IBT BANCORP, INC. 2005 ANNUAL REPORT





                         WHERE DO YOU WANT TO BE TODAY?


                                [GRAPHIC OMITTED]

<PAGE>

BE MORE TOMORROW.


<PAGE>

TO OUR STOCKHOLDERS


WHERE DO YOU WANT TO BE TODAY? That's the question we ask everyday at Irwin Bank
& Trust Company.  We ask our  customers,  providing them with the best financial
advice,  products,  and services to help them raise their  families,  buy homes,
start and expand businesses, save for higher education, and plan for retirement.
We ask our local  community,  using our  expertise  and  resources  to encourage
community  development and  revitalization  initiatives  that will help ensure a
prosperous future for our area.

Perhaps most importantly, we ask ourselves how we can be ever more efficient and
responsive to the changing  financial  needs of our customers and our community,
incorporating  traditional  values,   world-class  technology,  and  innovative,
proactive thinking into our day-to-day operations and long-term  strategies.  We
do this to  reinforce  the  strong,  personal  relationships  we build  with our
customers and our community - and help them reach their goals in life.

A Banking Transformation.
Today's  market  demands  more  from a  bank,  so IBT  Bancorp,  Inc.,  and  its
subsidiary,  Irwin Bank & Trust  Company,  work hard to stay in the forefront of
community  banking,  matching our unique mixture of products and services to the
changing financial environment. Our continuing commitment to traditional banking
values  means that we have been able to extend the  benefits  of being a "local"
bank far beyond the borders of our  community,  serving  customers in new areas.
And we must be doing something  right.  Today,  with more than $685.2 million in
assets, we are the largest financial  institution  headquartered in Westmoreland
County.

A Financial Snapshot.
While the Company  faced some  challenges  in 2005 due to a flat yield curve,  a
"buyer's market" in lending,  and dropping bank margins, net income rose to $8.6
million,  a  significant  improvement  over last year.  Despite the  challenging
market conditions,  our earnings per share have consistently  increased,  and we
are pleased to report growth in assets,  and loans while keeping  expenses under
control.  Assets increased by $9.3 million and net loan growth was $5.7 million.
Shareholder  benefit  improved  with a  dividend  increase  of 15% to $1.84  per
share.

While the  downward  trend in loan  pricing has eased,  pressure on net interest
margins  remains a factor  affecting our  profitability.  Also,  mortgage  rates
remained relatively flat and refinancing has slowed significantly.

A few other  factors are  noteworthy  as well.  Increases  in service fee income
resulted in a net gain of 38.8% over last year's already excellent  performance.
In fact, industry  statistics show that we consistently  outperform 75% of banks
nationwide,  and more than 90% of Pennsylvania  banks. So despite the continuing
economic challenges in today's banking  marketplace,  Irwin Bank & Trust Company
is in a very positive position as we start 2006.

Irwin Bank & Trust  Company is also  continuing  our  proactive  and  aggressive
program of cost  controls,  aimed at keeping us on the  cutting  edge of banking
product  offerings while making us more efficient in our day-to-day  operations.
In 2005, we upgraded  computer  systems,  while continued office  consolidations
have made us more efficient. And during this past year, we became a self-insured
medical  benefits  provider  - a move that  will  control  the cost of  benefits
without  sacrificing  the  quality  of  healthcare  coverage  we  provide to our
employees.



                                        IBT Bancorp, Inc. 2005 Annual Report/ 1
<PAGE>
TO OUR STOCKHOLDERS





2005 Initiatives.
Irwin Bank & Trust  Company's  total  commitment  to  community  banking  values
continues  to define our core banking  philosophy.  However,  influenced  by the
constant changes in banking technology,  regulation,  and customer expectations,
the way we serve the  needs of our  customers  is also  constantly  changing  in
response to market  conditions.  This allows us to accurately  anticipate change
and reposition ourselves to match the market,  offering the right mix of banking
products and services to help our customers run their  businesses and lives more
easily - and profitably.

In 2005,  Irwin Bank & Trust  Company  continued  to move ahead in  implementing
world-class  capabilities in check imaging,  customer electronic transaction and
account information  delivery,  customer relationship  management,  and expanded
product  offerings.  Our  Overdraft  Advantage  program also  continued to grow,
pleasing  customers with its convenience - and providing us with growing service
charge revenues.

The account structure for Business Banking we introduced in 2004 continued to be
increasingly  successful.  Bundled  with  advanced  electronic  and  debit  card
capabilities,  it helps  customers  manage their cash flow and financial  assets
more efficiently,  opening new financial opportunities. We also created the new,
full-time position of Business Banking Advisor.

Our Business Banking Advisor acts like a "financial  sales  engineer,"  matching
our capabilities to specific  customer needs and then directing and coordinating
our team of financial experts to create a Total Business  Relationship with each
customer.  This  enhances  our ability to build  long-term  relationships  while
increasing opportunities to generate new and exciting revenue streams.

Irwin Bank & Trust Company continued our expansion into the Greensburg market in
2005,  opening the Mt.  Pleasant  Loan Center,  highlighting  our  commitment to
growing deposit and loan business outside of our traditional  service areas. And
our continued  involvement  in The Irwin  Project,  coupled with our  employees'
contributions of their time and money, keeps us closely tied to our community.

Exceeding Expectations.
How successful  have we been in meeting or exceeding  customer  expectations?  A
recent survey showed that 98% of our customers would recommend us to a friend or
business associate. Just as telling, more than 55% of customers who received the
survey answered it - compared to the 5-10% average  response rate. It seems that
our customers  not only like us,  they're happy to tell others about us, too. We
think that's a very good sign for the future.

So, let's take a look at just where we are today.

/s/ Charles G. Urtin

Charles G. Urtin
President & Chief Executive Officer
IBT Bancorp, Inc.


2/ IBT Bancorp, Inc. 2005 Annual Report
<PAGE>
FINANCIAL HIGHLIGHTS IBT Bancorp, Inc. & Subsidiary

<TABLE>
<CAPTION>
(Dollars in thousands, except per share data)
YEARS ENDED                                          2005           2004            2003            2002          2001

<S>                                                <C>            <C>             <C>             <C>           <C>
SELECTED BALANCE SHEET DATA:
Total assets                                       $ 685,151      $ 675,857      $ 629,530      $ 584,035       $ 524,044
Cash and cash equivalents                             15,500         16,187         15,829         15,066          25,218
Securities available for sale                        201,463        196,891        172,448        186,718         162,968
Loans receivable (net)                               442,265        436,548        416,286        359,872         315,132
Deposits                                             520,486        526,217        492,158        468,257         422,462
Repurchase agreements                                 18,443         15,157         12,611         14,526          11,207
Federal funds purchased                               12,468              -          7,900              -               -
FHLB advances                                         68,651         70,265         53,308         40,000          35,000
Shareholders' equity                                  61,081         59,843         59,606         56,151          49,725

SELECTED RESULTS OF OPERATIONS
Interest income                                    $  35,771      $  33,726      $  33,398      $  33,560       $  35,185
Net interest income                                   22,090         21,918         22,083         20,732          18,226
Provision for loan losses                              1,200            600            600          1,100             500
Net interest income after provision
      for loan losses                                 20,890         21,318         21,483         19,632          17,726
Other income                                           6,635          5,116          5,891          5,317           4,009
Loss on write-down of equity securities                    -          2,426              -              -               -
Other expense                                         16,187         15,095         14,300         12,831          11,284
Net income                                             8,579          6,085          9,646          8,937           7,465

PER SHARE DATA:
Net Income
      Basic                                           $ 2.90         $ 2.05         $ 3.24         $ 3.00          $ 2.49
      Diluted                                           2.88           2.02           3.19           2.99            2.49
Cash dividends declared                                 1.84           1.60           1.40           1.20            1.04

SELECTED RATIOS:
Return on average assets                                1.26%          0.92%          1.59%          1.61%           1.45%
Return on average equity                               14.08%         10.25%         16.54%         16.95%          15.57%
Ratio of average equity to average assets               8.97%          9.02%          9.59%          9.47%           9.31%
Dividend payout                                        63.39%         78.01%         43.21%         40.00%          41.77%
</TABLE>

TOTAL ASSETS
AS OF 12/31 (IN MILLIONS)
[Bar graph with following data points:

        2001    $524.0
        2002    $584.0
        2003    $629.5
        2004    $675.9
        2005    $685.0]

TOTAL EQUITY
(IN THOUSANDS)
[Bar graph with following data points:

        2001    $49,725
        2002    $56,151
        2003    $59,606
        2004    $59,843
        2005    $61,081]

NET INCOME
(IN THOUSANDS)
[Bar graph with following data points:

        2001    $7,465
        2002    $8,937
        2003    $9,646
        2004    $6,085
        2005    $8,579]

DILUTED EARNINGS PER SHARE
[Bar graph with following data points:

        2001    $2.49
        2002    $2.99
        2003    $3.19
        2004    $2.02
        2005    $2.88]

DIVIDENDS PER SHARE
[Bar graph with following data points:

        2001    $1.04
        2002    $1.20
        2003    $1.40
        2004    $1.60
        2005    $1.84]
                                        IBT Bancorp, Inc. 2005 Annual Report/ 3

<PAGE>

                               [GRAPHIC OMITTED]


"IRWIN  BANK  LISTENED TO ME,  LOOKED  CLOSELY AT MY  PROJECT,  AND  DEVELOPED A
FINANCING  STRATEGY  THAT THE OTHER BANKS  HADN'T EVEN  CONSIDERED.  THEIR EXTRA
EFFORT IS WHAT SETS THEM APART."

4/ IBT Bancorp, Inc. 2005 Annual Report
<PAGE>
BOWLING A PERFECT GAME.

     Brian  Saunier had a problem.  How could he get the  financial  backing and
     services  he  needed to build  the  Paradise  Island  bowling  facility  he
     envisioned when the big, "local" banks just weren't interested?  Luckily, a
     friend  referred  him to Irwin  Bank -- and he found  out how a  "community
     bank" could help him in ways that the big guys wouldn't.

     To better serve a growing  local  population,  Brian wanted to renovate and
     expand the old  Corpen  Lanes on  Neville  Island,  adding 16 new lanes and
     putting in a new kitchen  and bar,  calling  his new  enterprise  "Paradise
     Island." At least one other financial institution had looked at his project
     and turned him down,  but Irwin Bank saw things  differently.  The  project
     presented  some  financial  challenges,  so Irwin Bank did its homework and
     partnered  with the SBA to help Brian get the loan he needed to improve his
     business.

     Irwin Bank is helping  Brian  Saunier to run his  day-to-day  business more
     efficiently,   too.  The  Bank's  world-class  service  capabilities  allow
     customers  like Brian to have a deposit  relationship  with us, even though
     they don't  have a nearby  branch  office.  Brian  Saunier  also uses Irwin
     Bank's lock box service for his subsidiary  company,  All American  Bowling
     Co., Inc., an equipment supplier and installer. And he employs our internet
     banking  capabilities  to manage  account  information  and  other  banking
     services.  It's  simple  and  convenient.  And it's one more way that Irwin
     Bank's unique mix of  world-class  services and community  values prove our
     ability to serve customers outside our traditional market area.


                               [GRAPHIC OMITTED]

                                (CAPTION:)
                                CUSTOMERS:  PARADISE ISLAND BOWLING,
                                            ALL AMERICAN BOWLING CO., INC.
                                LOCATION:  NEVILLE ISLAND, PA
                                OWNER: BRIAN SAUNIER
                                RELATIONSHIP MANAGER:  JIM THOMPSON
                                SERVICES: COMMERCIAL LOAN (SBA), DEPOSITS,
                                          LOCK BOX SERVICES, INTERNET BANKING

                                        IBT Bancorp, Inc. 2005 Annual Report/ 5
<PAGE>

                               [GRAPHIC OMITTED]

"THE BEST PART ABOUT MY  RELATIONSHIP  WITH IRWIN BANK IS KNOWING ALL THE PEOPLE
I'M DEALING  WITH.  IF FOR SOME REASON I CAN'T REACH AL LAZAR,  MY  RELATIONSHIP
MANAGER, I CAN CALL BOB BOWELL OR CHUCK URTIN, AND THEY'LL TAKE CARE OF ME."

6/ IBT Bancorp, Inc. 2005 Annual Report

<PAGE>

A RELATIONSHIP CAST IN... CONCRETE.

     Pete Cooper  tells it this way.  "10 years ago, I started  Cooper  Trading,
     Inc.,  in a 16' x 16' office with a phone and a fax machine.  Today,  we've
     grown to become a $12  million-a-year  business.  And as my business  grew,
     Irwin Bank was right there to help me at every step along the way."

     Pete  owns and runs  CTI,  a  commercial  building  materials  supplier  of
     concrete  and  concrete  accessories,   below-grade  waterproofing,  piping
     systems,  windows,  siding,  doors, and other materials.  CTI has also been
     involved in some high-visibility projects around the Pittsburgh area. These
     include  supplying  exterior  aluminum panels for the scoreboard and canopy
     materials above the seats at Heinz Field,  concrete accessories at PNC Park
     and the new North Side parking  garage,  and patching on the Fort  Duquesne
     Bridge.

     Irwin Bank has been a valuable  partner and  financial  resource for CTI as
     the company has grown. The Bank financed the construction of CTI's concrete
     plant,  an  office/showroom,  and  provided  a line of credit  for  working
     capital.  Pete  Cooper  adds,  "I  recently  went to Irwin  Bank to discuss
     financing  for a new  warehouse  and  infrastructure  improvements  on  our
     property.  They  came back with a  recommendation  to use a Small  Business
     Administration  (SBA) program that would make more financing  available and
     allow us to make even more  improvements.  And that's  exactly  the kind of
     service I've come to expect from them."

                                 [GRAPHIC OMITTED]

                                 (CAPTION:)
                                 CUSTOMER:  CTI (COOPER TRADING, INC).
                                 LOCATION:  IRWIN, PA
                                 OWNER:  PETE COOPER
                                 RELATIONSHIP MANAGER:  AL LAZAR
                                 SERVICES:  COMMERCIAL LOAN (SBA), DEPOSITS,
                                 BUSINESS CHECKING, INTERNET BANKING

                                        IBT Bancorp, Inc. 2005 Annual Report/ 7

<PAGE>

MAKING THE COMMUNITY A BETTER PLACE.

[Graphic omitted]

IRWIN BANK  EMPLOYEES AND FAMILIES  HELPED MAKE THE NORWIN RELAY FOR
LIFE A SUCCESS IN ITS FIRST YEAR.

[Graphic omitted]


THE LAMP THEATER WILL BE RECONSTRUCTED AS PART OF THE IRWIN PROJECT.
THIS PHOTO WAS TAKEN OPENING NIGHT, 1938.

As a vital  part of the local  community,  Irwin  Bank & Trust  Company  and our
employees  participate  in a number of  initiatives,  such as The Irwin Project,
that  highlight  our  personal  involvement  and interest in  strengthening  our
region's economy.

Irwin Bank continued its  commitment to our hometown  through our support of the
Irwin  Project's  "revitalization  initiative"  that is helping breathe new life
into our region's economy and infrastructure.

In 2005,  The Irwin Project made  significant  progress on several  fronts.  The
Project  received  $95,000 in grant  funding,  plus another  $100,000 in private
pledges.  The Irwin Project has also been  designated a  Pennsylvania  Blueprint
Community and a project community of the Governor's Community Action Team (CAT),
helping to facilitate project funding and  implementation.  The organization has
built excellent working  relationships with county and state agencies and, using
the funding they have obtained, are helping create a new comprehensive municipal
plan for Irwin Borough.  An application for the PA Main Street Program is nearly
complete,  and additional grants in excess of $1 million have been submitted and
are pending approval.  And through the Blueprint  Communities  program this past
year,  local leaders  attended a 5-day  leadership and  revitalization  training
course to help them meet the  challenges of keeping our  community  vigorous and
financially healthy.

Company  employees  also  serve  as  members  and  directors  of  several  local
organizations, and many more donate their time to these worthy causes. A variety
of  fundraising  efforts in which we  participate  also help  provide  financial
support for local initiatives. For instance, Irwin Bank was a sponsor of the 1st
Annual  Norwin  Relay for Life,  to raise money and  awareness  for the American
Cancer  Society.  For the past three years,  we have been a proud sponsor of the
"Light Up a Child's  Life"  holiday  campaign  which  benefits  the  Make-A-Wish
Foundation of Western Pennsylvania. The holiday campaign has become the region's
largest fundraiser to benefit children. The Irwin Bank Employee Club also played
a significant roll in fundraising for non-profit  organizations,  including Toys
for Tots,  Salvation Army, American Red Cross and the Make-A-Wish  Foundation of
Westmoreland County.

8/ IBT Bancorp, Inc. 2005 Annual Report

<PAGE>

                                                                FINANCIAL REVIEW

                                        IBT Bancorp, Inc. 2005 Annual Report/ 9
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations

     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                 OF OPERATIONS

     The Private  Securities  Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking  statements.  When used in this discussion,
the words "believes",  "anticipate",  "contemplates",  "expects",  "intends" and
similar expressions are intended to identify  forward-looking  statements.  Such
statements are subject to certain risks and uncertainties  which include changes
in interest rates, risks associated with the effect of opening new branches, the
ability to control  costs and expenses,  and general  economic  conditions.  IBT
Bancorp,   Inc.  undertakes  no  obligation  to  update  those   forward-looking
statements  to  reflect  events or  circumstances  after  the date  hereof or to
reflect the occurrence of unanticipated events.

GENERAL

     IBT  Bancorp,  Inc.  is a bank  holding  company  headquartered  in  Irwin,
Pennsylvania,  which  provides a full range of commercial and retail banking and
trust services through its wholly owned banking  subsidiary,  Irwin Bank & Trust
Co. (collectively, the "Company"). The Company's stock is traded on the American
Stock Exchange under the symbol IRW.


CRITICAL ACCOUNTING POLICIES

     The most  significant  accounting  policies  followed  by the  Company  are
presented in Note 1 to the  consolidated  financial  statements.  The  Company's
accounting  and  reporting  policies  conform  with  the  accounting  principles
generally  accepted in the United States of America and general practices within
the financial  services  industry.  The preparation of the financial  statements
requires  management to make estimates and  assumptions  that affect the amounts
reported in the financial  statements and the accompanying notes. Actual results
could differ from those estimates.

     Allowance for loan losses:  The Company considers that the determination of
the  allowance  for  loan  losses  involves  a higher  degree  of  judgment  and
complexity than its other significant  accounting  policies.  The balance in the
allowance  for loan  losses  is  determined  based on  management's  review  and
evaluation of the loan portfolio in relation to past loss  experience,  the size
and composition of the portfolio,  current  economic events and conditions,  and
other pertinent factors.  All of these factors may be susceptible to significant
change  to the  extent  actual  outcomes  differ  from  management's  estimates,
additional  provisions  for loan  losses may be  required  that would  adversely
impact earnings in future periods.

     Accounting  for stock options:  As of January 1, 2003, the Company  adopted
SFAS 123 as amended by SFAS 148 in regards to the  accounting for stock options.
As required by this statement,  the Company recognized  compensation  expense in
the income  statement  based on the  estimated  fair value of the options on the
date of the grant.  Prior to this date the  Company  accounted  for  stock-based
compensation in accordance with  Accounting  Principles  Board Opinion (APB) No.
25.  Under APB No.  25, no  compensation  expense  is  recognized  in the income
statement related to any options granted under the Company's stock option plans.
The pro forma  impact to net income and  earnings  per share that would occur if
compensation  expense was  recognized,  based on the estimated fair value of the
options on the date of the grant, is disclosed in the notes to the  consolidated
financial statements.

     Other-than-temporary  impairment:  Generally accepted accounting principles
require   management  to  examine  the   investment   portfolio  for  losses  on
investments,  which may be  determined to be other than  temporary.  The Company
currently owns certain  preferred stocks issued by the Federal National Mortgage
Corporation (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie
Mac).  Ongoing  negative  publicity  concerning  accounting  practices  at  both
agencies  negatively  impacts the value of these  investments.  These  preferred
stocks contain  attributes of both debt and equity. The dividend paid is tied to
an index plus or minus a margin, and the payment rate adjusts bi-annually.

                                                            IBT Bancorp, Inc./1

<PAGE>

Management's Discussion and Analysis of Financial Condition and Results
of Operations

FINANCIAL CONDITION

     At December 31, 2005,  total assets  increased  $9.3  million,  or 1.4%, to
$685.2  million from $675.9  million at December 31, 2004. The increase in total
assets was  primarily the result of an increase of $5.7 million in net loans and
$4.8 million in securities  available for sale. Growth in the loan portfolio and
securities  available for sale was  primarily  funded by a net increase of $12.5
million in Federal funds purchased and $3.2 million in repurchase agreements.

     The  increase in  available  for sale  securities  was mainly the result of
purchases of $53.2 million offset by net proceeds from  maturities and the sales
of  securities  of  $44.8  million.  This  resulted  in net  increases  of  U.S.
Government agencies and obligations of state and political sub-divisions of $7.8
million  and  $8.4   million,   respectively,   offset  by  net   decreases   in
mortgage-backed  securities of $11.2 million. The Company periodically sells and
purchases  securities  to maximize  the return of the  portfolio  within the set
policy limits established by the board of directors.

     The increase in net loans is primarily due to increases in installment term
loans and  commercial  loans of $8.7  million  and $2.4  million,  respectively.
Installment  loan growth was offset by a decrease of $3.5 million in home equity
adjustable rate lines of credit.  Rising market rates precipitated the migration
of customers to the fixed rate installment loans, from the adjustable rate lines
of credit.  The  minimal  growth in  commercial  loans and real  estate  secured
mortgage  loans was attributed to large payoffs  experienced in 2005,  principal
repayments,  and  sales  into the  secondary  mortgage  market.  The 1-4  family
residential  mortgage loans originated by the Company are  periodically  sold in
the secondary market to mitigate the interest-rate  risk associated with holding
long-term,  low rate loans in the  portfolio.  In 2005,  the  Company  sold $7.5
million in loans.

     At December 31, 2005, total liabilities increased $8.1 million, or 1.3%, to
$624.1  million  from $616.0  million at December  31,  2004.  The  increase was
primarily  related to the increases in Federal funds  purchased of $12.5 million
and  repurchase  agreements  of $3.2  million.  The  increases  were  offset  by
decreases in total  deposits and FHLB advances of $5.7 million and $1.6 million,
respectively.

     Non-interest  bearing  deposits  decreased $3.4 million to $83.8 million at
December  31, 2005 from $87.2  million at December  31,  2004.  The decrease was
substantially  offset  by a  related  increase  of $3.2  million  in  repurchase
agreements.  Under the terms of the  agreements,  deposits in designated  demand
accounts of the customer are put into an investment  vehicle which is used daily
to purchase an interest in designated U.S.  Government or Agencies'  securities.
The Company in turn agrees to repurchase these  investments on a daily basis and
pay the customers the daily  interest  earned based on the current  market rate.
See Note 8 to the consolidated financial statements.

     Interest-bearing  deposits  totaled  $436.6 million at December 31, 2005, a
decrease of $2.4 million from  December 31, 2004.  Included in this change was a
decrease in  interest-bearing  checking  accounts of $3.7 million,  money market
accounts of $1.0 million,  and savings  accounts of $3.0 million.  The decreases
were primarily due to the timing of month-end direct deposits, balance transfers
to  certificates  of  deposit,   and  increased   competition   from  investment
alternatives.  Certificates  of  deposit  had a net  decrease  of $2.2  million;
however,  included  in this  decrease  were  maturities  of  public  funds  from
municipalities  of $4.2  million.  The proceeds of the  maturities of the public
funds were primarily used by the municipalities to meet expenses.

     At December 31, 2005, total stockholders'  equity increased $1.3 million to
$61.1  million  from $59.8  million at  December  31,  2004.  The  increase  was
primarily  due to net income of $8.6 million for the period offset by a decrease
of $1.7 million in accumulated other comprehensive income (net of income taxes),
and dividends paid of $5.4 million.  In addition,  surplus  (additional  paid-in
capital) decreased $245,000 due to stock options exercised and increased $59,000
due to stock  options  granted in  accordance  with the adoption of FASB 123, as
amended  by FASB  148.  See Note 19 to the  consolidated  financial  statements.
Accumulated other  comprehensive  income decreased as a result of changes in the
net unrealized  gain on the available for sale securities due to fluctuations in
interest rates. Because of interest rate volatility,  the Company's  accumulated
other  comprehensive  income could materially  fluctuate for each interim period
and year-end. See Note 2 to the consolidated financial statements.

2/IBT Bancorp, Inc.
<PAGE>

Management's Discussion and Analysis of Financial Condition and Results
of Operations


RESULTS OF OPERATIONS

     Net Income: Net income increased  approximately $2.5 million,  or 41.0%, to
$8.6 million,  or $2.88 per diluted  share for the year ended  December 31, 2005
from $6.1 million,  or $2.02 per diluted  share for the year ended  December 31,
2004.  The  increase in net income for fiscal  2005  compared to fiscal 2004 was
primarily  due to a $3.9  million  increase  in other  income  and $2.1  million
increase in interest  income  offset by an increase in interest  expense of $1.9
million and  increases in the  provision  for loan losses and other  expenses of
$600,000 and $1.1 million,  respectively.  A $15.5  million  increase in average
interest  earning  assets and a 19 basis point  increase  in the  average  yield
supported  the  increase  in  interest  income.  The  Company did not record any
non-cash  charges for  investments  whose value  declines were  determined to be
other than  temporarily  impaired,  as a result,  other  income for fiscal  2005
exceeded other income reported for 2004.

     The  decrease  in net income for fiscal  2004  compared  to fiscal 2003 was
primarily due to a $2.4 million  non-cash  charge  resulting  from a decrease in
value of certain agency preferred stocks, which was determined by management, to
be other than  temporary as well as  decreases in net interest  income and total
other income of $165,000 and $775,000,  respectively and an increase of $795,000
in total  other  expenses.  Net  interest  income  decreased  primarily  because
interest expense rose $493,000,  or 4.4%, offset by an increase of $328,000,  or
1.0% in interest  income.  Increases in interest  expense were  attributed to an
increase of $46.6 million in average  interest-bearing  liabilities  offset by a
12-basis  point  decline in average  yield.  Other income  declined due to lower
investment securities gains and lower gains on sales of foreclosed real estate.

     Net Interest Income: Net interest income is the most significant  component
of the Company's income from  operations.  Net interest income is the difference
between  interest  received  on  interest-earning  assets  (primarily  loans and
investment  securities)  and  interest  paid  on  interest-bearing   liabilities
(primarily  deposits and borrowed  funds).  Net interest  income  depends on the
volume and rate earned on  interest-earning  assets and the volume and  interest
rate paid on interest-bearing liabilities.

     Net interest income increased  $172,000,  or 0.8% to $22.1 million for 2005
compared to $21.9 million for 2004.  The increase was primarily due to increases
in average  interest  earning  assets of $15.5  million and average  yield of 19
basis  points.  Included in this  increase was a rise of $6.4 million in average
loans receivable and $7.6 million in average investment  securities coupled with
increases  in the  average  yields  of 13  basis  points  and 37  basis  points,
respectively.  Offsetting  these  changes was an  increase  in average  interest
bearing  liabilities  of $18.3  million  and a 27 basis  point  increase  in the
average cost of funds.

     Net interest income decreased  $165,000,  or 0.7% to $21.9 million for 2004
compared  to $22.1  million  for 2003.  The  decrease  was  primarily  due to an
increase in average  interest-bearing  liabilities  of $46.6 million offset by a
12-basis point decrease in the average cost of funds. Such increases were mainly
in certificates  of deposit,  which rose an average of $24.7 million offset by a
21-basis  point  decline  in  average  cost.  Average  interest  earning  assets
increased  $47.8 million in fiscal 2004 offset by a 40-basis  point  decrease in
the average  yield of interest  earning  assets.  This increase was primarily in
average loans and  investment  securities  available for sale,  which grew $36.8
million  and $15.4  million,  respectively  offset by  decreases  in the average
yields of 52-basis points and 24-basis points, respectively.

     The  following  table  sets  forth  certain  information  relating  to  the
Company's  average  balance sheet and,  reflects the average yield on assets and
average cost of liabilities for the periods indicated. Such yields and costs are
derived  by  dividing  income or  expense  by the  average  balance of assets or
liabilities,  respectively,  for the periods  presented.  Average  balances  are
derived from daily balances.

                                                            IBT Bancorp, Inc./3

<PAGE>
<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                         --------------------------------------------------------------------------------------
                                                               2005                                  2004
                                         --------------------------------------------------------------------------------------
                                         Average                      Average     Average                         Average
                                         Balance          Interest   Yield/Cost   Balance           Interest     Yield/Cost
                                         ----------       ---------  --------     ----------        ---------    ---------
                                                                        (Dollars in Thousands)
<S>                                      <C>              <C>            <C>      <C>               <C>             <C>
Interest-earning assets:
     Loans receivable (1)                $  436,906       $  27,273      6.24%    $  430,543        $  26,313       6.11%
     Investment securities (2)              200,528           8,437      4.21%       192,934            7,403       3.84%
     Federal funds sold                       2,029              61      3.01%           540               10       1.82%
                                         ----------       ---------    ------     ----------        ---------     ------
          Total interest-earning assets     639,463          35,771      5.59%       624,017           33,726       5.40%

Non-interest earning assets (3)              40,138                                   34,156
                                         ----------                               ----------
          Total assets                   $  679,601                               $  658,173
                                         ==========                               ==========

Interest-bearing liabilities:
     Money market accounts               $   62,225           1,042      1.67%    $   58,103              516       0.89%
     Certificates of deposit                245,654           8,126      3.31%       245,881            7,595       3.09%
     Other liabilities (4)                  224,533           4,514      2.01%       210,096            3,697       1.76%
                                         ----------       ---------    ------     ----------        ---------     ------
         Total interest-bearing
            liabilities                     532,412          13,682      2.57%       514,080           11,808       2.30%
                                                          ---------    ------                       ---------     ------
Non-interest-bearing liabilities (3)         86,244                                   84,704
                                         ----------                               ----------
     Total liabilities                      618,656                                  598,784

 Stockholders' Equity (5)                    60,945                                   59,389
                                         ----------                               ----------
     Total liabilities and
        stockholders' equity             $  679,601                               $  658,173
                                         ==========                               ==========
Net interest income                                       $  22,089                                 $  21,918
                                                          =========                                 ============
Interest rate spread (6)                                                 3.02%                                      3.10%
                                                                       ======                                     ======
Net interest margin (7)                                                  3.45%                                      3.51%
                                                                       ======                                     ======
Ratio of average interest-earning
assets to average interest-bearing
liabilities                                                            120.11%                                    121.38%
                                                                       ======                                     ======
<CAPTION>

                                                           Year Ended December 31,
                                                 --------------------------------------------
                                                                    2003
                                                 --------------------------------------------
                                                 Average                              Average
                                                 Balance          Interest         Yield/Cost
                                                 ----------       ---------         ------
                                                           (Dollars in Thousands)
<S>                                              <C>              <C>                 <C>
Interest-earning assets:
     Loans receivable (1)                        $  393,743       $  26,097           6.63%
     Investment securities (2)                      177,557           7,244           4.08%
     Federal funds sold                               4,926              57           1.16%
                                                 ----------       ---------         ------
          Total interest-earning assets             576,226          33,398           5.80%

Non-interest earning assets (3)                      31,441
                                                 ----------
          Total assets                           $  607,667
                                                 ==========

Interest-bearing liabilities:
     Money market accounts                       $   61,138             645           1.05%
     Certificates of deposit                        221,186           7,303           3.30%
     Other liabilities (4)                          185,117           3,367           1.82%
                                                 ----------       ---------         ------
         Total interest-bearing
            liabilities                             467,441          11,315           2.42%
                                                                  ---------         ------
Non-interest-bearing liabilities (3)                 81,918
                                                 ----------
     Total liabilities                              549,359

 Stockholders' Equity (5)                            58,308
                                                 ----------
     Total liabilities and
        stockholders' equity                     $  607,667
                                                 ==========
Net interest income                                               $  22,083
                                                                  =========
Interest rate spread (6)                                                              3.38%
                                                                                    ======
Net interest margin (7)                                                               3.83%
                                                                                    ======
Ratio of average interest-earning
assets to average interest-bearing
liabilities                                                                         123.27%
                                                                                    ======
</TABLE>

(1)      Average  balances  include  non-accrual  loans, and are net of deferred
         loan fees.
(2)      Includes  investment  securities,  interest-bearing  deposits  in other
         financial institutions and FHLB stock.
(3)      Includes net  deferred  income taxes in excess of deferred tax benefits
         on AFS securities (SFAS 115), stock options (SFAS 123/148) and deferred
         fees (SFAS 109) (4) Includes FHLB  advances,  Federal funds  purchased,
         and repurchase agreements.
(5)      Includes  capital stock,  surplus and unrealized  holding gains on SFAS
         115 AFS securities.
(6)      Interest-rate  spread  represents  the  difference  between the average
         yield   on   interest-earning   assets   and   the   average   cost  of
         interest-bearing liabilities.
(7)      Net interest  margin  represents net interest income as a percentage of
         average interest earning assets.

<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations

         The following table shows the effect of changes in volumes and rates on
interest  income  and  interest  expense.  The  changes in  interest  income and
interest  expense  attributable  to  changes  in both  volume and rate have been
allocated to the changes due to rate.  Tax-exempt income was not recalculated on
a tax  equivalent  basis  due to the  immateriality  of the  change to the table
resulting from a recalculation.
<TABLE>
<CAPTION>
                                                Year Ended December 31,         Year Ended December 31,
                                             -----------------------------   -----------------------------
                                                      2005 vs. 2004                 2004 vs. 2003
                                             -----------------------------   -----------------------------
                                                  Increase (Decrease)             Increase (Decrease)
                                                        Due to                         Due to
                                             -----------------------------   -----------------------------
                                             Volume      Rate        Net     Volume      Rate        Net
                                             -------    -------   --------   -------    -------    -------
                                                                  (In Thousands)
<S>                                          <C>        <C>        <C>       <C>        <C>        <C>
Interest income:
     Loans receivable                        $   389    $   571    $   960   $ 2,439    $(2,223)   $   216
     Investment securities                       291        743      1,034       627       (468)       159
     Other interest-earning assets                27         24         51       (51)         4        (47)
                                             -------    -------   --------   -------    -------    -------
        Total interest-earning assets            707      1,338      2,045     3,015     (2,687)       328
                                             -------    -------   --------   -------    -------    -------

Interest expense:
     Money market accounts                        36        489        525       (32)       (97)      (129)
     Certificates of deposit                      (7)       538        531       816       (524)       292
     Other liabilities                           254        563        817       454       (124)       330
                                             -------    -------   --------   -------    -------    -------
        Total interest-bearing liabilities       283      1,590      1,873     1,238       (745)       493
                                             -------    -------   --------   -------    -------    -------

Net change in net interest income            $   424    $  (252)   $   172   $ 1,777    $(1,942)   $  (165)
                                             =======    =======   ========   =======    =======    =======
</TABLE>

     PROVISION FOR LOAN LOSSES: The Company recorded a provision for loan losses
of $1.2 million,  $600,000, and $600,000 for 2005, 2004, and 2003, respectively.
The table below sets forth information with respect to activity in the Company's
allowance for loan losses for the years indicated:
<TABLE>
<CAPTION>
                                                             AT DECEMBER 31,
                                                ---------------------------------------
                                                     2005          2004        2003
                                                ---------------------------------------
                                                           (DOLLARS IN THOUSANDS)
<S>                                              <C>           <C>           <C>
Total loans outstanding                          $  445,789    $  439,142    $  419,571
                                                =======================================
Average loans outstanding                        $  436,906    $  430,543    $  393,743
                                                =======================================

Allowance balances (at
beginning of period)                             $    2,594    $    3,285    $    2,873

Provision:                                            1,200           600           600

                                                            IBT Bancorp, Inc./5

<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations


Charge-Offs:
   Mortgage                                             (64)       (1,204)          (11)
   Installment                                         (188)         (127)          (84)
   Commercial                                           (19)           (8)         (148)
   Home equity lines of credit                            -             -             -
   PHEAA                                                  -             -             -
   Municipal                                              -             -             -
   Credit cards                                           -             -             -
   Other                                                  -             -
                                                ---------------------------------------
      Total charge-offs                                (271)       (1,339)         (243)

Recoveries:
   Mortgage                                               7             -             -
   Installment                                           21             3            19
   Commercial                                            13            45            36
   Home equity lines of credit                            -             -             -
   PHEAA                                                  -             -             -
   Municipal                                              -             -             -
   Credit cards                                           -             -             -
   Other                                                  -             -             -
                                                ---------------------------------------
        Total recoveries                                 41            48            55
                                                ---------------------------------------
   Net charge-offs                                     (230)       (1,291)         (188)
                                                ---------------------------------------

Allowance balance (at end of period)             $    3,564    $    2,594    $    3,285
                                                =======================================
Allowance for loan losses as a percent of total
loans outstanding                                      0.80%         0.59%         0.78%

Net loans charged off as a percent of average
loans outstanding                                      0.05%         0.30%         0.05%
</TABLE>

     The  provision  for loan losses is charged to operations to bring the total
allowance for loan losses to a level that represents  management's best estimate
of the losses inherent in the portfolio, based on a monthly review by management
of the following factors:

     o    Historical experience
     o    Volume
     o    Type of lending conducted by the Bank
     o    Industry standards
     o    The level and status of past due and non-performing loans
     o    The general economic conditions in the Bank's lending area; and
     o    Other  factors  affecting  the  collectability  of  the  loans  in the
          portfolio

6/IBT Bancorp, Inc.

<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations

     Large groups of homogeneous  loans, such as residential real estate,  small
commercial real estate loans and home equity and consumer loans are evaluated in
the aggregate  using  historical loss factors and other data. The amount of loss
reserve is calculated  using  historical loss rates, net of recoveries on a five
year rolling weighted average, adjusted for environmental, and other qualitative
factors such as industry, geographical,  economic and political factors that can
effect loss rates or loss measurements.

     Large balance and/or more complex loans such as multi-family and commercial
real estate loans may be evaluated on an individual basis and are also evaluated
in  the  aggregate  to  determine  adequate  reserves.  As  specific  loans  are
determined to be impaired,  specific reserves are assigned based upon collateral
value,  market  value,  if  determinable,  or the present value of the estimated
future cash flows of the loan.

     The allowance is increased by a provision for loan loss which is charged to
expense,  and reduced by  charge-offs,  net of  recoveries.  Loans are placed on
non-accrual  status when they are 90 days past due,  unless they are  adequately
collateralized and in the process of collection.

     The  allowance  for loan losses is  maintained  at a level that  represents
management's best estimate of losses in the portfolio at the balance sheet date.
However,  there  can be no  assurance  that the  allowance  for  losses  will be
adequate to cover losses which may be realized in the future and that additional
provisions for losses will not be required.

     OTHER INCOME:  Total other income increased $3.9 million, or 144.4% to $6.6
million  for the year ended  December  31,  2005 from $2.7  million for the year
ended  December 31,  2004.  The most  significant  change in other income is the
decrease  in  investment  security  losses of $2.7  million  for the year  ended
December 31, 2005.  Security  losses in 2004 were  primarily  related to a write
down of  preferred  stocks due to an other  than  temporary  impairment  of fair
value.  Service fees  increased  $1.0 million to $3.6 million for the year ended
December 31, 2005 from $2.6 million for 2004. This increase was primarily due to
an  additional  $929,000 in fees  collected  on deposit  accounts.  Other income
increased  $197,000 to $1.2  million for December 31, 2005 from $1.0 million for
2004 due to a one-time  gain  recorded  from the sale of property  classified as
other real estate.

     Total other income decreased  approximately $3.2 million,  or 54.3% to $2.7
million  for the year ended  December  31,  2004 from $5.9  million for the year
ended December 31, 2003. The decrease in other income was primarily attributable
to investment  securities losses.  Due to an other than temporary  impairment in
fair value,  adjustable  rate preferred  stocks were written down to fair market
value,  which  resulted in a $2.4 million  after tax charge to  earnings.  Other
income  decreased  $641,000  primarily due to a gain from the sale of other real
estate of $351,000 recorded in fiscal 2003.

     OTHER  EXPENSES:  Total other expenses  increased $1.1 million,  or 7.3% to
$16.2  million for the year ended  December 31, 2005 from $15.1  million for the
year ended  December 31, 2004.  This is primarily due to increases in salary and
other expenses.  Salary expense was $6.3 million for the year ended December 31,
2005 an increase of  $400,000  over 2004.  This  increase  is  primarily  due to
additions to staff and annual merit increases. Other expenses increased $400,000
to $4.3  million  for the year  ended  December  31,  2005 from $3.9  million at
December 31, 2004.  Such  increases to expense were  attributed  to increases in
other real estate, customer debit cards, and consulting fees paid by the Company
of $172,000, $96,000, and $52,000, respectively.

     Total other expense increased $795,000,  or 5.6%, to $15.1 million for 2004
from  $14.3  million  for 2003.  Of this  increase,  approximately  $222,000  is
attributed to increased salaries,  which reached $5.9 million for 2004 from $5.7
million for 2003.  Such  increases  in salaries  were mainly the result of staff
additions  and annual  merit  increases.  Pension  and other  employee  benefits
increased  $177,000  to $1.8  million for 2004  primarily  due to  increases  in
pension  costs  and  health  insurance  premiums.  Occupancy  expense  increased
$218,000 to $1.8 million,  for 2004 from $1.5 million for 2003  primarily due to
increases in depreciation  expenses of $261,000 related to building construction
and equipment purchases for technological improvements. Other expenses increased
$155,000 to $3.9 million for 2004 from $3.8 million for 2003.

                                                            IBT Bancorp, Inc./7
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations

     INCOME  TAXES:  Income  tax  expense  of $2.8  million  for the year  ended
December 31, 2005 remained relatively unchanged from 2004, however the effective
tax rate for 2005 dropped to 24.3% from 31.7% reported for 2004.

     Income tax expense for 2004 was $2.8  million  compared to $3.4  million in
2003.  The change in income tax  expense  was  principally  attributable  to the
change in earnings in each period. The Company's effective tax rates were 31.7%,
and 26.2% for 2004 and 2003, respectively.  The Company's effective tax rate has
been  below  the  statutory  rate of 34%  primarily  due to  interest  earned on
obligations of states and political  subdivisions,  which is exempt from federal
taxation. The Company's effective tax rate increased to 31.7% in 2004 from 26.2%
in 2003. The rate increased  because of the  insignificant tax effect concerning
the $2.4 million write down of certain  preferred  stocks that was determined to
be other than temporary.  The loss on these investments is a capital loss, which
can only be used to offset capital gains. The Company had very little in capital
gains to offset.  The tax  benefit  related to the $2.4  million  write down was
$45,000, a tax effect of 1.875%.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's  primary  sources of funds include  savings,  deposits,  loan
repayments and prepayments, cash from operations and borrowings from the Federal
Home Loan Bank. The Company uses its capital resources  principally to fund loan
originations  and  purchases,   to  repay  maturing   borrowings,   to  purchase
investments,  and for short-term liquidity needs. The Company expects to be able
to  fund  or  refinance,  on a  timely  basis,  its  commitments  and  long-term
liabilities.  As of December 31,  2005,  the Company had  commitments  to extend
credit of $104.3 million.

     The Company's  liquid assets  consist of cash and cash  equivalents,  which
include short-term investments.  The levels of these assets are dependent on the
Company's  operating,  financing,  and  investment  activities  during any given
period. At December 31, 2005, cash and cash equivalents totaled $15.5 million.

     Net cash from  operating  activities  for 2005 totaled  $12.1  million,  as
compared to net cash from  operating  activities of $11.3 million for 2004.  The
increase  in 2005 was  primarily  the result of a $2.5  million  increase in net
income,  a $600,000  increase in the provision  for loan losses,  and a $600,000
increase in other assets  offset by a $2.4 million  change in the  write-down of
equity  securities.  Net cash from  operating  activities for 2004 totaled $11.3
million, as compared to net cash from operating  activities of $10.1 million for
2003.  The  increase  in 2004  was  primarily  the  result  of $2.4  million  in
write-down of equity securities

     Net cash used by investing  activities for 2005 totaled $15.5  million,  as
compared to cash used of $50.5 million for 2004 and $47.9 million for 2003.  The
decrease of $35.0  million for 2005 is primarily  due to decreases in securities
purchased  and loans  made to  customers  of $58.4  million  and $15.1  million,
respectively.  These  changes  were  offset by a  decrease  of $40.4  million in
proceeds from the sales and  maturities of  securities.  The change for 2004 was
due to an increase in purchases  of  securities  available  for sale and Federal
Home Loan Bank stock of $34.8 million and $1.7 million,  respectively  offset by
decreases in the proceeds from the sale and  maturities of securities  available
for sale of $4.2  million,  net loans made to  customers  of $34.4  million  and
purchases of premises and equipment of $1.7 million.

     Net cash from  financing  activities  for the year ended  December 31, 2005
totaled $2.7 million, as compared to net cash from financing activities of $39.6
million  for 2004.  The change in 2005 was  primarily  due to  decreases  in net
deposits and proceeds  from FHLB  advances of $39.8  million and $28.0  million,
respectively,  offset by an increase in Federal funds purchased of $20.4 million
and a decrease of $9.4 million in  repayments  of FHLB  advances.  Net cash from
financing activities for the year ended December 31, 2004 totaled $39.6 million,
as compared to net cash from financing activities of $38.5 million for 2003. The
change in 2004 was the result of increased  proceeds from FHLB advances of $12.0
million  offset by increased  repayments  of $8.3  million and  increases in net
deposits of $10.2  million.  Such increases were offset by the repayment of $7.9
million in federal funds purchased.

8/IBT Bancorp, Inc.

<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations

     Liquidity  may  be  adversely  affected  by  unexpected  deposit  outflows,
excessive  interest rates paid by competitors,  and similar matters.  Management
monitors projected liquidity needs and determines the level desirable,  based in
part on the Company's  commitment to make loans and  management's  assessment of
the Company's  ability to generate funds. The Company is also subject to federal
regulations that impose certain minimum capital requirements.

     The table below sets forth  certain  information  regarding  the  Company's
contractual  obligations.  See Note 4,  Note 7 and  Note 10 to the  consolidated
financial statements
<TABLE>
<CAPTION>
                                                                        Payments Due By Period
                                          --------------------------------------------------------------------------------
                                                             Less than          1 - 3            3 - 5          More than
Contractual Obligations                        Total           1 year           years            years           5 years
--------------------------------------------------------------------------------------------------------------------------
                                                                           (In Thousands)
--------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>             <C>               <C>              <C>              <C>
Long-Term Debt Obligations                   $ 68,651        $  4,161          $13,490          $18,000          $33,000
Operating Lease Obligations                       947             204              317              245              181
Certificates of Deposit                       251,067         145,791           71,460           15,291           18,525
</TABLE>

OFF-BALANCE SHEET ARRANGEMENTS

     In the  normal  course of  business,  the  Company  engages in a variety of
financial  transactions that, in accordance with generally  accepted  accounting
principles,  are not recorded in its consolidated  financial  statements.  These
transactions involve, to varying degrees,  elements of credit, interest rate and
liquidity  risk.  Such  transactions  are used  primarily  to manage  customers'
requests for funding and take the form of loan  commitments and lines of credit.
At December 31, 2005 and 2004,  the Company had  commitments to extend credit in
the amount of $104.3  million and $96.1 million,  respectively.  During the year
ended  December 31, 2005,  the Company did not engage in any  off-balance  sheet
transactions  reasonably  likely to have a material  effect on its  consolidated
financial condition, results of operations or cash flows.

MARKET RISK

     Market risk is the risk of loss from adverse  changes in market  prices and
rates.  The  Company's  market risk arises  primarily  from  interest  rate risk
inherent in its lending, investment and deposit taking activities. The Company's
profitability  is  affected by  fluctuations  in  interest  rates.  A sudden and
substantial  increase or decrease in  interest  rates may  adversely  impact the
Company's  earnings  to the extent that the  interest  rates borne by assets and
liabilities  do not change at the same speed,  to the same extent or on the same
basis. To that end,  management  actively monitors and manages its interest rate
risk exposure.

     The principle  objective of the Company's  interest rate risk management is
to evaluate the interest rate risk inherent in certain  balance sheet  accounts,
determine the appropriate level of risk given the Company's  business  strategy,
operating   environment,   capital  and  liquidity   requirements,   performance
objectives, and manage the risk consistent with the Board of Directors' approved
guidelines.   Through  such  management,  the  Company  seeks  to  minimize  the
vulnerability  of its  operations  to changes in interest  rates.  The Company's
Asset/Liability  Committee is comprised of the Company's senior management under
the direction of the Board of Directors,  with senior management responsible for
reviewing with the Board of Directors its activities and strategies,  the effect
of those  strategies on the Company's net interest  margin,  the market value of
the  portfolio  and the effect that  changes in interest  rates will have on the
Company's portfolio and the Company's exposure limits.

The Company utilizes the following strategies to manage interest rate risk:

                                                            IBT Bancorp, Inc./9

<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations


     o    When market conditions  permit, to originate and hold in its portfolio
          adjustable rate loans;
     o    Sell  fixed rate  mortgage  loans  that  conform  to Federal  National
          Mortgage  Association  guidelines  when sales can be achieved on terms
          favorable to the Company;
     o    Lengthen the maturities of its liabilities  when deemed cost effective
          through the utilization of Federal Home Loan Bank advances;
     o    Purchase  mortgage-backed   securities  for  the  available  for  sale
          securities  portfolio with cash flows that can be reinvested in higher
          earning instruments when interest rates rise; and
     o    Generally,  maintain  securities in the  available for sale  portfolio
          that are  short  term to  offset  the  risk of long  term  fixed  rate
          mortgage loans in a rising rate environment.

     The following  table shows the  Company's  financial  instruments  that are
sensitive  to changes in interest  rates,  categorized  by expected  maturity or
repricing  maturity,  and the  instruments'  fair values at December  31,  2005.
Market risk sensitive  instruments  are generally  defined as those  instruments
that can be adversely  impacted by changes in market interest rates. The Company
currently does not participate in hedging programs, interest rate swaps or other
activities   involving  the  use  of  off-balance  sheet  derivative   financial
instruments,  but  may do so in the  future  to  mitigate  interest  rate  risk.
Expected  maturities  are  contractual  maturities  adjusted for  prepayments of
principle.  The Company uses  certain  assumptions  to estimate  fair values and
expected maturities.  For assets, expected maturities are based upon contractual
maturity, call dates and projected repayments of principle. For interest earning
assets,  no  prepayments  are assumed.  Interest  bearing  liabilities,  such as
negotiable order of withdrawal  ("NOW")  accounts,  money market  accounts,  and
similar interest bearing demand accounts are subject to immediate  withdrawal or
repricing and are therefore presented in the earliest period in the table.


10/IBT Bancorp, Inc.

<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations

Expected Maturity/Principal Repayment at December 31,
<TABLE>
<CAPTION>
                                                                                                 Total     Carrying      Fair
                                  2006       2007         2008         2009         2010      Thereafter    Value        Value
                                --------   --------     --------     --------     --------     --------    --------    --------
                                                                         (in thousands)
<S>                             <C>        <C>          <C>          <C>          <C>          <C>         <C>         <C>
Interest-earning assets
-----------------------
Mortgage loans                  $ 12,382   $ 16,542     $ 13,661     $ 15,079     $ 14,712     $180,323    $252,699    $258,038
Home equity loans,
    second mortgage
    loans, student loans,
    other loans                   18,207     17,353       16,205       14,722       13,574       40,638     120,699     123,975

Commercial loans,
    municipal loans               15,853      8,071        5,888        3,304        2,268       37,273      72,657      73,883

Investment securities                  -      1,795          361        2,526        3,967      187,344     195,993     195,993

Interest-bearing
-----------------------
liabilities
-----------------------
NOW and other
    transaction accounts        $ 41,186   $      -     $      -     $      -     $      -     $      -    $ 41,186    $ 41,186
Money market and
    other savings
    accounts                     144,386          -            -            -            -            -     144,386     144,386

Certificates of deposit          145,791     50,017       21,443       13,088        2,203       18,525     251,067     251,145

Federal Home Loan
    Bank of Pittsburgh
    advance                        4,161      3,418       10,072       18,000            -       33,000      68,651      69,968
</TABLE>

IMPACT OF INFLATION AND CHANGING PRICES

     The consolidated  financial statements and related financial data presented
in this Annual Report have been prepared in accordance  with generally  accepted
accounting  principles in the United  States,  which require the  measurement of
financial  position and operating results in terms of historical dollars without
considering the change in the relative  purchasing  power of money over time due
to inflation.  The primary  impact of inflation on the  Company's  operations is
reflected  in  increased  operating  costs.  Unlike most  industrial  companies,
virtually all the assets and liabilities of a financial institution are monetary
in nature. As a result,  interest rates generally have a more significant impact
on a financial  institution's  performance  than do general levels of inflation.
Interest  rates do not  necessarily  move in the same  direction  or to the same
extent as the prices of goods and services.

RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

     In  2005,   the   Financial   Accounting   Standards   Board   issued  FASB
interpretation  ("FIN") 47, Accounting for Asset Retirement Obligations and SFAS
No.  154,  Accounting  Changes and Errors  Corrections  - a  replacement  of APB
Opinion  No. 20 and FASB  Statement  No. 3. The Company  does not believe  these
statements will have a material impact on the Bank or its operations.

                                                            IBT Bancorp, Inc./11
<PAGE>
                      Management's Report to Shareholders

     The consolidated  financial  statements presented are the responsibility of
management  and are prepared in accordance  with generally  accepted  accounting
principles.  The financial  information contained elsewhere in the annual report
is consistent with that in the consolidated financial statements.  The financial
statements  necessarily  include  amounts  that are based on  management's  best
judgments and estimates.  In the opinion of management the accounting  practices
utilized are  appropriate  in the  circumstances  and the  financial  statements
fairly reflect the financial position and results of operation of the Company.

     IBT Bancorp,  Inc.  maintains a system of internal  controls over financial
reporting,  which is designed to provide  reasonable  assurance to the Company's
management  and  board of  directors  regarding  the  reliability  of  financial
reporting and the preparation of financial  statements for external  purposes in
accordance with generally accepted accounting  principles.  The Company assessed
its internal control over financial  reporting as of December 31, 2005, based on
the  criteria  for  effective  internal  control  over  financial  reporting  as
described in Internal  Control-Integrated  Framework  issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based upon that assessment,
the Company  believes  that,  as of December  31,  2005,  its system of internal
controls over financial reporting met those criteria.

     The Company's  independent  auditors,  Edwards  Sauer and Owens,  P.C. have
issued  an  attestation  report  on  management's  assessment  of the  Company's
internal  controls  over  financial  reporting.  Their  attestation  is included
elsewhere in this report.


                  /s/ Charles G. Urtin                  /s/ Raymond G. Suchta

                  Charles G. Urtin                      Raymond G. Suchta
                  President &                           Chief Financial Officer
                  Chief Executive Officer



12/IBT Bancorp, Inc.

<PAGE>
<TABLE>
<CAPTION>
<S>                        <C>
EDWARDS                    Certified Public Accountants & Business Advisors
SAUER &                    -----------------------------------------------------------------------------
OWENS, P.C.                500 Warner Centre, 332 Fifth Avenue, Pittsburgh, PA  15222
                           Phone: 412-281-9211   Fax: 412-281-2407            A Professional Corporation
                           www.esocpa.com                                     Direct Dial:
</TABLE>

                REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


 To the Board of Directors
 IBT Bancorp, Inc.
 Irwin, Pennsylvania


We have audited the  accompanying  consolidated  balance  sheets of IBT Bancorp,
Inc.  (the  Bancorp) and  subsidiary  as of December 31, 2005 and 2004,  and the
related consolidated  statements of income,  changes in stockholders' equity and
cash flows for each of the years in the  three-year  period  ended  December 31,
2005. We also have audited management's assessment, included in the accompanying
Management's  Report to  Shareholders,  that IBT Bancorp,  Inc.  and  subsidiary
maintained  effective  internal control over financial  reporting as of December
31, 2005, based on criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring  Organizations of the Treadway  Commission
(COSO). The Bancorp's management is responsible for these financial  statements,
for maintaining effective internal control over financial reporting, and for its
assessment of the  effectiveness of internal  control over financial  reporting.
Our responsibility is to express an opinion on these financial statements, an

We conducted  our audits in  accordance  with the  standards  of Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements are free of material  misstatement  and whether  effective
internal  control  over  financial  reporting  was  maintained  in all  material
respects. Our audit of financial statements included examining, on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall financial  statement  presentation.  Our
audit of  internal  control  over  financial  reporting  included  obtaining  an
understanding   of  internal  control  over  financial   reporting,   evaluating
management's  assessment,  testing  and  evaluating  the  design  and  operating
effectiveness  of internal  control,  and performing such other procedures as we
considered necessary in the circumstances.  We believe that our audits provide a
reasonable basis for our opinions.

<PAGE>
EDWARDS
SAUER &
OWENS, P.C.


A company's  internal control over financial  reporting is a process designed to
provide reasonable  assurance  regarding the reliability of financial  reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial  reporting  includes those policies and procedures that (1) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions  of the assets of the company;  (2)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the Bancorp are
being made only in accordance with authorizations of management and directors of
the Bancorp; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the Bancorp's
assets that could have a material effect on the financial statements.

Because of its inherent  limitations,  internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial  position of IBT Bancorp,  Inc.
and  subsidiary  as of  December  31,  2005 and  2004,  and the  results  of its
operations  and its cash  flows for each of the years in the  three-year  period
ended  December 31, 2005 in  conformity  with  accounting  principles  generally
accepted in the United  States of America.  Also,  in our opinion,  management's
assessment that IBT Bancorp,  Inc. and subsidiary  maintained effective internal
control over financial  reporting as of December 31, 2005 is fairly  stated,  in
all   material   respects,   based   on   criteria   established   in   Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway  Commission (COSO).  Furthermore,  in our opinion,  IBT Bancorp,
Inc. and subsidiary  maintained,  in all material  respects,  effective internal
control  over  financial  reporting  as of  December  31, 2005 based on criteria
established in Internal Control-Integrated  Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).

/s/ Edwards Sauer & Owens, P.C.

Pittsburgh, Pennsylvania
February 3, 2006


<PAGE>
          Consolidated Balance Sheets/IBT Bancorp, Inc., and Subsidiary

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                       ------------------------------
                                                             2005             2004
                                                       -------------    -------------
<S>                                                    <C>              <C>
 ASSETS
      Cash and due from banks                          $  15,063,970    $  14,641,942
      Interest-bearing deposits in banks                     435,970          515,229
      Federal funds sold                                        --          1,030,000
      Certificate of deposit                                 100,000          100,000
      Securities available for sale                      195,993,449      191,208,214
      Federal Home Loan Bank stock, at cost                5,469,600        5,682,700
      Loans, net of allowance for loan losses of
           $3,563,501 in 2005 and $2,593,642 in 2004     442,225,344      436,548,276
      Premises and equipment, net                          5,624,572        6,232,280
      Other assets                                        20,237,792       19,898,464
                                                       -------------    -------------
TOTAL ASSETS                                           $ 685,150,697    $ 675,857,105
                                                       =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
      Deposits
           Non-interest bearing                        $  83,846,681    $  87,248,485
           Interest-bearing                              436,639,077      438,968,463
                                                       -------------    -------------
           Total deposits                                520,485,758      526,216,948

      Federal funds purchased                             12,468,000             --
      Repurchase agreements                               18,442,703       15,157,257
      Accrued interest and other liabilities               4,022,118        4,374,824
      FHLB advances                                       68,651,125       70,265,314
                                                       -------------    -------------
      Total liabilities                                  624,069,704      616,014,343

STOCKHOLDERS' EQUITY
      Capital stock, par value $1.25,
           50,000,000 shares authorized,
           3,023,799 shares issued, 2,955,455
           shares outstanding
           at December 31, 2005 and 2004                   3,779,749        3,779,749
      Surplus                                              1,231,444        1,417,755
      Retained earnings                                   58,931,230       55,789,915
      Accumulated other comprehensive income                (512,029)       1,204,744
                                                       -------------    -------------
                                                          63,430,394       62,192,163

      Less:  Treasury stock, at cost (68,344 shares)      (2,349,401)      (2,349,401)
                                                       -------------    -------------
      Total stockholders' equity                          61,080,993       59,842,762
                                                       -------------    -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $ 685,150,697    $ 675,857,105
                                                       =============    =============
</TABLE>

                                                            IBT Bancorp, Inc./13


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>

       Consolidated Statements of Income/IBT Bancorp, Inc., and Subsidiary
<TABLE>
<CAPTION>
                                                      YEARS ENDED DECEMBER 31,
                                              --------------------------------------------
                                                  2005            2004            2003
                                              ------------    ------------    ------------
<S>                                           <C>             <C>             <C>
INTEREST INCOME
        Loans, including fees                 $ 27,272,969    $ 26,312,685    $ 26,096,559
        Investment securities                    8,437,156       7,403,199       7,244,174
        Federal funds sold                          61,177           9,835          57,110
                                              ------------    ------------    ------------

        Total interest income                   35,771,302      33,725,719      33,397,843

INTEREST EXPENSE
        Deposits                                 9,996,792       8,703,234       8,666,938
        Federal funds purchased                    180,901          92,982          25,933
        FHLB advances                            2,939,435       2,858,623       2,487,363
        Repurchase agreements                      564,658         152,970         134,546
                                              ------------    ------------    ------------

        Total interest expense                  13,681,786      11,807,809      11,314,780
                                              ------------    ------------    ------------

NET INTEREST INCOME                             22,089,516      21,917,910      22,083,063

PROVISION FOR LOAN LOSSES                        1,200,000         600,000         600,000
                                              ------------    ------------    ------------

NET INTEREST INCOME AFTER PROVISION
  FOR LOAN LOSSES                               20,889,516      21,317,910      21,483,063

OTHER INCOME (LOSSES)
        Service fees                             3,602,991       2,595,941       2,370,065
        Investment security gains                  274,267         383,290         533,155
        Investment security losses                (138,078)     (2,789,571)        (67,636)
        Increase in cash surrender value
          of life insurance                        456,042         466,923         513,066
        Debit card fees                            775,715         680,600         614,475
        Trust fees                                 455,051         340,492         275,378
        Other income                             1,209,163       1,011,967       1,652,555
                                              ------------    ------------    ------------
        Total other income                       6,635,151       2,689,642       5,891,058

OTHER EXPENSES
        Salaries                                 6,332,915       5,875,511       5,653,310
        Pension and other employee benefits      1,831,784       1,820,031       1,642,651
        Occupancy expense                        1,795,473       1,767,950       1,549,532
        Data processing expense                    992,005         916,939         843,074
        Advertising expense                        387,344         309,032         412,702
        Pennsylvania shares tax                    560,428         496,802         446,041
        Other expenses                           4,287,034       3,908,424       3,752,672
                                              ------------    ------------    ------------
        Total other expenses                    16,186,983      15,094,689      14,299,982
                                              ------------    ------------    ------------

INCOME BEFORE INCOME TAXES                      11,337,684       8,912,863      13,074,139

PROVISION FOR INCOME TAXES                       2,758,333       2,828,125       3,427,893
                                              ------------    ------------    ------------

NET INCOME                                    $  8,579,351    $  6,084,738    $  9,646,246
                                              ============    ============    ============

BASIC EARNINGS PER SHARE                      $       2.90    $       2.05    $       3.24
                                              ============    ============    ============
DILUTED EARNINGS PER SHARE                    $       2.88    $       2.02    $       3.19
                                              ============    ============    ============
</TABLE>

14/IBT Bancorp, Inc.


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


<PAGE>

Consolidated  Statements of Changes in Stockholders'  Equity/IBT Bancorp,  Inc.,
and Subsidiary

   Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
                                                                            ACCUMULATED
                                                                              OTHER
                                    CAPITAL                    RETAINED     COMPREHENSIVE    TREASURY
                                     STOCK       SURPLUS       EARNINGS       INCOME          STOCK            TOTAL
                                 ------------ ------------   -------------  ------------   ------------    -------------
<S>                           <C>            <C>            <C>             <C>            <C>            <C>
   BALANCE AT
   DECEMBER 31, 2002              $ 3,779,749  $ 2,073,102   $ 48,974,137   $   2,667,456   $ (1,343,266)  $  56,151,178

   Comprehensive Income
     Net income                                                 9,646,246                                      9,646,246
     Other comprehensive
       income, net of tax:
       Change in net
         unrealized holding
         gains on securities
         available for sale,
         net of deferred
         income tax benefit
         of ($739,040)                                                         (1,434,608)                    (1,434,608)

     Reclassification
       adjustment, net of
       deferred income tax
       benefit of ($102,624)                                                     (199,210)                      (199,210)
                                                                                                            -------------
                                                                                                              (1,633,818)
                                                                                                            -------------
     Total Comprehensive
       Income                                                                                                  8,012,428

   Cash dividends ($1.40)                                      (4,168,721)                                    (4,168,721)
   Stock options granted / vested                  102,154                                                       102,154
   Exercise of stock options                      (490,998)                                                     (490,998)
   Purchase of
     Treasury Stock                                                                                    -               -
                                  ------------ ------------  -------------  --------------  -------------  --------------
   BALANCE AT
   DECEMBER 31, 2003              $ 3,779,749  $ 1,684,258   $ 54,451,662   $   1,033,638   $ (1,343,266)  $  59,606,041
</TABLE>

                                                            IBT Bancorp, Inc./15


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.




<PAGE>
Consolidated  Statements of Changes in Stockholders' Equity (Cont.)/IBT Bancorp,
Inc., and Subsidiary

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                        ACCUMULATED
                                                                          OTHER
                                  CAPITAL                   RETAINED    COMPREHENSIVE    TREASURY
                                   STOCK        SURPLUS     EARNINGS      INCOME          STOCK         TOTAL
                               ------------  ------------ ------------- ------------   ------------  ------------
<S>                           <C>           <C>          <C>           <C>           <C>            <C>
BALANCE AT
DECEMBER 31, 2003               $ 3,779,749  $ 1,684,258  $ 54,451,662  $  1,033,638  $ (1,343,266)  $ 59,606,041

Comprehensive Income
   Net income                                                6,084,738                                  6,084,738
   Other comprehensive
     income, net of tax:
     Change in net
       unrealized holding
       gains on securities
       available for sale,
       net of deferred
       income tax benefit
       of ($688,712)                                                      (1,336,912)                  (1,336,912)

     Reclassification
       adjustment, net of
       deferred income tax
       of $776,858                                                         1,508,018                    1,508,018
                                                                                                     -------------
                                                                                                          171,106
                                                                                                     -------------
     Total Comprehensive
       Income                                                                                           6,255,844

Cash dividends ($1.60)                                      (4,746,485)                                (4,746,485)
Stock options granted / vested                    59,141                                                   59,141
Exercise of stock options                       (325,644)                                                (325,644)
Purchase of
   Treasury Stock                                                                       (1,006,135)    (1,006,135)
                                ------------ ------------ ------------- ------------- -------------  -------------
BALANCE AT
DECEMBER 31, 2004               $ 3,779,749  $ 1,417,755  $ 55,789,915  $  1,204,744  $ (2,349,401)  $ 59,842,762
</TABLE>

16/IBT Bancorp, Inc.


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.




<PAGE>
Consolidated  Statements of Changes in Stockholders' Equity (Cont.)/IBT Bancorp,
Inc., and Subsidiary

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                        ACCUMULATED
                                                                          OTHER
                                  CAPITAL                   RETAINED    COMPREHENSIVE    TREASURY
                                   STOCK        SURPLUS     EARNINGS      INCOME          STOCK         TOTAL
                               ------------  ------------ ------------- ------------   ------------  ------------
<S>                           <C>           <C>          <C>           <C>           <C>            <C>
BALANCE AT
DECEMBER 31, 2004               $ 3,779,749  $ 1,417,755  $ 55,789,915  $  1,204,744  $ (2,349,401)  $ 59,842,762

Comprehensive Income
   Net income                                                8,579,351                                  8,579,351
   Other comprehensive
     income, net of tax:
     Change in net
       unrealized holding
       gains on securities
       available for sale,
       net of deferred
       income tax benefit
       of ($831,292)                                                      (1,613,684)                  (1,613,684)

     Reclassification
       adjustment, net of
       deferred income tax
       of ($53,107)                                                         (103,089)                    (103,089)
                                                                                                     -------------
                                                                                                       (1,716,773)
                                                                                                     -------------
     Total Comprehensive
       Income                                                                                           6,862,578

Cash dividends ($1.84)                                      (5,438,036)                                (5,438,036)
Stock options granted / vested                    59,141                                                   59,141
Exercise of stock options                       (245,452)                                                (245,452)
Purchase of
   Treasury Stock                                                                                               -
                                ------------ ------------ ------------- ------------- -------------  -------------
BALANCE AT
DECEMBER 31, 2005               $ 3,779,749  $ 1,231,444  $ 58,931,230  $   (512,029) $ (2,349,401)  $ 61,080,993
                                ============ ============ ============= ============= =============  =============
</TABLE>

                                                            IBT Bancorp, Inc./17

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>
    Consolidated Statements of Cash Flows/IBT Bancorp, Inc., and Subsidiary

<TABLE>
<CAPTION>
                                                                            YEARS ENDED DECEMBER 31,
                                                                  -----------------------------------------------
                                                                       2005             2004            2003
                                                                  -------------    -------------    -------------
<S>                                                               <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
      Net income                                                  $   8,579,351    $   6,084,738    $   9,646,246
      Adjustments to reconcile net cash
        from operating activities:
        Depreciation                                                    994,839        1,009,989          832,770
        Increase in cash surrender value of insurance                  (456,042)        (466,923)        (513,066)
        Net amortization/accretion of
          premiums and discounts                                        810,975        1,046,467        1,129,046
        Net investment security gains                                  (136,189)         (19,896)        (465,519)
        Loss on write-down of equity securities                            --          2,426,177             --
        Provision for loan losses                                     1,200,000          600,000          600,000
        Stock options granted/vested                                     59,141           59,141          102,154
        Increase (decrease) in cash due to
        changes in assets and liabilities:
          Other assets                                                  775,593          223,003         (921,069)
          Accrued interest and other liabilities                        267,918          339,288         (311,325)
                                                                  -------------    -------------    -------------
      NET CASH FROM OPERATING ACTIVITIES                             12,095,586       11,301,984       10,099,237

CASH FLOWS FROM INVESTING ACTIVITIES
      Purchase of certificate of deposit                               (100,000)        (100,000)        (100,000)
      Proceeds from maturity of certificate of deposit                  100,000          100,000          100,000
      Proceeds from sales of securities available for sale            9,728,425       61,556,451       34,800,655
      Proceeds from maturities of securities available for sale      35,093,279       23,575,354       54,553,305
      Purchase of securities available for sale                     (53,165,621)    (111,626,403)     (76,835,123)
      Net loans made to customers                                    (6,989,448)     (22,118,272)     (56,458,544)
      Purchases of premises and equipment                              (387,131)        (773,520)      (2,542,504)
      Proceeds from the sale Federal Home Loan Bank stock             6,183,500        3,763,900        1,772,400
      Purchase of Federal Home Loan Bank stock                       (5,970,400)      (4,906,100)      (3,160,300)
                                                                  -------------    -------------    -------------

      NET CASH USED BY INVESTING ACTIVITIES                         (15,507,396)     (50,528,590)     (47,870,111)

CASH FLOWS FROM FINANCING ACTIVITIES
      Net (decrease) increase in deposits                            (5,731,190)      34,059,419       23,900,202
      Net increase(decrease) in securities sold
        under agreements to repurchase                                3,285,446        2,546,380       (1,914,959)
      Net increase (decrease) in federal funds purchased             12,468,000       (7,900,000)       7,900,000
      Dividends                                                      (5,438,036)      (4,746,485)      (4,168,721)
      Proceeds from FHLB advances                                          --         28,000,000       16,000,000
      Repayment of FHLB advances                                     (1,614,189)     (11,042,453)      (2,692,233)
      Purchase of treasury stock                                           --         (1,006,135)            --
      Exercised stock options                                          (245,452)        (325,644)        (490,998)
                                                                  -------------    -------------    -------------

      NET CASH FROM FINANCING ACTIVITIES                              2,724,579       39,585,082       38,533,291
                                                                  -------------    -------------    -------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                (687,231)         358,476          762,417

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                       16,187,171       15,828,695       15,066,278
                                                                  -------------    -------------    -------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                          $  15,499,940    $  16,187,171    $  15,828,695
                                                                  =============    =============    =============
</TABLE>

18/IBT Bancorp, Inc.


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>
 Consolidated Statements of Cash Flows (Cont.)/IBT Bancorp, Inc., and Subsidiary

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                     ---------------------------------------------
                                                          2005            2004           2003
                                                     -------------   -------------   -------------
<S>                                                  <C>             <C>             <C>
SUPPLEMENTAL DISCLOSURES

       Cash payments for:
           Interest                                  $ 13,625,849    $ 11,446,837    $ 11,446,828

           Income taxes                              $  3,182,617    $  2,634,965    $  3,671,847


NON CASH TRANSACTIONS

       Recorded unrealized (losses) gains on
           securities available for sale             $ (1,058,528)   $  1,825,368    $  1,566,116
           at December 31

       Deferred (benefit) income taxes on recorded
           unrealized (losses) gains on securities
           available for sale at December 31         $   (546,500)   $    620,625    $    532,479

       Loans transferred to foreclosed real
           estate during the year                    $    112,380    $  1,557,735    $    301,284

       Recorded nonmonetary gain (loss) on
           securities available for sale
           at December 31                            $     81,111    $ (2,426,177)   $     11,960
</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
                                                            IBT Bancorp, Inc./19


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS: IBT Bancorp, Inc. (the Bancorp), is a bank holding company
whose  principal  activity is the ownership  and  management of its wholly owned
subsidiary,  Irwin Bank & Trust  Company (the Bank).  The Bank is a full service
state  chartered  commercial  banking  institution  and  provides  a variety  of
financial services to individuals and corporate customers through its six branch
offices, two loan centers, a trust division,  four supermarket branches and main
office located in Southwestern Pennsylvania. The Bank's primary deposit products
are non-interest and  interest-bearing  checking accounts,  savings accounts and
certificates of deposit.  Its primary  lending  products are  single-family  and
multi-family residential loans, installment loans and commercial loans.

PRINCIPLES OF CONSOLIDATION:  The consolidated  financial statements include the
accounts of the Bancorp and the Bank. All significant intercompany accounts have
been eliminated in the consolidation.

PRINCIPLES OF CONSOLIDATION:  The consolidated  financial statements include the
accounts of the Bancorp and the Bank. All significant intercompany accounts have
been eliminated in the consolidation.

USE OF ESTIMATES:  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

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

INVESTMENT  SECURITIES:  All investments in debt and equity securities are to be
classified  into three  categories.  Securities  which  management  has positive
intent and ability to hold until  maturity are  classified  as held to maturity.
Securities  held to maturity are stated at cost,  adjusted for  amortization  of
premium and  accretion of discount  computed on a level yield basis.  Securities
that are bought and held principally for the purpose of selling them in the near
term are classified as trading  securities.  All other securities are classified
as  available  for sale  securities.  Unrealized  holding  gains and  losses for
trading securities are included in earnings. Unrealized holding gains and losses
for available for sale securities are excluded from earnings and reported net of
income taxes as a separate component of stockholders' equity until realized.  At
this time,  management  has no intention of  establishing  a trading  securities
classification.

Interest and dividends on securities are reported as interest income.  Gains and
losses  realized on sales of securities  represent the  differences  between net
proceeds and carrying values determined by the specific identification method.

ADVERTISING  COSTS:  Advertising  costs are  expensed as  incurred.  Advertising
expense totaled $387,344 for 2005, $309,032 for 2004 and $412,702 for 2003.

LOANS  AND  ALLOWANCE  FOR LOAN  LOSSES:  Loans are  stated at unpaid  principal
balances, less the allowance for loan losses and net deferred loan fees.

20/IBT Bancorp, Inc.


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Loan  origination  and commitment  fees, as well as certain  direct  origination
costs,  are deferred and amortized as a yield  adjustment  over the lives of the
related loans using the interest  method.  Amortization of deferred loan fees is
discontinued when a loan is placed on nonaccrual status.

The allowance for loan losses is  maintained at a level which,  in  management's
judgement,  is  adequate  to  absorb  potential  losses  inherent  in  the  loan
portfolio.  The amount of the allowance is based on  management's  evaluation of
the collectibility of the loan portfolio, including the nature of the portfolio,
credit concentrations,  trends in historical loss experience,  specific impaired
loans,  and economic  conditions.  Large groups of smaller  balance  homogeneous
loans are valued  collectively  for  impairment.  The amount of loss  reserve is
calculated  using  historical  loss  rates,  net  of  recoveries,  adjusted  for
environmental,  and other  qualitative  factors such as industry,  geographical,
economic and political factors that can affect loss rates or loss measurements.

Allowances for losses on specifically identified loans that are determined to be
impaired  are  calculated  based  upon  collateral   value,   market  value,  if
determinable,  or the present  value of the  estimated  future  cash flows.  The
allowance  is  increased  by a provision  for loan  losses,  which is charged to
expense,  and reduced by  charge-offs,  net of  recoveries.  Loans are placed on
nonaccrual  status when they are 90 days past due,  unless  they are  adequately
collateralized and in the process of collection.


PREMISES  AND  EQUIPMENT:  Premises  and  equipment  are  stated  at  cost  less
accumulated  depreciation  computed on both the  straight-line  and  accelerated
methods over the estimated useful lives of the assets. Costs for maintenance and
repairs are expensed  currently.  Costs of major additions or  improvements  are
capitalized.

OTHER REAL ESTATE OWNED (OREO):  Real estate  properties  acquired through or in
lieu of loan  foreclosure  are  initially  recorded  at the lower of the  Bank's
carrying  amount  or fair  value  less  estimated  selling  cost at the  date of
foreclosure.  Any  write-downs  based on the  asset's  fair value at the date of
acquisition  are charged to the  allowance for loan losses.  After  foreclosure,
these assets are carried at the lower of their new cost basis or fair value less
cost to sell.  Costs  of  significant  property  improvements  are  capitalized,
whereas  costs  relating  to  holding  property  are  expensed.  Valuations  are
periodically  performed  by  management,  and  any  subsequent  write-downs  are
recorded as a charge to operations,  if necessary,  to reduce the carrying value
of a property to the lower of its cost or fair value less cost to sell.

INCOME  TAXES:  The Bancorp  uses an asset and  liability  approach to financial
accounting and reporting for income taxes.  Deferred tax assets and  liabilities
are  recognized  for the future tax  consequences  attributable  to  differences
between  the  financial  statement  carrying  amounts  of  existing  assets  and
liabilities and their respective tax bases.  Deferred tax assets and liabilities
are measured  using enacted tax rates expected to apply to taxable income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled. Valuation allowances are established, when necessary to reduce deferred
tax assets to the amount expected to be realized.  Income tax expense is the tax
payable or refundable  for the period plus or minus the change during the period
in deferred tax assets and liabilities.  The Bancorp files consolidated  Federal
income tax returns with its subsidiary.

EARNINGS  PER  SHARE:  Earnings  per  share are  calculated  on the basis of the
weighted  average  number of shares  outstanding.  The weighted  average  shares
outstanding was 2,955,455,  2,966,409 and 2,977,655 for the years ended December
31, 2005, 2004 and 2003, respectively.


                                                            IBT Bancorp, Inc./21


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CASH  EQUIVALENTS:  For purposes of the  Statements  of Cash Flows,  the Bancorp
considers all highly liquid debt instruments  purchased with a maturity of three
months  or less to be cash  equivalents.  The  Bancorp  considers  all  cash and
amounts due from  depository  institutions,  interest-bearing  deposits in other
banks, except certificates of deposit with maturities of more than three months,
and federal funds sold to be cash  equivalents for purposes of the statements of
cash flows.

RECLASSIFICATION  OF PRIOR YEAR'S STATEMENTS:  Certain previously reported items
have been  reclassified  to conform to the current year's  classifications.  The
reclassifications  have  no  effect  on  total  assets,  total  liabilities  and
stockholders' equity, or net income.

NOTE 2 -- INVESTMENT SECURITIES

Investment securities available for sale consist of the following:
<TABLE>
<CAPTION>
                                                                   DECEMBER 31, 2005
                                           -------------------------------------------------------------------
                                                                 GROSS           GROSS
                                             AMORTIZED         UNREALIZED      UNREALIZED            MARKET
                                               COST              GAINS           LOSSES               VALUE
                                           ------------       -----------       -----------       ------------
<S>                                        <C>                <C>               <C>               <C>
Obligations of
  U.S. Government Agencies                 $ 80,139,533       $    35,630       $(1,301,245)      $ 78,873,918
Obligations of State and
  political sub-divisions                    53,723,194         1,356,363          (271,660)        54,807,897
Mortgage-backed securities                   55,228,872           114,890        (1,516,289)        53,827,473
Other securities                                195,589                 -                (2)           195,587
Equity securities                             7,764,789           557,507           (33,722)         8,288,574
                                           ------------       -----------       -----------       ------------

                                           $197,051,977       $ 2,064,390       $(3,122,918)      $195,993,449
                                           ============       ===========       ===========       ============
<CAPTION>
                                                                   DECEMBER 31, 2004
                                           -------------------------------------------------------------------
                                                                 GROSS           GROSS
                                             AMORTIZED         UNREALIZED      UNREALIZED            MARKET
                                               COST              GAINS           LOSSES               VALUE
                                           ------------       -----------       -----------       ------------
<S>                                        <C>                <C>               <C>               <C>
Obligations of
  U.S. Government Agencies                 $ 70,946,760       $  212,077        $ (56,170)        $ 71,102,667
Obligations of State and
  political sub-divisions                    44,986,435        1,697,812         (238,524)          46,445,723
Mortgage-backed securities                   64,928,907          422,687         (347,944)          65,003,650
Other securities                                713,965            2,023                -              715,988
Equity securities                             7,806,779          133,407                -            7,940,186
                                           ------------      -----------        ---------         ------------

                                           $189,382,846      $ 2,468,006        $(642,638)        $191,208,214
                                           ============      ===========        =========         ============
</TABLE>
22/IBT Bancorp, Inc.


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

NOTE 2 -- INVESTMENT SECURITIES (CONTINUED)


Gross  realized  gains  and  losses  on calls  and  sales of  available-for-sale
securities were:
<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                                     ------------------------------------
                                                        2005         2004        2003
                                                     ----------   ----------   ----------
<S>                                                  <C>          <C>          <C>
Gross realized gains:
  Obligations of U.S. Government Agencies            $     --     $  204,102   $   75,646
  Obligations of state and political sub-divisions      153,523       91,855       26,250
  Mortgage-backed securities                               --           --        279,457
  Equity securities                                     120,744       87,333      151,802
                                                     ----------   ----------   ----------

                                                     $  274,267   $  383,290   $  533,155
                                                     ==========   ==========   ==========
Gross realized losses:
  Obligations of U.S. Government Agencies            $   45,679   $  363,394   $     --
  Mortgage-backed securities                             92,399         --         67,636
  Equity securities                                        --      2,426,177         --
                                                     ----------   ----------   ----------
                                                     $  138,078   $2,789,571   $   67,636
                                                     ==========   ==========   ==========
</TABLE>

In 2004, the Company recorded a $2,426,177 non-cash write-down of certain agency
preferred  stocks due to an impairment in value that was  determined to be other
than temporary.

The  amortized  cost and  estimated  market value of the  investment  securities
available  for sale at December 31, 2005,  by  contractual  maturity,  are shown
below.  Expected  maturities  will differ from  contractual  maturities  because
issuers  have the right to call or prepay  obligations  with or without  call or
prepayment penalties.
<TABLE>
<CAPTION>
                                                   AMORTIZED        MARKET
                                                      COST          VALUE
                                                  ------------   ------------
<S>                                               <C>            <C>
Due in one year or less                           $         --   $         --
Due after one year through five years                8,747,091      8,649,040
Due after five years through ten years              96,109,200     94,810,139
Due after ten years, includes equity securities     92,195,686     92,534,270
                                                  ------------   ------------

                                                  $197,051,977   $195,993,449
                                                  ============   ============
</TABLE>

As a member of the  Federal  Home Loan Bank of  Pittsburgh  (FHLB),  the Bank is
required to  maintain a minimum  amount of FHLB  stock.  The  minimum  amount is
calculated  based  on  level  of  assets,  residential  real  estate  loans  and
outstanding FHLB advances. The Bank held $5,469,600 and $5,682,700 of FHLB stock
at December 31, 2005 and 2004, respectively.


                                                            IBT Bancorp, Inc./23

<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

NOTE 2 -- INVESTMENT SECURITIES (CONTINUED)

Temporarily impaired investments consist of the following:
<TABLE>
<CAPTION>
                                                               DECEMBER 31, 2005
                               ----------------------------------------------------------------------------------------
                                  LESS THAN 12 MONTHS           12 MONTHS OR LONGER                   TOTAL
                               --------------------------    --------------------------     ---------------------------
                                  MARKET     UNREALIZED        MARKET       UNREALIZED        MARKET        UNREALIZED
                                  VALUE        LOSSES          VALUE          LOSSES           VALUE          LOSSES
                               ------------  -----------     -----------    -----------     ------------    -----------
<S>                            <C>           <C>             <C>            <C>             <C>             <C>
Obligations of U.S.
    Government Agencies        $ 64,155,138  $  (984,395)    $13,683,150    $  (316,850)    $ 77,838,288    $(1,301,245)
Mortgage-backed securities       22,243,112     (621,158)     24,593,146       (895,131)      46,836,258     (1,516,289)
Obligations of state and
    political sub-divisions      14,909,740     (225,501)      2,100,444        (46,159)      17,010,184       (271,660)
Other investments                   979,056      (33,724)             --             --          979,056        (33,724)
                               ------------  -----------     -----------    -----------     ------------    -----------
    Total temporarily
         impaired securities   $102,287,046  $(1,864,778)    $40,376,740    $(1,258,140)    $142,663,786    $(3,122,918)
                               ============  ===========     ===========    ===========     ============    ===========
</TABLE>

Investments  are  reviewed for  declines in value on a quarterly  basis.  Equity
securities  currently have market values that are in excess of carrying  values.
All other  investments  are interest  rate  sensitive.  These  investments  earn
interest at fixed or adjustable  rates.  The  adjustable  rate  instruments  are
generally  linked to an index,  such as the 3 month libor rate,  plus or minus a
variable.  The  value of  these  instruments  fluctuates  with  interest  rates,
therefore the changes in value are deemed to be temporary.

NOTE 3 -- LOANS

Major classifications of loans are as follows:
<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                --------------------------------
                                                   2005                2004
                                                ------------        ------------

<S>                                             <C>                 <C>
Mortgage                                        $252,699,327        $252,114,219
Home equity credit                                19,684,198          23,201,124
Installment                                       93,428,367          84,673,524
Commercial                                        63,508,313          61,139,895
PHEAA                                              6,780,415           7,354,534
Municipal                                          9,148,382          10,050,265
Credit cards                                          61,868              44,882
Other                                                744,087             854,685
                                                ------------        ------------
                                                 446,054,957         439,433,128
Less:
  Allowance for loan losses                        3,563,501           2,593,642
  Deferred loan fees                                 266,112             291,210
                                                ------------        ------------

                                                $442,225,344        $436,548,276
                                                ============        ============
</TABLE>
24/IBT Bancorp, Inc.


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 3 -- LOANS (CONTINUED)

The aggregate  amount of demand deposit  accounts with  overdrawn  balances that
were  reclassified  as loan  balances at December 31, 2005 and 2004  amounted to
$607,114 and $715,870, respectively and are included in other loans.


The total  recorded  investment  in impaired  loans  amounted to  $1,484,017  at
December 31, 2005 and  $1,535,834  at December 31, 2004.  The allowance for loan
losses  related to impaired  loans amounted to $522,857 and $412,470 at December
31, 2005 and 2004, respectively.

Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
                                              YEARS ENDED DECEMBER 31,
                                      -----------------------------------------
                                         2005           2004            2003
                                      -----------    -----------    -----------
<S>                                   <C>            <C>            <C>
Balance, beginning of year            $ 2,593,642    $ 3,284,830    $ 2,873,067
  Provision charged to operations       1,200,000        600,000        600,000
  Loans charged off                      (269,310)    (1,338,749)      (242,711)
  Recoveries                               39,169         47,561         54,474
                                      -----------    -----------    -----------

Balance, end of year                  $ 3,563,501    $ 2,593,642    $ 3,284,830
                                      ===========    ===========    ===========
</TABLE>


NOTE 4 -- PREMISES AND EQUIPMENT

Premises and equipment which are stated at cost are as follows:
<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                   -----------------------------
                                                       2005            2004
                                                   -----------       -----------
<S>                                                <C>               <C>
  Land                                             $   921,559       $   921,559
  Buildings and improvements                         5,950,036         5,955,107
  Furniture and equipment                            7,744,717         7,413,916
                                                   -----------       -----------
                                                    14,616,312        14,290,582
  Less:  Accumulated depreciation                    8,991,740         8,058,302
                                                   -----------       -----------

                                                   $ 5,624,572       $ 6,232,280
                                                   ===========       ===========
</TABLE>

Depreciation  expense was $994,839 in 2005,  $1,009,989  in 2004 and $832,770 in
2003.

Nine of the Bank's  commercial  branch office  buildings and/or land, the Bank's
trust division office and an operations  facility are leased by the Bank.  These
leases have initial terms of 1 to 20 years,  and all contain renewal options for
additional  years.

In 2005, fully  depreciated  assets and the remaining  depreciation on assets no
longer in use, as a result of the closure of two branch  offices,  were  written
off.
                                                            IBT Bancorp, Inc./25


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 4 -- PREMISES AND EQUIPMENT (CONTINUED)

The  following is a summary of the future  minimum  lease  payments  under these
operating leases:

For the year ended December 31,
                         2006                  $204,104
                         2007                   167,428
                         2008                   148,951
                         2009                   148,894
                         2010                    96,300
                         2011 and thereafter    180,984
                                               --------

                                               $946,661
                                               ========

Rental expense under these operating leases was $247,327,  $250,464 and $220,981
for the years ended December 31, 2005, 2004 and 2003, respectively.

NOTE 5 -- JOINT VENTURE

The Bancorp has an 85% limited partnership  interest in T.A. of Irwin, L.P. This
partnership provides title insurance to the general public. The Bancorp uses the
equity method to account for its investment in the  partnership.  As of December
31, 2005 and 2004,  the  partnership is reflected in the other assets section of
the balance sheet at $31,772 and $20,083, respectively.

NOTE 6 -- BANK OWNED LIFE INSURANCE

In 2001, the Bank purchased  single premium life insurance  policies on officers
of the Bank at a cost of  $10,000,000.  At December 31, 2005 and 2004,  the cash
surrender value of these policies was $11,930,700 and $11,509,239, respectively,
and is included in the other assets section of the balance  sheet.  The increase
in cash surrender value of these policies is recorded as other income.

NOTE 7 -- DEPOSITS

Time deposits  maturing in years ending December 31, as of December 31, 2005 are
summarized as follows:


                         2006                  $145,790,925
                         2007                    50,017,326
                         2008                    21,442,535
                         2009                    13,087,855
                         2010                     2,203,285
                         2011 and thereafter     18,525,116
                                               ------------
                                               $251,067,042
                                               ============

26/IBT Bancorp, Inc.


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

NOTE 7 -- DEPOSITS (CONTINUED)

The Bank held related party deposits of approximately  $3,976,000 and $2,571,000
at December 31, 2005 and 2004, respectively.

The Bank held time deposits of $100,000 or more of $64,684,980  and  $63,260,047
at December 31, 2005 and 2004, respectively.

NOTE 8 -- REPURCHASE AGREEMENTS

The Bank offers its corporate  customers an investment  product fashioned in the
form of a repurchase  agreement.  Under the terms of the agreement,  deposits in
designated  demand  accounts of the customer are put into an investment  vehicle
which is used daily to purchase an interest in  designated  U.S.  Government  or
Agencies'  securities  owned by the Bank.  The Bank in turn agrees to repurchase
these  investments  on a daily  basis and pay the  customer  the daily  interest
earned  on them.  The  amount  of  repurchase  agreements  was  $18,442,703  and
$15,157,257 at December 31, 2005 and 2004, respectively.

NOTE 9 -- PLEDGED ASSETS

At December 31, 2005 and 2004, U.S.  Government  Agency  obligations  carried at
approximately $40,865,000 and $48,257,000 respectively,  were pledged to qualify
for fiduciary powers, to secure public monies and for other purposes required or
permitted  by law.  At  December  31,  2005 and  2004,  the  carrying  amount of
securities pledged to secure repurchase agreements was approximately $30,917,000
and $23,525,000 respectively.

NOTE 10 -- FHLB ADVANCES

At December  31, 2005 and 2004,  the Bank had the  following  advances  from the
Federal Home Loan Bank (FHLB).
<TABLE>
<CAPTION>
               2005                   2004             INTEREST RATE                           MATURITY DATE
       ---------------------  ---------------------  -----------------------------            ------------------

       <S>                             <C>              <C>                                    <C>
               $  1,250,000            $ 1,250,000      2.54% Fixed                            February 21, 2006
                  1,250,000              1,250,000      2.83% Fixed                            August 21, 2006
                  1,416,489              2,233,153      2.99% Amortizing-Fixed                 August 20, 2007
                  2,000,000              2,000,000      3.67% Fixed                            September 5, 2007
                  1,734,636              2,532,161      2.79% Amortizing-Fixed                 January 28, 2008
                  5,000,000              5,000,000      5.63% Fixed to Float                   July 21, 2008
                  5,000,000              5,000,000      4.86% Fixed to Float                   October 23, 2008
                  8,000,000              8,000,000      3.48% Fixed w/Strike rate              January 20, 2009
                 10,000,000             10,000,000      4.06% Fixed w/Strike rate              July 22, 2009
                  4,000,000              4,000,000      5.18% Fixed w/Strike Rate              February 23, 2011
                  4,000,000              4,000,000      4.98% Fixed to Float                   March 23, 2011
                  5,000,000              5,000,000      4.947% Fixed w/Strike Rate             August 29, 2011
                  5,000,000              5,000,000      4.6% Fixed w/Strike Rate               January 30, 2012
                  5,000,000              5,000,000      3.51% Fixed w/Strike Rate              January 28, 2013
                  5,000,000              5,000,000      3.47% Fixed w/Strike Rate              March 18, 2013
                  5,000,000              5,000,000      4.05% Fixed to Float                   August 20, 2014
       ---------------------  ---------------------
               $ 68,651,125            $70,265,314
       =====================  =====================
</TABLE>

Interest only is payable until maturity on all FHLB advances except for the FHLB
advances with maturity dates of August 20, 2007 and January 28, 2008. Collateral
for all advances includes all qualifying mortgages.

                                                            IBT Bancorp, Inc./27


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 10 -- FHLB ADVANCES (CONTINUED)

The  following is a summary of the  principal  payments  due on FHLB  amortizing
advances at December 31, 2005.
<TABLE>
<CAPTION>

<S>                                                 <C>       <C>                      <C>
      Original loan amount                                    $           4,000,000    $         2,500,000
      Interest rate                                                           2.79%                  2.99%
      Monthly payment (includes interest)                     $              71,502    $            72,692
      Number of payments                                                         60                     36
      Maturity date                                              January 28, 2008        August 20, 2007

      Principal payments due December 31:           2006      $             820,063    $           841,420
                                                    2007                    843,237                575,069
                                                    2008                     71,336                     --
                                                              ---------------------      -----------------
      Balance of loan at December 31, 2005                    $           1,734,636    $         1,416,489
                                                              =====================    ===================
</TABLE>

In 2005,  the Bank  renewed  its line of credit  with the FHLB in the  amount of
$20,000,000.  The interest  rate is variable and was 4.23% at December 31, 2005.
The line of credit has an expiration date of May 11, 2006.  There was no balance
outstanding on the line of credit as of December 31, 2005.

The Bank had maximum borrowing capacity with FHLB, including the line of credit,
of  approximately  $301,914,000  and $308,386,000 at December 31, 2005 and 2004,
respectively.

NOTE 11 -- INCOME TAXES

The provision for income taxes consists of:
<TABLE>
<CAPTION>
                                            YEARS ENDED DECEMBER 31,
                                    --------------------------------------------
                                        2005            2004             2003
                                    -----------      -----------     -----------

<S>                                 <C>              <C>             <C>
Currently payable                   $ 3,086,159      $ 2,643,614     $ 3,424,374
Deferred (benefit) tax                 (327,826)         184,511           3,519
                                    -----------      -----------     -----------

Total                               $ 2,758,333      $ 2,828,125     $ 3,427,893
                                    ===========      ===========     ===========
</TABLE>

The significant  components of temporary differences for 2005, 2004 and 2003 are
as follows:
<TABLE>
<CAPTION>
                                              YEARS ENDED DECEMBER 31,
                                      -----------------------------------------
                                         2005           2004             2003
                                      ---------       ---------       ---------

<S>                                   <C>             <C>             <C>
Provision for loan losses             $(329,752)      $ 153,231       $(201,201)
Depreciation                           (137,670)        (14,169)        143,959
Pension                                 106,946          85,095          28,457
Deferred loan fees                        8,533          15,825          74,418
Other                                    24,117         (55,471)        (42,114)
                                      ---------       ---------       ---------

Total                                 $(327,826)      $ 184,511       $   3,519
                                      =========       =========       =========
</TABLE>

28/IBT Bancorp, Inc.


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 11 -- INCOME TAXES (CONTINUED)

A  reconciliation  of the federal  statutory  tax rate to the effective tax rate
applicable to income before income taxes is as follows:
<TABLE>
<CAPTION>
                                                   YEARS ENDED DECEMBER 31,
                                                  ---------------------------
                                                       % of Pretax Income
                                                  ---------------------------
                                                  2005        2004      2003
                                                  ----        ----      ----
<S>                                               <C>         <C>       <C>
Provision at statutory rate                       34.0%       34.0%     34.0%
Effect of tax free income                         (7.7)       (6.3)     (5.2)
Other                                             (2.0)        4.0      (2.6)
                                                  ----        ----      ----

Effective tax rate                                24.3%       31.7%     26.2%
                                                  ====        ====      ====
</TABLE>

The deferred tax assets and  deferred  tax  liabilities  recorded on the balance
sheet as of December 31, 2005 and 2004 are as follows:
<TABLE>
<CAPTION>
                                        2005                      2004
                               ------------------------  ------------------------
                                     DEFERRED TAX              DEFERRED TAX
                               ------------------------  ------------------------
                                 ASSETS     LIABILITIES    ASSETS     LIABILITIES
                               ----------   -----------  ----------   -----------
<S>                            <C>          <C>          <C>          <C>
Provision for loan losses      $1,211,590   $       --   $  881,838   $       --
Depreciation                           --      166,238           --      294,849
Pension expense                        --      342,998           --      236,052
Other                             279,959           --      337,330       28,247
SFAS 115                          529,353           --           --      620,625
                               ----------   ----------   ----------   ----------

                               $2,020,902   $  509,236   $1,219,168   $1,179,773
                               ==========   ==========   ==========   ==========
</TABLE>

NOTE 12 -- SHAREHOLDER RIGHTS PLAN

On  November  18,  2003,  the  Board  of  Directors  of the  Bancorp  adopted  a
Shareholder Rights Plan. The Board declared a dividend distribution of one Right
for each  outstanding  share of common  stock to  stockholders  of record at the
close of  business  on  December  1, 2003.  Each Right  initially  entitled  the
registered  holder to purchase  from the Bancorp  common stock worth $410 on the
date of exercise, for a purchase price of $205, subject to adjustment.

Initially,  the  Rights  will  be  attached  to all  common  stock  certificates
representing  shares then outstanding,  and no separate Rights certificates will
be  distributed.   The  Rights  will  separate  from  the  common  stock  and  a
distribution  date will occur upon the earlier of (i) 10 business days following
a public announcement that a person or group of affiliated or associated persons
(an  "Acquiring  Person"),  has  acquired,  or  obtained  the Right to  acquire,
beneficial  ownership of 10% or more of the  outstanding  shares of common stock
("stock  acquisition  date") or (ii) 10 business days following the commencement
of a tender  offer or  exchange  offer  that  would  result in a person or group
beneficially owning 10% or more of such outstanding shares of common stock.

The Rights are not exercisable  until the  distribution  date and will expire at
the close of business on December 1, 2013,  unless earlier redeemed or exchanged
by the Bancorp.
                                                            IBT Bancorp, Inc./29


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 12 -- SHAREHOLDER RIGHTS PLAN (CONTINUED)

In the event that at any time following the Rights dividend  declaration date, a
person  becomes  the  beneficial  owner  of 10% or more of the  then-outstanding
shares of common  stock,  each holder of a Right  (other than Rights held by the
party  triggering  the Rights and certain  transferees  which are  voided)  will
thereafter  have the right to  receive,  upon  exercise,  common  stock (or,  in
certain  circumstances,  cash,  property,  or other  securities  of the  Bancorp
subject to certain  limitations)  having a value equal to two times the exercise
price of the Right. However, Rights are not exercisable following the occurrence
of the  event set  forth  above  until  such  time as the  Rights  are no longer
redeemable by the Bancorp.

NOTE 13 -- COMMITMENTS AND CONTINGENCIES

In the normal course of business,  there are various outstanding commitments and
certain  contingent  liabilities  which are not  reflected  in the  accompanying
financial  statements.  These commitments and contingent  liabilities  represent
financial  instruments  with  off-balance-sheet  risk.  The contract or notional
amounts of those  instruments  were  comprised of  commitments  to extend credit
approximating  $104,269,000  and  $96,130,000  as of December 31, 2005 and 2004,
respectively, and approximate fair value.

The instruments  involve,  to varying  degrees,  elements of credit and interest
rate risk in excess of the amount  recognized  in the  balance  sheet.  The same
credit policies are used in making  commitments  and conditional  obligations as
for on-balance-sheet  instruments.  The amount of collateral obtained, if deemed
necessary upon extension of credit,  is based on management's  credit evaluation
of the  counterparty.  The terms are  typically  for a one year period,  with an
annual renewal option subject to prior approval by management.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the loan agreement.  These
commitments are comprised  primarily of available  commercial and personal lines
of credit.

The exposure to loss under these  commitments  is limited by subjecting  them to
credit approval and monitoring procedures.  Substantially all of the commitments
to extend credit are  contingent  upon  customers  maintaining  specific  credit
standards at the time of the loan  funding.  Since many of the  commitments  are
expected to expire  without being drawn upon, the total  contractual  amounts do
not necessarily represent future funding requirements.

The Bancorp and Bank are involved in various legal actions from normal  business
activities.  Management  believes that the liability,  if any, arising from such
actions will not have a material adverse effect on the financial position of the
Bancorp and Bank.

NOTE 14 -- CONCENTRATION OF CREDIT

The Bank  primarily  grants  loans to  customers  in Western  Pennsylvania,  and
maintains a diversified  loan  portfolio and the ability of its debtors to honor
their  contracts  is not  substantially  dependent  on any  particular  economic
business  sector. A substantial  portion of the Bank's  investments in municipal
securities  are  obligations of state or political  subdivisions  located within
Pennsylvania.  As a whole,  the Bank's loan and investment  portfolios  could be
affected by the general  economic  conditions of Pennsylvania.  In addition,  at
December 31, 2005 and 2004, a significant portion of the Bank's "due from banks"
and "federal  funds sold" is maintained  with two large  financial  institutions
located in  Southwestern  Pennsylvania.  The Bank  maintains a cash  balance and
federal  funds sold at financial  institutions  that exceed the $100,000  amount
that is  insured  by the FDIC.  Amounts  in excess of  insured  limits,  per the
institutions' records, were approximately  $2,200,000 and $3,552,000 at December
31, 2005 and 2004, respectively.

30/IBT Bancorp, Inc.


<PAGE>

  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 15 -- EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT PLANS

The Bank  maintained one  non-contributory  defined benefit pension plan for its
employees  prior to 1995 (Plan  #1).  In 1995,  various  plan  assumptions  were
changed  which  resulted in a reduction in benefits for older and  long-standing
employees.  To  compensate  for  this,  a  supplemental  non-qualified  plan was
installed for those  employees so affected  (Plan #2). The Bank's funding policy
is to  contribute  annually the maximum  amount that can be deducted for federal
income tax purposes for Plan #1.  Contributions are intended to provide not only
for  benefits  attributed  to service to date but also for those  expected to be
earned  in the  future.  Assets  for the plans are  primarily  invested  in U.S.
Government  obligations,  corporate obligations,  equity securities,  and mutual
funds whose valuations are subject to fluctuations of the securities' market.

The actuarial  measurement period of October 15, through October 14, was used to
determine  the  components  of the net periodic  pension cost and the  financial
disclosures  for both plans.  The actuarial  measurement  date of October 15 was
used in determining the plans' liabilities and asset information.  The following
is a combined summary of the plans' components as of December 31, 2005, 2004 and
2003,  even  though  the  information  has  been  compiled  on the  basis of the
actuarial measurement period.
<TABLE>
<CAPTION>
                                                      2005          2004          2003
                                                  -----------    -----------    -----------
<S>                                               <C>            <C>            <C>
Change in Projected Benefit Obligation:
  Benefit obligation at beginning of year         $ 3,655,011    $ 3,331,356    $ 2,739,116
  Service cost                                        289,282        256,712        210,043
  Interest cost                                       227,751        216,129        184,275
  Actuarial loss due to settlements                        --          8,099             --
  Benefits paid                                       (73,069)      (350,346)       (35,897)
  Other - net                                         357,012        193,061        233,819
                                                  -----------    -----------    -----------
      Benefit obligation at end of year           $ 4,455,987    $ 3,655,011    $ 3,331,356
                                                  ===========    ===========    ===========

Change in Fair Value of Plan Assets:
  Plan assets at estimated
      fair value at beginning of year             $ 2,783,121    $ 2,736,071    $ 2,201,346
  Actual return on plan assets, net of expenses       157,829        146,318        305,653
  Plan settlements                                         --        (42,197)            --
  Benefits paid                                       (73,069)      (350,346)       (35,897)
  Employer contributions                              480,360        293,275        264,969
                                                  -----------    -----------    -----------
      Fair value of plan assets at end of year    $ 3,348,241    $ 2,783,121    $ 2,736,071
                                                  ===========    ===========    ===========

Funded status                                     $(1,107,746)   $  (871,890)   $  (595,285)
Unrecognized net loss from actuarial experience     1,706,791      1,352,122      1,115,107
Unrecognized prior service cost                      (147,176)      (165,438)      (183,700)
Unamortized net asset existing at date
      of adoption of SFAS No. 87                      (17,917)       (21,774)       (27,075)
Effect of settlements                                      --         (5,989)            --
                                                  -----------    -----------    -----------
      Prepaid pension cost                        $   433,952    $   287,031    $   309,047
                                                  ===========    ===========    ===========
</TABLE>
                                                            IBT Bancorp, Inc./31


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 15 -- EMPLOYEE BENEFIT PLANS (CONTINUED)

Defined Benefit Plans (continued)

<TABLE>
<CAPTION>
Net periodic pension cost included the following
 components:

                                               YEARS ENDED DECEMBER 31,
                                          -----------------------------------
                                            2005         2004         2003
                                          ---------    ---------    ---------
<S>                                       <C>          <C>          <C>
  Service cost                            $ 289,282    $ 256,712    $ 210,043
  Interest cost                             227,751      216,129      184,275
  Expected return on plan assets           (219,638)    (206,976)    (167,906)
  Amortization of prior service cost        (18,262)     (18,262)     (18,262)
  Amortization of transition asset           (3,857)      (4,098)      (4,098)
  Recognized net actuarial loss              57,296       45,043       44,196
                                          ---------    ---------    ---------

  Net periodic pension cost               $ 332,572    $ 288,548    $ 248,248
                                          =========    =========    =========

<CAPTION>
Amounts recognized in the consolidated
   balance sheets consist of:
                                               Years Ended December 31,
                                          -----------------------------------
                                             2005         2004         2003
                                          ---------    ---------    ---------
<S>                                       <C>          <C>          <C>

  Prepaid benefit cost                    $1,043,094   $ 713,304    $ 536,653
                                          ==========   =========    =========
</TABLE>

In the months of December 2005,  2004 and 2003, the Bank  contributed  $678,298,
$480,360 and $293,275  respectively,  to the plans  subsequent  to the actuarial
measurement  dates of October 15, 2005,  2004 and 2003.  Because these  employer
contributions were paid after the actuarial measurement period ended, the Bank's
prepaid  pension  cost at  December  31,  2005,  2004 and  2003 was  $1,043,094,
$713,304 and $536,653, respectively.

The combined  accumulated  benefit  obligation for both plans was $3,237,383 and
$2,675,106 at December 31, 2005, and 2004, respectively.
<TABLE>
<CAPTION>
Weighted-average assumptions used to determine
  both the benefit obligations and net periodic pension              Years Ended December 31,
  costs were as follows:                                   --------------------------------------------
                                                               2005           2004              2003
                                                           ------------    -------------   ------------
<S>                                                           <C>             <C>              <C>
   PLAN #1
     Discount rate                                            6.00%           6.25%            6.50%
     Expected long-term return on plan assets                 7.00%           7.00%            7.00%
     Rate of compensation increase                         3.50% - 5.50%   3.50% - 5.50%   3.50% - 5.50%

   PLAN #2
     Discount rate                                            7.00%           7.00%            7.00%
     Expected long-term return on plan assets                 6.00%           6.00%            7.00%
     Rate of compensation increase                            3.50%           3.50%            3.50%
</TABLE>

The interest rate assumption  utilized for the plan valuation methods is 7%. The
interest rate assumption is reasonable  considering  historical  rates of return
and the asset allocation mix of the plan.

32/IBT Bancorp, Inc.


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 15 -- EMPLOYEE BENEFIT PLANS (CONTINUED)

DEFINED BENEFIT PLANS (CONTINUED)

Pension plan weighted-average asset allocations
by investment category are as follows:
<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                   ------------------------------
                                                   2005        2004         2003
                                                   ----        ----         -----
<S>                                                 <C>          <C>         <C>
Cash and cash equivalents                           6%           9%          17%
Stocks                                             18%          22%          24%
Bonds                                               9%          12%          16%
Mutual funds                                       36%          33%          30%
Government securities                              31%          24%          13%
                                                  ---          ---          ---
Total                                             100%         100%         100%
                                                  ===          ===          ===
</TABLE>

The Bank's  pension plan funds are managed and held in trust by the Bank's Trust
Division.  The investment objective and strategy for investing plan assets calls
for  a  "Moderate  Growth  Income  Objective".  This  objective  provides  for a
preservation of the principal's purchasing power and moderate growth and income.
The  range  of  equity  exposure  is  from 40 to 80  percent  and  fixed  income
maturities to 30 years.  The investment  policies of the plan trustees  prohibit
the  use  of  derivatives.   In  addition,   the  plan  assets  are  diversified
appropriately  across different business sections for individual  securities and
the plan  trustees  have  further  diversified  plan  assets by  maintaining  an
investment in mutual funds.

OTHER EMPLOYEE BENEFIT PLANS

The Bank also maintains  non-qualified  deferred  compensation plans for certain
directors, which are generally funded by life insurance. Prior to 2002, premiums
on those  policies were paid for by the Bank.  In 2002,  the Bank elected to pay
those premiums with dividends  accruing on the insurance  policies.  The present
value of these  benefits to be paid under the programs is being accrued over the
estimated remaining service period of the participants.  The liability for these
future  obligations  was  $602,118  and  $588,611 at December 31, 2005 and 2004,
respectively.

In addition,  the Bank maintains a qualified 401(k) - deferred compensation plan
for eligible employees. The plan is designed to provide a predetermined matching
contribution by the Bank based on compensation  deferrals by participants in the
plan. The Bank contributions,  including administrative fees, for 2005, 2004 and
2003 amounted to $80,561, $77,362 and $68,479, respectively.


NOTE 16 -- RELATED-PARTY TRANSACTIONS

At December 31, 2005 and 2004, certain officers and directors of the Bancorp and
the Bank, and companies in which they have beneficial  ownership,  were indebted
to the Bank in the aggregate amount of approximately  $8,257,000 and $11,565,000
respectively.  During 2005, new loans to such related parties were approximately
$1,749,000 and repayments approximated $5,057,000.

                                                           IB T Bancorp, Inc./33


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 17 -- DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value.

Cash and cash equivalents:  The carrying amount is a reasonable estimate of fair
value.

Certificates of deposit:  The carrying  amounts of these short term  investments
approximate their fair value.

Investment  securities:  The fair value of  securities is equal to the available
quoted  market  price.  If no quoted  market price is  available,  fair value is
estimated using the quoted market price for similar securities.

Federal  Home  Loan  Bank  stock:  The  carrying  value of the  FHLB  stock is a
reasonable estimate of fair value due to restrictions on the securities.

Loans  receivable:  For certain  homogeneous  categories of loans, fair value is
estimated using the quoted market prices for securities  backed by similar loans
adjusted for differences in loan characteristics.  The fair value of other types
of loans is  estimated  by  discounting  the future cash flows using the current
rates at which similar  loans would be made to borrowers for the same  remaining
maturities.

Deposit  liabilities:  The fair value of demand  deposits,  savings accounts and
money market deposits is the amount payable on demand at the reporting date. The
fair value of fixed-maturity certificates of deposit is estimated by discounting
the future cash flows using the rates currently  offered for deposits of similar
remaining maturities.

Short-term  borrowings:  The carrying  amounts of federal  funds  purchased  and
borrowings under repurchase agreements are short-term borrowings and approximate
their fair values.

FHLB advances: The fair value of FHLB advances was determined using a discounted
cash flow analysis based on current FHLB advance rates for advances with similar
maturities.

The estimated fair value of the Bancorp's  financial  instruments as of December
31, 2005 are as follows:
<TABLE>
<CAPTION>
                                                   CARRYING            FAIR
                                                    AMOUNT             VALUE
                                                  ------------      ------------
<S>                                               <C>               <C>
Financial Assets:
      Cash and cash equivalents                   $ 15,499,940      $ 15,499,940
      Certificate of deposit                      $    100,000      $    100,000
      Investment securities                       $195,993,449      $195,993,449
      Federal Home Loan Bank stock                $  5,469,600      $  5,469,600
      Loans receivable                            $442,225,344      $452,066,869

Financial liabilities:
      Deposits                                    $520,485,758      $520,564,662
      Short-term borrowings                       $ 30,910,703      $ 30,910,703
      FHLB advances                               $ 68,651,125      $ 69,968,141
</TABLE>

The market values of investments, which are based upon quoted market prices, are
contained in Note 2.

34/IBT Bancorp, Inc.


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 18 -- REGULATORY MATTERS

The Bank is subject to legal  limitations on the amount of dividends that can be
paid to the Bancorp.  The  Pennsylvania  Banking Code  restricts  the payment of
dividends, generally to the extent of its retained earnings.

The Bank is subject to various regulatory capital  requirements  administered by
the federal banking agencies.  Failure to meet minimum capital  requirements can
initiate  certain  mandatory and possibly  additional  discretionary  actions by
regulators  that,  if  undertaken,  could have a direct  material  effect on the
Bank's  financial   statements.   Under  capital  adequacy  guidelines  and  the
regulatory  framework for prompt corrective  action, the Bank must meet specific
capital  guidelines  that involve  quantitative  measures of the Bank's  assets,
liabilities and certain  off-balance  sheet items as calculated under regulatory
accounting  practices.  The Bank's capital amounts and  classification  are also
subject to  qualitative  judgments  by the  regulators  about  components,  risk
weightings and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to maintain minimum amounts and ratios,  as set forth below, of
total  and Tier 1 capital  (as  defined  in the  regulations)  to  risk-weighted
assets,  and of Tier 1 capital to average  assets.  Management  believes,  as of
December  31,  2005  and  2004,  that  the  Bank  meets  all  capital   adequacy
requirements to which it is subjected.

The Bank's actual  capital  ratios as of December 31, 2005 and 2004, the minimum
ratios  required for capital  adequacy  purposes,  and the ratios required to be
considered  well  capitalized  under the Federal Deposit  Insurance  Corporation
Improvement Act of 1991 provisions are as follows:
<TABLE>
<CAPTION>

                                                          DECEMBER 31,         MINIMUM             WELL
                                                        ---------------        CAPITAL           CAPITALIZED
                                                        2005      2004       REQUIREMENTS        REQUIREMENTS
                                                        ----      -----      ------------       --------------
<S>                                                     <C>       <C>           <C>             <C>
Risk-based capital ratio                                14.2%     14.5%         8.0%            10.0% or higher
Leverage capital ratio                                   8.9%      8.5%      3.0% to 4.0%        5.0% or higher
Tier 1 risk-based capital  ratio                        15.1%     13.9%         4.0%             6.0% or higher
</TABLE>

Included in cash and due from banks are required  federal reserves of $7,450,000
and $7,032,000 at December 31, 2005 and 2004, respectively, for facilitating the
implementation  of monetary policy by the Federal  Reserve System.  The required
reserves  are computed by applying  prescribed  ratios to the classes of average
deposit balances. These reserves are held in the form of due from banks.

NOTE 19 -- STOCK OPTION PLAN

The  Bancorp's  Stock Option Plan  authorizes  the granting of stock  options to
directors  and employees  for up to 300,000  shares of common  stock.  The stock
option plan provides for a term of ten years, after which no awards can be made.
Under the plan,  the  exercise  price of each option  equals the closing  market
price of the Bancorp's stock on the grant date, and an option's  maximum term is
ten years. Options constitute both incentive and non-incentive stock options and
are generally granted annually in the month of May. Options granted to directors
are vested  immediately  and are  exercisable six months from the grant date and
options granted to employees generally vest over three years.

As of December 31, 2005, a total of 150,000 stock options have been granted,  of
which,  82,502 are vested and  exercisable,  4,769 have not vested,  53,528 have
been exercised and 9,201 have been forfeited.

                                                            IBT Bancorp, Inc./25


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 19 -- STOCK OPTION PLAN (CONTINUED)

A summary of the status of the Bank's stock option plan is presented below:
<TABLE>
<CAPTION>
                                                                                DECEMBER 31,
                                              --------------------------------------------------------------------------------
                                                         2005                         2004                        2003
                                              ------------------------     -------------------------     ---------------------
                                                             Weighted                      Weighted                   Weighted
                                                             Average                       Average                     Average
                                                             Exercise                      Exercise                   Exercise
                                                 Shares       Price          Shares        Price           Shares      Price
<S>                                              <C>          <C>           <C>           <C>             <C>         <C>
      Outstanding at beginning of year           102,089      $31.13        118,054       $ 30.94         119,709     $26.53
      Granted                                         --          --             --       $    --          20,500     $51.40
      Forfeitures                                     --          --         (5,034)      $ 39.34          (1,001)    $29.58
      Exercised                                  (14,818)     $26.75        (10,931)      $ 25.35         (21,154)    $25.85
                                              ----------                   --------                      --------

      Outstanding at December 31,                 87,271      $30.86        102,089       $ 31.13         118,054     $30.94
                                              ==========                   ========                      ========

      Exercisable at December 31,                 82,502      $30.75         85,223       $ 28.71          73,887     $25.54
                                              ==========                   =======                       ========
</TABLE>

The  options   outstanding   at  December  31,   2005,   2004  and  2003  had  a
weighted-average contractual maturity of 5.74 years, 6.68 years, and 7.66 years,
respectively.

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions:
<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                              --------------------------------------
                                                  2005           2004         2003
                                              ------------   ------------   --------
<S>                                           <C>            <C>               <C>
      Dividend yield                          None granted   None granted      2.72%
      Expected life                                                           7 years
      Expected volatility                                                      20%
      Risk-free interest rate                                                 4.00%
      Weighted-average fair value                                             $10.75
</TABLE>

Effective  January  1,  2003,  the  Bank  adopted  the  fair  value  recognition
provisions of Statement of Financial Accounting Standards (SFAS) 123, Accounting
for Stock-Based  Compensation,  prospectively  to all employee awards granted in
2003.  Awards under the plan vest over periods  ranging from six months to three
years. Therefore,  the cost related to stock-based  compensation included in the
determination  of net income  for 2003 is less than that  which  would have been
recognized  if the fair value based  method had been applied to all awards since
the original effective date of Statement 123.

36/IBT Bancorp, Inc.


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

NOTE 19 -- STOCK OPTION PLAN (CONTINUED)

The following table  illustrates the effect on net income and earnings per share
if the fair value based method had been applied to all  outstanding and unvested
awards in each year.
<TABLE>
<CAPTION>
                                                                          YEARS ENDED DECEMBER 31,
                                                                   --------------------------------------------
                                                                      2005            2004             2003
                                                                  ------------   --------------   -------------

<S>                                                               <C>            <C>              <C>
Net income, as reported                                           $  8,579,351   $    6,084,738   $   9,646,246
Add: Stock-based employee compensation expense
    included in reported net income, net of related tax effects         39,034           39,034          67,422
Deduct: Total stock-based employee compensation
    expense determined under fair value based method for
    all awards, net of related tax effects                                  --           85,525         151,518
                                                                  ------------   --------------   -------------

Pro-forma net income                                              $  8,618,385   $    6,038,247   $   9,562,150
                                                                  ============   ==============   =============

Earnings per share:
      Basic-as reported                                           $       2.90   $         2.05   $        3.24
                                                                  ============   ==============   =============
      Basic-pro forma                                             $       2.92   $         2.04   $        3.21
                                                                  ============   ==============   =============

      Diluted-as reported                                         $       2.88   $         2.02   $        3.19
                                                                  ============   ==============   =============
      Diluted-pro forma                                           $       2.89   $         2.01   $        3.17
                                                                  ============   ==============   =============
</TABLE>

Weighted-average  number of shares outstanding  assuming dilution of exercisable
stock  options using the treasury  stock method was  2,982,450,  3,005,367,  and
3,020,075 for the years ended December 31, 2005, 2004 and 2003, respectively.

NOTE 20 -- TREASURY STOCK

In 2004 the Bancorp repurchased 22,200 shares of its stock for $1,006,135 and is
being held as treasury  stock.  The Bancorp did not repurchase any shares of its
own stock during 2005.

NOTE 21 -- RECENT ACCOUNTING PRONOUNCEMENTS


In 2005,  the FASB issued FASB  interpretation  ("FIN") No. 47,  Accounting  for
Asset Retirement  Obligations.  FIN 47 clarifies that the term conditional asset
retirement obligations, refers to a legal obligation to perform asset retirement
activity in which the timing and/or the method of settlement are  conditional on
a future  event that may or may not be within the  control  of the  entity.  The
obligation  to perform the asset  retirement  obligation is  unconditional  even
though  uncertainty  exists  about  the  timing  and/or  method  of  settlement.
Uncertainty  about the timing and/or method of settlement of a conditional asset
retirement  obligation  should be factored into the measurement of the liability
when sufficient  information  exists. FIN 47 also clarifies when an entity would
have  sufficient  information to reasonably  estimate the fair value of an asset
retirement  obligation.  Also in 2005, the Financial  Accounting Standards Board
issued SFAS No. 154, Accounting Changes and Error Corrections,  a replacement of
APB Opinion No. 20 and FASB Statement No. 3.  Management does not believe either
statement will have an impact on the Bank or its operations.

                                                            IBT Bancorp, Inc./37


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

NOTE 22 -- PARENT COMPANY FINANCIAL INFORMATION

The condensed  financial  information  for IBT Bancorp,  Inc. as of December 31,
2005 and 2004 and for the years ended  December  31,  2005,  2004 and 2003 is as
follows:
<TABLE>
<CAPTION>
BALANCE SHEETS
                                                        DECEMBER 31
                                                  -------------------------
                                                      2005         2004
                                                  -----------   -----------
<S>                                               <C>           <C>
 ASSETS
     Cash in bank                                 $   522,780   $   264,390
     Investment in subsidiary                      60,002,071    58,868,856
     Securities available for sale                    294,163       513,157
     Other assets                                     261,979       241,717
                                                  -----------   -----------

     TOTAL ASSETS                                 $61,080,993   $59,888,120
                                                  ===========   ===========


LIABILITIES AND STOCKHOLDERS' EQUITY
     LIABILITIES                                  $        --   $    45,358

     STOCKHOLDERS' EQUITY                          61,080,993    59,842,762
                                                  -----------   -----------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $61,080,993   $59,888,120
                                                  ===========   ===========
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME

                                                     YEARS ENDED DECEMBER 31,
                                               ------------------------------------
                                                   2005        2004        2003
                                               ----------   ----------   ----------
<S>                                            <C>          <C>          <C>
INCOME
     Dividends from subsidiary                 $5,650,000   $5,900,000   $3,600,000
     Other dividends                               11,280       11,916       14,156
     Investment security gains                    120,744       87,333      151,802
     Income from joint ventures                    34,804       55,139      218,307

EXPENSES
     Professional fees                            105,943       97,126      167,658
     Miscellaneous                                 63,142       60,636       62,954
                                               ----------   ----------   ----------

INCOME BEFORE INCOME TAXES
     AND EQUITY IN UNDISTRIBUTED EARNINGS OF
     SUBSIDIARY                                 5,647,743    5,896,626    3,753,653

EQUITY IN UNDISTRIBUTED
     EARNINGS OF SUBSIDIARY                     2,931,608      188,112    5,892,593
                                               ----------   ----------   ----------

NET INCOME                                     $8,579,351   $6,084,738   $9,646,246
                                               ==========   ==========   ==========
</TABLE>
38/IBT Bancorp, Inc.


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary

Years Ended December 31, 2005, 2004 and 2003


NOTE 22 -- PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
                                                                  YEARS ENDED DECEMBER 31,
                                                        -----------------------------------------
                                                           2005          2004           2003
                                                        -----------    -----------    -----------
<S>                                                     <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

      Net income                                        $ 8,579,351    $ 6,084,738    $ 9,646,246
      Adjustments to reconcile net income to
         net cash provided by operating activities:
         Net undistributed earnings of joint ventures       (34,805)       (55,139)      (218,307)
         Investment security gains                         (120,744)       (87,333)      (151,802)
         Decrease in cash due to changes
             in assets and liabilities:
                Equity in undistributed earnings
                  of subsidiary                          (2,931,608)      (188,112)    (5,892,593)
                                                        -----------    -----------    -----------

NET CASH FROM OPERATING ACTIVITIES                        5,492,194      5,754,154      3,383,544

CASH FLOWS FROM INVESTING ACTIVITIES

      Distributions from joint ventures                      23,116         56,365        279,137
      Proceeds from sale of securities
         available for sale                                 185,899        168,033        166,846
      Purchase of securities available for sale              (4,783)       (22,355)        (1,577)
                                                        -----------    -----------    -----------

NET CASH FROM INVESTING ACTIVITIES                          204,232        202,043        444,406


CASH FLOWS FROM FINANCING ACTIVITIES

      Dividends paid                                     (5,438,036)    (4,746,485)    (4,168,721)
      Purchase of Treasury Stock                               --       (1,006,135)          --
                                                        -----------    -----------    -----------

NET CASH USED BY FINANCING ACTIVITIES                    (5,438,036)    (5,752,620)    (4,168,721)
                                                        -----------    -----------    -----------

NET CHANGE IN CASH AND CASH EQUIVALENTS                     258,390        203,577       (340,771)


CASH AND CASH EQUIVALENTS AT BEGINNING
      OF YEAR                                               264,390         60,813        401,584
                                                        -----------    -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                $   522,780    $   264,390    $    60,813
                                                        ===========    ===========    ===========
</TABLE>
                                                            IBT Bancorp, Inc./39


<PAGE>
  Notes to Consolidated Financial Statements/IBT Bancorp, Inc., and Subsidiary


YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003


NOTE 23 -- CONDENSED CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA  (Unaudited)
<TABLE>
<CAPTION>
                                         QUARTERS ENDED 2005
                          ---------------------------------------------------
                           MARCH 31      JUNE 30   SEPTEMBER 30   DECEMBER 31
                          ----------   ----------  ------------  ------------
<S>                       <C>          <C>          <C>           <C>
Interest income           $8,738,031   $8,814,344   $9,016,445    9,202,482
Interest expense           3,126,624    3,280,426    3,516,174    3,758,562
                          ----------   ----------   ----------   ----------
Net interest income        5,611,407    5,533,918    5,500,271    5,443,920
Provision for loan
  losses                     300,000      300,000      300,000      300,000
Non-interest income        1,624,670    1,777,621    1,638,471    1,594,390
Non-interest expense       3,710,161    4,064,011    4,134,575    4,278,237
                          ----------   ----------   ----------   ----------
Income before income
  taxes                    3,225,916    2,947,528    2,704,167    2,460,073
Income tax expense           901,770      621,685      665,927      568,951
                          ----------   ----------   ----------   ----------

Net income                $2,324,146   $2,325,843   $2,038,240   $1,891,122
                          ==========   ==========   ==========   ==========

Net income per Share of
  Capital Stock           $     0.79   $     0.79   $     0.69   $     0.63
                          ==========   ==========   ==========   ==========

<CAPTION>
                                         QUARTERS ENDED 2004
                          ---------------------------------------------------
                           MARCH 31      JUNE 30   SEPTEMBER 30   DECEMBER 31
                          ----------   ----------  ------------  ------------
<S>                       <C>          <C>          <C>           <C>
Interest income           $8,310,564   $8,372,018   $8,401,372   $8,641,765
Interest expense           2,852,344    2,877,888    2,969,697    3,107,880
                          ----------   ----------   ----------   ----------
Net interest income        5,458,220    5,494,130    5,431,675    5,533,885
Provision for loan
  losses                     125,000      125,000       40,000      310,000
Non-interest income        1,348,055    1,336,940    1,269,911    1,160,913
Non-interest expense       3,649,837    3,867,618    3,714,607    6,288,804
                          ----------   ----------   ----------   ----------
Income before income
  taxes                    3,031,438    2,838,452    2,946,979       95,994
Income tax expense           678,843      750,216      785,605      613,461
                          ----------   ----------   ----------   ----------

Net income                $2,352,595   $2,088,236   $2,161,374   $ (517,467)
                          ==========   ==========   ==========   ==========

Net income per Share of
  Capital Stock           $     0.79   $     0.70   $     0.73   $    (0.17)
                          ==========   ==========   ==========   ==========
</TABLE>

40/IBT Bancorp, Inc.


<PAGE>
                       IBT Bancorp, Inc./Corporate Profile


                       IBT BANCORP, INC. CORPORATE PROFILE

IBT Bancorp,  Inc. (the  "Company"),  a  Pennsylvania  corporation,  is the bank
holding company for Irwin Bank & Trust Company ("Irwin Bank"). Irwin Bank is the
principal subsidiary of the Company.

Irwin  Bank &  Trust  Company  was  incorporated  in  1922  under  the  laws  of
Pennsylvania  as  a  commercial  bank.  The  Bank  is  headquartered  in  Irwin,
Pennsylvania  and  conducts  business  through  7  full  service   branches,   4
supermarket  branches,  2 loan offices,  and a trust office in the  Pennsylvania
counties of Westmoreland  and Allegheny.  Irwin Bank is a diversified  financial
services  institution  providing a broad range of commercial  and retail banking
services,  as well as trust  services to consumers and  businesses.  Deposits in
Irwin Bank are insured by the Federal deposit Insurance  Corporation ("FDIC") to
applicable limits.


STOCK MARKET INFORMATION

The Company's  common stock is listed on the American  Stock  Exchange  ("AMEX")
under the symbol "IRW". As of March 1, 2005, IBT Bancorp, Inc. had approximately
1,306  shareholders of record and 2,955,455 shares of common stock  outstanding.
The number of  stockholders  does not reflect persons or entities who hold their
stock in nominee or "street" name through various brokerage firms
<TABLE>
<CAPTION>
                                                   Price Range             Cash Dividends
                                             High ($)       Low ($)     Declared Per Share ($)
<S>                                           <C>             <C>               <C>
2005
First Quarter                                 48.30           43.75             .46
Second Quarter                                45.50           37.00             .46
Third Quarter                                 44.60           40.50             .46
Fourth Quarter                                46.30           40.50             .46

2004
First Quarter                                 62.60           47.85             .40
Second Quarter                                48.09           44.87             .40
Third Quarter                                 51.00           45.50             .40
Fourth Quarter                                50.25           45.20             .40

</TABLE>

                                                            IBT Bancorp, Inc./41


<PAGE>
                       IBT Bancorp, Inc./Corporate Profile


The ability of the Company to pay  dividends  is  dependent  upon the ability of
Irwin Bank to pay  dividends to the Company.  Because Irwin Bank is a depository
institution  insured by the FDIC it may not pay dividends or distribute  capital
assets if it is in default on any assessment due the FDIC.

Additionally,  Irwin Bank is also subject to certain state banking  regulations.
Under  Federal  Reserve  Policy,  the Company is  required to maintain  adequate
regulatory  capital and is expected to act as a source of financial  strength to
Irwin Bank and to commit resources to support Irwin Bank in circumstances  where
it might not do so absent  such a policy.  The  policy  could have the effect of
reducing the amount of dividends declarable by the Company.

ANNUAL SHAREHOLDERS MEETING

The annual meeting of shareholders of IBT Bancorp, Inc., will be held on Tuesday
April 18, 2006 at 2:00 PM local time, at the Irwin Masonic Hall,  located at 417
Main Street, Irwin Pennsylvania 15642.

FORM 10-K

The Annual Report for the year ended December 31, 2005 filed with the Securities
and Exchange  Commission on Form 10-K, is available  without charge upon written
request. For a copy of the Form 10-K please contact:  Raymond G. Suchta,  Senior
Vice President and Chief Financial Officer, IBT Bancorp,  Inc., 309 Main Street,
Irwin, PA 15642.

TRANSFER AGENT                                 INDEPENDENT AUDITORS
Registrar and Transfer Company                 Edwards Sauer & Owens, P.C.
Investor Relations                             500 Warner Centre
10 Commerce Drive                              Pittsburgh, PA 15222
Cranford, New Jersey 07016-3572
1-800-368-5948

SPECIAL COUNSEL
Malizia, Spidi & Fisch, PC
901 New York Avenue, NW
Suite 210 East
Washington, D.C. 20001

42/IBT Bancorp, Inc.


<PAGE>

                                              Back row:
BOARD OF DIRECTORS                            DR. GRANT J. SHEVCHIK
                                              Director
                                              RICHARD J. HOFFMAN
                                              Director
                                              SECOND ROW:
                                              ROBERT C. WHISNER
                                              Director
[GRAPHIC OMITTED]                             CHARLES W. HERGENROEDER
                                              Director
                                              THOMAS E. DEGER
                                              Director
                                              FRONT ROW:
                                              JOHN N. BRENZIA
                                              Director
                                              RICHARD L. RYAN
                                              Director
                                              ROBERT REBICH, JR.
                                              Chairman
                                              CHARLES G. URTIN
                                              President/CEO

EMPLOYEE MILESTONES, PROMOTIONS, AND NEW HIRES.

                                              TOP ROW:
                                              DEBRAH J. BACHY
                                              Loan Center Manager
                                              Promoted: June, 2005

                                              CAROLYN SUE BOZZICK
                                              Assistant Vice President/Branch
                                              Manager-Haymaker Office
                                              Promoted: April, 2005

[GRAPHIC OMITTED]                             JUDI L. HEBRANK
                                              Operations Officer/Data Processing
                                              Promoted: December, 2005

                                              DEBORAH L. KUKIC
                                              Assistant Vice President/
                                              Training Officer
                                              Promoted: April, 2005

                                              BOTTOM ROW:
                                              DAWN M. SIMPSON
                                              Deposit Operations Officer
                                              Promoted: April, 2005

                                              NANCY A. SMITH
                                              Vice President/Mortgage Lending
                                              Promoted: April, 2005

                                              DAVID J. WHEATON
                                              Vice President/Commercial Lending
                                              Hired: May, 2005

                                              RICHARD P. ZELAZNY
                                              Assistant Vice President
                                              UVEST Investment Consultant
                                              Hired: January, 2005.

The hard work and  dedication of our employees  make the  continuing  success of
Irwin Bank & Trust Company  possible.  Their commitment and community-  oriented
spirit  are a major part of what makes us unique as a  community  bank  offering
"big city" capabilities.

In 2005, Nancy J. McCullough was recognized for her forty-five years of service,
Sharon A. Jaffre was recognized for her thirty-five years of service, and
Sara L. Benson and Patricia A. Debold were each recognized for their twenty-five
years of service.  We are proud to honor these employees for their many years of
dedication and hard work for Irwin Bank & Trust Company.

We are also pleased to recognize our officers who achieved higher rank and those
who joined Irwin Bank & Trust Company last year.


<PAGE>
<TABLE>
<CAPTION>

IRWIN BANK & TRUST COMPANY LOCATIONS

<S>                             <C>                                     <C>
MAIN OFFICE             |       TRUST DIVISION
309 MAIN STREET         |       SUITE 204
IRWIN, PA 15642         |       20 N. PENNSYLVANIA AVENUE
724-863-3100            |       GREENSBURG, PA 15601
                                724-836-2010



BRANCH OFFICES                  IN STORE LOCATIONS                      LOAN CENTER LOCATIONS

GREENSBURG (TRIANGLE DR.)       FT. ALLEN                               MAIN OFFICE LOAN CENTER
4 TRIANGLE DRIVE                INSIDE HEMPFIELD SHOP N' SAVE           319 MAIN STREET
GREENSBURG, PA 15601            ROUTE 136 & JANYCE DRIVE                IRWIN, PA 15642
724-837-5000                    GREENSBURG, PA 15601                    724-863-3100
                                724-853-8540

GREENSBURG (PA COMMONS)         IRWIN-NORTH HUNTINGDON                  MT. PLEASANT LOAN CENTER
20 N. PENNSYLVANIA AVENUE       INSIDE SCOZIO`S SHOP N' SAVE            445 WEST MAIN STREET
GREENSBURG, PA 15601            NORWIN HILLS SHOPPING CENTER            MT. PLEASANT, PA 15666
724-837-5000                    8775 NORWIN AVENUE                      724-547-2255
                                NORTH HUNTINGDON, PA 15642
                                724-861-8701

MONROEVILLE                     PENN CROSSING
HAYMAKER VILLAGE                INSIDE SCOZIO'S FESTIVAL FOODS
4580 BROADWAY BLVD.             2000 PENNY LANE
MONROEVILLE, PA 15146           JEANNETTE, PA 15644
412-858-4450                    724-744-6111

PENN TOWNSHIP                   WHITE OAK
4021 ROUTE 130                  INSIDE SCOZIO'S SHOP N' SAVE
IRWIN, PA 15642                 OAK PARK MALL
724-744-2176                    2001 LINCOLN WAY
                                WHITE OAK, PA 15131
                                412-664-0984
ROUTE 30
9350 ROUTE 30
IRWIN, PA 15642
724-863-2510

WHITE OAK
OAK PARK MALL
2003 LINCOLN WAY
WHITE OAK, PA 15131
412-678-3000

(LOGO:)
IRWIN BANK
& TRUST COMPANY
</TABLE>


www.myirwinbank.com