Montgomery County and Bucks County, Pennsylvania are suburbs of Philadelphia.

For 2003, the median household income in Montgomery and Bucks Counties was $70,584 and $68,519, respectively, compared to $46,158 and $46,615, respectively, for all of Pennsylvania and the entire Untied States. Household growth in 2003 was 1.1% for both Montgomery and Bucks Counties compared to 0.4% and 1.2%, respectively, for all of Pennsylvania and the United States.

The Company is primarily engaged in attracting deposits from the general public and using those funds to invest in loans and securities. The Company’s principal sources of funds are deposits, repayments of loans and mortgage-backed securities, maturities of investments and interest-bearing deposits, funds provided from operations and funds borrowed from outside sources such as the Federal Home Loan Bank of Pittsburgh. These funds are primarily used for the origination of various loan types including single-family residential mortgage loans, construction loans, non-residential or commercial real estate mortgage loans, home equity loans, commercial business loans and consumer loans. The Company is an active originator of residential home mortgage loans and home construction loans in its market area. Historically, Abington Bank was a traditional thrift with an emphasis on one loan product, fixed-rate long term single-family residential mortgage loans. In the mid-1990s, the Company determined to diversify its products in order to become more like a community bank. The Company began offering commercial real estate, construction and commercial business loans. In recent years the Company has increased its efforts to attract more commercial and construction loans. In 2002, the Company hired a new construction loan officer, and its construction loan portfolio increased significantly in 2002 and 2003. The Company continues, however, to be an active originator of single-family residential mortgage loans. In addition to offering loans and deposits, the Company also offers securities and annuities to the customers through an affiliation with a third-party broker-dealer. The efforts have been implemented by the Company’s experienced senior management team consisted of the Company’s President and Chief Executive Officer, who has been an Abington Bank employee for over 30 years, and the Company’s three Senior Vice Presidents who have an average of over 25 years of experience with the Company and other banks in the Delaware Valley area.

While the Company has expanded its loan products offered, at the same time the Company has maintained superior credit quality. At March 31, 2004, the Company’s total non-performing assets amounted to $354,000 or 0.06% of total assets. The Company attributes its credit quality to careful underwriting and the experience of the Company’s management team as well as the demographics of the Company’s customer base.

The Company’s total interest income was $7.2 million for the first quarter of 2004 compared to $7.6 million for the first quarter of 2003, a decrease of $374,000 or 4.9%.

Total interest expense amounted to $3.4 million in the first quarter of 2004 compared to $3.6 million in the first quarter of 2003, a decrease of $135,000 or 3.8%.

The Company’s total non-interest income amounted to $550,000 for the quarter ended March 31, 2004 compared to $441,000 for the quarter March 31, 2003, a $109,000 or 24.8% increase.