**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

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**Form      10-Q**

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| x      | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE |
|--------|------------------------------------------------------------------------|
|   | SECURITIES                EXCHANGE ACT OF 1934                         |

**      September 30, 2007**

| o      | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE |
|--------|-------------------------------------------------------------------------|
|   | SECURITIES                EXCHANGE ACT OF 1934                          |

**001-14879**

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**GREAT      LAKES BANCORP, INC.**

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| **DELAWARE**                                                                  | **94-3078031**                                      |
|-------------------------------------------------------------------------------|-----------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) | (I.R.S.                Employer Identification No.) |

| **2421                MAIN STREET, BUFFALO, NEW YORK**  | **14214**               |
|---------------------------------------------------------|-------------------------|
| (Address                of principal executive offices) | Zip                Code |

**(716)      961-1900**

----

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**GREAT      LAKES BANCORP, INC. AND SUBSIDIARIES**

**Form      10-Q**

**For      the Quarterly Period Ended September 30, 2007**

**TABLE        OF CONTENTS**

|                        |                                                                                                                                                           |  **PAGE** |
|-----------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|
| **PART                I.**  | **FINANCIAL                INFORMATION**                                                                                                                       |           |
|                        |                                                                                                                                                           |           |
| ITEM                1.      | FINANCIAL                STATEMENTS                                                                                                                            |           |
|                        |                                                                                                                                                           |           |
|                        | Condensed                Consolidated Balance Sheets (Unaudited) -  at                September 30, 2007 and December 31, 2006                            | 3              |
|                        |                                                                                                                                                           |           |
|                        | Condensed                Consolidated Statements of Operations (Unaudited) -  Three                and nine months ended September 30, 2007 and 2006      | 4              |
|                        |                                                                                                                                                           |           |
|                        | Condensed                Consolidated Statements of Shareholders’ Equity (Unaudited) - Nine                months ended September 30, 2007 and 2006 | 5              |
|                        |                                                                                                                                                           |           |
|                        | Condensed                Consolidated Statements of Cash Flows (Unaudited) - Nine                months ended September 30, 2007 and 2006                 | 6              |
|                        |                                                                                                                                                           |           |
|                        | Notes                to Condensed Consolidated Financial Statements (Unaudited)                                                                                | 7              |
|                        |                                                                                                                                                           |           |
| ITEM                2.      | MANAGEMENT’S                DISCUSSION AND ANALYSIS OF                FINANCIAL CONDITION AND RESULTS                OF OPERATIONS                  | 15             |
|                        |                                                                                                                                                           |           |
| ITEM                3.      | QUANTITATIVE                AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                                      | 25             |
|                        |                                                                                                                                                           |           |
| ITEM                4.      | CONTROLS                AND PROCEDURES                                                                                                                         | 25             |
|                        |                                                                                                                                                           |           |
| **PART                II.** | **OTHER                INFORMATION**                                                                                                                           |           |
|                        |                                                                                                                                                           |           |
| ITEM                1.      | LEGAL                PROCEEDINGS                                                                                                                               | 26             |
|                        |                                                                                                                                                           |           |
| ITEM                1A.     | RISK                FACTORS                                                                                                                                    | 26             |
|                        |                                                                                                                                                           |           |
| ITEM                2.      | UNREGISTERED                SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                                                                     | 26             |
|                        |                                                                                                                                                           |           |
| ITEM                3.      | DEFAULTS                UPON SENIOR SECURITIES                                                                                                                 | 26             |
|                        |                                                                                                                                                           |           |
| ITEM                4.      | SUBMISSION                OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                             | 26             |
|                        |                                                                                                                                                           |           |
| ITEM                5.      | OTHER                INFORMATION                                                                                                                               | 27             |
|                        |                                                                                                                                                           |           |
| ITEM                6.      | EXHIBITS                                                                                                                                                       | 27             |
|                        |                                                                                                                                                           |           |
|                        | SIGNATURES                                                                                                                                                     | 28             |

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**PART      I. FINANCIAL INFORMATION**

**ITEM      1. **
**FINANCIAL      STATEMENTS**

**GREAT      LAKES BANCORP, INC. AND SUBSIDIARIES**

**Condensed      Consolidated Balance Sheets (Unaudited)**

**(In      thousands, except share and per share data)**

|                                                                                                                                                                               |   | **September 30,****2007** |    | **December 31,****2006** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|-------------------------------|--------|
| **ASSETS**                                                                                                                                                                         |   |                           |    |                          |   |   |   |
| Cash                and cash equivalents:                                                                                                                                          |   |                           |    |                          |   |   |   |
| Cash                and due from banks                                                                                                                                             |   | $                              | 12,581  |                          | $      | 13,582 |   |
| Interest-earning                deposits in other financial institutions                                                                                                           |   |                           | 218     |                          |   | 444 |   |
| Total                cash and cash equivalents                                                                                                                                     |   |                           | 12,799  |                          |   | 14,026 |   |
| Restricted                cash                                                                                                                                                     |   |                           | 3,897   |                          |   | 3,923 |   |
| Securities                available for sale, at fair value                                                                                                                        |   |                           | 207,698 |                          |   | 233,853 |   |
| Securities                held to maturity, at amortized cost (fair value of $15,648 and $15,758,                respectively)                                                     |   |                           | 15,973  |                          |   | 15,997 |   |
| Federal                Home Loan Bank stock, at cost                                                                                                                               |   |                           | 3,640   |                          |   | 2,712 |   |
| Loans,                net of allowance for loan losses of $2,953 and $3,781,                respectively                                                                           |   |                           | 554,172 |                          |   | 513,928 |   |
| Premises                and equipment, net                                                                                                                                         |   |                           | 26,824  |                          |   | 24,765 |   |
| Accrued                interest receivable                                                                                                                                         |   |                           | 4,186   |                          |   | 3,694 |   |
| Bank-owned                life insurance                                                                                                                                           |   |                           | 13,373  |                          |   | 13,006 |   |
| Deferred                tax asset, net                                                                                                                                             |   |                           | 58,139  |                          |   | 43,106 |   |
| Goodwill                                                                                                                                                                           |   |                           | 244     |                          |   | 12,832 |   |
| Other                assets                                                                                                                                                        |   |                           | 2,802   |                          |   | 2,570 |   |
| Total                assets                                                                                                                                                        |   | $                              | 903,747 |                          | $      | 884,412 |   |
|                                                                                                                                                                               |   |                           |    |                          |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                                                                                                                      |   |                           |    |                          |   |   |   |
| Deposits:                                                                                                                                                                          |   |                           |    |                          |   |   |   |
| Noninterest-bearing                                                                                                                                                                |   | $                              | 32,188  |                          | $      | 37,145 |   |
| Interest-bearing                                                                                                                                                                   |   |                           | 611,814 |                          |   | 597,511 |   |
| Total                deposits                                                                                                                                                      |   |                           | 644,002 |                          |   | 634,656 |   |
| Short-term                borrowings                                                                                                                                               |   |                           | 15,801  |                          |   | 17,900 |   |
| Long-term                borrowings                                                                                                                                                |   |                           | 100,372 |                          |   | 86,372 |   |
| Accrued                expenses and other liabilities                                                                                                                              |   |                           | 12,079  |                          |   | 9,974 |   |
| Total                liabilities                                                                                                                                                   |   |                           | 772,254 |                          |   | 748,902 |   |
|                                                                                                                                                                               |   |                           |    |                          |   |   |   |
| Shareholders’                equity:                                                                                                                                         |   |                           |    |                          |   |   |   |
| Common                stock - 20,000,000 shares of $0.01 par value authorized; 10,925,387                shares                issued in 2007 and 10,923,213 shares issued in 2006 |   |                           | 109     |                          |   | 109 |   |
| Additional                paid-in capital                                                                                                                                          |   |                           | 136,017 |                          |   | 136,138 |   |
| Retained                earnings (accumulated deficit)                                                                                                                             |   |                           | (629    | )                             |   | 1,934 |   |
| Treasury                stock, at cost; 99,189 and 1,417 shares, respectively                                                                                                      |   |                           | (1,212  | )                             |   | (234 | ) |
| Accumulated                other comprehensive loss                                                                                                                                |   |                           | (2,792  | )                             |   | (2,437 | ) |
| Total                shareholders’ equity                                                                                                                                    |   |                           | 131,493 |                          |   | 135,510 |   |
| Total                liabilities and shareholders’ equity                                                                                                                    |   | $                              | 903,747 |                          | $      | 884,412 |   |

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**GREAT      LAKES BANCORP, INC. AND SUBSIDIARIES**

**Condensed      Consolidated Statements of Operations (Unaudited)**

**(In      thousands, except share and per share data)**

|                                                                 |   | **Three months ended** **September 30,** |       | **Nine months ended** **September 30,** |   |
|----------------------------------------------------------------------|--------|--------------------------------------------------------------|------------|-------------------------------------------------------------|--------|
|                                                                 |   | **2007**                                                     |       | **2006**                                                    |   | **2007** |   | **2006** |   |
| **Interest                and dividend income:**                     |   |                                                         |       |                                                        |   |   |   |   |   |   |   |   |   |
| Interest                and fees on loans                            |   | $                                                            | 8,444      |                                                        | $      | 7,393 |   | $ | 24,768 |   | $ | 20,147 |   |
| Interest                on investment securities:                    |   |                                                         |       |                                                        |   |   |   |   |   |   |   |   |   |
| Taxable                                                              |   |                                                         | 2,746      |                                                        |   | 3,137 |   |   | 8,570 |   |   | 9,367 |   |
| Tax-exempt                                                           |   |                                                         | 129        |                                                        |   | 130 |   |   | 389 |   |   | 390 |   |
| Total                interest on securities                          |   |                                                         | 2,875      |                                                        |   | 3,267 |   |   | 8,959 |   |   | 9,757 |   |
| Dividends                on FHLB stock                               |   |                                                         | 62         |                                                        |   | 62 |   |   | 153 |   |   | 156 |   |
| Other                interest income                                 |   |                                                         | 38         |                                                        |   | 415 |   |   | 82 |   |   | 1,829 |   |
| Total                interest and dividend income                    |   |                                                         | 11,419     |                                                        |   | 11,137 |   |   | 33,962 |   |   | 31,889 |   |
| **Interest                expense:**                                 |   |                                                         |       |                                                        |   |   |   |   |   |   |   |   |   |
| Deposits                                                             |   |                                                         | 6,275      |                                                        |   | 6,013 |   |   | 18,043 |   |   | 16,594 |   |
| Short-term                borrowings                                 |   |                                                         | 69         |                                                        |   | 85 |   |   | 654 |   |   | 517 |   |
| Long-term                borrowings                                  |   |                                                         | 1,301      |                                                        |   | 1,043 |   |   | 3,781 |   |   | 3,434 |   |
| Total                interest expense                                |   |                                                         | 7,645      |                                                        |   | 7,141 |   |   | 22,478 |   |   | 20,545 |   |
| Net                interest income                                   |   |                                                         | 3,774      |                                                        |   | 3,996 |   |   | 11,484 |   |   | 11,344 |   |
| Provision                for loan losses                             |   |                                                         | 376        |                                                        |   | 29 |   |   | 263 |   |   | 587 |   |
| Net                interest income after provision for loan losses   |   |                                                         | 3,398      |                                                        |   | 3,967 |   |   | 11,221 |   |   | 10,757 |   |
| **Noninterest                income:**                               |   |                                                         |       |                                                        |   |   |   |   |   |   |   |   |   |
| Gain                on sale of mortgage loans                        |   |                                                         | 374        |                                                        |   | - |   |   | 699 |   |   | - |   |
| Service                charges on deposit accounts                   |   |                                                         | 233        |                                                        |   | 184 |   |   | 623 |   |   | 480 |   |
| Other                fees and service charges                        |   |                                                         | 195        |                                                        |   | 137 |   |   | 539 |   |   | 379 |   |
| Loan                fee income                                       |   |                                                         | 177        |                                                        |   | 88 |   |   | 479 |   |   | 247 |   |
| Earnings                on bank-owned life insurance                 |   |                                                         | 124        |                                                        |   | 117 |   |   | 367 |   |   | 348 |   |
| Other                operating income                                |   |                                                         | 36         |                                                        |   | 58 |   |   | 108 |   |   | 132 |   |
| Total                noninterest income                              |   |                                                         | 1,139      |                                                        |   | 584 |   |   | 2,815 |   |   | 1,586 |   |
| **Noninterest                expense:**                              |   |                                                         |       |                                                        |   |   |   |   |   |   |   |   |   |
| Salaries                and employee benefits                        |   |                                                         | 4,509      |                                                        |   | 2,716 |   |   | 10,883 |   |   | 7,620 |   |
| Occupancy,                equipment and furnishings                  |   |                                                         | 971        |                                                        |   | 630 |   |   | 2,449 |   |   | 1,782 |   |
| Professional                services                                 |   |                                                         | 418        |                                                        |   | 167 |   |   | 793 |   |   | 457 |   |
| Data                processing and operations                        |   |                                                         | 298        |                                                        |   | 240 |   |   | 865 |   |   | 690 |   |
| Deposit                and other insurance                           |   |                                                         | 222        |                                                        |   | 94 |   |   | 612 |   |   | 185 |   |
| Printing,                postage and supplies                        |   |                                                         | 119        |                                                        |   | 123 |   |   | 387 |   |   | 332 |   |
| Advertising                                                          |   |                                                         | 106        |                                                        |   | 202 |   |   | 379 |   |   | 592 |   |
| Other                operating expenses                              |   |                                                         | 673        |                                                        |   | 450 |   |   | 1,788 |   |   | 1,300 |   |
| Total                noninterest expense                             |   |                                                         | 7,316      |                                                        |   | 4,622 |   |   | 18,156 |   |   | 12,958 |   |
| Loss                before income taxes                              |   |                                                         | (2,779     | )                                                           |   | (71 | ) |   | (4,120 | ) |   | (615 | ) |
| Income                tax benefit                                    |   |                                                         | (1,079     | )                                                           |   | (62 | ) |   | (1,557 | ) |   | (472 | ) |
| Net                loss                                              |   | $                                                            | (1,700     | )                                                           | $      | (9 | ) | $ | (2,563 | ) | $ | (143 | ) |
|                                                                 |   |                                                         |       |                                                        |   |   |   |   |   |   |   |   |   |
| Loss                per share – basic and diluted         |   | $                                                            | (0.16      | )                                                           | $      | - |   | $ | (0.23 | ) | $ | (0.02 | ) |
| Weighted                average basic and diluted shares outstanding |   |                                                         | 10,883,784 |                                                        |   | 10,914,896 |   |   | 10,909,761 |   |   | 8,007,137 |   |

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**GREAT      LAKES BANCORP, INC. AND SUBSIDIARIES **

**Condensed      Consolidated Statements of Shareholders’ Equity      (Unaudited)**

**Nine      months ended September 30, 2007 and 2006**

**(In      thousands, except share data)**

|                                                                                                     |   | **Common ****Stock** |    | **Additional ****Paid-in ****Capital** |   | **Retained                Earnings (Accumulated Deficit)** |   | **Treasury****Stock** |      | **Accumulated                Other Comprehensive Loss** |   | **Total                Shareholders’ Equity** |   |
|----------------------------------------------------------------------------------------------------------|--------|---------------------------|---------|--------------------------------------------------|--------|------------------------------------------------------------|--------|-----------------------|-----------|---------------------------------------------------------|--------|-----------------------------------------------------|--------|
| **Balance                at January 1, 2006**                                                            |   | **$**                     | **43**  |                                             | **$**  | **35,383**                                                 |   | **$**                 | **2,830** |                                                    | **$**  | **-**                                               |   | **$** | **(2,743** | **)** | **$** | **35,513** |   |
| Comprehensive                income:                                                                     |   |                      |    |                                             |   |                                                       |   |                  |      |                                                    |   |                                                |   |   |   |   |   |   |   |
| Net                loss                                                                                  |   |                      | -       |                                             |   | -                                                          |   |                  | (143      | )                                                       |   | -                                                   |   |   | - |   |   | (143 | ) |
| Change                in net unrealized loss on securities available for sale, net of                tax |   |                      | -       |                                             |   | -                                                          |   |                  | -         |                                                    |   | -                                                   |   |   | 311 |   |   | 311 |   |
| Total                comprehensive income                                                                |   |                      |    |                                             |   |                                                       |   |                  |      |                                                    |   |                                                |   |   |   |   |   | 168 |   |
| Outstanding                Bay View shares at merger date – 6,613,099 shares                       |   |                      | 66      |                                             |   | 101,584                                                    |   |                  | -         |                                                    |   | -                                                   |   |   | - |   |   | 101,650 |   |
| Bay                View treasury stock at merger date – 1,417 shares                               |   |                      | -       |                                             |   | 234                                                        |   |                  | -         |                                                    |   | (234                                                | )      |   | - |   |   | - |   |
| Bay                View merger costs                                                                     |   |                      | -       |                                             |   | (1,158                                                     | )      |                  | -         |                                                    |   | -                                                   |   |   | - |   |   | (1,158 | ) |
| Stock-based                compensation plans:                                                           |   |                      |    |                                             |   |                                                       |   |                  |      |                                                    |   |                                                |   |   |   |   |   |   |   |
| Compensation                expense on stock options                                                     |   |                      | -       |                                             |   | 19                                                         |   |                  | -         |                                                    |   | -                                                   |   |   | - |   |   | 19 |   |
| Shares                issued for stock option exercises – 1,739 shares                             |   |                      | -       |                                             |   | 16                                                         |   |                  | -         |                                                    |   | -                                                   |   |   | - |   |   | 16 |   |
| **Balance                at September 30, 2006**                                                         |   | **$**                     | **109** |                                             | **$**  | **136,078**                                                |   | **$**                 | **2,687** |                                                    | **$**  | **(234**                                            | **)**  | **$** | **(2,432** | **)** | **$** | **136,208** |   |
|                                                                                                     |   |                      |    |                                             |   |                                                       |   |                  |      |                                                    |   |                                                |   |   |   |   |   |   |   |
| **Balance                at January 1, 2007**                                                            |   | **$**                     | **109** |                                             | **$**  | **136,138**                                                |   | **$**                 | **1,934** |                                                    | **$**  | **(234**                                            | **)**  | **$** | **(2,437** | **)** | **$** | **135,510** |   |
| Comprehensive                loss:                                                                       |   |                      |    |                                             |   |                                                       |   |                  |      |                                                    |   |                                                |   |   |   |   |   |   |   |
| Net                loss                                                                                  |   |                      | -       |                                             |   | -                                                          |   |                  | (2,563    | )                                                       |   | -                                                   |   |   | - |   |   | (2,563 | ) |
| Change                in net unrealized loss on securities available for sale, net of                tax |   |                      | -       |                                             |   | -                                                          |   |                  | -         |                                                    |   | -                                                   |   |   | (355 | ) |   | (355 | ) |
| Total                comprehensive loss                                                                  |   |                      |    |                                             |   |                                                       |   |                  |      |                                                    |   |                                                |   |   |   |   |   | (2,918 | ) |
| Purchase                of treasury stock – 99,020 shares                                          |   |                      | -       |                                             |   | -                                                          |   |                  | -         |                                                    |   | (1,184                                              | )      |   | - |   |   | (1,184 | ) |
| Release                of treasury stock – 1,248 shares                                            |   |                      | -       |                                             |   | (206                                                       | )      |                  | -         |                                                    |   | 206                                                 |   |   | - |   |   | - |   |
| Stock-based                compensation plans:                                                           |   |                      |    |                                             |   |                                                       |   |                  |      |                                                    |   |                                                |   |   |   |   |   |   |   |
| Compensation                expense on stock options and related taxes                                   |   |                      | -       |                                             |   | 65                                                         |   |                  | -         |                                                    |   | -                                                   |   |   | - |   |   | 65 |   |
| Shares                issued for stock option exercises – 2,174 shares                             |   |                      | -       |                                             |   | 20                                                         |   |                  | -         |                                                    |   | -                                                   |   |   | - |   |   | 20 |   |
| **Balance                at September 30, 2007**                                                         |   | **$**                     | **109** |                                             | **$**  | **136,017**                                                |   | **$**                 | **(629**  | **)**                                                   | **$**  | **(1,212**                                          | **)**  | **$** | **(2,792** | **)** | **$** | **131,493** |   |

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**GREAT      LAKES BANCORP, INC. AND SUBSIDIARIES**

**Condensed      Consolidated Statements of Cash Flows (Unaudited)**

**(In      thousands)**

|                                                                                                                                 |   | **Nine months ended September 30,** |    |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------|---------|
|                                                                                                                                 |   | **2007**                                                |    | **2006** |   |
| **Cash                flows from operating activities:**                                                                             |   |                                                    |    |   |   |   |   |
| Net                loss                                                                                                              |   | $                                                       | (2,563  | ) | $ | (143 | ) |
| Adjustments                to reconcile net loss to net cash used in operating                activities:                            |   |                                                    |    |   |   |   |   |
| Depreciation                and amortization of premises and equipment                                                               |   |                                                    | 1,281   |   |   | 1,006 |   |
| Net                amortization of premiums on investment securities                                                                 |   |                                                    | 335     |   |   | 491 |   |
| Net                amortization of deferred loan costs                                                                               |   |                                                    | 1,767   |   |   | 1,234 |   |
| Compensation                expense on stock options                                                                                 |   |                                                    | 65      |   |   | 19 |   |
| Deferred                income tax benefit                                                                                           |   |                                                    | (1,560  | ) |   | (297 | ) |
| Gain                on sale of mortgage loans                                                                                        |   |                                                    | (699    | ) |   | - |   |
| Provision                for loan losses                                                                                             |   |                                                    | 263     |   |   | 587 |   |
| Increase                in accrued interest receivable                                                                               |   |                                                    | (492    | ) |   | (728 | ) |
| Increase                in bank-owned life insurance                                                                                 |   |                                                    | (367    | ) |   | (348 | ) |
| Originations                of mortgage loans held for sale                                                                          |   |                                                    | (76,501 | ) |   | - |   |
| Proceeds                from sale of mortgage loans held for sale                                                                    |   |                                                    | 69,192  |   |   | - |   |
| Decrease                in other assets                                                                                              |   |                                                    | 268     |   |   | 3,052 |   |
| Increase                (decrease) in accrued expenses and other liabilities                                                         |   |                                                    | 931     |   |   | (28,303 | ) |
| Net                cash used in operating activities                                                                                 |   |                                                    | (8,080  | ) |   | (23,430 | ) |
|                                                                                                                                 |   |                                                    |    |   |   |   |   |
| **Cash                flows from investing activities:**                                                                             |   |                                                    |    |   |   |   |   |
| Net                decrease in restricted deposits                                                                                   |   |                                                    | 26      |   |   | 14,218 |   |
| Purchases                of securities available for sale                                                                            |   |                                                    | -       |   |   | (55,104 | ) |
| Proceeds                from principal payments, maturities and calls on securities available                for                sale |   |                                                    | 25,278  |   |   | 24,808 |   |
| Redemption                (purchase) of Federal Home Loan Bank stock                                                                 |   |                                                    | (928    | ) |   | 2,018 |   |
| Purchases                of loans                                                                                                    |   |                                                    | -       |   |   | (15,352 | ) |
| Net                increase in loans                                                                                                 |   |                                                    | (34,266 | ) |   | (72,154 | ) |
| Purchase                of premises and equipment                                                                                    |   |                                                    | (3,340  | ) |   | (5,567 | ) |
| Cash                received in Bay View merger                                                                                      |   |                                                    | -       |   |   | 63,435 |   |
| Bay                View merger costs                                                                                                 |   |                                                    | -       |   |   | (1,158 | ) |
| Net                cash used in investing activities                                                                                 |   |                                                    | (13,230 | ) |   | (44,856 | ) |
|                                                                                                                                 |   |                                                    |    |   |   |   |   |
| **Cash                flows from financing activities:**                                                                             |   |                                                    |    |   |   |   |   |
| Net                increase in deposits                                                                                              |   |                                                    | 9,346   |   |   | 35,436 |   |
| Net                decrease in short-term borrowings                                                                                 |   |                                                    | (2,099  | ) |   | (11,361 | ) |
| Proceeds                from long-term borrowings                                                                                    |   |                                                    | 39,000  |   |   | 186,000 |   |
| Repayment                of long-term borrowings                                                                                     |   |                                                    | (25,000 | ) |   | (224,000 | ) |
| Proceeds                from issuance of common stock                                                                                |   |                                                    | 20      |   |   | 16 |   |
| Purchase                of treasury stock                                                                                            |   |                                                    | (1,184  | ) |   | - |   |
| Net                cash provided by (used in) financing activities                                                                   |   | $                                                       | 20,083  |   | $ | (13,909 | ) |
| Net                decrease in cash and cash equivalents                                                                             |   | $                                                       | (1,227  | ) | $ | (82,195 | ) |
| Cash                and cash equivalents, beginning of period                                                                        |   |                                                    | 14,026  |   |   | 95,500 |   |
| Cash                and cash equivalents, end of period                                                                              |   | $                                                       | 12,799  |   | $ | 13,305 |   |
|                                                                                                                                 |   |                                                    |    |   |   |   |   |
| Supplemental                disclosure of cash flow information:                                                                     |   |                                                    |    |   |   |   |   |
| Cash                paid for interest                                                                                                |   | $                                                       | 21,692  |   | $ | 20,201 |   |
| Cash                refunded for income taxes                                                                                        |   |                                                    | 233     |   |   | 355 |   |
| Acquisition                of Bay View Capital Corporation:                                                                          |   |                                                    |    |   |   |   |   |
| Assets                acquired (excluding cash and cash equivalents acquired)                                                        |   |                                                    | -       |   |   | 73,937 |   |
| Liabilities                assumed                                                                                                   |   |                                                    | -       |   |   | 35,722 |   |

----

**GREAT      LAKES BANCORP, INC. AND SUBSIDIARIES**

**Notes      to Condensed Consolidated Financial Statements (Unaudited)**

**(1.)**
**ACCOUNTING      POLICIES**

**Recently      Adopted Accounting Pronouncements**

*Accounting      for Uncertainty in Income Taxes *

**(2.)**
**MERGERS**

**Pending      Merger with First Niagara Financial Group**

**Merger      with Bay View Capital Corporation**

----

**GREAT      LAKES BANCORP, INC. AND SUBSIDIARIES**

**Notes      to Condensed Consolidated Financial Statements (Unaudited)**

| ***(Dollars                in thousands)***                              |   |   |    |
|--------------------------------------------------------------------------|--------|--------|---------|
| Cash                and cash equivalents                                 |   | $      | 63,435  |   |
| Restricted                cash                                           |   |   | 18,118  |   |
| Deferred                tax assets, net of valuation allowance of $7,273 |   |   | 53,900  |   |
| Goodwill                                                                 |   |   | 244     |   |
| Other                assets, including FSA recovery of $2,000            |   |   | 3,760   |   |
| Total                assets acquired                                     |   |   | 139,457 |   |
|                                                                     |   |   |    |   |
| Accounts                payable                                          |   |   | 2,984   |   |
| FSA                settlement liability                                  |   |   | 20,000  |   |
| Employee-related                liabilities                              |   |   | 3,623   |   |
| Accrued                insurance and professional fees                   |   |   | 4,044   |   |
| Leased                facility obligation                                |   |   | 5,639   |   |
| Other                liabilities                                         |   |   | 1,517   |   |
| Total                liabilities assumed                                 |   |   | 37,807  |   |
|                                                                     |   |   |    |   |
| Net                assets acquired                                       |   | $      | 101,650 |   |

**(3.)**
**EXIT      OF MORTGAGE BANKING ACTIVITIES**

| ***(Dollars                in thousands)***         |   |   |   |
|-----------------------------------------------------|--------|--------|--------|
| Employee                severance and related costs |   | $      | 601    |   |
| Leased                facility costs                |   |   | 184    |   |
| Other                                               |   |   | 20     |   |
|                                                |   | $      | 805    |   |

----

**GREAT      LAKES BANCORP, INC. AND SUBSIDIARIES**

**Notes      to Condensed Consolidated Financial Statements (Unaudited)**

**(4.)**
**INVESTMENT      SECURITIES**

|                                                  |   | **September                30, 2007** |    |
|-------------------------------------------------------|--------|---------------------------------------|---------|
| ***(Dollars                in thousands)***           |   | **Amortized** **Cost**           |    | **Unrealized** **Gains** |   | **Unrealized** **Losses** |   | **Fair** **Value** |   |
| **Securities                available for sale:**     |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| U.S.                Government agency obligations     |   | $                                     | 19,999  |   | $ | - |   | $ | (60 | ) | $ | 19,939 |   |
| Mortgage-backed                securities:            |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| Government                agency issued or guaranteed |   |                                  | 36,216  |   |   | 104 |   |   | (540 | ) |   | 35,780 |   |
| Privately                issued                       |   |                                  | 152,889 |   |   | - |   |   | (4,035 | ) |   | 148,854 |   |
| State                and municipal obligations        |   |                                  | 2,149   |   |   | - |   |   | (16 | ) |   | 2,133 |   |
| Corporate                and other debt obligations   |   |                                  | 1,002   |   |   | - |   |   | (10 | ) |   | 992 |   |
| Total                available for sale securities    |   | $                                     | 212,255 |   | $ | 104 |   | $ | (4,661 | ) | $ | 207,698 |   |
|                                                  |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| **Securities                held to maturity:**       |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| State                and municipal obligations        |   | $                                     | 12,967  |   | $ | - |   | $ | (243 | ) | $ | 12,724 |   |
| Corporate                and other debt obligations   |   |                                  | 3,006   |   |   | - |   |   | (82 | ) |   | 2,924 |   |
| Total                held to maturity securities      |   | $                                     | 15,973  |   | $ | - |   | $ | (325 | ) | $ | 15,648 |   |

|                                                  |   | **December                31, 2006** |    |
|-------------------------------------------------------|--------|--------------------------------------|---------|
| ***(Dollars                in thousands)***           |   | **Amortized** **Cost**          |    | **Unrealized** **Gains** |   | **Unrealized** **Losses** |   | **Fair** **Value** |   |
| **Securities                available for sale:**     |   |                                 |    |   |   |   |   |   |   |   |   |   |   |
| U.S.                Government agency obligations     |   | $                                    | 19,997  |   | $ | - |   | $ | (323 | ) | $ | 19,674 |   |
| Mortgage-backed                securities:            |   |                                 |    |   |   |   |   |   |   |   |   |   |   |
| Government                agency issued or guaranteed |   |                                 | 42,546  |   |   | 9 |   |   | (601 | ) |   | 41,954 |   |
| Privately                issued                       |   |                                 | 172,138 |   |   | - |   |   | (3,060 | ) |   | 169,078 |   |
| State                and municipal obligations        |   |                                 | 2,155   |   |   | - |   |   | (16 | ) |   | 2,139 |   |
| Corporate                and other debt obligations   |   |                                 | 1,008   |   |   | - |   |   | - |   |   | 1,008 |   |
| Total                available for sale securities    |   | $                                    | 237,844 |   | $ | 9 |   | $ | (4,000 | ) | $ | 233,853 |   |
|                                                  |   |                                 |    |   |   |   |   |   |   |   |   |   |   |
| **Securities                held to maturity:**       |   |                                 |    |   |   |   |   |   |   |   |   |   |   |
| State                and municipal obligations        |   | $                                    | 12,987  |   | $ | - |   | $ | (243 | ) | $ | 12,744 |   |
| Corporate                and other debt obligations   |   |                                 | 3,010   |   |   | 16 |   |   | (12 | ) |   | 3,014 |   |
| Total                held to maturity securities      |   | $                                    | 15,997  |   | $ | 16 |   | $ | (255 | ) | $ | 15,758 |   |

----

**GREAT      LAKES BANCORP, INC. AND SUBSIDIARIES**

**Notes      to Condensed Consolidated Financial Statements (Unaudited)**

|                                                     |   | **September                30, 2007**  |       |
|----------------------------------------------------------|--------|----------------------------------------|------------|
|                                                     |   | **Less                than 12 months** |       | **12                months or longer** |   | **Total** |   |
| ***(Dollars                in thousands)***              |   | **Fair****Value**                      | ** ** | **Unrealized                Losses** | ** ** | **Fair****Value** | ** ** | **Unrealized                Losses** | ** ** | **Fair****Value** | ** ** | **Unrealized                Losses** |   |
| **Securities                available for sale:**        |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                Government agency obligations        |   | $                                      | -          |   | $ | - |   | $ | 9,939 |   | $ | (60 | ) | $ | 9,939 |   | $ | (60 | ) |
| Mortgage-backed                securities:               |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government                agency issued or guaranteed    |   |                                   | 9,603      |   |   | (26 | ) |   | 19,832 |   |   | (514 | ) |   | 29,435 |   |   | (540 | ) |
| Privately                issued                          |   |                                   | 36,523     |   |   | (603 | ) |   | 112,331 |   |   | (3,432 | ) |   | 148,854 |   |   | (4,035 | ) |
| State                and municipal obligations           |   |                                   | 744        |   |   | (3 | ) |   | 1,389 |   |   | (13 | ) |   | 2,133 |   |   | (16 | ) |
| Corporate                and other debt obligations      |   |                                   | 992        |   |   | (10 | ) |   | - |   |   | - |   |   | 992 |   |   | (10 | ) |
| Total                available for sale securities       |   | $                                      | 47,862     |   | $ | (642 | ) | $ | 143,491 |   | $ | (4,019 | ) | $ | 191,353 |   | $ | (4,661 | ) |
|                                                     |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Securities                held to maturity:**          |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| State                and municipal obligations           |   | $                                      | -          |   | $ | - |   | $ | 12,724 |   | $ | (243 | ) | $ | 12,724 |   | $ | (243 | ) |
| Corporate                and other debt obligations      |   |                                   | 965        |   |   | (35 | ) |   | 959 |   |   | (47 | ) |   | 1,924 |   |   | (82 | ) |
| Total                held to maturity securities         |   | $                                      | 965        |   | $ | (35 | ) | $ | 13,683 |   | $ | (290 | ) | $ | 14,648 |   | $ | (325 | ) |
| **Total                temporarily impaired securities** |   | $                                      | 48,827     |   | $ | (677 | ) | $ | 157,174 |   | $ | (4,309 | ) | $ | 206,001 |   | $ | (4,986 | ) |

|                                                     |   | **December                31, 2006**   |       |
|----------------------------------------------------------|--------|----------------------------------------|------------|
|                                                     |   | **Less                than 12 months** |       | **12                months or longer** |   | **Total** |   |
| ***(Dollars                in thousands)***              |   | **Fair****Value**                      | ** ** | **Unrealized                Losses** | ** ** | **Fair****Value** | ** ** | **Unrealized                Losses** | ** ** | **Fair****Value** | ** ** | **Unrealized                Losses** |   |
| **Securities                available for sale:**        |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                Government agency obligations        |   | $                                      | -          |   | $ | - |   | $ | 19,674 |   | $ | (323 | ) | $ | 19,674 |   | $ | (323 | ) |
| Mortgage-backed                securities:               |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government                agency issued or guaranteed    |   |                                   | 23,356     |   |   | (136 | ) |   | 14,056 |   |   | (465 | ) |   | 37,412 |   |   | (601 | ) |
| Privately                issued                          |   |                                   | 37,382     |   |   | (134 | ) |   | 131,696 |   |   | (2,926 | ) |   | 169,078 |   |   | (3,060 | ) |
| State                and municipal obligations           |   |                                   | 747        |   |   | (2 | ) |   | 1,392 |   |   | (14 | ) |   | 2,139 |   |   | (16 | ) |
| Total                available for sale securities       |   | $                                      | 61,485     |   | $ | (272 | ) | $ | 166,818 |   | $ | (3,728 | ) | $ | 228,303 |   | $ | (4,000 | ) |
|                                                     |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Securities                held to maturity:**          |   |                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| State                and municipal obligations           |   | $                                      | -          |   | $ | - |   | $ | 12,744 |   | $ | (243 | ) | $ | 12,744 |   | $ | (243 | ) |
| Corporate                and other debt obligations      |   |                                   | -          |   |   | - |   |   | 998 |   |   | (12 | ) |   | 998 |   |   | (12 | ) |
| Total                held to maturity securities         |   | $                                      | -          |   | $ | - |   | $ | 13,742 |   | $ | (255 | ) | $ | 13,742 |   | $ | (255 | ) |
| **Total                temporarily impaired securities** |   | $                                      | 61,485     |   | $ | (272 | ) | $ | 180,560 |   | $ | (3,983 | ) | $ | 242,045 |   | $ | (4,255 | ) |

----

**GREAT        LAKES BANCORP, INC. AND SUBSIDIARIES**

**Notes        to Condensed Consolidated Financial Statements        (Unaudited)**

**(5.)**
**LOANS**

| ***(Dollars                  in thousands)***    |   | **September 30,** |    | **December 31,** |   |
|--------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|                                             |   | **2007**               |    | **2006**              |   |
| Real                  estate loans:              |   |                   |    |                  |   |   |   |
| Residential                                      |   | $                      | 245,148 |                  | $      | 253,709 |   |
| Home                  equity                     |   |                   | 60,449  |                  |   | 53,676 |   |
| Commercial                                       |   |                   | 86,927  |                  |   | 78,666 |   |
| Construction                                     |   |                   | 33,822  |                  |   | 25,481 |   |
| Commercial                  and industrial loans |   |                   | 67,682  |                  |   | 55,055 |   |
| Automobile                  loans                |   |                   | 55,139  |                  |   | 43,719 |   |
| Other                  consumer loans            |   |                   | 1,377   |                  |   | 659 |   |
| Total                  loans                     |   |                   | 550,544 |                  |   | 510,965 |   |
| Allowance                  for loan losses       |   |                   | (2,953  | )                     |   | (3,781 | ) |
| Deferred                  loan costs, net        |   |                   | 6,581   |                  |   | 6,744 |   |
| Total                  loans, net                |   | $                      | 554,172 |                  | $      | 513,928 |   |

**(6.)**
**DEPOSITS**

|                                            |   | **September 30, 2007** |    | **December 31, 2006** |   |
|-------------------------------------------------|--------|----------------------------------|---------|---------------------------------|--------|
|                                            |   |                             |    | **Weighted**                    |   |   |   | **Weighted** |   |
| ***(Dollars                  in thousands)***   |   |                             |    | **Average**                     |   |   |   | **Average** |   |
|                                            |   | **Amount**                       |    | **Rate**                        |   | **Amount** |   | **Rate** |   |
| Noninterest-bearing                  checking   |   | $                                | 32,188  |                            |   | - | % | $ | 37,145 |   |   | - | % |
| Interest-bearing                  checking      |   |                             | 44,435  |                            |   | 1.17 |   |   | 45,139 |   |   | 1.21 |   |
| Savings                  and money market       |   |                             | 194,998 |                            |   | 3.18 |   |   | 214,454 |   |   | 3.17 |   |
| Total                  core deposits            |   |                             | 271,621 |                            |   | 2.48 |   |   | 296,738 |   |   | 2.47 |   |
|                                            |   |                             |    |                            |   |   |   |   |   |   |   |   |   |
| Certificates                  of deposit, due:  |   |                             |    |                            |   |   |   |   |   |   |   |   |   |
| Within                  one year                |   |                             | 339,715 |                            |   | 4.77 |   |   | 272,659 |   |   | 4.70 |   |
| One                  to two years               |   |                             | 29,073  |                            |   | 4.53 |   |   | 55,126 |   |   | 4.47 |   |
| Two                  to three years             |   |                             | 3,038   |                            |   | 4.62 |   |   | 9,223 |   |   | 4.10 |   |
| Three                  to five years            |   |                             | 555     |                            |   | 4.13 |   |   | 910 |   |   | 3.92 |   |
| Total                  certificates of deposits |   |                             | 372,381 |                            |   | 4.75 |   |   | 337,918 |   |   | 4.65 |   |
| Total                  deposits                 |   | $                                | 644,002 |                            |   | 3.79 | % | $ | 634,656 |   |   | 3.63 | % |

----

**GREAT          LAKES BANCORP, INC. AND SUBSIDIARIES**

**Notes          to Condensed Consolidated Financial Statements          (Unaudited)**

**(7.)**
**BORROWINGS**

| ***(Dollars                  in thousands)***                   |   | **September 30,** |    | **December 31,** |   |
|-----------------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|                                                            |   | **2007**               |    | **2006**              |   |
| Federal                  Home Loan Bank overnight borrowings    |   | $                      | 15,532  |                  | $      | 17,500 |   |
| Other                                                           |   |                   | 269     |                  |   | 400 |   |
| Short-term                  borrowings                          |   |                   | 15,801  |                  |   | 17,900 |   |
|                                                            |   |                   |    |                  |   |   |   |
| Securities                  sold under agreements to repurchase |   |                   | 78,000  |                  |   | 74,000 |   |
| Federal                  Home Loan Bank term advance            |   |                   | 10,000  |                  |   | - |   |
| Subordinated                  debentures                        |   |                   | 12,372  |                  |   | 12,372 |   |
| Long-term                  borrowings                           |   |                   | 100,372 |                  |   | 86,372 |   |
|                                                            |   |                   |    |                  |   |   |   |
| Total                  borrowings                               |   | $                      | 116,173 |                  | $      | 104,272 |   |

**(8.)**
**INCOME        TAXES**

----

**GREAT          LAKES BANCORP, INC. AND SUBSIDIARIES**

**Notes          to Condensed Consolidated Financial Statements          (Unaudited)**

| ***(Dollars                  in thousands)***                                     |   | **September 30,** |   | **December 31,** |   |
|-----------------------------------------------------------------------------------|--------|------------------------|--------|-----------------------|--------|
|                                                                              |   | **2007**               |   | **2006**              |   |
|                                                                              |   |                   |   |                  |   |
| Deferred                  tax assets:                                             |   |                   |   |                  |   |   |   |
| Tax                  loss carryforwards                                           |   | $                      | 46,387 |                  | $      | 30,822 |   |
| Tax                  credit carryovers                                            |   |                   | 5,726  |                  |   | 5,794 |   |
| Capital                  loss carryforward                                        |   |                   | 4,097  |                  |   | 4,097 |   |
| Securitizations                                                                   |   |                   | 3,587  |                  |   | 3,611 |   |
| Other                  accrued expenses not currently deductible for tax purposes |   |                   | 3,306  |                  |   | 3,552 |   |
| Net                  unrealized loss on securities available for sale             |   |                   | 1,765  |                  |   | 1,554 |   |
| Allowance                  for loan losses                                        |   |                   | 1,109  |                  |   | 1,417 |   |
| Hedge                  losses                                                     |   |                   | 834    |                  |   | 1,236 |   |
| Other                                                                             |   |                   | 387    |                  |   | 419 |   |
| Gross                  deferred tax assets                                        |   |                   | 67,198 |                  |   | 52,502 |   |
| Valuation                  allowance                                              |   |                   | (7,273 | )                     |   | (7,273 | ) |
| Deferred                  tax assets, net of valuation allowance                  |   |                   | 59,925 |                  |   | 45,229 |   |
| Deferred                  tax liabilities:                                        |   |                   |   |                  |   |   |   |
| Deferred                  loan origination costs                                  |   |                   | (859   | )                     |   | (994 | ) |
| Depreciation                  and amortization                                    |   |                   | (846   | )                     |   | (1,046 | ) |
| Rehabilitation                  credit basis reduction                            |   |                   | (81    | )                     |   | (83 | ) |
| Total                  deferred tax liabilities                                   |   |                   | (1,786 | )                     |   | (2,123 | ) |
| Net                  deferred tax asset                                           |   | $                      | 58,139 |                  | $      | 43,106 |   |

**(9.)**
**PER        SHARE DATA**

----

**GREAT          LAKES BANCORP, INC. AND SUBSIDIARIES**

**Notes          to Condensed Consolidated Financial Statements          (Unaudited)**

**(10.)**
**STOCK-BASED        COMPENSATION**

|                                                 |   | **Nine months ended**              |   |
|------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                 |   | **September 30,                  2007** |   |
| Dividend                  yield                      |   |                                         | 0.00   | % |
| Expected                  volatility                 |   |                                         | 28.17  | % |
| Risk-free                  interest rate             |   |                                         | 4.69   | % |
| Expected                  term of options (in years) |   |                                         | 6.7    |   |

|                                                       |   |                           |    |         |   | **Weighted**    |   |          |                       |
|------------------------------------------------------------|--------|--------------------------------|---------|--------------|--------|-----------------|--------|---------------|----------------------------|
|                                                       |   |                           |    | **Weighted** |   | **average**     |   |          |                       |
|                                                       |   |                           |    | **average**  |   | **remaining**   |   | **Aggregate** |                       |
|                                                       |   | **Number**                     |    | **exercise** |   | **contractual** |   | **intrinsic** |                       |
|                                                       |   | **of                  shares** |    | **price**    |   | **term**        |   | **value**     |                       |
| Options                  outstanding at December 31, 2006  |   |                           | 227,767 |         | $      | 11.01           |   |          |                       |   |   |   |   |
| Options                  granted                           |   |                           | 85,000  |         |   | 13.70           |   |          |                       |   |   |   |   |
| Options                  exercised                         |   |                           | (2,174  | )            |   | 9.20            |   |          |                       |   |   |   |   |
| Options                  expired                           |   |                           | (1,800  | )            |   | 137.61          |   |          |                       |   |   |   |   |
| Options                  forfeited                         |   |                           | (15,000 | )            |   | 13.76           |   |          |                       |   |   |   |   |
| Options                  outstanding at September 30, 2007 |   |                           | 293,793 |         | $      | 10.88           |   |          | 4.6                  years |   | $ | 815,259 |   |
| Options                  exercisable at September 30, 2007 |   |                           | 223,793 |         | $      | 10.01           |   |          | 3.1                  years |   | $ | 809,459 |   |

**(11.)**
**SHAREHOLDERS’        EQUITY**

**(12.)**
**RECENTLY        ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED**

*The        Fair Value Option for Financial Assets and Liabilities. *

*Fair        Value Measurements, *

----

| **ITEM                2.** | **MANAGEMENT’S                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                  OPERATIONS** |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------|

**OVERVIEW**

**Forward-Looking        Statements**

**CRITICAL        ACCOUNTING ESTIMATES**

**Adequacy        of the Allowance for Loan Losses**

**Carrying        Value of Deferred Taxes**

----

**AVERAGE        BALANCE SHEETS WITH RESULTANT INTEREST AND RATES**

|                                                                                                                   |   | **Three Months Ended September 30,** |    |
|------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|---------|
|                                                                                                                   |   | **2007**                                                 |    | **2006** |   |
| ***(Dollars                  in thousands)***                                                                          |   |                                                     |    | **Interest** |   |   |   |   |   | **Interest** |   |   |   |
|                                                                                                                   |   | **Average**                                              |    | **and** |   | **Average** |   | **Average** |   | **and** |   | **Average** |   |
|                                                                                                                   |   | **Balance**                                              |    | **Dividend** |   | **Rate** |   | **Balance** |   | **Dividend** |   | **Rate** |   |
| **Assets:**                                                                                                            |   |                                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                  securities                                                                                    |   | $                                                        | 217,842 |   | $ | 2,746 |   |   | 5.04 | % | $ | 252,513 |   | $ | 3,137 |   |   | 4.97 | % |
| Tax-exempt                  securities(1)                                                                              |   |                                                     | 15,122  |   |   | 196 |   |   | 5.19 |   |   | 15,157 |   |   | 197 |   |   | 5.19 |   |
| Total                  investment securities(2)                                                                        |   |                                                     | 232,964 |   |   | 2,942 |   |   | 5.05 |   |   | 267,670 |   |   | 3,334 |   |   | 4.98 |   |
| Short-term                  investments(3)                                                                             |   |                                                     | 5,702   |   |   | 38 |   |   | 2.65 |   |   | 33,078 |   |   | 415 |   |   | 4.97 |   |
| FHLB                  stock                                                                                            |   |                                                     | 3,175   |   |   | 62 |   |   | 7.74 |   |   | 2,821 |   |   | 62 |   |   | 8.78 |   |
| Loans(4)                                                                                                               |   |                                                     | 550,205 |   |   | 8,444 |   |   | 6.09 |   |   | 489,694 |   |   | 7,393 |   |   | 5.99 |   |
| Total                  interest-earning assets                                                                         |   |                                                     | 792,046 |   | $ | 11,486 |   |   | 5.75 | % |   | 793,263 |   | $ | 11,204 |   |   | 5.60 | % |
| Allowance                  for loan losses                                                                             |   |                                                     | (3,096  | ) |   |   |   |   |   |   |   | (3,319 | ) |   |   |   |   |   |   |
| Noninterest-earning                  assets                                                                            |   |                                                     | 110,143 |   |   |   |   |   |   |   |   | 102,631 |   |   |   |   |   |   |   |
| Total                  assets                                                                                          |   | $                                                        | 899,093 |   |   |   |   |   |   |   | $ | 892,575 |   |   |   |   |   |   |   |
|                                                                                                                   |   |                                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                  and shareholders’ equity:**                                                       |   |                                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                              |   |                                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  checking                                                                             |   | $                                                        | 46,505  |   | $ | 139 |   |   | 1.18 | % | $ | 40,916 |   | $ | 132 |   |   | 1.28 | % |
| Savings                                                                                                                |   |                                                     | 81,639  |   |   | 444 |   |   | 2.16 |   |   | 98,476 |   |   | 556 |   |   | 2.24 |   |
| Money                  market                                                                                          |   |                                                     | 117,929 |   |   | 1,161 |   |   | 3.91 |   |   | 141,166 |   |   | 1,396 |   |   | 3.92 |   |
| Certificates                  of deposit                                                                               |   |                                                     | 374,111 |   |   | 4,531 |   |   | 4.81 |   |   | 349,826 |   |   | 3,929 |   |   | 4.46 |   |
| Total                  interest-bearing deposits                                                                       |   |                                                     | 620,184 |   |   | 6,275 |   |   | 4.01 |   |   | 630,384 |   |   | 6,013 |   |   | 3.78 |   |
| Short-term                  borrowings                                                                                 |   |                                                     | 5,339   |   |   | 69 |   |   | 5.08 |   |   | 6,413 |   |   | 85 |   |   | 5.24 |   |
| Long-term                  borrowings                                                                                  |   |                                                     | 97,242  |   |   | 1,301 |   |   | 5.31 |   |   | 73,809 |   |   | 1,043 |   |   | 5.61 |   |
| Total                  interest-bearing liabilities                                                                    |   |                                                     | 722,765 |   | $ | 7,645 |   |   | 4.20 | % |   | 710,606 |   | $ | 7,141 |   |   | 3.99 | % |
| Noninterest-bearing                  deposits                                                                          |   |                                                     | 30,999  |   |   |   |   |   |   |   |   | 30,606 |   |   |   |   |   |   |   |
| Other                  liabilities                                                                                     |   |                                                     | 11,424  |   |   |   |   |   |   |   |   | 16,377 |   |   |   |   |   |   |   |
| Shareholders’                  equity                                                                            |   |                                                     | 133,905 |   |   |   |   |   |   |   |   | 134,986 |   |   |   |   |   |   |   |
| Total                  liabilities and shareholders’ equity                                                      |   | $                                                        | 899,093 |   |   |   |   |   |   |   | $ | 892,575 |   |   |   |   |   |   |   |
| Net                  interest income                                                                                   |   |                                                     |    |   | $ | 3,841 |   |   |   |   |   |   |   | $ | 4,063 |   |   |   |   |
| Interest                  rate spread                                                                                  |   |                                                     |    |   |   |   |   |   | 1.55 | % |   |   |   |   |   |   |   | 1.61 | % |
| Contribution                  of interest-free funds                                                                   |   |                                                     |    |   |   |   |   |   | 0.37 |   |   |   |   |   |   |   |   | 0.42 |   |
| Net                  interest margin                                                                                   |   |                                                     |    |   |   |   |   |   | 1.92 | % |   |   |   |   |   |   |   | 2.03 | % |
| Ratio                    of average interest-earning assets to average                    interest-bearing liabilities |   |                                                     |    |   |   |   |   |   | 109.59 | % |   |   |   |   |   |   |   | 111.63 | % |

| (1) | The                  interest on tax-exempt securities is calculated on a fully tax-equivalent                  basis assuming a federal tax rate of 34% for the periods                  presented. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The                  average balance of the securities is based upon amortized historical                  cost. |
|-----|------------------------------------------------------------------------------------------------------------------|

| (3) | Short-term                  investments include interest-earning deposits, restricted interest-earning                  cash and short-term investments. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Fees                  in the amount of $68 and $49 thousand are included in interest                  and fees on                  loans for the three months ended September 30, 2007 and 2006,                  respectively. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                       |   | **Nine                  Months Ended September 30,** |    |
|----------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|---------|
|                                                                                                                       |   | **2007**                                             |    | **2006** |   |
| ***(Dollars                  in thousands)***                                                                              |   |                                                 |    | **Interest** |   |   |   |   |   | **Interest** |   |   |   |
|                                                                                                                       |   | **Average**                                          |    | **and** |   | **Average** |   | **Average** |   | **and** |   | **Average** |   |
|                                                                                                                       |   | **Balance**                                          |    | **Dividend** |   | **Rate** |   | **Balance** |   | **Dividend** |   | **Rate** |   |
| **Assets:**                                                                                                                |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                  securities                                                                                        |   | $                                                    | 226,757 |   | $ | 8,570 |   |   | 5.04 | % | $ | 252,842 |   | $ | 9,367 |   |   | 4.94 | % |
| Tax-exempt                  securities(1)                                                                                  |   |                                                 | 15,131  |   |   | 589 |   |   | 5.19 |   |   | 15,165 |   |   | 591 |   |   | 5.19 |   |
| Total                  investment securities(2)                                                                            |   |                                                 | 241,888 |   |   | 9,159 |   |   | 5.05 |   |   | 268,007 |   |   | 9,958 |   |   | 4.95 |   |
| Short-term                  investments(3)                                                                                 |   |                                                 | 4,995   |   |   | 82 |   |   | 2.20 |   |   | 50,883 |   |   | 1,829 |   |   | 4.80 |   |
| FHLB                  stock                                                                                                |   |                                                 | 3,277   |   |   | 153 |   |   | 6.23 |   |   | 3,601 |   |   | 156 |   |   | 5.80 |   |
| Loans(4)                                                                                                                   |   |                                                 | 538,664 |   |   | 24,768 |   |   | 6.15 |   |   | 458,707 |   |   | 20,147 |   |   | 5.87 |   |
| Total                  interest-earning assets                                                                             |   |                                                 | 788,824 |   | $ | 34,162 |   |   | 5.79 | % |   | 781,198 |   | $ | 32,090 |   |   | 5.49 | % |
| Allowance                  for loan losses                                                                                 |   |                                                 | (3,538  | ) |   |   |   |   |   |   |   | (3,146 | ) |   |   |   |   |   |   |
| Noninterest-earning                  assets                                                                                |   |                                                 | 109,164 |   |   |   |   |   |   |   |   | 74,245 |   |   |   |   |   |   |   |
| Total                  assets                                                                                              |   | $                                                    | 894,450 |   |   |   |   |   |   |   | $ | 852,997 |   |   |   |   |   |   |   |
|                                                                                                                       |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                  and shareholders’ equity:**                                                           |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                  |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  checking                                                                                 |   | $                                                    | 44,699  |   | $ | 401 |   |   | 1.20 | % | $ | 42,241 |   | $ | 456 |   |   | 1.44 | % |
| Savings                                                                                                                    |   |                                                 | 84,667  |   |   | 1,374 |   |   | 2.17 |   |   | 116,567 |   |   | 1,989 |   |   | 2.28 |   |
| Money                  market                                                                                              |   |                                                 | 126,729 |   |   | 3,707 |   |   | 3.91 |   |   | 132,852 |   |   | 3,851 |   |   | 3.88 |   |
| Certificates                  of deposit                                                                                   |   |                                                 | 353,258 |   |   | 12,561 |   |   | 4.75 |   |   | 324,072 |   |   | 10,298 |   |   | 4.25 |   |
| Total                  interest-bearing deposits                                                                           |   |                                                 | 609,353 |   |   | 18,043 |   |   | 3.96 |   |   | 615,732 |   |   | 16,594 |   |   | 3.60 |   |
| Short-term                  borrowings                                                                                     |   |                                                 | 16,006  |   |   | 654 |   |   | 5.46 |   |   | 14,337 |   |   | 517 |   |   | 4.82 |   |
| Long-term                  borrowings                                                                                      |   |                                                 | 94,412  |   |   | 3,781 |   |   | 5.35 |   |   | 92,765 |   |   | 3,434 |   |   | 4.95 |   |
| Total                  interest-bearing liabilities                                                                        |   |                                                 | 719,771 |   | $ | 22,478 |   |   | 4.18 | % |   | 722,834 |   | $ | 20,545 |   |   | 3.80 | % |
| Noninterest-bearing                  deposits                                                                              |   |                                                 | 28,947  |   |   |   |   |   |   |   |   | 27,100 |   |   |   |   |   |   |   |
| Other                  liabilities                                                                                         |   |                                                 | 10,668  |   |   |   |   |   |   |   |   | 11,653 |   |   |   |   |   |   |   |
| Shareholders’                  equity                                                                                |   |                                                 | 135,064 |   |   |   |   |   |   |   |   | 90,710 |   |   |   |   |   |   |   |
| Total                  liabilities and shareholders’ equity                                                          |   | $                                                    | 894,450 |   |   |   |   |   |   |   | $ | 852,297 |   |   |   |   |   |   |   |
| Net                  interest income                                                                                       |   |                                                 |    |   | $ | 11,684 |   |   |   |   |   |   |   | $ | 11,545 |   |   |   |   |
| Interest                  rate spread                                                                                      |   |                                                 |    |   |   |   |   |   | 1.61 | % |   |   |   |   |   |   |   | 1.69 | % |
| Contribution                  of interest-free funds                                                                       |   |                                                 |    |   |   |   |   |   | 0.37 |   |   |   |   |   |   |   |   | 0.29 |   |
| Net                  interest margin                                                                                       |   |                                                 |    |   |   |   |   |   | 1.98 | % |   |   |   |   |   |   |   | 1.98 | % |
| Ratio                      of average interest-earning assets to average interest-bearing                      liabilities |   |                                                 |    |   |   |   |   |   | 109.59 | % |   |   |   |   |   |   |   | 108.07 | % |

| (1) | The                  interest on tax-exempt securities is calculated on a fully tax-equivalent                  basis assuming a federal tax rate of 34% for the periods                  presented. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The                  average balance of the securities is based upon amortized historical                  cost. |
|-----|------------------------------------------------------------------------------------------------------------------|

| (3) | Short-term                  investments include interest-earning deposits, restricted interest-earning                  cash and short-term investments. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Fees                  in the amount of $183 and $152 thousand are included in interest                  and fees                  on loans for the nine months ended September 30, 2007 and 2006,                  respectively. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Rate        / Volume Analysis**

|                                                |   | **Three months ended**                    |   | **Nine months ended**                     |   |
|-----------------------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                                |   | **September 30, 2007 vs. 2006** |   | **September 30, 2007 vs. 2006** |   |
|                                                |   | **Increase/(Decrease)**                             |   |                                                |   | **Increase/(Decrease)** |   |   |   |
|                                                |   | **Due to Change in**                 |   | **Total Net**                                  |   | **Due to Change in** |   | **Total Net** |   |
| ***(Dollars                  in thousands)***       |   | **Average**                                         |   | **Average**                                         |   | **Increase** |   | **Average** |   | **Average** |   | **Increase** |   |
|                                                |   | **Volume**                                          |   | **Rate**                                            |   | **(Decrease)** |   | **Volume** |   | **Rate** |   | **(Decrease)** |   |
|                                                |   |                                                |   |                                                |   |   |   |   |   |   |   |   |   |
| INTEREST                  AND DIVIDEND INCOME:      |   |                                                |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                  securities                 |   | $                                                   | (431   | )                                                   | $      | 40 |   | **$** | (391 | ) | $ | (966 | ) | $ | 169 |   | **$** | (797 | ) |
| Tax-exempt                  securities              |   |                                                | -      |                                                |   | (1 | ) |   | (1 | ) |   | (1 | ) |   | (1 | ) |   | (2 | ) |
| Total                  investment securities        |   |                                                | (431   | )                                                   |   | 39 |   |   | (392 | ) |   | (967 | ) |   | 168 |   |   | (799 | ) |
| Short-term                  investments             |   |                                                | (343   | )                                                   |   | (34 | ) |   | (377 | ) |   | (1,649 | ) |   | (98 | ) |   | (1,747 | ) |
| FHLB                  stock                         |   |                                                | 8      |                                                |   | (8 | ) |   | - |   |   | (14 | ) |   | 11 |   |   | (3 | ) |
| Loans                                               |   |                                                | 914    |                                                |   | 137 |   |   | 1,051 |   |   | 3,512 |   |   | 1,109 |   |   | 4,621 |   |
| Total                  interest-earning assets      |   | $                                                   | 148    |                                                | $      | 134 |   | $ | 282 |   | $ | 882 |   | $ | 1,190 |   | $ | 2,072 |   |
|                                                |   |                                                |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST                  EXPENSE:                  |   |                                                |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                           |   |                                                |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  checking          |   | $                                                   | 18     |                                                | $      | (11 | ) | **$** | 7 |   | $ | 27 |   | $ | (82 | ) | $ | (55 | ) |
| Savings                                             |   |                                                | (95    | )                                                   |   | (17 | ) |   | (112 | ) |   | (544 | ) |   | (71 | ) |   | (615 | ) |
| Money                  market                       |   |                                                | (230   | )                                                   |   | (5 | ) |   | (235 | ) |   | (177 | ) |   | 33 |   |   | (144 | ) |
| Certificates                  of deposit            |   |                                                | 273    |                                                |   | 329 |   |   | 602 |   |   | 927 |   |   | 1,336 |   |   | 2,263 |   |
| Total                  interest-bearing deposits    |   |                                                | (34    | )                                                   |   | 296 |   |   | 262 |   |   | 233 |   |   | 1,216 |   |   | 1,449 |   |
| Short-term                  borrowings              |   |                                                | (14    | )                                                   |   | (2 | ) |   | (16 | ) |   | 60 |   |   | 77 |   |   | 137 |   |
| Long-term                  borrowings               |   |                                                | 331    |                                                |   | (73 | ) |   | 258 |   |   | 61 |   |   | 286 |   |   | 347 |   |
| Total                  borrowings                   |   |                                                | 317    |                                                |   | (75 | ) |   | 242 |   |   | 121 |   |   | 363 |   |   | 484 |   |
| Total                  interest-bearing liabilities |   | $                                                   | 283    |                                                | $      | 221 |   | $ | 504 |   | $ | 354 |   | $ | 1,579 |   | **$** | 1,933 |   |
| CHANGE                  IN NET INTEREST INCOME      |   | $                                                   | (135   | )                                                   | $      | (87 | ) | $ | (222 | ) | $ | 528 |   | $ | (389 | ) | $ | 139 |   |

----

**RESULTS        OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND        2006**

**Net        Interest Income**

**Provision**
**        for Loan Losses**

**Noninterest        Income**

| ***(Dollars                  in thousands)***          |   | **Three Months Ended September 30,** |   |
|--------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                                                   |   | **2007**                                                 |   | **2006** |   |
| Gain                  on sale of mortgage loans        |   | $                                                        | 374    |   | $ | - |   |
| Service                  charges on deposit accounts   |   |                                                     | 233    |   |   | 184 |   |
| Other                  fees and service charges        |   |                                                     | 195    |   |   | 137 |   |
| Loan                  fee income                       |   |                                                     | 177    |   |   | 88 |   |
| Earnings                  on bank-owned life insurance |   |                                                     | 124    |   |   | 117 |   |
| Other                  operating income                |   |                                                     | 36     |   |   | 58 |   |
| Total                  noninterest income              |   | $                                                        | 1,139  |   | $ | 584 |   |

----

**Noninterest        Expense**

| ***(Dollars                  in thousands)***         |   | **Three Months Ended September 30,** |   |
|-------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                                                  |   | **2007**                                                 |   | **2006** |   |
| Salaries                  and employee benefits       |   | $                                                        | 4,509  |   | $ | 2,716 |   |
| Occupancy,                  equipment and furnishings |   |                                                     | 971    |   |   | 630 |   |
| Professional                  services                |   |                                                     | 418    |   |   | 167 |   |
| Data                  processing and operations       |   |                                                     | 298    |   |   | 240 |   |
| Deposit                  and other insurance          |   |                                                     | 222    |   |   | 94 |   |
| Printing,                  postage and supplies       |   |                                                     | 119    |   |   | 123 |   |
| Advertising                                           |   |                                                     | 106    |   |   | 202 |   |
| Other                  operating expense              |   |                                                     | 673    |   |   | 450 |   |
| Total                  noninterest expense            |   | $                                                        | 7,316  |   | $ | 4,622 |   |

**Income        Taxes**

**RESULTS        OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND        2006**

**Net        Interest Income**

----

**Provision        **
**for        Loan Losses**

**Noninterest        Income**

| ***(Dollars                  in thousands)***          |   | **Nine Months Ended September 30,** |   |
|--------------------------------------------------------|--------|---------------------------------------------------------|--------|
|                                                   |   | **2007**                                                |   | **2006** |   |
| Gain                  on sale of mortgage loans        |   | $                                                       | 699    |   | $ | - |   |
| Service                  charges on deposit accounts   |   |                                                    | 623    |   |   | 480 |   |
| Other                  fees and service charges        |   |                                                    | 539    |   |   | 379 |   |
| Loan                  fee income                       |   |                                                    | 479    |   |   | 247 |   |
| Earnings                  on bank-owned life insurance |   |                                                    | 367    |   |   | 348 |   |
| Other                  operating income                |   |                                                    | 108    |   |   | 132 |   |
| Total                  noninterest income              |   | $                                                       | 2,815  |   | $ | 1,586 |   |

**Noninterest        Expense**

| ***(Dollars                  in thousands)***         |   | **Nine Months Ended September 30,** |   |
|-------------------------------------------------------|--------|---------------------------------------------------------|--------|
|                                                  |   | **2007**                                                |   | **2006** |   |
| Salaries                  and employee benefits       |   | $                                                       | 10,883 |   | $ | 7,620 |   |
| Occupancy,                  equipment and furnishings |   |                                                    | 2,449  |   |   | 1,782 |   |
| Data                  processing and operations       |   |                                                    | 865    |   |   | 690 |   |
| Professional                  services                |   |                                                    | 793    |   |   | 457 |   |
| Deposit                  and other insurance          |   |                                                    | 612    |   |   | 185 |   |
| Printing,                  postage and supplies       |   |                                                    | 387    |   |   | 332 |   |
| Advertising                                           |   |                                                    | 379    |   |   | 592 |   |
| Other                  operating expense              |   |                                                    | 1,788  |   |   | 1,300 |   |
| Total                  noninterest expense            |   | $                                                       | 18,156 |   | $ | 12,958 |   |

**Income        Taxes**

----

**FINANCIAL        CONDITION**

**Lending        Activities**

| ***(Dollars                  in thousands)***    |   | **September 30, 2007** |    | **December 31, 2006** |   |
|--------------------------------------------------|--------|----------------------------------|---------|---------------------------------|--------|
|                                             |   | **Amount**                       |    | **Percent**                     |   | **Amount** |   | **Percent** |   |
| Real                  estate loans:              |   |                             |    |                            |   |   |   |   |   |   |   |   |   |
| Residential                                      |   | $                                | 245,148 |                            |   | 44.5 | % | $ | 253,709 |   |   | 49.6 | % |
| Home                  equity                     |   |                             | 60,449  |                            |   | 11.0 |   |   | 53,676 |   |   | 10.5 |   |
| Commercial                                       |   |                             | 86,927  |                            |   | 15.8 |   |   | 78,666 |   |   | 15.4 |   |
| Construction                                     |   |                             | 33,822  |                            |   | 6.1 |   |   | 25,481 |   |   | 5.0 |   |
| Total                  mortgage loans            |   |                             | 426,346 |                            |   | 77.4 |   |   | 411,532 |   |   | 80.5 |   |
| Commercial                  and industrial loans |   |                             | 67,682  |                            |   | 12.3 |   |   | 55,055 |   |   | 10.8 |   |
| Automobile                  loans                |   |                             | 55,139  |                            |   | 10.0 |   |   | 43,719 |   |   | 8.6 |   |
| Other                  consumer loans            |   |                             | 1,377   |                            |   | 0.3 |   |   | 659 |   |   | 0.1 |   |
| Total                  loans                     |   |                             | 550,544 |                            |   | 100.0 | % |   | 510,965 |   |   | 100.0 | % |
| Allowance                  for loan losses       |   |                             | (2,953  | )                               |   |   |   |   | (3,781 | ) |   |   |   |
| Deferred                  loan costs, net        |   |                             | 6,581   |                            |   |   |   |   | 6,744 |   |   |   |   |
| Total                  loans, net                |   | $                                | 554,172 |                            |   |   |   | $ | 513,928 |   |   |   |   |

**Non-Performing        Assets and **
**Allowance        for Loan Losses**

| ***(Dollars                  in thousands)***                          |   | **September 30,** |   | **December 31,** |   |
|------------------------------------------------------------------------|--------|------------------------|--------|-----------------------|--------|
|                                                                   |   | **2007**               |   | **2006**              |   |
| Nonaccrual                  loans                                      |   | $                      | 974    |                  | $      | 3,548 |   |
| Accruing                  loans contractually past due 90 days or more |   |                   | 2,369  |                  |   | - |   |
| Total                  non-performing loans                            |   |                   | 3,343  |                  |   | 3,548 |   |
| Foreclosed                  assets                                     |   |                   | 70     |                  |   | 91 |   |
| Total                  non-performing assets                           |   | $                      | 3,413  |                  | $      | 3,639 |   |
|                                                                   |   |                   |   |                  |   |   |   |
| Ratios:                                                                |   |                   |   |                  |   |   |   |
| Non-performing                  loans to total loans                   |   |                   | 0.60   | %                     |   | 0.69 | % |
| Non-performing                  assets to total assets                 |   |                   | 0.38   | %                     |   | 0.41 | % |

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| ***(Dollars                  in thousands)***                               |   | **Nine Months Ended September 30,** |   |
|-----------------------------------------------------------------------------|--------|---------------------------------------------------------|--------|
|                                                                        |   | **2007**                                                |   | **2006** |   |
| Balance,                  beginning of period                               |   | $                                                       | 3,781  |   | $ | 2,910 |   |
| Provision                  for loan losses                                  |   |                                                    | 263    |   |   | 587 |   |
| Net                  charge-offs:                                           |   |                                                    |   |   |   |   |   |
| Charge-offs                                                                 |   |                                                    | (1,093 | ) |   | (124 | ) |
| Recoveries                                                                  |   |                                                    | 2      |   |   | 2 |   |
| Net                  charge-offs                                            |   |                                                    | (1,091 | ) |   | (122 | ) |
| Balance,                  end of period                                     |   | $                                                       | 2,953  |   | $ | 3,375 |   |
| Ratio                  of allowance for loan losses to:                     |   |                                                    |   |   |   |   |   |
| Total                  loans                                                |   |                                                    | 0.53   | % |   | 0.68 | % |
| Non-performing                  loans                                       |   |                                                    | 88.34  | % |   | 284.62 | % |
| Ratio                  of annualized net charge-offs to average total loans |   |                                                    | 0.27   | % |   | 0.04 | % |

**Investment        Activities **

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**Funding      Activities**

**Deposits**

**LIQUIDITY      AND CAPITAL RESOURCES**

|  ***(Dollars                    in thousands)***                  |   | **Actual** |   | **For                    Capital****Adequacy                    Purposes** |   | **Minimum                    To Be Well****Capitalized                    Under****Prompt                    Corrective****Action                    Provisions** |   |
|------------------------------------------------------------------------|--------|------------|--------|----------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                   |   | **Amount** |   | **Ratio**                                                                  |   | **Amount**                                                                                                                                                        |   | **Ratio** |   | **Amount** |   | **Ratio** |   |
| **September                    30, 2007:**                             |   |       |   |                                                                       |   |                                                                                                                                                              |   |   |   |   |   |   |   |
| Total                    risk-based capital (to risk-weighted assets): |   |       |   |                                                                       |   |                                                                                                                                                              |   |   |   |   |   |   |   |
| Great                    Lakes Bancorp, Inc.                           |   | $          | 92,600 |                                                                       |   | 17.7                                                                                                                                                              | %      | $ | 41,772 |   |   | 8.0 | % | $ | N/A |   |   | N/A | % |
| Greater                    Buffalo Savings Bank                        |   |       | 50,937 |                                                                       |   | 10.1                                                                                                                                                              |   |   | 40,488 |   |   | 8.0 |   |   | 50,610 |   |   | 10.0 |   |
| Tier                    1 capital (to risk-weighted assets):           |   |       |   |                                                                       |   |                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Great                    Lakes Bancorp, Inc.                           |   |       | 89,647 |                                                                       |   | 17.2                                                                                                                                                              |   |   | 20,886 |   |   | 4.0 |   |   | N/A |   |   | N/A |   |
| Greater                    Buffalo Savings Bank                        |   |       | 47,984 |                                                                       |   | 9.5                                                                                                                                                               |   |   | 20,244 |   |   | 4.0 |   |   | 30,366 |   |   | 6.0 |   |
| Tier                    1 leverage:                                    |   |       |   |                                                                       |   |                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Great                    Lakes Bancorp, Inc.                           |   |       | 89,647 |                                                                       |   | 10.6                                                                                                                                                              |   |   | 33,793 |   |   | 4.0 |   |   | N/A |   |   | N/A |   |
| Greater                    Buffalo Savings Bank                        |   |       | 47,984 |                                                                       |   | 5.9                                                                                                                                                               |   |   | 32,779 |   |   | 4.0 |   |   | 40,974 |   |   | 5.0 |   |
|                                                                   |   |       |   |                                                                       |   |                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **December                    31, 2006:**                              |   |       |   |                                                                       |   |                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    risk-based capital (to risk-weighted assets): |   |       |   |                                                                       |   |                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Great                    Lakes Bancorp, Inc.                           |   | $          | 99,322 |                                                                       |   | 20.8                                                                                                                                                              | %      | $ | 38,278 |   |   | 8.0 | % | $ | N/A |   |   | N/A | % |
| Greater                    Buffalo Savings Bank                        |   |       | 50,037 |                                                                       |   | 10.8                                                                                                                                                              |   |   | 36,972 |   |   | 8.0 |   |   | 46,216 |   |   | 10.0 |   |
| Tier                    1 capital (to risk-weighted assets):           |   |       |   |                                                                       |   |                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Great                    Lakes Bancorp, Inc.                           |   |       | 95,541 |                                                                       |   | 20.0                                                                                                                                                              |   |   | 19,139 |   |   | 4.0 |   |   | N/A |   |   | N/A |   |
| Greater                    Buffalo Savings Bank                        |   |       | 46,256 |                                                                       |   | 10.0                                                                                                                                                              |   |   | 18,486 |   |   | 4.0 |   |   | 27,729 |   |   | 6.0 |   |
| Tier                    1 leverage:                                    |   |       |   |                                                                       |   |                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Great                    Lakes Bancorp, Inc.                           |   |       | 95,541 |                                                                       |   | 11.6                                                                                                                                                              |   |   | 32,817 |   |   | 4.0 |   |   | N/A |   |   | N/A |   |
| Greater                    Buffalo Savings Bank                        |   |       | 46,256 |                                                                       |   | 5.8                                                                                                                                                               |   |   | 31,776 |   |   | 4.0 |   |   | 39,720 |   |   | 5.0 |   |

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**ITEM      3. **
**QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

**ITEM      4. **
**CONTROLS      AND PROCEDURES**

***Evaluation      of disclosure controls and procedures***

***Changes      in internal control over financial reporting***

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**PART      II. OTHER INFORMATION**

**ITEM      1. **
**LEGAL      PROCEEDINGS**

**ITEM      1A. **
**RISK      FACTORS**

|   | · | The                merger is subject to a number of contingencies, including approval                by the                Company’s stockholders, the receipt of required regulatory approvals and                other customary closing conditions, each of which must either be                satisfied                or waived prior to the closing. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                              |
|   | · | If                the merger is not completed, the Company’s stock price may decline to the                extent that the current trading price reflects a positive market                assumption that the merger will be completed.                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                              |
|   | · | The                Company could lose key personnel who may be difficult to replace                that                decide to pursue other opportunities in light of the proposed                merger.                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                              |
|   | · | The                Company has and will continue to incur significant expenses related                to the                merger prior to its closing, which must be paid even if the merger                is not                completed if the transaction is not consummated.                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                              |
|   | · | Depending                upon the circumstances, the Company may be obligated to pay First                Niagara                a termination fee of $5.9 million under the terms of the merger agreement                with First Niagara.                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                              |
|   | · | The                merger agreement with First Niagara imposes restrictions on the Company’s                ability to conduct its business prior to the completion of the merger,                which could potentially impact the longer-term business prospects                of the                Company.                                           |

**ITEM      2. **
**UNREGISTERED      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

|       |   |                          |   |                         |   | **Total Number of**     |   | **Maximum Number of**    |   |
|------------|--------|-------------------------------|--------|------------------------------|--------|-----------------------------------|--------|------------------------------------|--------|
|       |   |                          |   |                         |   | **Shares Purchased as** |   | **Shares                that May** |   |
|       |   | **Total Number of** |   | **Average Price**       |   | **Part of Publicly**    |   | **Yet Be Purchased**     |   |
| **Period** |   | **Shares Purchased**     |   | **Paid per Share** |   | **Announced Plan**           |   | **Under the Plan**       |   |
|       |   |                          |   |                         |   |                              |   |                               |   |
| July       |   |                          | **-**  |                         | **$**  | **-**                             |   |                               | -      |   |   | 546,152 |   |
| August     |   |                          | 77,916 |                         |   | 12.01                             |   |                               | 77,916 |   |   | 468,236 |   |
| September  |   |                          | 21,104 |                         |   | 11.96                             |   |                               | 21,104 |   |   | 447,132 |   |

**ITEM      3. **
**DEFAULTS      UPON SENIOR SECURITIES**

**ITEM      4. **
**SUBMISSION      OF MATTERS TO A VOTE OF SECURITY HOLDERS**

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**ITEM      5. **
**OTHER      INFORMATION**

**ITEM      6. **
**EXHIBITS**

| **Exhibit                #** |   | **Description**                                                                                                                                                                                                   |
|------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1                         |   | Certification                of the Chief Executive Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                                              |
|                         |   |                                                                                                                                                                                                              |
| 31.2                         |   | Certification                of the Chief Financial Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                                              |
|                         |   |                                                                                                                                                                                                              |
| 32.1                         |   | Certification                of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350,                as                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of                2002 |
|                         |   |                                                                                                                                                                                                              |
| 32.2                         |   | Certification                of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350,                as                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of                2002 |

----

**SIGNATURES      **

**GREAT      LAKES BANCORP, INC.**

|   |                                                                  |                              |
|--------|-----------------------------------------------------------------------|-----------------------------------|
|   | ***/s/                Michael J. Rogers***                            | ,                November 2, 2007 |
|   | Michael                J. Rogers                                      |                              |
|   | Executive                Vice President and Chief Financial Officer   |                              |
|   | (Principal                Financial and Principal Accounting Officer) |                              |

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