10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2007

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. 1-31655

IBT Bancorp, Inc.

(Exact name of Registrant as specified in its charter)

Pennsylvania	25-1532164
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

309 Main Street, Irwin, Pennsylvania	15642
(Address of principal executive offices)	(Zip Code)

(724) 863-3100

(Registrant’s telephone number, including area code)

NA

(Former name, former address and former fiscal year, if changed since last report)

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. x Yes    o No

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

Large accelerated filer o Accelerated filer x Non-accelerated filer o

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

Number of shares of Common Stock outstanding as of November 5, 2007:           5,852,924

IBT BANCORP, INC.

Quarterly Report on Form 10Q

For Quarter Ended September 30, 2007

Contents

	Pages
PART I - FINANCIAL INFORMATION
Item 1.         Financial Statements	2
Consolidated balance sheets (unaudited) at September 30, 2007 and December 31, 2006	2
Consolidated statements of income (unaudited) for the three and nine months ended September 30, 2007 and 2006	3
Consolidated statements of cash flows (unaudited) for the nine months ended September 30, 2007 and 2006	4
Notes to consolidated financial statements	5
Item 2.         Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 3.         Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.         Controls and Procedures	14
PART II - OTHER INFORMATION
Item 1.         Legal Proceedings	15
Item 1A.     Risk Factors	15
Item 2.        Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.        Defaults upon Senior Securities	16
Item 4.        Submission of Matters to a Vote of Security-Holders	16
Item 5.        Other Information	16
Item 6.        Exhibits	17
Signatures	18

CONSOLIDATED BALANCE SHEETS

IBT BANCORP, INC. AND SUBSIDIARY

	September 30, 2007			December 31, 2006
	(unaudited)			(unaudited)
ASSETS
Cash and due from banks	$	21,275,133		$	19,317,614
Interest-bearing deposits in banks		13,283			637,034
Certificates of deposit		100,000			100,000
Securities available for sale		238,693,255			221,249,369
Federal Home Loan Bank stock, at cost		5,128,300			5,196,800
Loans, net		480,714,634			467,720,508
Premises and equipment, net		5,211,537			5,281,385
Other assets		22,688,293			21,459,045
Total Assets	$	773,824,435		$	740,961,755
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits
Non-interest bearing	$	84,272,058		$	85,553,753
Interest-bearing		496,236,491			486,918,461
Total deposits		580,508,549			572,472,214
Repurchase agreements		57,827,605			27,416,559
Accrued interest and other liabilities		5,846,828			6,082,279
FHLB advances		66,755,954			72,409,643
Total liabilities		710,938,936			678,380,695
Stockholders’ Equity
Capital stock, par value $1.25 per share, 50,000,000 shares authorized, 5,965,119 shares issued, 5,852,924 and 5,882,640 shares outstanding at September 30, 2007 and December 31, 2006, respectively		7,456,399			7,456,399
Retained earnings		60,541,824			58,970,791
Accumulated other comprehensive income (loss)		(1,605,344	)		(904,723	)
		66,392,879			65,522,467
Less: Treasury stock, at cost		(3,507,380	)		(2,941,407	)
Total stockholders’ equity		62,885,499			62,581,060
Total Liabilities and Stockholders’ Equity	$	773,824,435		$	740,961,755

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

2

CONSOLIDATED STATEMENTS OF INCOME

IBT BANCORP, INC. AND SUBSIDIARY

	Three Months Ended September 30,					Nine Months Ended September 30,
	2007		2006			2007			2006
	(unaudited)					(unaudited)
Interest Income
Loans, including fees	$	8,328,180	$	7,889,433		$	24,403,919		$	22,595,515
Investment securities		2,951,600		2,466,830			8,464,546			7,021,358
Federal funds sold		3,305		2,341			10,076			31,856
Total interest income		11,283,085		10,358,604			32,878,541			29,648,729
Interest Expense
Deposits		4,276,751		3,502,774			12,531,592			9,536,002
FHLB advances		817,102		840,009			2,417,292			2,469,687
Repurchase agreements		593,412		404,585			1,344,513			928,108
Federal funds purchased		-		105,795			-			322,972
Total interest expense		5,687,265		4,853,163			16,293,397			13,256,769
Net Interest Income		5,595,820		5,505,441			16,585,144			16,391,960
Provision for Loan Losses		250,000		350,000			750,000			1,200,000
Net Interest Income after Provision for Loan Losses		5,345,820		5,155,441			15,835,144			15,191,960
Other Income (losses)
Service fees		973,914		983,985			2,815,355			2,787,939
Investment security gains		-		316,949			1,361			896,791
Investment security losses		-		(62,898	)		(42,052	)		(119,998	)
Increase in cash surrender value of life insurance		120,696		119,572			357,617			333,205
Debit card fees		234,582		204,242			688,169			612,598
Trust fees		123,395		98,009			381,909			300,649
Other income		271,309		279,809			818,599			831,586
Total other income		1,723,896		1,939,668			5,020,958			5,642,770
Other Expenses
Salaries		1,591,615		1,578,087			4,766,406			4,711,455
Pension and other employee benefits		694,761		640,470			1,981,627			1,743,542
Occupancy expense		453,760		428,976			1,254,716			1,239,372
Data processing expense		239,101		277,117			749,941			817,909
Pennsylvania shares tax		157,534		164,355			478,017			479,494
Advertising expense		118,370		117,915			409,972			285,311
Debit card expense		152,457		149,855			449,872			433,043
Other expenses		1,054,428		918,683			3,018,054			2,820,527
Total other expenses		4,462,026		4,275,458			13,108,605			12,530,653
Income Before Income Taxes		2,607,690		2,819,651			7,747,497			8,304,077
Provision for Income Taxes		588,174		668,466			1,796,400			1,657,031
Net Income	$	2,019,516	$	2,151,185		$	5,951,097		$	6,647,046
Basic Earnings per Share	$	0.34	$	0.37		$	1.01		$	1.12
Diluted Earnings per Share	$	0.34	$	0.36		$	1.01		$	1.12
Dividends per Share	$	0.25	$	0.25		$	0.75		$	0.75

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

3

CONSOLIDATED STATEMENTS OF CASH FLOWS

IBT BANCORP, INC. AND SUBSIDIARY

	Nine Months Ended September 30,
	2007			2006
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	5,951,097		$	6,647,046
Adjustments to reconcile net cash from operating activities:
Depreciation		540,000			612,000
Increase in cash surrender value of insurance		(357,617	)		(333,205	)
Net accretion/amortization of premiums and discounts		(103,015	)		313,781
Investment security losses (gains)		40,691			(776,793	)
Provision for loan losses		750,000			1,200,000
Stock options granted		52,697			39,808
Increase (decrease) in cash due to changes in assets and liabilities:
Other assets		46,164			(368,636	)
Accrued interest and other liabilities		(235,451	)		912,962
Net Cash From Operating Activities		6,684,566			8,246,963
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificates of deposit		(100,000	)		(100,000	)
Proceeds from maturity of certificates of deposit		100,000			100,000
Proceeds from sales of securities available for sale		5,632,265			22,714,264
Proceeds from maturities of securities available for sale		24,466,591			14,999,214
Purchase of securities available for sale		(48,530,880	)		(47,715,554	)
Net increase in loans		(14,312,080	)		(23,336,684	)
Purchases of premises and equipment		(470,152	)		(369,136	)
Proceeds from sales of Federal Home Loan Bank stock		3,700,200			4,755,300
Purchase of Federal Home Loan Bank stock		(3,631,700	)		(4,517,100	)
Net Cash Used By Investing Activities		(33,145,756	)		(33,469,696	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		8,036,335			28,233,579
Net increase in securities sold under repurchase agreements		30,411,046			20,486,009
Dividends paid		(4,404,626	)		(4,425,730	)
Proceeds from FHLB advances		321,272,600			12,000,000
Repayment of FHLB advances		(326,926,289	)		(10,741,603	)
Federal funds purchased		-			(12,468,000	)
Exercised stock options		(28,135	)		(97,434	)
Purchase of treasury stock		(565,973	)		(640,150	)
Sale of treasury stock		-			95,624
Net Cash From Financing Activities		27,794,958			32,442,295
Net Change in Cash and Cash Equivalents		1,333,768			7,219,562
Cash and Cash Equivalents at Beginning of Period		19,954,648			15,499,940
Cash and Cash Equivalents at End of Period	$	21,288,416		$	22,719,502

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

4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

IBT BANCORP, INC. AND SUBSIDIARY

Period Ended September 30, 2007

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ended December 31, 2007 or any future interim period. The interim financial statements should be read in conjunction with the financial statements and footnotes thereto included in the IBT Bancorp, Inc. and subsidiary Annual Report on Form 10-K for the year ended December 31, 2006.

NOTE B – EARNINGS PER SHARE

Earnings per share are calculated on the basis of the weighted average number of shares outstanding. The weighted average shares outstanding were 5,858,265 and 5,873,975 for the three and nine months ended September 30, 2007 and 5,885,132 and 5,900,132 for the three and nine months ended September 30, 2006. The outstanding shares for the three and nine months ended September 30, 2006 have been restated for the 100% stock dividend paid on November 16, 2006.

NOTE C – COMPREHENSIVE INCOME

Total comprehensive income for the three months ended September 30, 2007 and 2006 was $3,905,416 and $4,388,272, respectively and for the nine months ended September 30, 2007 and 2006 was $5,250,476 and $6,465,424, respectively.

NOTE D – INVESTMENT SECURITIES

Investment securities available for sale consist of the following:

	September 30, 2007
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Market Value
Obligations of U.S. Government Agencies	$	104,149,333	$	632,989	$	(633,277	)	$	104,149,045
Obligations of State and political sub-divisions		62,812,857		857,036		(492,118	)		63,177,775
Mortgage-backed securities		72,600,914		12,481		(1,506,493	)		71,106,902
Other securities		47,358		-		(2	)		47,356
Equity securities		250,220		1,474		(39,517	)		212,177
	$	239,860,682	$	1,503,980	$	(2,671,407	)	$	238,693,255

5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

IBT BANCORP, INC. AND SUBSIDIARY

Period Ended September 30, 2007

NOTE E – RECENT ACCOUNTING PRONOUNCEMENTS

In February 2007, the FASB issued Statement No. 159 the Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB 115. FASB No. 159 permits entities to choose to measure certain financial instruments at fair value. It was developed to improve financial reporting by reducing the volatility pertaining to the measurement of assets and liabilities without having to apply complex hedge accounting guidance. This statement is expected to expand the use of fair value measurement, which is consistent with FASB’s long-term measurement objectives for accounting for financial instruments. This statement is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of the fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FAS No. 157, Fair Value Measurements. The Company is evaluating the effects of this statement on its financial statements and has not elected to adopt early.

6

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”, “anticipates”, “contemplates”, “expects”, 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 services through its wholly owned banking subsidiary, Irwin Bank (collectively, the “Company”). In the fall of 2006, the Company began a branding and market research initiative. As a result of this on-going endeavor, in February 2007, the Company developed a new logo for its banking subsidiary and shortened its name to “Irwin Bank”. The Company’s stock is traded on the American Stock Exchange under the symbol IRW. All historical per share amounts have been restated for the 100% stock dividend paid on November 16, 2006.

FINANCIAL CONDITION

At September 30, 2007 total assets increased $32.8 million to $773.8 million from $741.0 million at December 31, 2006. The asset growth was primarily due to increases in securities available for sale of $17.5 million and in net loans of $13.0 million.

At September 30, 2007, securities available for sale increased $17.5 million to $238.7 million from $221.2 million at December 31, 2006. This change was primarily due to increases in U.S. government agencies of $8.8 million and mortgage-backed securities of $10.1 million offset by net a decrease of $1.4 million in obligations of state and political sub-divisions. The Company evaluates the available-for-sale investment portfolio on an on-going basis to maximize yield, within board-approved risk thresholds, making purchasing and selling decisions accordingly.

Net loans at September 30, 2007 reached $480.7 million, a $13.0 million increase over the reported total of $467.7 million at December 31, 2006. Loan growth was concentrated in real estate secured mortgage and commercial loans, which increased $11.2 million and consumer installment loans, which increased $1.6 million. These increases were partially offset by decreases in consumer lines of credit and municipal loans of $1.2 million and $1.8 million, respectively. In June 2007, approximately $3.0 million in real estate secured commercial mortgages, previously included in non-performing accruing loans contractually past due 90 days or more, were transferred to non accrual status. The Company believes that these loans are sufficiently collateralized and does not anticipate any future losses.

7

At September 30, 2007, total liabilities increased $32.5 million to $710.9 million from $678.4 million at December 31, 2006. The changes in total liabilities were primarily due to increases in total deposits and repurchase agreements of $8.0 million and $30.4 million, respectively, offset by a $5.6 million decrease in FHLB advances.

Repurchase agreements increased $30.4 million to $57.8 million at September 30, 2007, from $27.4 million at December 31, 2006 as a result of an increase in customers with sweep arrangements as well as existing customers maintaining higher balances. The Company offers its corporate customers sweep accounts where unused deposit balances are swept into an overnight repurchase agreement yielding market rates.

FHLB advance totals dropped $5.6 million to $66.8 million at September 30, 2007, from $72.4 million at December 31, 2006. The decrease is due to the contractual maturity of $10.0 million in advances and principal payments on amortizing advances of $1.2 million. These decreases were offset by an increase of $5.6 million in the Company’s open line of credit, which is primarily used to meet daily liquidity needs.

Non-interest bearing deposit accounts decreased $1.3 million to $84.3 million at September 30, 2007, from $85.6 million at December 31, 2006. This change is attributed to normal fluctuations, which arise due to the timing of month-end pension and social security deposits.

Interest-bearing deposits increased $9.3 million to $496.2 million at September 30, 2007, from $486.9 million at December 31, 2006. The change was primarily due to increases in certificates of deposits and money market accounts of $9.0 million and $5.8 million, respectively. Offsetting the increases were decreases in savings and interest-bearing checking accounts of $3.6 million and $1.9 million, respectively. The competitive market rates paid on the certificate of deposit and money market accounts have contributed to the growth in these accounts.

At September 30, 2007, total stockholders’ equity increased $304,000 to $62.9 million from $62.6 million at December 31, 2006. The change was primarily due to net income of $6.0 million partially offset by an increase in accumulated other comprehensive loss (net of deferred income taxes) of $701,000, dividends paid of $4.4 million, and treasury stock purchased of $566,000. Accumulated other comprehensive loss increased as a result of changes in the net unrealized gains/losses on securities available for sale. Because of the effect of interest rate volatility on unrealized gains/losses on securities available for sale, the Company’s accumulated other comprehensive income could materially fluctuate for each interim period and year-end. See Note D to the consolidated financial statements.

RESULTS OF OPERATIONS

Net income. Net income for the three months ended September 30, 2007 decreased $131,000 to $2,020,000, or $.34 diluted earnings per share from $2,151,000, or $.36 diluted earnings per share, for the comparable three-month period in 2006. Net income for the nine months ended September 30, 2007 decreased $696,000 to $5,951,000 or $1.01 diluted earnings per share from $6,647,000, or $1.12 diluted earnings per share, for the comparable nine month period in 2006. The decrease for the three and nine months ended September 30, 2007 was primarily the result of a decrease in other income due mainly to a decrease in investment security gains, and an increase in other expense, which offset an improvement in net interest income.

8

Net interest income. Net interest income increased $91,000 to $5,596,000 for the three months ended September 30, 2007 compared to $5,505,000 for the three months ended September 30, 2006. Interest income increased 8.9% over the comparable 2006 quarter but was substantially offset by an increase in interest expense of 17.2%. This was due to rates paid for deposits increasing at a faster rate than rates charged for loans. As a result, the Company’s net interest spread tightened to 2.56% from 2.71% in the prior year period and its net interest margin narrowed to 3.11% from 3.24%. Net interest income increased $193,000 to $16,585,000 for the nine months ended September 30, 2007 compared to $16,392,000 for the nine months ended September 30, 2006. Despite the net interest income increase, the net interest spread narrowed to 2.56% from 2.76% for the comparable period in 2006 and the net interest margin tightened to 3.12% from 3.27%. The compression of the spread and margin reflect the current relatively flat yield curve environment in which short-term rates (off which we price our deposits) are the same as or slightly lower than long-term rates (off which we price our loans.)

Interest income. Interest income for the three months ended September 30, 2007 increased $924,000 to $11,283,000 from $10,359,000 for the comparable three-month period in 2006. The average balance of interest earning assets increased $39.7 million for the three months ended September 30, 2007, to $718.6 million from $678.9 million for the comparable period in 2006. The yield on these assets increased 18 basis points to 6.28%, for the three months ended September 30, 2007 from 6.10% for the comparable period in 2006. Interest income for the nine months ended September 30, 2007 increased $3,230,000 to $32,879,000 from $29,649,000 for the comparable nine month period in 2006. This change was supported by a $40.2 million increase in the average balance of interest earning assets and a 27 basis point increase in the yield, which reached 6.19% from 5.92% for the comparable period in 2006. See “Average Balance Sheet and Rate/Volume Analysis”.

Interest expense. Interest expense for the three months ended September 30, 2007 increased $834,000 to $5,687,000 from $4,853,000 for the comparable period in 2006. The change in interest expense was primarily attributed to the average cost of funds increasing 33 basis points to 3.72% for the three months ended September 30, 2007 from 3.39% for the comparable period in 2006, coupled with an increase of $39.2 million in the average balance of interest-bearing liabilities to $611.1 million from $571.9 million for the comparable period in 2006. Interest expense for the nine months ended September 30, 2007 increased $3,036,000 to $16,293,000 from $13,257,000 for the comparable period in 2006. This change was primarily the result of a 47 basis point increase in the average cost of funds to 3.63% from 3.16% for the comparable period in 2006 and a $38.1 million increase in the average balance of interest-bearing liabilities. See “Average Balance Sheet and Rate/Volume Analysis”.

9

Average Balance Sheet

The following table sets forth certain information relating to the Company for the periods indicated. The average yields and costs are derived by dividing income or expense on an annualized basis by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are derived from average daily balances.

	Three Months Ended September 30,						Three Months Ended September 30,
	2007						2006
	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
	(Dollars In Thousands)
Interest-earning assets:
Loans receivable(1)	$	481,917	$	8,328	6.91	%	$	466,203	$	7,889	6.77	%
Investment securities available for sale (2)		236,460		2,952	4.99	%		212,563		2,467	4.64	%
Federal funds sold		195		3	6.15	%		100		2	8.57	%
Total interest-earning assets		718,572		11,283	6.28	%		678,866		10,358	6.10	%
Non-interest-earning assets (3)		42,019						40,373
Total assets	$	760,591					$	719,239
Interest-bearing liabilities:
Money market accounts	$	60,567	$	470	3.11	%	$	50,183	$	342	2.73	%
Certificates of Deposit		305,343		3,622	4.76	%		277,488		2,998	4.32	%
Other liabilities (4)		245,151		1,595	2.60	%		244,230		1,513	2.48	%
Total interest-bearing liabilities		611,061		5,687	3.72	%		571,901		4,853	3.39	%
Non-interest-bearing liabilities (3)		89,288						87,760
Total liabilities		700,349						659,661
Stockholders’ equity (5)		60,242						59,578
Total liabilities and stockholders’ equity	$	760,591					$	719,239
Net interest income			$	5,596					$	5,505
Interest rate spread (6)					2.56	%					2.71	%
Net interest margin (7)					3.11	%					3.24	%
Ratio of average interest-earning assets to average interest-bearing liabilities					117.59	%					118.70	%

(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 other interest bearing checking accounts, FHLB advances and 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.

10

Average Balance Sheet

The following table sets forth certain information relating to the Company for the periods indicated. The average yields and costs are derived by dividing income or expense on an annualized basis by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are derived from average daily balances.

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2007						2006
	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
	(Dollars In Thousands)
Interest-earning assets:
Loans receivable (1)	$	476,334	$	24,404	6.83	%	$	458,683	$	22,596	6.57	%
Investment securities (2)		231,543		8,464	4.87	%		208,348		7,021	4.49	%
Federal funds sold		215		10	6.20	%		852		32	4.97	%
Total interest-earning assets		708,092		32,878	6.19	%		667,883		29,649	5.92	%
Non-interest-earning assets (3)		41,096						39,445
Total assets	$	749,188					$	707,328
Interest-bearing liabilities:
Money market accounts	$	59,057	$	1,350	3.05	%	$	52,730	$	951	2.40	%
Certificates of Deposit		303,789		10,625	4.66	%		265,666		8,015	4.02	%
Other liabilities (4)		235,825		4,318	2.44	%		242,153		4,291	2.36	%
Total interest-bearing liabilities		598,671		16,293	3.63	%		560,549		13,257	3.16	%
Non-interest-bearing liabilities (3)		89,363						86,206
Total liabilities		688,034						646,755
Stockholders’ equity (5)		61,154						60,573
Total liabilities and stockholders’ equity	$	749,188					$	707,328
Net interest income			$	16,585					$	16,392
Interest rate spread (6)					2.56	%					2.76	%
Net interest margin (7)					3.12	%					3.27	%
Ratio of average interest-earning assets to average interest-bearing liabilities					118.28	%					119.15	%

(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 other interest bearing checking accounts, FHLB advances and 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.

11

Rate / Volume Analysis

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.

	Three Month Period Ended September 30,							Nine Month Period Ended September 30,
	2007 vs. 2006							2007 vs. 2006
	Increase (Decrease)							Increase (Decrease)
	Due to							Due to
	Volume		Rate			Net		Volume			Rate			Net
	(Dollars In Thousands)
Interest income:
Loans receivable	$	266	$	173		$	439	$	870		$	938		$	1,808
Investment securities available for sale		277		208			485		781			662			1,443
Other interest earning assets		2		(1	)		1		(23	)		1			(22	)
Total interest-earning assets		545		380			925		1,628			1,601			3,229
Interest expense:
Money market accounts		71		57			128		114			285			399
Certificates of deposit		301		323			624		1,150			1,460			2,610
Other liabilities		5		77			82		(112	)		139			27
Total interest-bearing liabilities		377		457			834		1,152			1,884			3,036
Net change in net interest income	$	168	$	(77	)	$	91	$	476		$	(283	)	$	193

Provision for loan losses. For the three and nine months ended September 30, 2007, $250,000 and $750,000 were taken as a provision for loan losses compared to $350,000 and $1,200,000 for the comparable periods in 2006. At September 30, 2007, the allowance for loan losses equaled 1.11% of gross loans outstanding compared to .97% at September 30, 2006. Net charge-offs as a percentage of average loans for the three and nine month period ended September 30, 2007 were .02% and .04%, respectively, compared to .05% and .03% for the comparable periods in 2006.

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:

• Historical experience

• Volume

• Type of lending conducted by the Bank

• Industry standards

• The level and status of past due and non-performing loans

• The general economic conditions in the Bank’s lending area; and

• Other factors affecting the collectability of the loans in the portfolio

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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. Watch and classified loans are allocated additional reserves.

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.

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 for the three months ended September 30, 2007 decreased $216,000 to $1,724,000 from $1,940,000 for the comparable three-month period in 2006. The decrease in other income for the three months ended September 30, 2007 was primarily due to a decrease in net investment security gains of $254,000. This decrease was partially offset by increases in debit card and trust fees of $30,000 and $25,000, respectively. Total other income for the nine months ended September 30, 2007 decreased $622,000 to $5,021,000 from $5,643,000 for the comparable nine-month period in 2006. This change was primarily due to a decrease in net investment security gains of $817,000 offset by increases in debit card and trust fees of $76,000 and $81,000, respectively. Income from debit card fees rose due to a growing deposit base and increased transactions from the comparable periods in 2006. Growth in the Trust Department’s assets under management contributed to the increase in fees collected from the comparable periods in 2006.

Other expenses. Total other expense for the three-month period ended September 30, 2007 increased $187,000 to $4,462,000 from $4,275,000 for the comparable three-month period in 2006. Increases in other expenses and pension and other employee benefits of $136,000 and $54,000, respectively, were partially offset by a decrease in data processing costs of $38,000. Total other expense for the nine-month period ended September 30, 2007 increased $578,000 to $13,109,000 from $12,531,000 for the comparable nine-month period in 2006. Increases in pension and other employee benefits, other expenses, and advertising of $238,000, $198,000, and $125,000, respectively, were offset by a decrease in data processing costs of $68,000. Increases, for the three and nine month period ended September 30, 2007, in employee benefits are related to a rise in health care costs while other expenses rose due primarily to increases in losses due to check fraud, legal fees related to loan collection, and various services the Company subscribes to with third party vendors. Advertising costs, for the nine months ended September 30, 2007, increased due to expenses related to the Company’s new logo and marketing campaign. A decrease in data processing costs is attributed to a new contract the Company signed with its core data processor.

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Provision for income taxes. Income taxes, for the three months ended September 30, 2007, decreased $80,000 to $588,000 from $668,000 for the comparable period in 2006. The effective tax rate decreased to 22.6% for the three month period ended September 30, 2007, compared to 23.7% for the comparable period in 2006. Income taxes for the nine months ended September 30, 2007, increased $139,000 to $1,796,000 from $1,657,000 for the comparable period in 2006. The effective tax rate increased to 23.1% for the nine month period ended September 30, 2007, compared to 20.0% for the comparable period in 2006. The increase is primarily related to securities written down in December 2004 and sold in 2006. The gain realized in 2006 was not subject to federal taxation.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no significant changes for the three and nine months ended September 30, 2007 from the information presented in the Annual Report on Form 10K, under the caption Market Risk, for the year ended December 31, 2006.

Item 4. CONTROLS AND PROCEDURES

The Company’s management evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures, as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Registrant is not party to any material legal proceedings at the present time. From time to time, the Bank is a party to routine legal proceedings within the normal course of business wherein it enforces its security interest in loans made by it, and other matters of a like kind.

Item 1A. Risk Factors

There have been no material changes from the risk factors as previously disclosed in the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Equity Securities. Not Applicable

(b) Use of Proceeds. Not Applicable

(c) Issuer Purchases of Equity Securities.

Period	(a) Total Number Of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)	(c) Total Number Of Shares (or Units) Purchased as Part Of Publicly Announced Plans or Programs*	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
July 1 through 31	27,716	$18.98	111,795	39,305
August 1 through 31	400	$17.95	112,195	38,905
September 1 through 30	--	--	--	--
Total	28,116	$18.97	112,195	38,905

* On November 18, 1999, the Registrant announced a stock repurchase plan for up to 151,100 shares.

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Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5. Other Information

Not applicable

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Item 6. Exhibits

The following exhibits are either filed with or incorporated by reference in this Quarterly Report on Form 10-Q:

	3(i)	Articles of Incorporation of IBT Bancorp, Inc.*
	3(ii)	Amended Bylaws of IBT Bancorp, Inc.
	4	Rights Agreement, dated as of November 18, 2003, by and between IBT Bancorp, Inc. and Registrar and Transfer Company, as Rights Agent.**
	10	Change In Control Severance Agreement with Charles G. Urtin ***
	10.1	Deferred Compensation Plan For Bank Directors***
10.2			Death Benefit Only Deferred Compensation Plan For Bank Directors effective as of January 1, 1990***
10.3			Retirement and Death Benefit Deferred Compensation Plan For Bank Directors effective as of January 1, 1990***
10.4			2000 Stock Option Plan****
10.5			Irwin Bank & Trust Company Supplemental Pension Plan *****
10.6			Medical Insurance Continuation Agreement with Charles G. Urtin ******
10.7			Directors Change in Control Severance Plan *******
31.1			Rule 13a-14(a) Certification of Chief Executive Officer
31.2			Rule 13a-14(a) Certification of Chief Financial Officer
32			Section 1350 Certification
*			Incorporated by reference to the identically numbered exhibits of the Registrant’s Form 10 (File No. 0-25903) filed April 29, 1999.
**			Incorporated by reference to Exhibit 4 to Amendment No. 1 to Form 8-A (File No. 1-31655) filed November 20, 2003.
***			Incorporated by reference to the identically numbered exhibits of the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
****			Incorporated by reference to Exhibit 4.1 the Registrant’s Registration Statement on Form S-8 (File No. 333-40398) filed September 29, 2000.
*****			Incorporated by reference to identically numbered exhibit to Registrant’s Annual Report on Form 10-K for fiscal year ended December 31, 2004.
******			Incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K filed March 6, 2006.
*******			Incorporated by reference to the identically numbered exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

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SIGNATURES

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

	IBT BANCORP, INC.
Date:  November 5, 2007	By:	/s/ Charles G. Urtin
		Charles G. Urtin President, Chief Executive Officer (Duly authorized officer)
Date:  November 5, 2007	By:	/s/ Raymond G. Suchta
		Raymond G. Suchta Chief Financial Officer (Principal Financial Officer)

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EX-3.(II)

INDEX

TO BYLAWS OF

IBT BANCORP, INC.

ARTICLE I - MEETINGS OF SHAREHOLDERS

Section 101. Place of Meetings

Section 102. Annual Meetings

Section 103. Special Meetings

Section 104. Conduct of Shareholders’ Meetings

ARTICLE II - DIRECTORS AND BOARD MEETINGS

Section 201. Management by Board of Directors

Section 202 Nomination for Directors

Section 203. Directors Must be Shareholders

Section 204. Eligibility and Mandatory Retirement

Section 205. Number of Directors and Vacancies

Section 206. Compensation of Directors

Section 207. Regular Meetings

Section 208. Special Meetings

Section 209. Reports and Records

ARTICLE III - COMMITTEES

Section 301. Committees

Section 302. Executive Committee

Section 303. Appointment of Committee Members

Section 304. Organization and Proceedings

ARTICLE IV - OFFICERS

Section 401. Officers

Section 402. Chairman of the Board

Section 403. President

Section 404. Vice Presidents

Section 405. Secretary

Section 406. Treasurer

Section 407. Assistant Officers

Section 408. Compensation

Section 409. General Powers

ARTICLE V - INDEMNIFICATION

Section 501. Mandatory Indemnification

Section 502. Optional Indemnification

Section 503. Personal Liability of Directors

ARTICLE VI - SHARES OF CAPITAL STOCK

Section 601. Authority to Sign Share Certificates

Section 602. Lost or Destroyed Certificates

Section 603. Uncertificated Shares

ARTICLE VI - GENERAL

Section 701. Fiscal Year

Section 702. Record Date

Section 703. Absentee Participation in Meetings

Section 704. Emergency Bylaws

Section 705. Severability

ARTICLE VIII - AMENDMENT OR REPEAL

Section 801. Amendment or Repeal by the Board of Directors

Section 802. Recording Amendments and Repeals

ARTICLE IX - APPROVAL OF AMENDED BYLAWS AND RECORD OF AMENDMENTS AND REPEALS

Section 901. Approval and Effective Date

Section 902. Amendments or Repeals

BYLAWS

OF

IBT BANCORP, INC.

These Bylaws are supplemental to the Pennsylvania Business Corporation Law and other applicable provisions of law, as the same shall from time to time be in effect.

ARTICLE I. MEETINGS OF SHAREHOLDERS.

Section 101. Place of Meeting. All meetings of the shareholders shall be held at such place or places, within or without the Commonwealth of Pennsylvania, as shall be determined by the Board of Directors from time to time.

Section 102. Annual Meetings. The annual meeting of the shareholders for the election of Directors and the transaction of such other business as may properly come before the meeting shall be held at such date or hour as may be fixed by the Board of Directors. Any business which is a proper subject for shareholder action may be transacted at the annual meeting, irrespective of whether the notice of said meeting contains any reference thereto, except as otherwise provided by applicable law.

Section 103. Special Meetings. Special meetings of the shareholders may be called at any time by the Board of Directors, the President, or by the shareholders entitled to cast at least one-third of the vote which all shareholders are entitled to cast at the particular meeting.

Section 104. Conduct of Shareholders’ Meetings. The Chairman of the Board shall preside at all shareholders’ meetings. In the absence of the Chairman of the Board, the President shall preside or, in his/her absence, any Officer designated by the Board of Directors. The Officer presiding over the shareholders’ meeting may establish such rules and regulations for the conduct of the meeting as he/she may deem to be reasonably necessary or desirable for the orderly and expeditious conduct of the meeting. Unless the Officer presiding over the shareholders’ meeting otherwise requires, shareholders need not vote by ballot on any question. Directors shall be elected by a plurality of votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Unless otherwise provided in the articles of incorporation, by statute, or by these bylaws, in matters other than the election of directors, a majority of the shares present in person or represented by proxy at a lawful meeting and entitled to vote on the subject matter, shall be sufficient to pass on a transaction or matter.

ARTICLE II. DIRECTORS AND BOARD MEETINGS.

Section 201. Management by Board of Directors. The business and affairs of the Corporation shall be managed by its Board of Directors. The Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute, regulation, the Articles of Incorporation or these Bylaws directed or required to be exercised or done by the shareholders.

Section 202. Nomination for Directors. Nominations for directors to be elected at an annual meeting of shareholders, except those made by the Board of Directors of the Corporation, must be submitted to the Secretary of the Corporation in writing not later than the close of business on the sixtieth (60th) day immediately preceding the date of the meeting. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of capital stock of the Corporation that will be voted for each proposed nominee; (d) the name and residence

address of the notifying shareholder; and (e) the number of shares of capital stock of the Corporation owned by the notifying shareholder. Nominations not made in accordance herewith may, in his/her discretion, be disregarded by the Presiding Officer of the meeting, and upon his/her instruction, the vote tellers may disregard all votes cast for each such nominee. In the event the same person is nominated by more than one shareholder, the nomination shall be honored, and all shares of capital stock of the Corporation shall be counted if at least one nomination for that person complies herewith.

Section 203. Directors Must be Shareholders. Every Director must be a shareholder of the Corporation and shall beneficially own at least five hundred (500) shares of the Corporation’s common stock at the time he/she becomes a director. If a Director does not have beneficial ownership of at least 5,000 shares of common stock at the time he/she is elected, all fees to be paid to the person for serving on the Board of Directors will be used to purchase additional shares of common stock for the Director until he/she obtains beneficial ownership of at least 5,000 shares of common stock. All persons must continue to beneficially own at least 5,000 shares of common stock while serving on the Board of Directors. If any Directors does not continue to beneficially own at least 5,000 shares of common stock, his/her ownership shall be reported by the Secretary, or other officer, to the Board of Directors. If the Director does not acquire common stock to restore his/her beneficial ownership to at least 5,000 shares of common stock within sixty (60) days of notice, he/she shall be removed from the Board of Directors. “Beneficial” ownership shall be interpreted as defined under the regulations of the Securities and Exchange Act of 1934.

Section 204. Eligibility and Mandatory Retirement. No person shall be eligible to be newly elected or appointed as a Director as he/she shall have attained the age of seventy (70) years on or prior to the date of his/her election. Notwithstanding the foregoing, the mandatory retirement provisions of this section shall not apply retroactively to those Directors elected as Interim Directors at the first meeting of the Board of Directors of the Corporation (with the exception of William D. Fawcett, Sr. and J. Curt Gardner), nor thereafter, should they desire to stand for reelection thereafter. Any Director of this Corporation, with the exception of the Interim Directors as specified above, who attains the age of seventy (70) years shall cease to be a Director (without any action on his/her part) at the close of business on the day prior to the date of the next shareholders’ meeting at which directors are to be elected regardless of whether or not his/her term as a Director would otherwise expire at such shareholders’ meeting. The Board of Directors may designate one or more persons who have retired from the Board as honorary members of the Board. Such honorary members may attend meetings of the Board but shall have no authority to vote or receive compensation.

Section 205. Number of Directors and Vacancies. The Board of Directors of the Corporation shall consist of nine members. Vacancies in the Board of Directors, including vacancies resulting from an increase in the number of Directors, may be filled by the remaining members of the Board even though less than a quorum. Any Director elected to fill a vacancy in the Board of Directors shall become a member of the same Class of Directors in which the vacancy existed; but if the vacancy is due to an increase in the number of Directors a majority of the members of the Board of Directors shall designate such directorship as belonging to Class 1, Class 2 or Class 3 so as to maintain the three (3) classes of Directors as nearly equal in number as possible. Each Director so elected shall be a Director until his/her successor is elected by the shareholders, who may make such election at the next annual meeting of the shareholders or at any special meeting duly called for that purpose and held prior thereto.

Section 206. Compensation of Directors. No Director shall be entitled to any salary as such; but the Board of Directors may fix, from time to time, a reasonable annual fee for acting as a Director and a reasonable fee to be paid each Director his/her services in attending meetings of the Board and meetings of committees appointed by the Board. The Corporation may reimburse Directors for expenses related to their duties as a member of the Board.

2

Section 207. Regular Meetings. Regular meetings of the Board of Directors shall be held on such day, at such hour, and at such place, consistent with applicable law, as the Board shall from time to time designate or as may be designated in any notice from the Secretary calling the meeting. The Board of Directors shall meet for reorganization at the first regular meeting following the annual meeting of shareholders at which the Directors are elected. Notice need not be given of regular meeting is not to be held at the time and place designated by the Board of Directors, notice of such meeting, which need not specify the business to be transacted thereat and which may be either verbal or in writing, shall be given by the Secretary to each member of the Board at least twenty-four (24) hours before the time of the meeting.

A majority of the members of the Board of Directors shall constitute a quorum for the transaction of business. If at the time fixed for the meeting, including the meeting to organize the new Board following the annual meeting of shareholders, a quorum is not present, the directors in attendance may adjourn the meeting from time to time until a quorum is obtained.

Except as otherwise provided herein, a majority of those directors present and voting at any meeting of the Board of Directors, shall decide each matter considered. A director cannot vote by proxy, or otherwise act by proxy at a meeting of the Board of Directors.

Section 208. Special Meetings. Special meetings of the Board of Directors may be called by the President or at the request of five or more members of the Board of Directors. A special meeting of the Board of Directors shall be deemed to be any meeting other than the regular meeting of the Board of Directors. Notice of the time and place of every special meeting, which need not specify the business to be transacted thereat and which may be either verbal or in writing, shall be given by the Secretary to each member of the Board at least twenty-four (24) hours before the time of such meeting excepting the Organization Meeting following the election of Directors.

Section 209. Reports and Records. The reports of Officers and Committees and the records of the proceedings of all Committees shall be filed with the Secretary of the Corporation and presented to the Board of Directors, if practicable, at its next regular meeting. The Board of Directors shall keep complete records of its proceedings in a minute book kept for that purpose. When a Director shall request it, the vote of each Director upon a particular question shall be recorded in the minutes.

ARTICLE III. COMMITTEES.

Section 30l. Committees. The following Committee of the Board of Directors shall be established by the Board of Directors in addition to any other Committee the Board of Directors may in its discretion establish.

Section 302. Executive Committee. The Executive Committee shall consist of the Chairman of the Board, the President and at least four (4) other Directors. A majority of the members of the Executive Committee shall constitute a quorum, and actions of a majority of those present at a meeting at which a quorum is present shall be actions of the Committee. Meetings of the Committee may be called at any time by the Chairman or Secretary of the Committee, and shall be called whenever two (2) or more members of the Committee so request in writing. The Executive Committee shall have and exercise the authority of the Board of Directors in the management of the business of the Corporation between the dates of regular meetings of the Board.

3

Section 303. Appointment of Committee Members. The Board of Directors shall elect the members of the Committees and the Chairman and Vice Chairman of each such Committee to serve until the next annual meeting of shareholders. The President shall appoint or shall establish a method of appointing, subject to the approval of the Board of Directors, the members of any other Committees established by the Board of Directors, and the Chairman and Vice Chairman of such Committee, to serve until the next annual meeting of shareholders. The Board of Directors may appoint, from time to time, other committees, for such purposes and with such powers as the Board may determine.

ARTICLE IV. OFFICERS.

Section 401. Officers. The Officers of the Corporation shall be a Chairman of the Board, a President, one (1) or more Vice Presidents, a Secretary, a Treasurer, and such other Officers and Assistant Officers as the Board of Directors may from time to time deem advisable. Except for the President, Secretary, and Treasurer, the Board may refrain from filling any of the said offices at any time and from time to time. The same individual may hold any two (2) or more offices except both the offices of President and Secretary. The Officers shall be elected by the Board of Directors at the time, in the manner and for such terms as the Board of Directors from time to time shall determine. Any Officer may be removed at any time, with or without cause, and regardless of the term for which such Officer was elected, but without prejudice to any contract right of such Officer. Each Officer shall hold his office for the current year for which he was elected or appointed by the Board unless he shall resign, becomes disqualified, or be removed at the pleasure of the Board of Directors.

Section 402. Chairman of the Board. The Board of Directors shall elect a Chairman of the Board at the first regular meeting of the Board following each annual meeting of shareholders at which Directors are elected. The Chairman of the Board shall be a member of the Board of Directors and shall preside at the meetings of the Board and perform such other duties as may be prescribed by the Board of Directors.

Section 403. President. The President shall have general supervision of all of the departments and business of the Corporation and shall prescribe the duties of the other Officers and Employees and see to the proper performance thereof. The President shall be responsible for having all orders and resolutions of the Board of Directors carried into effect. The President shall execute on behalf of the Corporation and may affix or cause to be affixed a seal to all authorized documents and instruments requiring such execution, except to the extent that signing and execution thereof shall have been delegated to some other Officer or Agent of the Corporation by the Board of Directors or by the President. The President shall be a member of the Board of Directors. In the absence or disability of the Chairman of the Board or his/her refusal to act, the President shall preside at meetings of the Board. In general, the President shall perform all the duties and exercise all the powers and authorities incident to such office or as prescribed by the Board of Directors.

Section 404. Vice Presidents. The Vice Presidents shall perform such duties, do such acts and be subject to such supervision as may be prescribed by the Board of Directors or the President. In the event of the absence or disability of the President or his/her refusal to act, the Vice Presidents, in the order of their rank, and within the same rank in the order of their authority, shall perform the duties and have the powers and authorities of the President, except to the extent inconsistent with applicable law.

Section 405. Secretary. The Secretary shall act under the supervision of the President or such other Officers as the President may designate. Unless a designation to the contrary is made at a meeting, the Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all of the proceedings of such meetings in a book to be kept for that purpose, and shall perform like duties for the standing Committees when required by these Bylaws or otherwise. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors. The Secretary shall keep a seal of the Corporation, and, when authorized by the Board of Directors or the

4

President, cause it to be affixed to any documents and instruments requiring it. The Secretary shall perform such other duties as may be prescribed by the Board of Directors, President, or such other Supervising Officer as the President may designate.

Section 406. Treasurer. The Treasurer shall act under the supervision of the President or such other Officer as the President may designate. The Treasurer shall have custody of the Corporation’s funds and such other duties as may be prescribed by the Board of Directors, President or such other Supervising Officer as the President may designate.

Section 407. Assistant Officers. Unless otherwise provided by the Board of Directors, each Assistant Officer shall perform such duties as shall be prescribed by the Board of Directors, the President or the Officer to whom he/she is an Assistant. In the event of the absence or disability of an Officer or his/her refusal to act, his/her Assistant Officer shall, in the order of their rank, and within the same rank in the order of their seniority, have the powers and authorities of such Officer.

Section 408. Compensation. Unless otherwise provided by the Board of Directors, the salaries and compensation of all Officers and Assistant Officers, except the President shall be fixed by or in the manner designated by the President.

Section 409. General Powers. The Officers are authorized to do and perform such corporate acts as are necessary in the carrying on of the business of the Corporation, subject always to the direction of the Board of Directors.

Section 410. Mandatory Retirement. No person shall be eligible to be appointed as an Officer once he/she has attained the age of seventy (70) years. All Officers shall be retired automatically at or upon the date of their seventieth (70th) birthday, at which time their employment shall terminate.

ARTICLE V. INDEMNIFICATION.

Section 501. Mandatory Indemnification. The Corporation shall, to the full extent permitted by the Pennsylvania Business Corporation Law, as amended from time to time, indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he/she is or was a Director, Officer or Employee of the Corporation or of any of its subsidiaries.

Section 502. Optional Indemnification. In all situations in which indemnification is not mandatory under Section 501 hereof, the Corporation may, to the full extent permitted by the Pennsylvania Business Corporation Law, as amended from time to time, indemnify all persons whom it is empowered to indemnify pursuant thereto.

Section 503. Personal Liability of Directors. A director of the Corporation shall not be personally liable, as such, for monetary damages for any action taken unless: (a) the director has breached or failed to perform the fiduciary duties of his office under the requirements of Subchapter B of Chapter 17 of the Pennsylvania Business Corporation Law of 1988; and (b) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness. However, this Section 503 shall not apply to the responsibility of a director pursuant to any criminal statute or the liability of a director for the payment of taxes pursuant to federal, state or local law.

Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

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ARTICLE VI. SHARES OF CAPITAL STOCK.

Section 601. Authority to Sign Share Certificates. Every share certificate of the Corporation shall be signed by the President and by the Secretary or one of the Assistant Secretaries. Certificates may be signed by a facsimile signature of the President and the Secretary or one of the Assistant Secretaries of the Corporation.

Section 602. Lost or Destroyed Certificates. Any person claiming a share certificate to be lost, destroyed or wrongfully taken shall receive a replacement certificate if such person shall have: (a) requested such replacement certificate before the Corporation has notice that the shares have been acquired by a bona fide purchaser; (b) provided the Corporation with an indemnity agreement satisfactory in form and substance to the Board of Directors, or the President or the Secretary; and (c) satisfied any other reasonable requirements (including providing an affidavit and a surety bond) fixed by the Board of Directors, or the President or the Secretary.

Section 603. Uncertificated Shares. The Board of Directors may authorize the issuance of uncertificated shares by the Company, and may prescribe procedures for the issuance and registration of transfer thereof, and with respect such other matters relating to uncertificated shares as the Board of Directors may deem appropriate. No such authorization shall affect previously issued and outstanding shares represented by certificates until such certificates shall have been surrendered to the Company. Within a reasonable time after the issuance or transfer of any uncertificated shares, the Company shall issue or cause to be issued to the holder of such shares a written statement of the information required to be included on stock certificates under Pennsylvania law. Notwithstanding the adoption of any resolution providing for uncertificated shares, each registered holder of stock represented by uncertificated shares shall be entitled, upon request to the custodian of the stock transfer books of the Company, or other person designated as the custodian of the records of uncertificated shares, to have physical certificates representing such shares registered in such holder’s name.

ARTICLE VII. GENERAL.

Section 701. Fiscal Year. The fiscal year of the Corporation shall begin on the first (1st) day of January in each year and end on the thirty-first (31st) day of December in each year.

Section 702. Record Date. The Board of Directors may fix any time whatsoever (but not more than fifty (50) days) prior to the date of any meeting of shareholders, or the date for the payment of any dividend or distribution, or the date for the allotment of rights, or the date when any change or conversion or exchange of shares will be made or will go into effect, as a record date for the determination of the shareholders entitled to notice of, or to vote at, any such meetings, or entitled to receive payment of any such dividend or distribution, or to receive any such allotment of rights, or to exercise the rights in respect to any such change, conversion or exchange of shares.

Section 703. Absentee Participation in Meetings. One (1) or more Directors may participate in a meeting of the Board of Directors, or of a Committee of the Board, by means of a conference telephone or similar communications equipment, by means of which all persons participating in the meeting can hear each other.

Section 704. Emergency Bylaws. In the event of any emergency resulting from a nuclear attack or similar disaster, and during the continuance of such emergency, the following Bylaw provisions shall be in effect, notwithstanding any other provisions of the Bylaws:

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(a)         A meeting of the Board of Directors or of any Committee thereof may be called by any Officer or Director upon one (1) hour’s notice to all persons entitled to notice whom, in the sole judgment of the notifier, it is feasible to notify;

(b)        The Director or Directors in attendance at the meeting of the Board of Directors or of any Committee thereof shall constitute a quorum; and

(c)         These Bylaws may be amended or repealed, in whole or in part, by a majority vote of the Directors attending any meeting of the Board of Directors, provided such amendment or repeal shall only be effective for the duration of such emergency.

Section 705. Severability. If any provision of these Bylaws is illegal or unenforceable as such, such illegality or unenforceability shall not affect any other provision of these Bylaws and such other provisions shall continue in full force and effect.

ARTICLE VIII. AMENDMENT OR REPEAL.

Section 801. Amendment or Repeal by the Board of Directors. These Bylaws may be amended or repealed, in whole or in part, by a majority vote of members of the Board of Directors at any regular or special meeting of the Board duly convened. Notice need not be given of the purpose of the meeting of the Board of Directors at which the amendment or repeal is to be considered.

Section 802. Recording Amendments and Repeals. The text of all amendments and repeals to these Bylaws shall be attached to the Bylaws with a notation of the date and vote of such amendment or repeal.

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ARTICLE IX. APPROVAL OF AMENDED BYLAWS

AND RECORD OF AMENDMENTS AND REPEALS.

Section 901. Approval and Effective Date. These Bylaws have been approved as the Bylaws of the Corporation this 18th day of February, 2003, and shall be effected as of said date.

/s/ Charles G. Urtin

Charles G. Urtin, Secretary

Section 902. Amendments or Repeals.

Section Involved	Date Amended or Repealed	Approved By
Section 203	June 19, 2007	Board of Directors
Section 603	October 16, 2007	Board of Directors

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EX-31

CERTIFICATION

I, Charles G. Urtin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of IBT Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-12(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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.

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:November 5, 2007	By:	/s/ Charles G. Urtin
		Charles G. Urtin Chief Executive Officer

CERTIFICATION

I, Raymond G. Suchta, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of IBT Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-12(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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.

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:November 5, 2007	By:	/s/ Raymond G. Suchta
		Raymond G. Suchta Chief Financial Officer

EX-32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of IBT Bancorp, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof, we, Charles G. Urtin, Chief Executive Officer, and Raymond G. Suchta, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)        The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)        The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Charles G. Urtin	/s/ Raymond G. Suchta
Charles G. Urtin Chief Executive Officer	Raymond G. Suchta Chief Financial Officer

November 5, 2007