Alliance Bancorp Inc Of Pennsylvania 10-Q 2008 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2008
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                

Commission File No.:  001-33189

ALLIANCE BANCORP, INC. OF PENNSYLVANIA

 (Exact name of registrant as specified in its charter)

Pennsylvania	56-2637804
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification Number)
541 Lawrence Road
Broomall, Pennsylvania	19008
(Address)	(Zip Code)

(610) 353-2900

 (Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the  preceding 12 months (or for such  shorter  period that the  Registrant  was required  to file  such  reports),  and  (2) has  been  subject  to such  filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares outstanding of Common Stock of the Registrant as of May 8, 2008, was, 7,043,276.

ALLIANCE BANCORP, INC. OF PENNSYLVANIA

Index

		PAGE
Part I – Financial Information
Item 1.	Financial Statements
	Unaudited Consolidated Statements of Financial Condition as of March 31, 2008 and December 31, 2007	3
	Unaudited Consolidated Statements of Income For the Three Months Ended March 31, 2008 and 2007	4
	Unaudited Consolidated Statement of Changes in Stockholders’ Equity For the Three Months Ended March 31, 2008 and 2007	5
	Unaudited Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2008 and 2007	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4T.	Controls and Procedures	22
Part II – Other Information
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Submission of Matters to a Vote of Security Holders	24
Item 5.	Other Information	24
Item 6.	Exhibits	24
	Signatures	25

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Part I – Item 1.

Alliance Bancorp, Inc. of Pennsylvania and Subsidiaries

Consolidated Statements of Financial Condition (Unaudited)

(Dollar amounts in thousands, except share data)

	March 31,			December 31,
	2008			2007
Assets
Cash and cash due from depository institutions	$	4,253		$	3,918
Interest bearing deposits with depository institutions	36,317			38,161
Total cash and cash equivalents	40,570			42,079
Investment securities available for sale	42,429			45,614
Mortgage-backed securities available for sale	33,886			35,632
Investment securities held to maturity (fair value - 2008, $24,964; 2007, $22,827)	24,254			22,247
Loans receivable - net of allowance for loan losses - 2008, $2,893; 2007, $2,831	264,822			256,932
Loans held for sale	186			—
Accrued interest receivable	1,926			1,932
Premises and equipment – net	2,878			2,910
Federal Home Loan Bank (FHLB) stock-at cost	2,294			2,310
Bank owned life insurance	10,555			10,463
Deferred tax asset	3,571			3,589
Prepaid expenses and other assets	761			758
Total Assets	$	428,132		$	424,466
Liabilities and Stockholders’ Equity
Liabilities
Non-interest bearing deposits	$	18,020		$	16,840
Interest bearing deposits	317,908			313,948
Total deposits	335,928			330,788
Demand notes issued to the U.S. Treasury	50			42
FHLB advances	37,000			37,000
Accrued expenses and other liabilities	5,126			5,178
Total Liabilities	378,104			373,008
Stockholders’ Equity
Common stock, $.01 par value; shares authorized – 2008, 15,000,000; 2007, 15,000,000; issued and outstanding - 2008, 7,043,276; 2007, 7,225,000	72			72
Additional paid-in capital	24,041			24,041
Retained earnings - partially restricted	28,822			28,975
Common stock acquired Employee Stock Ownership Plan (ESOP)	(828		)	(843		)
Accumulated other comprehensive loss	(415		)	(787		)
Treasury stock, at cost: 181,724 and -0- shares at March 31, 2008 and December 31, 2007, respectively.	(1,664		)	—
Total Stockholders’ Equity	50,028			51,458
Total Liabilities and Stockholders’ Equity	$	428,132		$	424,466

See notes to consolidated financial statements.

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Alliance Bancorp, Inc. of Pennsylvania and Subsidiaries

Consolidated Statements of Income (Unaudited)

(Dollar amounts in thousands, except per share data)

	For the Three Months
	Ended March 31,
	2008			2007
Interest and Fees and Dividend Income
Loans	$	4,355		$	4,073
Mortgage-backed securities	399			495
Investment securities
Taxable	313			190
Tax - exempt	270			283
Dividends	249			276
Balances due from depository institutions	296			606
Total interest and dividend income	5,882			5,923
Interest Expense
Deposits	2,753			2,762
FHLB advances and other borrowed money	589			587
Total interest expense	3,342			3,349
Net Interest Income	2,540			2,574
Provision for Loan Losses	165			15
Net Interest Income After Provision for Loan Losses	2, 375			2,559
Other Income
Service charges on deposit accounts	91			83
Management fees	96			105
Other fee income	39			33
Gain on sale of loans	2			6
Impairment charge on securities	(363		)	—
Increase in cash surrender value of bank owned life insurance	92			88
Total other (loss) income	(43		)	315
Other Expenses
Salaries and employee benefits	1,394			1,402
Occupancy and equipment	489			478
Advertising and marketing	79			83
Professional fees	102			110
Other noninterest expense	385			401
Total other expenses	2,449			2,474
Income (Loss) Before Income Taxes	(117		)	400
Income Tax (Benefit) Expense	(159		)	16
Net Income	$	42		$	384
Basic and Diluted Earnings per Share	$	0.01		$	0.05

See notes to consolidated financial statements.

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Alliance Bancorp, Inc. of Pennsylvania and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(Dollar amounts in thousands)

	Common Stock		Additional Paid-in Capital		Treasury Stock			Retained Earnings – Partially Restricted			Unearned Shares Held by ESOP			Accumulated Other Comprehensive Loss			Total Stockholder’s Equity			Comprehensive Income (Loss)
Balance, January 1, 2007	$	34	$	7,598	$	—		$	28,538		$	—		$	(2,670	)	$	33,500
Proceeds from sale of common stock net of offering costs of approximately $1,573	38		16,462														16,500
Common stock acquired by ESOP											(903		)				(903		)
ESOP shares committed to be released											15						15
Net income								384									384			$	384
Dividends declared								(130		)							(130		)
Change in net unrealized loss on securities available for sales,-net of tax of $113 and reclassification adjustment														219			219			219
Balance, March 31, 2007	$	72	$	24,060	$	—		$	28,792		$	(888	)	$	(2,451	)	$	49,585		$	603
Balance, January 1, 2008	$	72	$	24,041	$	—		$	28,975		$	(843	)	$	(787	)	$	51,458
ESOP shares committed to be released											15						15
Net income								42									42			$	42
Dividends declared								(195		)							(195		)
Acquisition of Treasury Stock (181,724 shares)					(1,664		)										(1,664		)
Change in net unrealized loss on securities available for sales,-net of tax of $192 and reclassification adjustment														372			372			372
Balance, March 31, 2008	$	72	$	24,041	$	(1,664	)	$	28,822		$	(828	)	$	(415	)	$	50,028		$	414

See notes to consolidated financial statements.

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Alliance Bancorp, Inc. of Pennsylvania and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(Dollar amounts in thousands)

	For the Three Months
	Ended March 31,
	2008			2007
Operating Activities
Net income	$	42		$	384
Adjustments to reconcile net income to cash provided by operating activities:
Provision for:
Loan losses	165			15
Depreciation and amortization	169			165
Gain on sale of loans	(2		)	(6		)
Impairment charge on securities	363			—
ESOP shares committed to be released	15			15
Origination of loans held for sale	(841		)	(1,331		)
Deferred tax benefit	(174		)	(36		)
Proceeds from loans sold in the secondary market	657			759
Changes in assets and liabilities which provided (used) cash:
Accrued expenses and other liabilities	(52		)	(14		)
Prepaid expenses and other assets	(3		)	779
Increase in cash surrender value of bank owned life insurance	(92		)	(88		)
Accrued interest receivable	6			66
Net cash provided by operating activities	253			708
Investing Activities
Purchase of investment securities-available for sale	(9,000		)	(5,000		)
Purchase of investment securities-held to maturity	(2,635		)	—
Loans originated and acquired	(17,355		)	(14,312		)
Proceeds from maturities and calls of investment securities	12,632			1,444
Redemption of FHLB Stock	16			200
Principal repayments of:
Loans	9,300			12,324
Mortgage-backed securities	2,128			2,221
Purchase of premises and equipment	(137		)	(120		)
Net cash used in investing activities	(5,051		)	(3,243		)
Financing Activities
Dividends declared	(195		)	(130		)
(Decrease) increase in deposits	5,140			(7,515		)
Purchase of treasury stock	(1,664		)	—
Proceeds from sale of common stock	—			16,500
Stock acquired by ESOP	—			(903		)
Increase (decrease) in:
Demand notes issued to the U.S. Treasury	8			256
FHLB Advances	—			(3		)
Net cash provided by financing activities	3,289			8,205
Increase (decrease) in Cash and Cash Equivalents	(1,509		)	5,670
Cash and Cash Equivalents, Beginning of Year	42,079			48,282
Cash and Cash Equivalents, End of Year	$	40,570		$	53,952
Supplemental Disclosures of Cash Flow Information-
Cash paid during the period for:
Interest	$	3,367		$	3,349
Income taxes	$	100		$	100

See notes to consolidated financial statements.

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ALLIANCE BANCORP, INC OF PENNSYLVANIA AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(1) Organization and Basis of Presentation

On January 30, 2007, Alliance Bank (the “Bank”) completed its reorganization to a mid-tier holding company structure and the sale by the mid-tier company, Alliance Bancorp, Inc. of Pennsylvania (“Alliance Bancorp” or the “Company”) of shares of its common stock.  In the reorganization and offering, the Company sold 1,807,339 shares of common stock at a purchase price of $10.00 per share and issued 5,417,661 shares of common stock in exchange for former outstanding shares of the Bank.  Each share of the Bank’s common stock was converted into 2.09945 shares of the Company.  The offering resulted in approximately $16.5 million in net proceeds.

As a result of the reorganization and offering, Alliance Mutual Holding Company (the “Holding Company”) owned 55% of the outstanding common stock of Alliance Bancorp and minority public stockholders owned the remaining 45% of the outstanding common stock of Alliance Bancorp.  Following purchases, at March 31, 2008, the Holding Company owns 56.4% of the outstanding of the outstanding common stock at Alliance Bancorp and the minority public shareholders own 43.6%.  The Holding Company is a federally chartered mutual holding company.  The Holding Company and the Company are subject to regulation and supervision of the Office of Thrift Supervision.

The Bank is a community oriented savings bank headquartered in Broomall, Pennsylvania.  The Bank operates a total of nine banking offices located in Delaware and Chester Counties, which are suburbs of Philadelphia.  The Bank’s primary business consists of attracting deposits from the general public and using those funds, together with borrowed funds, to originate loans to its customers and invest in securities such as United States (“U.S.”). Government and agency securities, mortgage-backed securities and municipal obligations.

The Bank is primarily engaged in attracting deposits from the general public through its branch offices and using such deposits primarily to (i) originate and purchase loans secured by first liens on single-family (one-to-four units) residential and commercial real estate properties and (ii) invest in securities issued by the U.S. Government and agencies thereof, municipal and corporate debt securities and certain mutual funds.  The Bank derives its income principally from interest earned on loans, mortgage-backed securities and investments and, to a lesser extent, from fees received in connection with the origination of loans and for other services.  The Bank’s primary expenses are interest expense on deposits and borrowings and general operating expenses.  Funds for activities are provided primarily by deposits, repayments and prepayments of outstanding loans and mortgage-backed securities and other sources.

The Bank is subject to regulation by the Pennsylvania Department of Banking (the “Department”), as its chartering authority and primary regulator, and by the Federal Deposit Insurance Corporation (the “FDIC”), which insures the Bank’s deposits up to applicable limits.

The accompanying unaudited consolidated financial statements of Alliance Bancorp, Inc. of Pennsylvania include the accounts of the Bank and Alliance Delaware Corporation.  The Bank is a wholly owned subsidiary of the Company and Alliance Delaware Corporation is a wholly owned subsidiary of Alliance Bank.  Intercompany accounts and transactions have been eliminated in consolidation.

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Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all information or footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America.  The statement of financial condition at December 31, 2007, has been derived from audited financial statements but does not include all information and footnotes required by generally accepted accounting principles for complete financial statements.  However, in the opinion of management, all adjustments consisting of normal recurring adjustments or accruals, which are necessary for a fair presentation of the consolidated financial statements, have been included.  The results of operations for the three months ended March 31, 2008 are not necessarily indicative of the results which may be expected for the year ending December 31, 2008 or any other period.  All significant intercompany accounts and transactions have been eliminated. In the opinion of management, all adjustments (including normal recurring adjustments) considered necessary for a fair presentation of the results for the interim periods have been included. For comparative purposes, prior years’ consolidated financial statements have been reclassified to conform to report classifications of the current year. The reclassifications had no effect on net income.  The unaudited consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report to Stockholders on Form 10-K for the year ended December 31, 2007.

Related Party Transactions

The Bank maintains a lease agreement with the Holding Company for one of its office locations.    The initial lease term expires in September 2015 and the Bank paid $10,500 for both the three months ended March 31, 2008 and 2007, respectively.  In addition, the Bank maintains a management fee agreement with the Holding Company which provides for the sharing of certain public company related expenses.  Such expenses include salaries and benefits, insurance expenses, professional fees and directors fees.  The Bank has received management fees amounting to $96,000 and $105,000 for the three months ended March 31, 2008 and 2007, respectively.

Commitments and Contingencies

Standby letters of credit are conditional commitments issued by the Bank to guarantee performance of a customer to a third party.  The amount of credit risk involved in issuing letters of credit in the event of nonperformance by the other party is the contract amount.  The maximum exposure related to these commitments at March 31, 2008 was $569,000 which was secured by cash and marketable securities.

Segment Information

The Company has one reportable segment, “Community Banking.”  All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others.  For example, lending is dependent upon the ability of the Company to fund itself with deposits and other borrowings and manage interest rate and credit risk.  Accordingly, all significant operating decisions are based upon analysis of the Company as one segment or unit.

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Recent Accounting Pronouncements

FASB statement No. 141 (R) “Business Combinations” was issued in December of 2007. This Statement establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The Statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The guidance will become effective as of the beginning of a company’s fiscal year beginning after December 15, 2008. This new pronouncement will impact the Company’s accounting for business combinations completed beginning January 1, 2009.

FASB statement No. 160 “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” was issued in December of 2007. This Statement establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance will become effective as of the beginning of a company’s fiscal year beginning after December 15, 2008. The Company is currently evaluating the potential impact the pronouncement will have on its consolidated financial statements.

Staff Accounting Bulletin No. 110 (SAB 110) amends and replaces Question 6 of Section D.2 of Topic 14, “Share-Based Payment,” of the Staff Accounting Bulletin series. Question 6 of Section D.2 of Topic 14 expresses the views of the staff regarding the use of the “simplified” method in developing an estimate of expected term of “plain vanilla” share options and allows usage of the “simplified” method for share option grants prior to December 31, 2007. SAB 110 allows public companies which do not have historically sufficient experience to provide a reasonable estimate to continue use of the “simplified” method for estimating the expected term of “plain vanilla” share option grants after December 31, 2007.  SAB 110 is effective January 1, 2008.  The Company does not expect SAB 110 to have a material impact on its financial statements.

Staff Accounting Bulletin No. 109 (SAB 109), “Written Loan Commitments Recorded at Fair Value Through Earnings” expresses the views of the staff regarding written loan commitments that are accounted for at fair value through earnings under generally accepted accounting principles. To make the staff’s views consistent with current authoritative accounting guidance, the SAB revises and rescinds portions of SAB No. 105, “Application of Accounting Principles to Loan Commitments.”  Specifically, the SAB revises the SEC staff’s views on incorporating expected net future cash flows related to loan servicing activities in the fair value measurement of a written loan commitment. The SAB retains the staff’s views on incorporating expected net future cash flows related to internally-developed intangible assets in the fair value measurement of a written loan commitment. The staff expects registrants to apply the views in Question 1 of SAB 109 on a prospective basis to derivative loan commitments issued or modified in fiscal quarters beginning after December 15, 2007. The Company does not expect SAB 109 to have a material impact on its financial statements.

In December 2007, the FASB issued proposed FASB Staff Position (FSP) 157-b, “Effective Date of FASB Statement No. 157,” that would permit a one-year deferral in applying the measurement provisions of Statement No. 157 to non-financial assets and non-financial liabilities (non-financial items) that are not recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually). Therefore, if the change in fair value of a

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non-financial item is not required to be recognized or disclosed in the financial statements on an annual basis or more frequently, the effective date of application of Statement 157 to that item is deferred until fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. This deferral does not apply, however, to an entity that applies Statement 157 in interim or annual financial statements before proposed FSP 157-b is finalized. The Company is currently evaluating the impact, if any, that the adoption of FSP 157-b will have on the Company’s operating income or net earnings.

In February 2008, the FASB issued FASB Staff Position (FSP) 157-2, “Effective Date of FASB Statement No. 157,” that permits a one-year deferral in applying the measurement provisions of Statement No. 157 to non-financial assets and non-financial liabilities (non-financial items) that are not recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually). Therefore, if the change in fair value of a non-financial item is not required to be recognized or disclosed in the financial statements on an annual basis or more frequently, the effective date of application of Statement 157 to that item is deferred until fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. This deferral does not apply, however, to an entity that applied Statement 157 in interim or annual financial statements prior to the issuance of  FSP 157-2. The Company is currently evaluating the impact, if any, that the adoption of FSP 157-2 will have on the Company’s operating income or net earnings.

In June 2007, the Emerging Issues Task Force (EITF) reached a consensus on Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards” (“EITF 06-11”). EITF 06-11 states that an entity should recognize a realized tax benefit associated with dividends on nonvested equity shares, nonvested equity share units and outstanding equity share options charged to retained earnings as an increase in additional paid in capital. The amount recognized in additional paid in capital should be included in the pool of excess tax benefits available to absorb potential future tax deficiencies on share-based payment awards. EITF 06-11 should be applied prospectively to income tax benefits of dividends on equity-classified share-based payment awards that are declared in fiscal years beginning after December 15, 2007. The Company expects that EITF 06-11 will not have a material impact on its consolidated financial statements.

In March 2008, the FASB issued Statement No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133” (Statement 161).  Statement 161 requires entities that utilize derivative instruments to provide qualitative disclosures about their objectives and strategies for using such instruments, as well as any details of credit-risk-related contingent features contained within derivatives.  Statement 161 also requires entities to disclose additional information about the amounts and location of derivatives located within the financial statements, how the provisions of SFAS 133 has been applied, and the impact that hedges have on an entity’s financial position, financial performance, and cash flows.  Statement 161 is effective for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged.  The Company is currently evaluating the potential impact the new pronouncement will have on its consolidated financial statements.

In February 2008, the FASB issued a FASB Staff Position (FSP) FAS 140-3, “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions.” This FSP addresses the issue of whether or not these transactions should be viewed as two separate transactions or as one “linked” transaction. The FSP includes a “rebuttable presumption” that presumes linkage of the two transactions unless the presumption can be overcome by meeting certain criteria. The FSP will be effective for fiscal years

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beginning after November 15, 2008 and will apply only to original transfers made after that date; early adoption will not be allowed. The Company is currently evaluating the potential impact the new pronouncement will have on its consolidated financial statements.

Earnings Per Share

The net income for the three months ended March 31, 2008 was $42,000 and net income for the three months ended March 31, 2007 was $384,000.  There are no convertible securities which would affect the net income (numerator) in calculating basic and diluted earnings per share. Basic and diluted earnings per share data are based on the weighted-average number of shares outstanding during each period.  Diluted earnings per share are further adjusted for potential common shares that were dilutive and outstanding during the period.

The following table sets forth the composition of the weighted average shares (denominator) used in the basic and diluted earnings share computation.

	For the Three Months Ended March 31,
	2008			2007
Net Income	$	42,000		$	384,000
Weighted average shares outstanding	7,159,003			7,225,000
Average unearned ESOP shares	(83,608		)	(88,827		)
Weighted average shares outstanding – basic and dilutive	7,075,395			7,136,173
Basic and dilutive earnings per share	$	0.01		$	0.05

The Bank has an Employee Stock Ownership Plan (“ESOP”) for the benefit of employees who meet the eligibility requirements as defined in the ESOP.  The ESOP purchased 90,333 shares of common stock in the offering completed on January 30, 2007 using proceeds of a loan from the Company.  The Bank will make quarterly payments of principal and interest over a term of 15 years at a rate of 8.25% to the Company.  The loan is secured by the shares of the stock purchased.

As the debt is repaid, shares are released from the collateral and allocated to qualified employees.  As shares are released from collateral, the Company reports compensation expense equal to the current market price of the shares, and the shares become outstanding for earnings per share computations.  The compensation expense for the three months ended March 31, 2008 was $15,000.  Shares released for allocation, unreleased shares, and total ESOP shares were 7,427, 82,906, and 90,333, respectively.

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Retirement Plans

The Bank has a defined benefit pension plan which covers all full-time employees meeting certain eligibility requirements.  As required under SFAS No. 158 the net pension costs included the following components:

	For the Three Months Ended March 31,
	2008			2007
Net Periodic Benefit Cost
Service Cost	$	77,171		$	80,500
Interest Cost	58,727			65,750
Expected Return on Plan Assets	(71,976		)	(72,009		)
Amortization of Transition Obligation/(Asset)	438			874
Amortization of Prior Service Cost	3,171			3,171
Amortization of (Gain)/Loss	5,219			16,214
Net Periodic Benefit Cost	$	72,750		$	94,500

In July 2000, the Bank entered into a Nonqualified Retirement and Death Benefit Agreement (the “Agreement”) with certain officers of the Bank.  The purpose of the Agreement is to provide the officers with supplemental retirement benefits equal to a specified percentage of final compensation and a pre-retirement death benefit if the officer does not attain the specific age requirement.  A summary of the interim information required under SFAS No. 158 for the Agreement is as follows:

	For the Three Months Ended March 31,
	2008		2007
Net Periodic Benefit Cost
Service Cost	$	8,779	$	8,603
Interest Cost	55,485		53,261
Amortization of Prior Service Cost	58,163		58,163
Amortization of (Gain)/Loss	7,911		13,813
Net Periodic Benefit Cost	$	130,338	$	133,840

Fair Value Accounting

In September of 2006, the FASB issued Statement No. 157, Fair Value Measurement (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements.  SFAS 157 applies to other accounting pronouncements that require or permit fair value measurements.  The new guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007, and for interim periods within those years.

The primary effect of SFAS 157 on the Company was to expand the required disclosures pertaining to the methods used to determine fair values.

SFAS 157 establishes a fair value hierarchy that prioritizes the inputs to validation methods used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to

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unobservable inputs (Level 3 measurements).  The three levels of fair value hierarchy under SFAS 157 are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2:  Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3:  Prices or valuation techniques that require inputs that are both significant to fair value measurement and unobservable (i.e. support with little or no market value activity).

An asset or liability’s level within the fair value hierarchy is based on the level of input that is significant to the fair value measurement.

For assets measured at fair value on a recurring basis, the fair value measurements by level with in the fair vale hierarchy used at March 31, 2008 are as follows:

			Quoted Prices In				Significant
			Active Markets for		Significant Other		Unobservable
(In thousands)	March 31,		Identical Assets		Observable Inputs		Inputs
Description	2008		(Level 1)		(Level 2)		(Level 3)
Investment securities available for sale	$	42,429	$	—	$	42,429	$	—
Mortgage backed securities available for sale	$	33,886	$	—	$	33,886	$	—
Total	$	76,315	$	—	$	76,315	$	—

13

Part I – Item 2.

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

Forward-Looking Statements

The Company may from time to time make written or oral “forward-looking statements,” including statements contained in the Company’s filings with the Securities and Exchange Commission (including this Quarterly Report on Form 10-Q and the exhibits hereto and thereto), in its reports to shareholders and in other communications by the Company, which are made in good faith by the Company pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond the Company’s control).  The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan” and similar expressions are intended to identify forward-looking statements.  The following factors, among others, could cause the Company’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the timely development of and acceptance of new products and services of the Company and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors’ products and services; the willingness of users to substitute competitors’ products and services for the Company’s products and services; the success of the Company in gaining regulatory approval of its products and services, when required; the impact of changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance); technological changes; acquisitions; changes in consumer spending and saving habits; and the success of the Company at managing the risks involved in the foregoing.

The Company cautions that the foregoing list of important factors is not exclusive.  Readers are also cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this report.  The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

General

The Company’s profitability is highly dependent on net interest income.  The components that drive net interest income are the amounts of interest-earning assets and interest-bearing liabilities along with rates earned or paid on such rate sensitive instruments.  The Company manages interest rate exposure by attempting to match asset maturities with liability maturities.  In addition to managing interest rate exposure, the Company also considers the credit risk,

14

prepayment risk and extension risk of certain assets.  The Company maintains asset quality by utilizing comprehensive loan underwriting standards and collection efforts as well as originating or purchasing primarily secured or guaranteed assets.

The Company’s profitability is also affected by fee income, gain or loss on the sale of other real estate owned, general and administrative expenses, provisions for loan losses, other real estate owned and income taxes.

Critical Accounting Policies

In reviewing and understanding financial information for the Company, you are encouraged to read and understand the significant accounting policies used in preparing our consolidated financial statements included elsewhere herein.  These policies are described in Note 2 of the notes to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2007.  The accounting and financial reporting policies of the Company conform to accounting principles generally accepted in the United States of America (US GAAP) and to general practices within the banking industry.  Accordingly, the consolidated financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable, based upon the information available.  These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the periods presented.  The following accounting policies comprise those that management believes are the most critical to aid in fully understanding and evaluating our reported financial results.  These policies require numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our reported results and financial condition for the period or in future periods.

Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses charged to expense.  Charges against the allowance for loan losses are made when management believes that the collectibility of loan principal is unlikely.  Subsequent recoveries are added to the allowance.  The allowance is an amount that management believes will cover known and inherent losses in the loan portfolio, based on evaluations of the collectibility of loans.  The evaluations take into consideration such factors as changes in the types and amount of loans in the loan portfolio, historical loss experience, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, estimated losses relating to specifically identified loans, and current economic conditions.  This evaluation is inherently subjective as it requires material estimates including, among others, exposure at default, the amount and timing of expected future cash flows on impaired loans, value of collateral, estimated losses on our commercial and residential loan portfolios and general amounts for historical loss experience.  All of these estimates may be susceptible to significant change.

While management uses the best information available to make loan loss allowance evaluations, adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance.  Historically, our estimates of the allowance for loan losses have not required significant adjustments from management’s initial estimates.  In addition, the Pennsylvania Department of Banking and the FDIC, as an integral part of their examination processes, periodically review our allowance for loan losses.  The Pennsylvania

15

Department of Banking and the FDIC may require the recognition of adjustments to the allowance for loan losses based on their judgment of information available to them at the time of their examinations.  To the extent that actual outcomes differ from management’s estimates, additional provisions to the allowance for loan losses may be required that would adversely impact earnings in future periods.

Income Taxes. Management makes estimates and judgments to calculate various tax liabilities and determine the recoverability of our deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenues and expenses.  We also estimate a deferred tax asset valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods.  These estimates and judgments are inherently subjective.  Historically, our estimates and judgments to calculate our deferred tax accounts have not required significant revision to our initial estimates.

In evaluating our ability to recover deferred tax assets, we consider all available positive and negative evidence, including our past operating results, recent cumulative losses and our forecast of future taxable income.  In determining future taxable income, we make assumptions for the amount of taxable income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies.  These assumptions require us to make judgments about our future taxable income and are consistent with the plans and estimates we use to manage our business.  Any reduction in estimated future taxable income may require us to record an valuation allowance against our deferred tax assets.  An increase in the valuation allowance would result in additional income tax expense in the period and could have a significant impact on our future earnings.

Other than Temporary Impairment of Securities.  The Company is required to perform periodic reviews of individual securities in its investment portfolio to determine whether a decline in the fair value of a security is other than temporary.  A review of other than temporary impairment requires management to make certain judgments regarding the nature of the decline, its effect on the financial statements and the probability, extent and timing of a valuation recovery and the Company’s intent and ability to hold the security.  Management evaluates securities for other than temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warrant such evaluations.  Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.  If the decline in the market value of a security is determined to be other than temporary we would recognize the decline as a an impairment charge on the income statement.

As of March 31, 2008, the Company identified an impairment of investment in certain mutual funds as other than temporary and recorded a $363,000 pretax loss against operating income.  In April 2008, the Company sold approximately $15.5 million of the mutual funds and as a result will record a pretax loss on the sale of securities of $153,000 in the second quarter of 2008.  The Company will continue to monitor the performance of the remaining mutual funds for any further impairment charges.

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Comparison of Financial Condition at March 31, 2008 and December 31, 2007

Total assets increased $3.7 million or 0.9% to $428.1 million at March 31, 2008 compared to $424.5 million at December 31, 2007.  This increase was primarily due to a $7.9 million or 3.1% increase in the net loans and a $2.0 million or 9.0% increase in investment securities held to maturity.  The increase was partially offset by a $1.7 million or 4.9% decrease in mortgage-backed securities available for sale, a $3.2 million or 7.0% decrease in investment securities available for sale and a $1.5 million or 3.6% decrease in total cash and cash equivalents.

Total liabilities increased $5.1 million or 1.4% to $378.1 million at March 31, 2008 compared to $373.0 million at December 31, 2007.  This increase was due to a $1.2 million or 7.0% increase in non-interest bearing deposits and a $4.0 million or 1.3% increase in interest bearing deposits. This increase was partially offset by a $52,000 decrease in accrued expenses and other liabilities from December 31, 2007 to March 31, 2008.

Stockholders’ equity decreased $1.4 million to $50.0 million as of March 31, 2008 compared to $51.5 million at December 31, 2007. Beginning January 31, 2008, the Company commenced a repurchase program and has repurchased 181,724 shares at an average price of $9.16 per share through March 31, 2008. , which decreased stockholder’ equity by $1.6 million.

Nonperforming assets, which consist of nonaccruing loans, accruing loans 90 days or more delinquent and other real estate owned (which includes real estate acquired through, or in lieu of, foreclosure) increased to $2.6 million or 0.6% of total assets at March 31, 2008 from $2.1  million or 0.5% of total assets at December 31, 2007.  At March 31, 2008, the $2.6 million of nonperforming assets consisted of $719,000 of accruing loans 90 days or more delinquent, and $1.8 million of nonaccrual loans.  At March 31, 2008, the $719,000 of nonperforming loans consisted of two single family real estate loans, seven commercial real estate loans, and one commercial business loan.  Management continues to aggressively pursue the collection and resolution of all delinquent loans.

At March 31, 2008 and December 31, 2007, the allowance for loan losses amounted to $2.9 million and $2.8 million, respectively.  At March 31, 2008, the allowance for loan losses amounted to 114.57% of nonperforming loans and 1.08% of total loans receivable, as compared to 135.00% and 1.08%, respectively, at December 31, 2007.

Although management believes that the allowance for loan losses at March 31, 2008 was appropriate based on facts and circumstances available to management at that time, there can be no assurances that additions to the allowance for loan losses will not be necessary in future periods.

Comparison of Results of Operations for the Three Months ended March 31, 2008 and March 31, 2007

General.  Net income decreased $342,000 or 89.1% to $42,000 or $0.01 per diluted share for the three months ended March 31, 2008 as compared to $384,000 or $0.05 per diluted share for the same period in 2007.  The decrease in net income was primarily due to an impairment charge of certain mutual funds, an increased provision for loan losses, and a decrease in net interest

17

income.  These items were offset by a decrease in other expenses and a decrease in income tax expense.

Net Interest Income.  Net interest income is determined by the interest rate spread (i.e., the difference between the yields earned on its interest-earning assets and the rates paid on its interest-bearing liabilities) and the relative amounts of interest-earning assets and interest-bearing liabilities.  Net interest income decreased $34,000 or 1.3% during the three months ended March 31, 2008 as compared to the same period in 2007.  The decrease was primarily due to a 3.7% or 22 basis point decrease in the average rates earned on interest earning assets and a 2.1% or $7.3 million increase in the average balance of interest bearing liabilities.  The decrease was partially offset by a $11.9 million or 3.0% increase in the average balance of interest earning assets as well as a 2.8% or 10 basis point decrease in the average rates paid on interest bearing deposits.

As a result, the interest rate spread decreased 13 basis points from 2.15% for the three months ended March 31, 2007 to 2.02% for the three months ended March 31, 2008.  Based on the current market interest rate environment and increased competition, management anticipates continued pressure on the interest rate spread for the second quarter of 2008 which may negatively impact net interest income.

Interest Income.  Interest income decreased $42,000 or 0.7% to $5.9 million for the three months ended March 31, 2008, compared to the same period in 2007.  The decrease was due to a $310,000 or 51.2% decrease in interest income on balances due from depository institutions and a $96,000 or 19.4% decrease in interest income on mortgage backed securities.  These decreases were partially offset by a $282,000 or 6.9% increase in interest income earned on loans and an $83,000 or 11.1% increase on interest earned on investment securities.  The decrease in interest income on balances due from depository institutions was due to an $10.7 million or 22.3% decrease in the average balance of balances due from depository institutions and a 187 basis point or 37.2% decrease in the average yield earned on balances due from depository institutions.  The decrease in interest income on mortgage backed securities was due to a $7.9 million or 18.3% decrease in the average balance of mortgage backed securities and a 6 basis point or 1.3% decrease in the average yield earned on mortgage backed securities.  The increase in interest income on loans was due to a $22.3 million or 9.3% increase in the average balance of loans outstanding, partially offset by a 14 basis point or 2.1% decrease in the average yield earned.  The increase in interest income on investment securities was due to an $8.3 million or 13.5% increase in the average balance of investment securities, partially offset by a 10 basis point or 2.1% decrease in the average yield earned.

Interest Expense.  Interest expense decreased $7,000 or 0.2% to $3.3 million for the three months ended March 31, 2008, compared to the same period in 2007.  This decrease was due to a $9,000 or 0.4% decrease in interest expense on deposits, partially offset by a $2,000 or 0.4% increase in interest expense on FHLB advances and other borrowings.  The decrease in interest expense on deposits was due to a 10 basis point or 2.8% decrease in the rates paid on deposits, partially offset by a $7.3 million or 2.4% increase in the average balance of deposits.  Interest expense on deposits is expected to continue to decrease as higher cost time deposits reprice at lower rates as the Company responds to the Federal Reserve’s decreases in the federal funds rate.  The increase in interest expense on FHLB advances and other borrowings was due to a 3 basis

18

point or 0.5% decrease in the rates paid on FHLB advances and other borrowings, partially offset by a $37,000 or 0.1% decrease in the average balance of FHLB advances and other borrowings.

19

Average Balances, Net Interest Income and Yields Earned and Rates Paid.  The following average balance sheet table sets forth for the periods indicated, information on the Company regarding:  (i) the total dollar amounts of interest income on interest-earning assets and the resulting average yields; (ii) the total dollar amounts of interest expense on interest-bearing liabilities and the resulting average costs; (iii) net interest income; (iv) interest rate spread; (v) net interest-earning assets (interest-bearing liabilities); (vi) the net yield earned on interest-earning assets; and (vii) the ratio of total interest-earning assets to total interest-bearing liabilities.  Information is based on average daily balances during the periods presented.

	Three Months Ended March 31,
	2008						2007
	Average						Average
(Dollars in Thousands)	Balance		Interest		Rate		Balance		Interest		Rate
Interest-earning assets:
Loans receivable (1) (2) (3) (4)	$	263,240	$	4,355	6.62	%	$	240,936	$	4,073	6.76	%
Mortgage-backed securities (3) (4)	35,246		399		4.53		43,130		495		4.59
Investment securities (4)	69,636		832		4.78		61,379		749		4.88
Other interest-earning assets	37,519		296		3.16		48,264		606		5.02
Total interest-earning assets	405,641		5,882		5.80		393,709		5,923		6.02
Noninterest-earning assets	20,902						22,029
Total assets	$	426,543					$	415,738
Interest-bearing liabilities:
Deposits	$	315,545	2,753		3.49		$	308,270	2,762		3.59
FHLB advances and other borrowings	37,941		589		6.21		37,978		587		6.18
Total interest-bearing liabilities	353,486		3,342		3.78		346,248		3,349		3.87
Noninterest-bearing
Liabilities	21,639						25,470
Total liabilities	375,125						371,718
Stockholders’ equity	51,418						44,020
Total liabilities and stockholders’ equity	$	426,543					$	415,738
Net interest-earning assets	$	52,155					$	47,461
Net interest income/interest rate spread			$	2,540	2.02	%			$	2,574	2.15	%
Net yield on interest- Earning assets (4)					2.50	%					2.61	%

(1)Includes loans held for sale.

(2)Nonaccrual loans and loan fees have been included.

(3)Net interest income divided by interest-earning assets.

(4)The indicated yields are not reflected on a tax equivalent basis.

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Provision for Loan Losses.  The provision for loan losses amounted to $165,000 for the three months ended March 31, 2008 as compared to $15,000 for the three months ended March 31, 2007.  Such provisions were primarily to maintain a reserve level deemed appropriate by management in light of factors such as the level of nonperforming loans and the current economic environment.  The increase in the provision for loan losses was primarily due to a partial charge-off of $100,000 on a $350,000 commercial loan.  A 50% reserve of $125,000 was set aside in the allowance for loan losses on the remaining $250,000.  The loan is secured by commercial real estate.  This write-down and adverse classification resulted from a decline in the estimated net realizable value of the commercial real estate securing the loan.

Other Income.  Other income decreased $358,000 or 113.5% to $(43,000) for the three months ended March 31, 2008 as compared to the same period in 2007.  The decrease was primarily the result of the Company identifying an impairment charge on its $20.0 million investment in mutual funds as other than temporary and recording a $363,000 pretax loss against operating income. In April 2008, the Company sold approximately $15.5 million of the mutual funds and as a result will record a pretax loss on the sale of securities of $153,000 in the second quarter of 2008.  The Company will continually monitor the performance of the remaining mutual funds for any further impairment charges.

Other Expenses. Other expenses decreased $25,000 or 1.0% to $2.5 million for the three months ended March 31, 2008 compared to the same period in 2007.  The decrease was primarily due to a $4,000 or 4.6% decrease in advertising and marketing expenses, an $8,000 or 0.6% decrease in salaries and employee’s benefits, an $8,000 or 7.0% decrease in professional fees, and a $16,000 or 4.0% decrease in other expenses.  These decreases were partially offset by an $11,000 or 2.3% increase in expenses of premises and equipment.

Income Tax Expense. Income tax (benefit) expense amounted to $(159,000) and $16,000 for the three months ended March 31, 2008 and 2007, respectively, resulting in effective tax rates of (135.9)% and 4.0%, respectively.  The decrease in income tax expense was primarily due to the Company’s decrease in taxable income.

Liquidity and Capital Resources

Liquidity, represented by cash and cash equivalents, is a product of its cash flows from operations. The primary sources of funds are deposits, borrowings, amortization, prepayments and maturities of outstanding loans and mortgage-backed securities, sales of loans, maturities and calls of investment securities and other short-term investments and income from operations.  Changes in the cash flows of these instruments are greatly influenced by economic conditions and competition.  Management attempts to balance supply and demand by managing the pricing of its loan and deposit products while maintaining a level of growth consistent with the conservative operating philosophy of the management and board of directors.  Any excess funds are invested in overnight and other short-term interest-earning accounts.  Cash flows are generated through the retail deposit market, its traditional funding source, for use in investing activities.  In addition, the borrowings such as Federal Home Loan Bank advances may be utilized for liquidity or profit enhancement.  At March 31, 2008, the Company had $37.0 million of outstanding advances and approximately $149.3 million of additional borrowing capacity from the FHLB of Pittsburgh.  Further, the Company has access to the Federal Reserve Bank discount window.  At March 31, 2008 no such funds were outstanding.

21

The primary use of funds is to meet ongoing loan and investment commitments, to pay maturing savings certificates and savings withdrawals and expenses related to general operations of the Company.  At March 31, 2008, the total approved loan commitments outstanding amounted to $17.9 million.  At the same date, commitments under unused lines of credit amounted to $31.3 million.  Certificates of deposit scheduled to mature in one year or less at March 31, 2008 totaled $180.6 million.  Management believes that a significant portion of maturing deposits will remain with the Company.  For the quarter ended March 31, 2008, there were no material changes in contractual obligations that were outside of the ordinary course of business.  Management anticipates that it will continue to have sufficient cash flows to meet its current and future commitments.

Impact of Inflation and Changing Prices

The unaudited condensed consolidated financial statements and related financial data presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation.  Unlike most industrial companies, virtually all of the Company’s assets and liabilities are monetary in nature.  As a result, interest rates generally have a more significant impact on a financial institution’s performance than does the effect of inflation.

Part I - - Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Not Applicable.

Part I - - Item 4T.

CONTROLS AND PROCEDURES

The Company’s management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report.  Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are designed to ensure that financial information required to be disclosed by the Company in the reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations and are operating in an effective manner.

No change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

22

Part II - - Other Information

Item 1.	Legal Proceedings
	The Company is involved in legal proceedings and litigation arising in the ordinary course of business. However, there can be no assurance that any of the outstanding legal proceedings and litigation to which the Company is a party will not be decided adversely to the Company’s interests and have a material adverse effect on the consolidated financial statements.
Item 1A.		Risk Factors
		Not Applicable
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds
		(a) - (b) Not Applicable

(c) The following table sets forth information with respect to purchases made by or on behalf of the Company of shares of common stock of the Company during the indicated periods.

					Maximum
				Total Number of	Number of Shares
				Shares Purchased	that May Yet Be
	Total Number			as Part of Publicly	Purchased Under
	of Shares	Average Price		Announced Plans	the Plans or
Period	Purchased(1)	Paid per Share		or Programs	Programs(1)
January  2008	—	$	—	—	325,125
February 2008	108,600	9.15		108,600	216,525
March  2008	73,124	9.16		73,124	143,401
Totals	181,724	$	9.16	181,724	143,401

(1)           All shares were repurchased under the Company’s announced repurchase program. On January 25, 2008, the Company announced a program to repurchase up to 325,125 shares, or 10% of the outstanding common stock other than shares owned by Alliance Mutual Holding Company, commencing on January 30, 2008, the one year anniversary of the completion of the mid-tier stock holding company reorganization of Alliance Bank.  The program will expire in twelve months, or on January 30, 2009, and all shares are purchased in the open market or by privately negotiated transactions, as in the opinion of management, market conditions warrant.

Item 3.	Defaults Upon Senior Securities
	Not Applicable

23

Item 4.	Submission of Matters to a Vote of Security Holders
	(a)	The Company’s Annual Meeting of Stockholders was held on April 23, 2008.
	(b)	At the Annual Meeting, Messrs. Cirucci, Flatley, Stonier, and Meier were elected as directors for a three year term expiring in 2011.  In addition, Messrs. Carr, Cotter, Hecht, Raggi, Rainer, and Woolard will continue as directors after the Annual Meeting.
	(c)	There were 7,088,500 shares of Common Stock of the Company eligible to be voted at the Annual Meeting and 6,520,006 shares were represented at the meeting by the holders thereof, which constituted a quorum.  The items voted upon at the Annual Meeting and the vote for each proposal were as follows:

1.Election of Directors:

Nominees for three year terms

	FOR	WITHHELD
Dennis D. Cirucci	5,453,453	1,066,553
Timothy E. Flatley	5,472,369	1,047,637
Philip K. Stonier	5,474,369	1,045,637
Peter J. Meier	5,460,653	1,059,353

2.Proposal to ratify the appointment of Beard Miller Company LLP as independent auditor for the year ending December 31, 2008:

FOR	AGAINST	ABSTAIN
6,335,834	183,595	577

There were no broker non-votes at the Annual Meeting.

Item 5.	Other Information
	None
Item 6.	Exhibits
	(a)	The following exhibits are filed herewith:

Ex. No.	Description
31.1	Section 302 Certification of Chief Executive Officer
31.2	Section 302 Certification of Chief Financial Officer
32.1	Section 906 Certification of Chief Executive Officer
32.2	Section 906 Certification of Chief Financial Officer

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SIGNATURES

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

ALLIANCE BANCORP, INC. OF PENNSYLVANIA

Date: May 12, 2008	By:	/s/ Dennis D. Cirucci
		Dennis D. Cirucci, President
		and Chief Executive Officer
Date: May 12, 2008	By:	/s/ Peter J. Meier
		Peter J. Meier, Executive Vice
		President and Chief Financial Officer

25