UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]                QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 2004

[ ]                TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

             For the transition period from __________ to __________

                        Commission file number 000-31789

                               ASB HOLDING COMPANY
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

         United States                                   56-2317250
         -------------                                   ----------
 (State or other jurisdiction                         (I.R.S. Employer
 of Incorporation or organization)                 Identification Number)


                 365 Broad Street, Bloomfield, New Jersey 07003
--------------------------------------------------------------------------------
                    (Address of Principal Executive Offices)


                                 (973) 748-3600
--------------------------------------------------------------------------------
                (Issuer's telephone number, including area code)



Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act  during  the past 12 months  (or 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 [ ]


As of  February  14,  2005,  there  were  5,554,500  outstanding  shares  of the
Registrant's Common Stock.

Transitional Small Business Disclosure format (Check one):   Yes [ ]     No [X]

<PAGE>

                               ASB HOLDING COMPANY

                                Table of Contents

<TABLE>
<CAPTION>
<S>                                                                             <C>
PART I - FINANCIAL INFORMATION (UNAUDITED)

     Item 1.    Financial Statements                                                 3
                Notes to Financial Statements                                        8

     Item 2.    Management's Discussion and Analysis of Financial Condition and
                Results of Operations                                               10

     Item 3.    Controls and Procedures                                             19


PART II - OTHER INFORMATION

     Item 1.    Legal Proceedings                                                   21
     Item 2.    Changes in Securities and Issuer Purchases of Equity Securities     21
     Item 3.    Defaults Upon Senior Securities                                     21
     Item 4.    Submission of Matters to a Vote of Securities Holders               21
     Item 5.    Other Information                                                   21
     Item 6.    Exhibits                                                            21


FORM 10-QSB SIGNATURE PAGE                                                          22

CERTIFICATIONS
</TABLE>

                                       2

<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

ASB Holding Company
Statements of Financial Condition
(in thousands, except share data)
(unaudited)

<TABLE>
<CAPTION>
                                                                      December 31,  September 30,
                                                                           2004         2004
                                                                        ---------    ---------
<S>                                                                   <C>          <C>
ASSETS
Cash and cash equivalents
     Cash and due from banks                                            $   2,528    $   2,256
     Interest-bearing deposits                                              2,723        5,778
                                                                        ---------    ---------
         Total cash and cash equivalents                                    5,251        8,034

Securities available-for-sale                                              81,865       89,495
Securities held-to-maturity (fair value: December 31, 2004 -
  $8,751; September 30, 2004 - $2,806)                                      8,825        2,794
Loans, net                                                                318,482      308,970
Premises and equipment                                                      3,927        3,910
Federal Home Loan Bank stock, at cost                                       3,374        2,890
Cash surrender value of life insurance                                      7,302        6,242
Accrued interest receivable                                                 1,387        1,359
Other assets                                                                1,081        1,250
                                                                        ---------    ---------
     Total assets                                                       $ 431,494    $ 424,944
                                                                        =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
     Deposits
         Noninterest-bearing                                            $  23,530    $  22,599
         Interest-bearing                                                 305,376      300,117
                                                                        ---------    ---------
              Total deposits                                              328,906      322,716

     Advance payments by borrowers for taxes and insurance                  2,261        2,322
     Federal Home Loan Bank advances                                       58,077       57,491
     Accrued interest payable and other liabilities                         3,368        3,049
     Common stock in ESOP subject to contingent repurchase obligation         304           52

Stockholders' Equity
     Preferred stock, $.10 par value, 5,000,000 shares authorized               -            -
     Common stock, $.10 par value; 20,000,000 shares
       authorized; 5,554,500 shares issued and outstanding                    555          555
     Additional paid-in capital                                            15,807       15,687
     Unearned ESOP shares                                                  (1,164)      (1,200)
     Retained earnings                                                     24,166       24,806
     Accumulated other comprehensive loss                                    (482)        (482)
     Amount reclassified on ESOP shares                                      (304)         (52)
                                                                        ---------    ---------
         Total stockholders' equity                                        38,578       39,314
                                                                        ---------    ---------
              Total liabilities and stockholders' equity                $ 431,494    $ 424,944
                                                                        =========    =========
</TABLE>

      See accompanying notes to unaudited consolidated financial statements

                                       3
<PAGE>

ASB Holding Company
Statements of Income
(in thousands, except share data)
(unaudited)

                                                          Three Months
                                                        Ended December 31,
                                                        ------------------
                                                         2004         2003
                                                      ----------   ----------
Interest and dividend income
    Loan, including fees                              $    4,137   $    3,690
    Securities                                               739          750
    Federal funds sold and other                              28           13
                                                      ----------   ----------
       Total interest income                               4,904        4,453

Interest expense
    NOW and money market                                      99           57
    Savings                                                  576          562
    Certificates of deposit                                  809          749
    Federal Home Loan Bank advances                          696          718
                                                      ----------   ----------
       Total interest expense                              2,180        2,086
                                                      ----------   ----------

Net interest income                                        2,724        2,367

Provision for loan losses                                     41           41
                                                      ----------   ----------

Net interest income after provision for loan losses        2,683        2,326

Noninterest income
    Deposit service fees and charges                         174          177
    Income from cash surrender value of
     life insurance                                           60           51
    Gain on sale of loans                                      1            7
    Other                                                     12           45
                                                      ----------   ----------
       Total noninterest income                              247          280

Noninterest expense
    Salaries and employee benefits                         1,210        1,123
    Occupancy and equipment                                  205          224
    Data processing                                          146          158
    Advertising                                               64           71
    Federal deposit insurance                                 11           11
    Other                                                    321          243
                                                      ----------   ----------
       Total noninterest expense                           1,957        1,830
                                                      ----------   ----------

Income before provision for income taxes                     973          776

Provision for income taxes                                   363          302
                                                      ----------   ----------

Net income                                            $      610   $      474
                                                      ==========   ==========

Comprehensive income                                  $      610   $      661
                                                      ==========   ==========

Earnings per share:

    Basic and diluted                                 $     0.11   $     0.09
                                                      ==========   ==========
Weighted average shares                                5,436,210    5,422,902


      See accompanying notes to unaudited consolidated financial statements

                                       4

<PAGE>

ASB Holding Company
Statements of Stockholders' Equity
Three months ended December 31, 2004
(in thousands)
(unaudited)

<TABLE>
<CAPTION>
                                                                                             Amount
                                                                             Accumulated  Reclassified
                                     Additional    Unearned                     Other          on                 Compre-
                          Common       Paid-in       ESOP         Retained   Comprehensive    ESOP       Total    hensive
                           Stock       Capital      Shares        Earnings      Loss         Shares     Equity    Income
                           -------------------      ------        --------      ----         ------     ------    ------
<S>                    <C>          <C>          <C>          <C>          <C>          <C>         <C>          <C>
Balance at
  September 30, 2004    $     555    $   15,687   $   (1,200)  $   24,806   $     (482)  $      (52) $   39,314

ESOP shares earned              -            20           36            -            -            -          56

ESOP dividend proceeds          -           100            -            -            -            -         100

Cash dividends paid -
$0.75 per share                 -             -            -       (1,250)           -            -      (1,250)

Reclassification due to change in
fair value of common stock in ESOP
subject  to contingent repurchase
  obligation                    -             -            -            -            -         (252)       (252)

Comprehensive income
    Net income                  -             -            -          610            -            -         610
    Change in unrealized
      gain on securities
      available-for-sale,
      net of taxes              -             -            -            -            -            -           -
                                                                                                     ----------
       Total
         comprehensive
         income                                                                                                                  610
                        ---------    ----------   ----------   ----------   ----------   ----------  ----------   ==================

Balance at
  December 31, 2004     $     555    $   15,807   $   (1,164)  $   24,166   $     (482)  $     (304) $   38,578
                        =========    ==========   ===========  ==========   ===========  =========== ==========
</TABLE>
      See accompanying notes to unaudited consolidated financial statements

                                        5

<PAGE>

ASB Holding Company
Statements of Cash Flows
(in thousands)
(unaudited)

<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                              December 31,
                                                                          --------------------
                                                                            2004        2003
                                                                          --------    --------
<S>                                                                     <C>         <C>
Cash flows from operating activities
    Net income                                                            $    610    $    474
    Adjustments to reconcile net income to net cash
      provided by operating activities
       Depreciation and amortization                                            91         107
       Net amortization of premiums and discounts                               35         143
       ESOP compensation expense                                               156          55
       Provision for loan losses                                                41          41
       Increase in cash surrender value of life insurance                      (60)        (51)
       Gain on sale of loans                                                    (1)         (7)
       Proceeds from sales of loans                                            144       1,107
       Net change in loans held for sale                                         -        (144)
       Change in accrued interest receivable                                   (28)          8
       Change in other assets                                                  191         216
       Change in deferred income taxes                                         (48)        (13)
       Increase in other liabilities                                           319          80
                                                                          --------    --------
              Net cash from operating activities                             1,450       2,016

Cash flows from investing activities
    Net increase in loans receivable                                        (9,696)     (8,993)
    Purchases of securities held-to-maturity                                (6,227)       (297)
    Principal paydowns on securities held-to-maturity                          194         387
    Purchases of securities available-for-sale                                   -      (4,011)
    Calls of securities available-for-sale                                   2,000           -
    Principal paydowns on securities available-for-sale                      5,623       8,253
    Purchase of Federal Home Loan Bank stock                                  (984)       (335)
    Redemption of Federal Home Loan Bank stock                                 500         410
    Purchase of bank-owned life insurance                                   (1,000)          -
    Purchase of premises and equipment                                        (108)        (90)
                                                                          --------    --------
       Net cash from investing activities                                   (9,698)     (4,676)

Cash from financing activities
    Net increase in deposits                                                 6,190       2,201
    Net change in advance payments by borrowers for taxes and insurance        (61)        (43)
    Repayment of Federal Home Loan Bank of New York advances                (1,014)     (1,000)
    Net change in Federal Home Loan Bank of New York OLOC                    1,600       7,500
    Cash dividends paid                                                     (1,250)          -
    Refund of stock subscriptions received                                       -     (41,159)
                                                                          --------    --------
       Net cash from financing activities                                    5,465     (32,501)
                                                                          --------    --------

Net change in cash and cash equivalents                                     (2,783)    (35,161)

Cash and cash equivalents at beginning of period                             8,034      38,365
                                                                          --------    --------

Cash and cash equivalents at end of period                                $  5,251    $  3,204
                                                                          ========    ========
</TABLE>

      See accompanying notes to unaudited consolidated financial statements

                                        6

<PAGE>

ASB Holding Company
Statements of Cash Flows
(in thousands)
(unaudited)

<TABLE>
<CAPTION>
                                                                        Three Months Ended
                                                                           December 31,
                                                                           ------------
                                                                        2004       2003
                                                                        ----       ----
<S>                                                                  <C>        <C>
Supplemental cash flow information:
    Cash paid during the period for
       Interest                                                        $ 2,177    $ 2,085
       Income taxes, net of refunds                                         48         10

Supplemental disclosures of non-cash investing transactions:
    Transfer stock subscriptions received and deposits to capital            -     14,728

</TABLE>

      See accompanying notes to unaudited consolidated financial statements

                                        7


<PAGE>

NOTES TO UNAUDITED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

         ASB Holding Company is a federally chartered  corporation  organized in
June 2003 that was formed for the purpose of acquiring  all of the capital stock
of American Savings Bank of NJ, which was previously owned by American  Savings,
MHC, a federally  chartered mutual holding company.  American Savings Bank of NJ
converted  from a mutual to a stock  savings  bank in a mutual  holding  company
reorganization  in 1999 in which no stock  was  sold to any  person  other  than
American  Savings,  MHC.  Currently,  all of the  outstanding  stock of American
Savings  Bank of NJ is held by ASB  Holding  Company.  The MHC  holds 70% of the
outstanding  stock of ASB Holding  Company  with the  remaining  30% held by the
public.

         The accompanying  unaudited  consolidated  financial statements include
the  accounts  of ASB  Holding  Company  ("the  Company")  and its wholly  owned
subsidiaries,  American Savings Bank of NJ ("the Bank") and ASB Investment Corp.
("the Investment  Corp.") as of December 31, 2004 and September 30, 2004 and for
the  three-month   periods  ended  December  31,  2004  and  2003.   Significant
intercompany  accounts and transactions  have been eliminated in  consolidation.
References  in this  Quarterly  Report on Form 10-QSB to the  Company  generally
refer to the  Company  and the Bank,  unless the  context  indicates  otherwise.
References to "we", "us", or "our" refer to the Bank or Company, or both, as the
context indicates.

         The primary  business of the Company is the  ownership  of the Bank and
the  Investment  Corp.  The Bank  provides a full range of banking  services  to
individual  and  corporate  customers  in New  Jersey.  The Bank is  subject  to
competition from other financial  institutions and to the regulations of certain
federal  and  state  agencies  and  undergoes  periodic  examinations  by  those
regulatory  authorities.  The Investment  Corp. was organized for the purpose of
selling insurance and investment products,  including annuities, to customers of
the Bank and the general public,  with initial activities limited to the sale of
fixed rate annuities. The Investment Corp. has had no activity to date.

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States  of  America  for  interim  financial  information  and  with the
instructions to Form 10-QSB and Article 10 of Regulation S-B. Accordingly,  they
do not include all the information  and notes required by accounting  principles
generally  accepted  in the United  States of  America  for  complete  financial
statements.  These interim  statements  should be read in  conjunction  with the
consolidated  financial  statements  and notes  included in the Annual Report on
Form 10-KSB.  The  September 30, 2004 balance  sheet  presented  herein has been
derived  from the audited  financial  statements  included  in the  consolidated
financial  statements  and notes  included  in the Annual  Report on Form 10-KSB
filed with the  Securities  and  Exchange  Commission,  but does not include all
disclosures  required by accounting  principles generally accepted in the United
States of America.

         To  prepare   financial   statements  in  conformity   with  accounting
principles generally accepted in the United States of America,  management makes
estimates and assumptions  based on available  information.  These estimates and
assumptions  affect the amounts  reported in the  financial  statements  and the
disclosures  provided,  and future results could differ.  The allowance for loan
losses,  prepayment  speeds  on  mortgage  -backed  securities,  and  status  of
contingencies are particularly subject to change.

         Interim  statements  are subject to possible  adjustment  in connection
with the annual audit of the Company for the year ending  September 30, 2005. In
the opinion of management of the Company,  the  accompanying  unaudited  interim
consolidated financial statements reflect all of the adjustments  (consisting of
normal  recurring   adjustments)  necessary  for  a  fair  presentation  of  the
consolidated  financial position and consolidated  results of operations for the
periods presented.

         The results of operations  for the three months ended December 31, 2004
are not  necessarily  indicative of the results to be expected for the full year
or any other period.

                                       8

<PAGE>

Note 2 - Minority Offering

         On October 3, 2003, the Company completed a minority stock offering and
sold  1,666,350  shares of common  stock in a  subscription  offering at $10 per
share and received  proceeds of  $16,060,000  net of offering costs of $603,000.
The Company  contributed  $9,616,000 or approximately 60% of the net proceeds to
the Bank in the form of a capital contribution. The Company loaned $1,333,000 to
the  Bank's  employee  stock  ownership  plan and the ESOP used  those  funds to
acquire 133,000 shares of common stock at $10 per share.

         After the sale of the stock, the MHC holds 70%, or 3,888,150 shares, of
the  outstanding  stock of the Company,  with the  remaining  30% or,  1,666,350
shares, held by persons other than the MHC. The Company holds 100% of the Bank's
outstanding  common stock.  The Bank may not pay dividends to the Company if the
dividends  would  cause  the Bank to fall  below  the  "adequately  capitalized"
capital threshold.

         The Company had stock  subscriptions  received totaling  $52,137,000 at
September 30, 2003 pending  completion of the Company's initial public offering.
At the time of closing on October 3, 2003, gross proceeds of $15,330,000  became
capital of the Company with the remainder returned on oversubscriptions.


Note 3 - Earnings Per Share

         Amounts reported as earnings per share of common stock reflect earnings
available to stockholders  for the period divided by the weighted average number
of commons shares outstanding during the period less unearned ESOP shares. There
were no potentially dilutive securities for any periods presented.


Note 4 - Employee Stock Ownership Plan

         As part  of the  minority  stock  offering,  the  Bank  established  an
employee  stock  ownership  plan  (ESOP) for the  benefit of  substantially  all
employees. The ESOP borrowed $1,333,000 from the Company and used those funds to
acquire 133,000 shares of the Company's stock at $10 per share.

         Shares issued to the ESOP are allocated to ESOP  participants  based on
principal  repayments made by the ESOP on the loan from the Company. The loan is
secured by shares  purchased  with the loan  proceeds  and will be repaid by the
ESOP with funds from the Company's  discretionary  contributions to the ESOP and
earnings on the ESOP's assets.  Principal payments are scheduled to occur over a
ten-year period.

         At December 31, 2004,  the ESOP held  133,000  shares of the  Company's
common stock and 16,913  shares held by the ESOP were  allocated to the accounts
maintained for participants.  Participants become eligible to receive payment of
the vested benefits under the plan upon retirement, disability or termination of
employment. Participants who elect to receive their benefit payments in the form
of ASB Holding  Company  common  stock may  require the Company to purchase  the
common  stock  distributed  at fair value during two 60-day  periods.  The first
purchase  period begins on the date the benefit is paid and the second  purchase
period  begins on the first  anniversary  of the payment date.  This  contingent
repurchase  obligation  is reflected in the  Company's  financial  statements as
"Common stock in ESOP subject to contingent  repurchase  obligation" and reduces
shareholder's  equity by an amount  that  represents  the fair  value of all the
shares of Company common stock held by the ESOP, without regard to whether it is
likely that the shares would be distributed or that the recipients of the shares
would be likely to exercise  their right to require the Company to purchase  the
shares.  At December 31, 2004, this  contingent  repurchase  obligation  reduced
stockholders' equity by $304,000.

                                       9

<PAGE>

Note 5 - Subsequent Event - Stock-Based Compensation

         At the annual  meeting  held on January 20, 2005,  stockholders  of ASB
Holding Company  approved the ASB Holding Company 2005 Stock Option Plan and the
American  Savings Bank of NJ 2005 Restricted  Stock Plan.  Subject to regulatory
approval,  272,171  shares of common  stock were made  available  under the 2005
Stock Option Plan and 272,171  options  were  awarded on January 20, 2005.  Also
subject  to  regulatory  approval,  108,868  shares  of common  stock  were made
available under the 2005 Restricted  Stock Plan and 108,868 shares of restricted
stock were awarded on January 20, 2005.

         Shares of common stock issuable  pursuant to outstanding  options under
the 2005 Stock  Option  Plan will be  considered  outstanding  for  purposes  of
calculating  earnings per share on a diluted  basis.  The  Financial  Accounting
Standards  Board has  announced  a change  in the  required  accounting  methods
applicable to stock options effective after June 15, 2005. Under such accounting
requirements,  the Company  will be required to recognize  compensation  expense
related to stock options outstanding based upon the fair value of such awards at
the date of grant over the period that such awards are earned.

         For accounting purposes,  the Bank will recognize  compensation expense
for shares of common stock awarded under the 2005 Restricted Stock Plan over the
vesting  period  at the fair  market  value of the  shares  on the date they are
awarded.


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

Forward-Looking Statements

         This report  contains  certain  forward-looking  statements  within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking  statements  to be covered  by the safe  harbor  provisions  for
forward-looking  statements  contained in the Private  Securities  Reform Act of
1995 as amended  and is  including  this  statement  for  purposes of these safe
harbor  provisions.  Forward-looking  statements,  which  are  based on  certain
assumptions  and describe  future plans,  strategies,  and  expectations  of the
Company,  are generally  identifiable by use of the words  "believe,"  "expect,"
"intend,"  "anticipate,"  "estimate,"  "project,"  or similar  expressions.  The
Company's  ability to predict  results or the actual  effect of future  plans or
strategies is inherently  uncertain.  Factors that could have a material adverse
affect  on  the  operations  and  future   prospects  of  the  Company  and  its
wholly-owned  subsidiaries include, but are not limited to, changes in: interest
rates; general economic conditions;  legislative/regulatory provisions; monetary
and fiscal  policies  of the U.S.  Government,  including  policies  of the U.S.
Treasury and the Federal  Reserve Board;  the quality or composition of the loan
or investment portfolios;  demand for loan products; deposit flows; competition;
demand for  financial  services in the  Company's  market area;  and  accounting
principles,  policies,  and guidelines.  These risks and uncertainties should be
considered in evaluating  forward-looking  statements, and undue reliance should
not be placed on such statements.


General

         The  Company's  results  of  operations  depend  primarily  on its  net
interest  income.  Net interest  income is the  difference  between the interest
income  we earn  on our  interest-earning  assets  and  the  interest  we pay on
interest-bearing  liabilities. It is a function of the average balances of loans
and investments versus deposits and borrowed funds outstanding in any one period
and the  yields  earned  on those  loans and  investments  and the cost of those
deposits and borrowed funds. Our  interest-earning  assets consist  primarily of
residential  mortgage  loans,  multi-family  and commercial real estate mortgage
loans,  residential  mortgage-related  securities  and U.S.  Agency  debentures.
Interest-bearing liabilities consist primarily of retail deposits and borrowings
from the Federal Home Loan Bank of New York.

                                       10

<PAGE>

         Declining  interest rates in the three year period ended  September 30,
2003 resulted in  acceleration  of asset  prepayments  due primarily to mortgage
refinancing.  The  negative  impact  on  interest  income  from  earning  assets
refinancing to lower market interest rates was exacerbated during that period by
the  accelerated   amortization  of  the  remaining   balance  of  net  deferred
origination  costs and net premiums  relating to such assets.  This reduction in
earning asset yields was partially  offset by a reduction in the Company's  cost
of retail  deposits.  However,  the reduction in the  Company's  overall cost of
liabilities  lagged that of its deposits  due to its balance of higher  costing,
long term,  fixed rate FHLB borrowings  previously  drawn for interest rate risk
management  purposes.  Together,  these  factors  resulted in  reduction  of the
Company's net interest margin and its net income through that period.

         During the Company's  fiscal year ended September 30, 2004, the general
level of market  interest rates  increased from the historical lows of the prior
periods. Such increases slowed the pace of loan refinancing thereby reducing the
rate at which the Company's earning assets prepaid. Slowing prepayments resulted
in a corresponding  reduction in the amortization of deferred costs and premiums
thereby  increasing  the Company's  earning asset yields.  The Company's cost of
interest-bearing  liabilities  lagged the  upward  movement  in  current  market
interest  rates.  After  decreasing  for  thirteen  consecutive  quarters,   the
Company's  cost  of  interest-bearing  liabilities  remained  unchanged  for the
quarters  ended March 31, 2004 and June 30, 2004 before  increasing  modestly in
the final quarter of the fiscal year ended September 30, 2004. As a result,  the
Company  reported a 16 basis point  improvement  in its net  interest  margin to
2.60%  for the year  ended  September  30,  2004 from  2.44% for the year  ended
September 30, 2003.

         The Company continued to realize modest improvement in its net interest
margin in the first  quarter  of fiscal  2005.  The  Company's  overall  cost of
interest-bearing liabilities remained stable for the quarter as increases in the
cost of retail  deposits were offset by  reductions  in the cost of  borrowings.
Conversely, the Company realized modest increases in its yield on earning assets
as increases in the yield on investment securities and short term, liquid assets
more than offset a modest  reduction in the Company's  yield on loans. In total,
the Company's net interest margin  increased three basis points to 2.63% for the
quarter ended December 31, 2004 from that reported for fiscal 2004.

         Our results of operations also depend on our provision for loan losses,
noninterest income, and noninterest expense. After shrinking during fiscal 2004,
non-performing loans as a percentage of total assets have remained stable in the
first quarter of fiscal 2005. Consequently,  loan loss provisions in the current
quarter resulted primarily from the overall growth in portfolio loans.

         Noninterest income includes deposit service fees and charges, income on
the cash  surrender  value  of life  insurance,  gains  on  sales  of loans  and
securities,  gains on sales of other real estate owned and loan related fees and
charges.  Excluding gains on sale of assets,  annualized noninterest income as a
percentage of average  assets  totaled 0.23% for the quarter ended  December 31,
2004 - a reduction  of 0.04% from 0.27% for fiscal 2004.  Much of this  decrease
results from the  recognition of  comparatively  lower levels of loan prepayment
fees resulting from slowing loan prepayments.

         Gains and losses on sale of loans  excluded  in the  comparison  above,
typically  result from the Company  selling long term,  fixed rate mortgage loan
originations  into the  secondary  market  for  interest  rate  risk  management
purposes. Demand for such loans typically fluctuates with market interest rates.
As interest rates rise,  market demand for long term,  fixed rate mortgage loans
diminishes  in favor of hybrid ARMs which the Company  retains in the  portfolio
rather than  selling  into the  secondary  market.  Consequently,  the gains and
losses on sale of loans  reported  by the  Company  will  fluctuate  with market
conditions.

         Noninterest expense includes salaries and employee benefits,  occupancy
and equipment expenses and other general and administrative expenses.  Excluding
penalties for prepayment of borrowed funds,  annualized noninterest expense as a
percentage of average  assets  totaled 1.83% for the quarter ended  December 31,
2004 - a reduction  of 0.06% from 1.89% for fiscal  2004.  In large  part,  this
improvement  results

                                       11

<PAGE>

from  management's  continued  efforts to limit the dollar growth of noninterest
expense  while  continuing  to execute the  Company's  balance  sheet growth and
diversification strategies.

         Notwithstanding  these efforts,  certain operating costs have increased
since the  Company's  initial  public  offering in the beginning of fiscal 2004.
Operating as a public entity resulted in comparatively higher legal,  accounting
and compliance  costs  throughout  fiscal 2004 than had been recorded in earlier
years.  This trend is expected to  continue  as the  Company  incurs  additional
compliance costs associated with the Sarbanes-Oxley  Act of 2002.  Additionally,
the Company is recording  higher employee  compensation and benefit expense than
it had in the years preceding its minority stock offering. Much of this increase
is  attributable  to the  implementation  of an employee  stock  ownership  plan
benefit that did not exist prior to the offering.  Prospectively,  benefit costs
are also expected to increase as the Company implements the restricted stock and
stock option plans approved by shareholders at the Company's annual meeting held
on January 20, 2005.

         In relation to the rate of balance sheet growth,  these sharp increases
in  compensation,  benefit and  professional  service costs have been  partially
offset  by  slower  increases  - as  well  as  outright  reductions  - in  other
noninterest  expenses.  For the quarter ended December 31, 2004,  both Occupancy
and Equipment and Data Processing costs have been reduced from both a dollar and
percentage  of average  assets  perspective  when  compared  with  fiscal  2004.
Reductions in these expenses have each contributed  0.02% to the 0.06% reduction
in the Company's  noninterest  expense ratio  reported  earlier.  In large part,
these reductions result from reduced depreciation expense and the absence in the
current period of certain  non-recurring  charges  associated  with  information
technology infrastructure upgrades that were incurred in fiscal 2004.

         Finally,  the Bank  continues  to  evaluate  the costs and  benefits of
incrementally restructuring its portfolio of FHLB advances. Such a restructuring
transaction  took place during  fiscal 2004 when the Bank  recognized a $125,000
penalty  to prepay  $3.0  million of fixed  rate FHLB  advances  with a weighted
average  cost  of  6.28%.  In  the  current  interest  rate  environment,   such
prepayments  result  in one  time  charges  to  earnings  in the  form  of  FHLB
prepayment penalties. When replaced by lower cost funding, however,  prepayments
lower the interest paid on borrowings  thereby improving the Bank's net interest
spread and margin and enhancing future earnings.

         In total,  our return on average assets increased three basis points to
0.57% for the quarter  ended  December 31, 2004 from 0.54% for fiscal 2004 while
return  on  average  equity  increased  0.56% to 6.33%  from  5.77% for the same
comparative  periods. In a stable interest rate environment,  we expect that our
net interest  margin will  continue to  stabilize at the levels  reported in the
latter half of fiscal 2004 and the first  quarter of fiscal 2005.  However,  our
net interest margin may be adversely affected in either a rising or falling rate
environment.  A decrease in interest  rates could  trigger  another wave of loan
refinancing that could result in the margin compression previously  experienced.
Conversely,  notwithstanding  the earning asset yield improvement  during fiscal
2004 which  resulted  from  interest  rates rising from their  historical  lows,
continued  increases  in  interest  rates  from  current  levels  could  trigger
increases in the Bank's cost of  interest-bearing  liabilities that outpace that
of its yield on earning assets causing further net interest margin  compression.
This risk is particularly  noteworthy given the Bank's substantial net growth in
non-maturity  deposits  over the past  three  years.  Like many  banks,  we were
successful  in  growing   deposits  while  interest  rates  decreased  to  their
historical  lows.  However,  our  ability to retain and grow such  deposits at a
reasonable  cost,  while a highly  competitive  marketplace  adjusts its pricing
strategies to an environment of rising interest rates, remains untested.

         Our results of operations may also be affected  significantly  by other
economic  and  competitive  conditions  in our market area as well as changes in
applicable laws, regulations or governmental policies. Furthermore,  because our
lending  activity is  concentrated  in loans  secured by real estate  located in
northern New Jersey,  downturns in the regional economy  encompassing New Jersey
could have a negative impact on our earnings.

                                       12

<PAGE>

Comparison of Financial Condition at December 31, 2004 and September 30, 2004

         Our total assets increased by $6.6 million,  or 1.6%, to $431.5 million
at December  31, 2004 from $424.9  million at September  30, 2004.  The increase
reflected growth in loans receivable, net and securities held to maturity offset
by declines in  interest-bearing  deposits and  securities  available  for sale.
Loans receivable,  net increased by $9.5 million,  or 3.1%, to $318.5 million at
December  31, 2004 from $309.0  million at September  30, 2004.  Our increase in
loans resulted from a high volume of multi-family and commercial real estate and
one-to four-family mortgage loan originations.

         The following  table  compares the  composition  of the Company's  loan
portfolio by loan type as a percentage  of total assets at December 31, 2004 and
September 30, 2004.  Amounts reported exclude  allowance for loan losses and net
deferred origination costs.

                                 December 31, 2004        September 30, 2004
                                 -----------------        ------------------
                                               (Dollars in thousands)
                                           Percent of                Percent of
 Type of Loans                   Amount   Total Assets    Amount    Total Assets
 -------------                   ------     ------        ------    ------------
 Construction                 $   2,964      0.69%     $   3,075        0.72%
 1/1 and 3/3 ARMs                 2,486      0.58%         1,800        0.42%
 3/1 and 5/1 ARMs                94,360     21.87%        89,694       21.11%
 5/5 and 10/10 ARMs              31,594      7.32%        24,619        5.79%
 7/1 and 10/1 ARMs                1,759      0.41%         1,675        0.40%
 15 year fixed or less          110,218     25.54%       112,238       26.41%
 Greater than 15 year fixed      63,258     14.66%        64,702       15.23%
 Home equity lines of credit     11,358      2.63%        10,666        2.51%
 Consumer                           719      0.17%           746        0.18%
 Commercial                         445      0.10%           398        0.09%
                              ---------     -----      ---------       -----

 Total                        $ 319,161     73.97%     $ 309,613       72.86%
                              =========     =====      =========       =====

          Securities classified as available-for-sale decreased $7.6 million, or
8.5%,  to $81.9 million at December 31, 2004 from $89.5 million at September 30,
2004 as the Bank continued to reinvest cash flows from the investment securities
portfolio into loans.  Cash and cash equivalents  decreased by $2.7 million,  or
33.8%,  to $5.3 million at December 31, 2004 from $8.0 million at September  30,
2004 to provide funding for loan growth.  These decreases were partially  offset
by an increase in securities  held to maturity of $6.0 million or 214.3% to $8.8
million at December 31, 2004 from $2.8 million at September 30, 2004.

         The  following   table  compares  the   composition  of  the  Company's
investment securities portfolio by security type as a percentage of total assets
at December 31, 2004 and September 30, 2004. Amounts reported exclude unrealized
gains and losses on the available for sale portfolio.

                                December 31, 2004     September 30, 2004
                                -----------------     ------------------
                                          (Dollars in thousands)
                                       Percent of               Percent of
Type of security               Amount Total Assets     Amount  Total Assets
----------------               ------ ------------     ------  ------------
Fixed rate MBS               $ 15,233        3.53%   $ 15,923      3.75%
ARM MBS                         9,577        2.22%      8,755      2.06%
Fixed rate CMO                 39,391        9.13%     43,982     10.36%
Floating rate CMO               3,268        0.76%        435      0.10%
ARM mutual fund                10,000        2.32%     10,000      2.35%
Fixed rate agency debentures   13,997        3.24%     13,997      3.29%
                             --------       -----    --------     -----

Total                        $ 91,466       21.20%   $ 93,092     21.91%
                             ========       =====    ========     =====

                                       13

<PAGE>

         Assuming no change in interest rates, the estimated average life of the
investment securities  portfolio,  excluding the ARM mutual fund, was 2.52 years
and 2.23 years at  December  31,  2004 and  September  30,  2004,  respectively.
Assuming a  hypothetical  immediate and permanent  increase in interest rates of
300 basis points,  the estimated  average life of the portfolio  extends to 3.28
years and 3.12 years at December 31, 2004 and September 30, 2004, respectively.

         Total deposits increased by $6.2 million, or 1.9%, to $328.9 million at
December 31, 2004 from $322.7  million at September  30, 2004.  The increase was
primarily due to increases in certificates of deposit,  non interest-bearing and
interest-bearing  checking  deposits,  partially  offset by a decline in savings
deposits.  Certificates  of deposit  accounts  increased $4.3 million or 3.6% to
$122.3 million.  Savings deposits  decreased by $1.7 million,  or 1.2% to $141.7
million.  Checking  deposits,  including  demand,  NOW and money market checking
accounts, increased $3.7 million or 6.0% to $65.0 million.

         The following table compares the  composition of the Company's  deposit
portfolio by category as a percentage  of total assets at December 31, 2004 with
that of September 30, 2004.

                            December 31, 2004           September 30, 2004
                            -----------------           ------------------
                                          (Dollars in thousands)
                                         Percent of                 Percent of
Deposit category            Amount      Total Assets   Amount      Total Assets
----------------            ------      ------------   ------      ------------
Money market checking    $  25,974         6.02%      $ 25,834          6.08%
Other checking              38,993         9.03%        35,461          8.34%
Money market savings        42,516         9.85%        44,880         10.56%
Other savings               99,146        22.98%        98,521         23.18%
Certificates of deposit    122,277        28.34%       118,020         27.78%
                         ---------        -----       --------         -----

Total                    $ 328,906        76.22%      $322,716         75.94%
                         =========        =====       ========         =====

         FHLB advances increased $586,000, or 1.0%, to $58.1 million at December
31, 2004 from $57.5 million at September 30, 2004.  The net increase of $586,000
was  comprised  of $1.6  million  drawn on an  overnight  line of  credit  which
replaced   $1.0  million  of  maturing   fixed  rate  advances  and  $14,000  of
amortization on fixed rate amortizing advances.

         The following table compares the composition of the Company's borrowing
portfolio by remaining  term to maturity at December 31, 2004 and  September 30,
2004.  Scheduled  principal  payments on amortizing  borrowings  are reported as
maturities.


                       December 31, 2004              September 30, 2004
                       -----------------              ------------------
                                     (Dollars in thousands)
                                     Percent of                   Percent of
Remaining Term          Amount      Total Assets      Amount     Total Assets
--------------          ------      ------------      ------     ------------
Overnight             $  4,300        1.00%         $  2,700            0.64%
One year or less            58        0.01%            1,057            0.25%
One to two years        10,060        2.33%            8,060            1.90%
Two to three years       7,063        1.64%            8,062            1.90%
Three to four years     12,066        2.80%           12,065            2.84%
Four to five years       7,530        1.74%            7,547            1.77%
More than five years    17,000        3.94%           18,000            4.23%
                        ------        ----            ------            ----

Total                 $ 58,077       13.46%         $ 57,491           13.53%
                      ========       =====         =========           =====

                                       14

<PAGE>

         Equity  decreased  $736,0or 1.8%, to 00,  $38.6 million at December 31,
2004 from $39.3 million at September 30, 2004.  The decrease  reflects a special
dividend paid of $1.2 million during the quarter ended December 31, 2004, offset
by net income of $610,000  for the three months  ended  December  31,  2004.  In
addition,  the amount  reclassified on ESOP shares  increased  $252,000 due to a
change in the fair  value and the  number of shares of common  stock in the ESOP
subject to a contingent repurchase obligation as discussed earlier.

Comparison of Operating Results for the Three Months Ended December 31, 2004 and
December 31, 2003

         General.  Net income for the three months  ended  December 31, 2004 was
$610,000,  an increase of $136,000,  or 28.7% from the same period in 2003.  The
increase  in net  income  resulted  from  an  increase  in net  interest  income
partially offset by a decrease in noninterest income, an increase in noninterest
expense and an increase in the provision for income taxes.

         Interest  Income.  Total interest income increased 10.1% or $451,000 to
$4.9 million for the three months ended December 31, 2004, from $4.5 million for
the same period in 2003. For those same comparative  periods,  the average yield
on interest-earning assets increased 0.02% to 4.74% from 4.72% while the average
balance of  interest-earning  assets  increased  $36.2 million or 9.6% to $413.7
million from $377.5 million.

         Interest income on loans  increased  $447,000 or 12.1%, to $4.1 million
for the three  months  ended  December  31, 2004 from $3.7  million for the same
period in 2003.  This increase was due, in part, to a $44.7 million  increase in
the average balance of loans  receivable to $312.8 million for the quarter ended
December  31,  2004 from $268.1  million for same period in 2003.  The impact on
interest income  attributable to this growth more than offset the 0.21% decrease
in the average yield on loans which  declined to 5.29% from 5.50% for those same
comparative periods. The increase in the average balance of loans receivable was
the result of loan originations exceeding repayments due to strong demand.

         The rise in  interest  income  on loans was  offset  by lower  interest
income on securities,  which decreased  $11,000 to $739,000 for the three months
ended  December 31, 2004 from $750,000 for the same period in 2003. The decrease
was  due,  in  part,  to a $12.6  million  decline  in the  average  balance  of
investment  securities to $93.6 million for the three months ended  December 31,
2004 from $106.2  million  for the same  period in 2003.  The impact on interest
income  attributable  to this  decline  was  offset by a 0.33%  increase  in the
average  yield on  securities  which  grew to 3.16%  from  2.83% for those  same
comparative  periods.  This  increase in yield  primarily  resulted from slowing
prepayments which reduced net premium amortization.

         Further,   interest   income   on   federal   funds   sold  and   other
interest-bearing  deposits  increased  $15,000 to $28,000 for the quarter  ended
December  31, 2004 from $13,000 for the same period in 2003.  This  increase was
due, in part,  to an increase  of $4.1  million in the average  balance of these
assets to $7.2 million for the quarter ended December 31, 2004 from $3.1 million
for the same period in 2003. The impact on interest income  attributable to this
growth was offset by a 0.07%  reduction  in the  average  yield on these  assets
which declined to 1.53% from 1.60% for those same comparative periods.

         Interest  Expense.  Total interest expense increased by $94,000 or 4.5%
to $2.2 million for the three  months ended  December 31, 2004 from $2.1 million
for the same period in 2003.  For those same  comparative  periods,  the average
cost of interest-bearing  liabilities  decreased 0.09% to 2.42% from 2.51% while
the average balance of interest-bearing  liabilities  increased $27.2 million or
8.2% to $360.0 million from $332.8 million.

         Interest expense on deposits increased $116,000 or 8.5% to $1.5 million
for the three  months  ended  December  31, 2004 from $1.4  million for the same
period in 2003.  This increase was due, in part, to a $25.2 million  increase in
the average  balance of  interest  bearing  deposits  to $300.0  million for the
quarter ended December 31, 2004 from $274.8 million for the same period in 2003.
The  components  of this net  increase  for the  comparative  periods  include a
decrease of $853,000 in the average balance of certificates of deposit,  a

                                       15

<PAGE>

$10.8 million  increase in the average  balance of savings  accounts and a $15.3
million increase in the average balance of interest-bearing checking accounts.

         The impact on interest expense  attributable to the net growth in these
average  balances  was  offset  by a  0.09%  reduction  in the  average  cost of
interest-bearing  liabilities which declined to 2.42% for the three months ended
December 31, 2004 from 2.51% for the same period in 2003. The components of this
net  decrease  for the  comparative  periods  includes a 0.22%  increase  in the
average cost of certificates of deposit, a 0.09% decrease in the average cost of
savings  accounts and a 0.03%  increase in the average cost of  interest-bearing
checking accounts.

         Interest expense on FHLB advances decreased $22,000 to $696,000 for the
three months ended  December 31, 2004 from $718,000 for the same period in 2003.
This  decrease  was due, in part,  to a 0.30%  reduction  in the average cost of
advances  which  declined to 4.65% for the three months ended  December 31, 2004
from 4.95% for the same period in 2003.  The impact on expense  attributable  to
this decline in average cost was modestly  offset by a $1.9 million  increase in
the average  balance of advances to $59.9  million from $58.0  million for those
same comparative periods. The lower average cost is primarily due to utilization
of overnight  line of credit  borrowings and new term  borrowings  whose cost is
less than those that matured or were prepaid by the Company during fiscal 2004.

         Net Interest Income. In total, net interest income for the three months
ended  December 31, 2004  increased  by $357,000 or 15.1%,  to $2.7 million from
$2.4 million for the same period in 2003.  For those same  comparative  periods,
our net interest rate spread  increased  0.11% to 2.32% from 2.21% while our net
interest margin increased 0.12% to 2.63% from 2.51%.

         Provision for Loan Losses. In evaluating the level of the allowance for
loan losses, management considers historical loss experience, the types of loans
and the  amount  of loans in the loan  portfolio,  adverse  situations  that may
affect  the  borrower's  ability  to repay,  estimated  value of any  underlying
collateral,  peer group information,  and prevailing economic conditions.  Large
groups of smaller balance  homogeneous  loans,  such as residential real estate,
small commercial real estate,  and home equity and consumer loans, are evaluated
in the aggregate using  historical loss factors and peer group data adjusted for
current economic  conditions.  Large balance and/or more complex loans,  such as
multi-family  and commercial real estate loans,  are evaluated  individually for
impairment.  This evaluation is inherently subjective,  as it requires estimates
that are  susceptible  to  significant  revision,  as more  information  becomes
available or as projected events change.

         Management  assesses the  allowance  for loan losses  quarterly.  While
management uses available  information to recognize losses on loans, future loan
loss  provisions may be necessary  based on changes in economic  conditions.  In
addition, regulatory agencies, as an integral part of their examination process,
periodically  review the  allowance  for loan losses and may require the Bank to
recognize additional provisions based on their judgment of information available
to them at the time of their  examination.  The  allowance for loan losses as of
December 31, 2004 was maintained at a level that represented  management's  best
estimate of losses in the loan  portfolio to the extent they were both  probable
and reasonable to estimate.

         The  provision  for loan losses  totaled  $41,000 for the three  months
ended  December  31, 2004  equaling  the  provision  for the three  months ended
December 31, 2003.  Provisions for specific  nonperforming assets and historical
losses based on net charge-offs were nominal due to a history of low charge-offs
and the  relative  stability  of  nonperforming  asset  balances.  However,  the
application of the Bank's loan loss methodology outlined above results, in part,
in historical and  environmental  loss factors being applied to the  outstanding
balance of homogeneous  groups of loans to estimate probable credit losses.  For
example,  as a result of recent  loan  growth,  a large part of the Bank's  loan
portfolio is considered  "unseasoned,"  meaning the loans were  originated  less
than two years ago.  Generally,  unseasoned loans  demonstrate a greater risk of
credit losses than their seasoned  counterparts.  Moreover, in many cases, these
unseasoned  loans are  obligations  of  borrowers  with whom the Bank has had no
prior  payment  experience.  These  risks are

                                       16

<PAGE>

considered  in the  environmental  factors  used in the  Bank's  loss  provision
calculations as described above. Both historical and environmental  loss factors
are reviewed and updated  quarterly as part of  management's  assessment  of the
allowance for loan losses.

         Using this methodology,  incremental growth in the outstanding  balance
of the loans on which  historical  and  environmental  loss  factors are applied
results in additional loss provisions.  For the quarter ended December 31, 2004,
total   one-to-four   family  mortgages   increased   $439,000  or  0.17%  while
multi-family  and commercial  real estate loans increased $8.5 million or 19.7%,
reflecting  the  majority  of the  Bank's  net  loan  growth  for  the  quarter.
Commercial loans increased $47,000 or 11.8% and consumer loans decreased $27,000
or 3.7%. Home equity loans increased  $686,000 or 6.4% while  construction loans
decreased $106,000 or 3.5%.

         In total,  the allowance for loan losses as a percentage of gross loans
outstanding  increased  0.01% to 0.51% for the quarter  ended  December 31, 2004
from 0.50% for the prior  fiscal year ended  September  30,  2004.  These ratios
reflect  allowance  for loan loss  balances of $1.6  million  and $1.6  million,
respectively.  Furthermore,  nonperforming  loans as a percentage of gross loans
was 0.18% at December 31, 2004 compared to 0.17% at September 30, 2004. As noted
earlier,  the level of the  allowance  is based on  estimates  and the  ultimate
losses may vary from those estimates.

         Noninterest  Income.  Noninterest  income decreased $33,000 to $247,000
for the three  months  ended  December  31, 2004  compared to the same period in
2003.  The decrease was primarily  the result of a decline in other  noninterest
income  totaling  $33,000 due largely to reduced loan  prepayment  penalties and
late charges. For these same comparative periods,  gain on sale of held for sale
loans  also  declined  $6,000  as fewer  longer  term,  fixed  rate  loans  were
originated and sold into the secondary market.  Offsetting these decreases was a
$9,000 increase in income from bank-owned life insurance policies resulting from
higher policy balances held by the Company.

         Noninterest Expense. Noninterest expense increased $127,000, or 6.9% to
$2.0 million for the three months ended  December 31, 2004 from $1.8 million for
the same period in 2003. The increase was primarily a result of higher  expenses
for salaries and benefits and other non-interest expense, offset by decreases in
occupancy and equipment expense, data processing, and advertising.

         Salaries  and  employee  benefits  increased  $87,000  or  7.8% to $1.2
million for the three months ended December 31, 2004 as compared to $1.1 million
for the same  period in 2003.  A large  portion of the  increase  resulted  from
comparatively  higher  management  incentive plan expense in the current quarter
when  compared  with  the same  period  in 2003  when  significant  cutbacks  in
management  incentive  plan  compensation  resulted from  corporate  performance
targets not being achieved. Additionally benefit plan premiums increased $10,000
to $106,000 for the three  months  ended  December 31, 2004 from $96,000 for the
same period in 2003.  Offsetting  these  increases  were decreases of $8,000 for
personnel placement expenses and $9,000 in travel and related expenses.

         Occupancy and equipment  expense  decreased $19,000 to $205,000 for the
three months ended December 31, 2004 as compared to $224,000 for the same period
in 2003, primarily  attributable to a $16,000 decrease in computer  depreciation
expense.  Data  processing  costs also decreased  $12,000 to $146,000 due to the
absence in the current period of non recurring information technology conversion
and  upgrade  expenses  that were  recognized  during  the year ago  comparative
period.

         Other noninterest expenses increased $78,000 for the three months ended
December 31, 2004 as compared to the same period in 2003.  Legal fees  increased
$40,000 to $75,000 for the three months ended December 31, 2004 from $35,000 for
the same period in 2003.  Much of the increase in legal fees is  attributable to
matters  presented to shareholders at the Company's  annual meeting held January
20, 2005. Additionally, professional and consulting fees, including auditing and
accounting  fees,  increased  $37,000  to  $66,000  for the three  months  ended
December  31,  2004 as  compared  to the same  period in 2003 due largely to the
Company's  operation as a public company  including  costs  associated  with the
Sarbanes-Oxley Act of 2002.

                                       17

<PAGE>

         Management  expects benefit costs to increase as the Company implements
the  restricted  stock and stock option plans  approved by  shareholders  at the
Company's  annual  meeting  held on January 20, 2005.  Additionally,  management
expects costs of complying  with the  Sarbanes-Oxley  Act of 2002 to continue to
grow. Furthermore,  we currently intend to expand our branch office network over
the next  several  years,  and  expenses  related to such  expansion  may impact
earnings in future periods.

         Provision  for Income Taxes.  The provision for income taxes  increased
$61,000 for the three  months  ended  December  31, 2004 from the same period in
2003.  The  effective  tax rate was 37.3% and 38.9% for the three  months  ended
December 31, 2004 and 2003,  respectively.  The modest decrease in the effective
tax rate is primarily  attributable to the Company's funding of American Savings
Investment  Corporation in November  2004, a wholly owned New Jersey  investment
subsidiary  formed in August 2004 by American Savings Bank of NJ. The purpose of
this  subsidiary is to invest in stocks,  bonds,  notes and all types of equity,
mortgages, debentures and other investment securities. Interest income from this
subsidiary  is taxed by the State of New Jersey at an effective  rate lower than
the statutory  corporate state income tax rate.  Additionally,  increases in the
Bank's balance of bank-owned life  insurance,  which generates tax exempt income
from growth in the cash  surrender  value of policies,  has also  contributed to
reductions in the Company's effective income tax rate.

Liquidity and Commitments

         We are  required  to have  enough  investments  that  qualify as liquid
assets  in order to  maintain  sufficient  liquidity  to ensure a safe and sound
operation. Liquidity may increase or decrease depending upon the availability of
funds and comparative  yields in investments in relation to the return on loans.
Historically,  we have  maintained  liquid  assets above  levels  believed to be
adequate to meet the  requirements  of normal  operations,  including  potential
deposit  outflows.  Cash flow projections are regularly  reviewed and updated to
assure that adequate liquidity is maintained.

         The  Bank's  short  term  liquidity,   represented  by  cash  and  cash
equivalents, is a product of its operating, investing, and financing activities.
The Bank's primary sources of funds are deposits, amortization, prepayments, and
maturities of outstanding loans and  mortgage-backed  securities,  maturities of
investment securities,  and other short-term investments and funds provided from
operations.  While  scheduled  payments  from  the  amortization  of  loans  and
mortgage-backed  securities  and maturing  investment  securities and short-term
investments are relatively  predictable sources of funds, deposit flows and loan
and securities  prepayments  are greatly  influenced by general  interest rates,
economic conditions, and competition. In addition, the Bank invests excess funds
in short-term  interest-earning  assets, which provide liquidity to meet lending
requirements. The Bank also generates cash through borrowings. The Bank utilizes
Federal Home Loan Bank  advances to leverage its capital base and provide  funds
for its lending and investing activities,  and to enhance its interest rate risk
management.

         Liquidity management is both a daily and long-term function of business
management.  Excess  liquidity is generally  invested in short-term  investments
such as overnight  deposits or U.S. Agency  securities.  On a longer-term basis,
the Bank  maintains a strategy of  investing  in various  loan  products  and in
securities collateralized by loans. The Bank uses its sources of funds primarily
to meet its ongoing  commitments,  to pay maturing  certificates  of deposit and
savings  withdrawals,  to fund loan commitments and to maintain its portfolio of
mortgage-backed  securities and investment securities. At December 31, 2004, the
total  approved  loan  origination  commitments  outstanding  amounted  to $16.1
million.  At the same  date,  unused  lines of credit  were  $12.8  million  and
construction  loans in  process  were $4.4  million.  Management's  policy is to
maintain deposit rates at levels that are competitive with other local financial
institutions.  Based on the  competitive  rates  and on  historical  experience,
management  believes that a significant portion of maturing deposits will remain
with the Bank.  In  addition,  the Bank has the ability at December  31, 2004 to
borrow an additional $48.9 million from the FHLB of New York as a funding source
to meet commitments and for liquidity purposes.

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<PAGE>

Capital

Consistent  with  its  goals  to  operate  a  sound  and  profitable   financial
organization,   the  Bank  actively  seeks  to  maintain  a  "well  capitalized"
institution in accordance with regulatory standards. The Bank's total equity was
$33.6 million at December 31, 2004, or 7.85% of total assets on that date. As of
December 31, 2004, the Bank exceeded all capital  requirements  of the Office of
Thrift  Supervision.  American Savings Bank of NJ's regulatory capital ratios at
December 31, 2004 were as follows: core capital 7.96%; Tier 1 risk-based capital
14.89%; and total risk-based capital 15.59%. The regulatory capital requirements
to be considered well capitalized are 5.0%, 6.0%, and 10.0%, respectively.

Impact of Inflation

         The financial  statements  included in this document have been prepared
in accordance with accounting principles generally accepted in the United States
of America.  These principles  require the measurement of financial position and
operating results in terms of historical dollars, without considering changes in
the relative purchasing power of money over time due to inflation.

         Our primary assets and liabilities are monetary in nature. As a result,
interest  rates  have a more  significant  impact  on our  performance  than the
effects  of  general  levels  of  inflation.  Interest  rates,  however,  do not
necessarily  move in the same  direction or with the same magnitude as the price
of goods and services,  since such prices are affected by inflation. In a period
of rapidly rising interest rates, the liquidity and maturities structures of our
assets and liabilities are critical to the maintenance of acceptable performance
levels.

         The principal effect of inflation,  as distinct from levels of interest
rates, on earnings is in the area of noninterest expense.  Such expense items as
employee  compensation,  employee benefits and occupancy and equipment costs may
be  subject to  increases  as a result of  inflation.  An  additional  effect of
inflation  is the  possible  increase  in the  dollar  value  of the  collateral
securing loans that we have made. We are unable to determine the extent, if any,
to which  properties  securing our loans have appreciated in dollar value due to
inflation.

Recent Regulatory and Accounting Developments

         FAS 123, Revised,  requires all public companies to record compensation
cost for stock options provided to employees in return for employee service. The
cost is measured at the fair value of the options when granted, and this cost is
expensed over the employee service period,  which is normally the vesting period
of the options.  This will apply to awards  granted or modified  after the first
quarter or year beginning after December 15, 2005.  Compensation  cost will also
be recorded  for prior option  grants that vest after the date of adoption.  The
effect on results of operations will depend on the level of future option grants
and the  calculation  of the fair value of the  options  granted at such  future
date,  as well as the  vesting  periods  provided,  and so cannot  currently  be
predicted.  Management  is  evaluating  the future  cost of  options  granted on
January 20, 2005, subject to regulatory approval, that vest after adoption date.
However,  there will be no  significant  effect on  financial  position as total
equity will not change.

ITEM 3.  CONTROLS AND PROCEDURES

(a)  Evaluation  of  disclosure  controls and  procedures:  An evaluation of the
     Company's  disclosure  controls  and  procedures  (as  defined  in  Section
     13(a)-15(e) of the Securities  Exchange Act of 1934 ("the Act") was carried
     out under the supervision and with the participation of the Company's Chief
     Executive Officer, Chief Financial Officer and several other members of the
     Company's senior management.  Based on such evaluation, the Company's Chief
     Executive  Officer and Chief Financial Officer concluded that the Company's
     disclosure  controls and  procedures  in effect as of the end of the period
     covered  by this  quarterly  report  are  effective  in  ensuring  that the
     information required

                                       19

<PAGE>

     to be disclosed by the Company in the reports it files or submits under the
     Act  is (i)  accumulated  and  communicated  to  the  Company's  management
     (including the Chief Executive  Officer and Chief  Financial  Officer) in a
     timely manner, and (ii) recorded, processed, summarized and reported within
     the time periods specified in the Securities and Exchange  Commission rules
     and forms.

(b)  Changes in internal controls: In the quarter ended December 31, 2004, there
     was no change in the Company's  internal  control over financial  reporting
     that has materially affected, or is reasonably likely to materially affect,
     the Company's internal control over financial reporting.

                                       20

<PAGE>

PART II - - OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

At December 31, 2004, the Company and its subsidiaries  were not involved in any
pending  proceedings other than the legal proceedings  occurring in the ordinary
course of business.  Such legal  proceedings  in the  aggregate  are believed by
management to be immaterial to the Company's  financial condition and results of
operations.

ITEM 2.   CHANGES IN SECURITIES AND ISSUER PURCHASES OF EQUITY SECURITIES

                  None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

                  None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

                  None

ITEM 5.  OTHER INFORMATION

                  None

ITEM 6.  EXHIBITS

(a)      Exhibits

          31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14a
               and 15d-14a.
          31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14a
               and 15d-14a.

          32   Certification  of Chief  Executive  Officer  and Chief  Financial
               Officer  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
               2002.


                                       21
<PAGE>

                                   SIGNATURES


In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                               ASB Holding Company
                                   (Registrant)


Date: February 14, 2005        /s/Joseph Kliminski
                               ------------------------------------------------
                               Joseph Kliminski
                               President and Chief Executive Officer


Date: February 14, 2005        /s/Eric B. Heyer
                               -------------------------------------------------
                               Eric B. Heyer
                               Senior Vice President and Chief Financial Officer



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