In connection with the Plan, the Bank intends to form a new Pennsylvania state-chartered mid-tier stock holding company that will acquire all of the outstanding shares of the Bank’s common stock. The new mid-tier stock holding company will offer for sale a minority interest in its shares of common stock to eligible deposit account holders of the Bank and others. If any shares of common stock remain unsold after the subscription offering, they may be offered for sale to the public through a community offering and/or syndicated community offering, as determined by the Boards of the new mid-tier stock holding company and of the Bank in their sole discretion. A majority of the mid-tier stock holding company’s common stock will be issued to a Pennsylvania state-chartered mutual holding company to be formed by the Bank.

The Plan is subject to the approval of the Pennsylvania Department of Banking, the Federal Deposit Insurance Corporation (“FDIC”) and the Board of Governors of the Federal Reserve System. The Plan is also subject to the approval of the Bank’s depositors. The Bank expects to file the necessary applications with the regulators in the near term. During the reorganization process, the business of North Penn Bank will continue normally and without interruption.

During the reorganization process and upon consummation of the reorganization, depositors will continue to hold accounts in the Bank identical as to dollar amount, rate of return and general terms in effect immediately before the consummation of the reorganization and such accounts will continue to be insured by the FDIC to the fullest extent permissible by law. Similarly, the reorganization will not affect the existing terms or conditions of borrowers’ loans with the Bank. The Bank will continue to be regulated by the Pennsylvania Department of Banking as its chartering authority and by the FDIC, which insures the Bank’s deposits. In addition, the Bank will continue to be a member of the Federal Home Loan Bank system.

North Penn Bank is a Pennsylvania state-chartered mutual savings bank that is, and will continue to be, headquartered in Scranton, Pennsylvania. At June 30, 2004, North Penn Bank had assets of $93.8 million and deposits of $80.8 million. North Penn Bank is a community oriented financial institution offering traditional financial services within its local communities through its main office and three branches located in Lackawanna and Monroe Counties, Pennsylvania.

The offering will be made only by means of a prospectus in accordance with the Securities Act of 1933, as amended, and all applicable state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities.

This press release contains certain forward-looking statements about the transaction. Forward-looking statements are statements that do not relate strictly to historical or current facts. Certain factors that could cause actual results to differ materially from expected results include delays in consummation of the reorganization, difficulties in selling the common stock or in selling the common stock within the expected time frame, increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the businesses in which the Bank is engaged.