods presented.  The results of operations for the period ended August 23,
1996 are not necessarily indicative of operating results for the full year.

2.  INVENTORIES

    Inventories are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                            8/23/96     11/24/95      8/25/95
<S>                          <C>         <C>          <C>
FIFO Cost:
    finished shoes           $4,815       $3,355       $4,079
    shoes in process              0           22           72
    raw materials                43          232          310
                            _______      _______      _______ 
                             $4,857       $3,609       $4,461
Excess of FIFO cost over
LIFO inventory value           (739)        (555)        (930)
                            _______      _______      _______
                             $4,118       $3,054       $3,020 
                            =======      =======      =======
</TABLE>

    The Company uses the LIFO method because it more realistically
reflects operating results by charging current costs against current
revenues.

3.  SHAREHOLDERS' EQUITY

    During the nine months ended August 23, 1996, shareholders' equity
changed due to net income of  $451,000, dividends declared of $ 221,000,
purchases of treasury stock of $119,000 and a decrease of $123,000
resulting from a decrease in the net unrealized gain on available-for-
sale securities held by the Company.  Effective November 26, 1994, the
Company adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities",
necessitating the inclusion of this net unrealized gain on the balance
sheet.
<PAGE>
                        PENOBSCOT SHOE COMPANY
    MANAGEMENT DISCUSSION AND ANALYSIS OF THE SUMMARY OF OPERATIONS
                                   
Liquidity and Capital Resources:

   At August 23, 1996, Penobscot Shoe Company had working capital of
approximately $10,326,000 versus approximately $10,172,000 at November
24, 1995, an increase of $154,000.  The ratio of current assets to
current liabilities at August 23, 1996, was 10.7 to 1, compared to 8.9
to 1, at November 24, 1995.

   The statement of cash flows for the nine months ended August 23, 1996, shows
a decrease of $922,000 in cash and cash equivalents since November 24, 1995. 
The Company's operations used $633,000 since November 24, 1995, primarily 
due to seasonal fluctuations in inventory. The Company's quarterly dividend 
amounted to a use of $221,000 during the period, purchases of treasury shares 
used $119,000 and capital expenditures for equipment amounted to a further use 
of $16,000. Proceeds from the sale of machinery and equipment provided $67,000 
since November 24, 1995.

   The decreases in accounts receivable and accounts payable, and the increases 
in inventories and other current assets since November 24, 1995, were all the 
result of ordinary fluctuations. The changes in property and equipment and the 
related accumulated depreciation accounts resulted from the closure of the 
Company's plant in Old Town, Maine. The majority of the equipment and 
machinery from that plant were sold or disposed of during the quarter, 
resulting in the reduction in net property and equipment since November 24, 
1995.

   Management believes that Penobscot Shoe Company remains financially
well structured to consider a variety of financing options should the need
arise and will make choices depending on economic conditions at the time.
Options available include conversion of marketable securities held by the
Company into cash and cash equivalents.  The Company also has an established 
line of credit with a major bank available for direct borrowing at the prime 
rate should the need arise.

Results of Operations:

   Net sales for the third quarter ended August 23, 1996, were $3,865,000, 
about equal to sales of $3,872,000 in the same period last year. Net income 
for the current quarter was $196,000, or $.13 per share, compared to net 
income of $133,000, or $.09 per share, in the corresponding quarter last year. 

   For the nine months year-to-date, net sales were $11,114,000, up 18% from 
$9,447,000 a year ago. Net income for the year-to-date period was $451,000, 
or $.31 per share, versus net income of $120,000, or $.08 per share, last year.

   During the third quarter the Company ceased production at its plant on 
Gilman Falls Avenue in Old Town, Maine. The closure was in response to a 
decline in the portion of the product line that had been assembled in Old Town. 
A restructuring charge of approximately $150,000, pre-tax, was taken as a 
result of this closure. 

   Cost of sales was 69.8% of net sales in the third quarter compared to 66.8% 
a year ago resulting in gross profit margins of 30.2% and 33.2% in the 1996 
and 1995 quarters, respectively. The majority of the decline in gross profit 
margin from last year was a result of the restructuring charge discussed 
previously. Without the impact of that charge, the gross profit margin in the 
current quarter would have been 32.9%. 

   Selling and administrative costs in the third quarter were approximately 
12 % lower than last year. Lower advertising, commissions, and selling 
expenses were a result of both timing and efficiencies realized in selling 
efforts. 

   Other income in the current quarter was enhanced by a favorable settlement of
litigation, which amounted to $100,000, pre-tax. This litigation against our 
insurance carrier was related to the issue of insurance coverage arising out 
of a case settled two years ago.

   The sales growth of Trotters during the first nine months of 1996 has been 
based largely on a stronger retail environment than a year ago and on increased 
distribution of the brand. Future growth will be dependent upon a continuation 
of these same two factors.



<PAGE>

PART II.  OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K

            (a) Exhibits

                Exhibit 27.  Financial Data Schedule

            (b) Reports on Form 8-K

                No reports on Form 8-K have been filed during the
                last quarter of the period covered by this report.
<PAGE>
SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.




                                         Penobscot Shoe Company
                                         _________________________
                                              (Registrant)
                                              
                                              
Date: October 7, 1996                        Paul Hansen
                                         _________________________ 
                                         By: Paul Hansen
                                         President and
                                         Chief Executive Officer

Date: October 7, 1996                         David L. Keane
                                         _________________________ 
                                         By:  David L. Keane
                                         Vice President/Finance
                                         and Administration