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 June 30, 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  August  13,  2004,  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>                                                                                 <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                                                           21


PART II - OTHER INFORMATION

     Item 1.    Legal Proceedings                                                                 22
     Item 2.    Changes in Securities and Small Business Issuer Purchases of Equity Securities    22
     Item 3.    Defaults Upon Senior Securities                                                   22
     Item 4.    Submission of Matters to a Vote of Securities Holders                             22
     Item 5.    Other Information                                                                 22
     Item 6.    Exhibits and Reports                                                              22


FORM 10-QSB SIGNATURE PAGE                                                                        23

CERTIFICATIONS
</TABLE>

                                        2

<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>

                                                                          June 30,  September 30,
                                                                            2004         2003
                                                                            ----         ----
<S>                                                                   <C>          <C>
ASSETS
Cash and cash equivalents
     Cash and due from banks                                            $   2,149    $   1,206
     Interest-bearing deposits                                              3,945       31,259
     Federal funds sold                                                         -        5,900
                                                                        ---------    ---------
         Total cash and cash equivalents                                    6,094       38,365

Securities available-for-sale                                              98,768      107,391
Securities held-to-maturity (fair value: June 30, 2004 -
  $2,982; September 30, 2003 - $2,864)                                      2,998        2,839
Loans, net                                                                284,780      262,844
Loans held for sale                                                             -          500
Premises and equipment                                                      3,950        3,939
Federal Home Loan Bank stock, at cost                                       3,215        3,150
Cash surrender value of life insurance                                      5,184        5,028
Accrued interest receivable                                                 1,335        1,255
Other real estate owned                                                       209            -
Other assets                                                                2,211        1,755
                                                                        ---------    ---------
     Total assets                                                       $ 408,744    $ 427,066
                                                                        =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
     Deposits
         Noninterest-bearing                                            $  23,034    $  21,676
         Interest-bearing                                                 277,961      271,150
                                                                        ---------    ---------
              Total deposits                                              300,995      292,826

     Stock subscriptions received                                               -       52,137
     Advance payments by borrowers for taxes and insurance                  2,292        2,079
     Federal Home Loan Bank advances                                       63,900       55,000
     Accrued interest payable and other liabilities                         3,651        2,685
     Common stock in ESOP subject to contingent repurchase obligation          50            -

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            -
     Additional paid-in capital                                            15,670          100
     Unearned ESOP shares                                                  (1,233)           -
     Retained earnings                                                     24,241       22,644
     Accumulated other comprehensive loss                                  (1,327)        (405)
     Amount reclassified on ESOP shares                                       (50)           -
                                                                        ---------    ---------
         Total stockholders' equity                                        37,856       22,339
                                                                        ---------    ---------
              Total liabilities and stockholders' equity                $ 408,744    $ 427,066
                                                                        =========    =========
</TABLE>
      See accompanying notes to unaudited consolidated financial statements

                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                  Nine Months                Three Months
                                                                Ended June 30,              Ended June 30,
                                                                --------------              --------------
                                                              2004          2003           2004          2003
                                                              ----          ----           ----          ----
<S>                                                      <C>           <C>           <C>           <C>
Interest and dividend income
    Loan, including fees                                   $   11,098    $   10,773    $    3,693    $    3,645
    Securities                                                  2,350         2,301           762           719
    Federal funds sold and other                                   41           182            16            49
                                                           ----------    ----------    ----------    ----------
       Total interest income                                   13,489        13,256         4,471         4,413

Interest expense
    NOW and money market                                          158           238            50            60
    Savings                                                     1,557         1,703           523           571
    Certificates of deposit                                     2,158         2,651           699           825
    Federal Home Loan Bank advances                             2,117         2,099           689           730
                                                           ----------    ----------    ----------    ----------
       Total interest expense                                   5,990         6,691         1,961         2,186
                                                           ----------    ----------    ----------    ----------

Net interest income                                             7,499         6,565         2,510         2,227

Provision for loan losses                                          96           171            42            41
                                                           ----------    ----------    ----------    ----------

Net interest income after provision for loan losses             7,403         6,394         2,468         2,186

Noninterest income
    Deposit service fees and charges                              519           336           170           109
    Income from cash surrender value of
     life insurance                                               156           177            41            59
    Gain on sale of loans                                          22            84             1            84
    Loss on sales of securities available-for-sale                  -          (188)            -             -
    Other                                                         111            53            34            35
                                                           ----------    ----------    ----------    ----------
       Total noninterest income                                   808           462           246           287

Noninterest expense
    Salaries and employee benefits                              3,542         3,397         1,199         1,080
    Occupancy and equipment                                       648           596           207           205
    Data processing                                               500           396           165           132
    Advertising                                                   174           142            45            39
    Federal deposit insurance                                      35            32            11            11
    Other                                                         700           507           203           207
                                                           ----------    ----------    ----------    ----------
       Total noninterest expense                                5,599         5,070         1,830         1,674
                                                           ----------    ----------    ----------    ----------

Income before provision for income taxes                        2,612         1,786           884           799

Provision for income taxes                                      1,015           653           347           298
                                                           ----------    ----------    ----------    ----------

Net income                                                 $    1,597    $    1,133    $      537    $      501
                                                           ==========    ==========    ==========    ==========

Comprehensive income (loss)                                $      675    $      711    $     (896)   $      408
                                                           ==========    ==========    ==========    ==========

Earnings per share:

    Basic and diluted                                      $     0.29    $     0.29    $     0.10    $     0.13
                                                           ==========    ==========    ==========    ==========
Weighted average shares                                     5,426,230     3,888,150     5,429,542     3,888,150

</TABLE>
      See accompanying notes to unaudited consolidated financial statements

                                       4
<PAGE>

ASB Holding Company
Statements of Stockholders' Equity
Nine months ended June 30, 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>
Balance at
  September 30, 2003    $       -    $      100   $        -   $   22,644   $     (405)  $        -  $   22,339

Issuance of common
  stock, net of issuance
  costs                       555        15,506       (1,333)           -            -            -      14,728

ESOP shares earned              -            64          100            -            -            -         164

Reclassification of
  common stock in ESOP
  to contingent repurchase
  obligation                    -             -            -            -            -          (50)        (50)

Comprehensive income
    Net income                  -             -            -        1,597            -            -       1,597
    Change in unrealized
      gain on securities
      available-for-sale,
      net of taxes              -             -            -            -         (922)           -        (922)
                                                                                                     ----------
       Total
         comprehensive
         income                                                                                                  $    675
                        ---------    ----------   ----------   ----------   ----------   ----------  ----------  ========
Balance at
  June 30, 2004         $     555    $   15,670   $   (1,233)  $   24,241   $   (1,327)  $      (50) $   37,856
                        =========    ==========   ==========   ==========   ==========   ==========  ==========
</TABLE>

      See accompanying notes to unaudited consolidated financial statements

                                        5

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                           Nine Months Ended
                                                                                               June 30,
                                                                                     --------------------------
                                                                                            2004           2003
                                                                                            ----           ----
<S>                                                                                <C>            <C>
Cash flows from operating activities
    Net income                                                                       $     1,597    $     1,133
    Adjustments to reconcile net income to net cash
      provided by operating activities
       Depreciation and amortization                                                         319            272
       Net amortization of premiums and discounts                                            253            773
       Losses on sales of securities available-for-sale                                        -            188
       ESOP compensation expense                                                             164              -
       Provision for loan losses                                                              96            171
       Increase in cash surrender value of life insurance                                   (156)          (177)
       Gain on sale of other real estate owned                                                 -             (3)
       Gain on sale of loans                                                                 (22)           (84)
       Proceeds from sales of loans                                                        3,809          2,946
       Net change in loans held for sale                                                     500         (5,173)
       Change in accrued interest receivable                                                 (80)            29
       Change in other assets                                                                194           (521)
       Change in deferred income taxes                                                       (37)            (7)
       Increase in other liabilities                                                         966            180
                                                                                     -----------    -----------
              Net cash from operating activities                                           7,603           (273)

Cash flows from investing activities
    Net increase in loans receivable                                                     (26,028)       (38,078)
    Purchases of securities held-to-maturity                                                (922)             -
    Principal paydowns on securities held-to-maturity                                        752          3,724
    Purchases of securities available-for-sale                                           (21,459)       (81,817)
    Sales of securities available-for-sale                                                     -         21,026
    Calls of securities available-for-sale                                                 8,560              -
    Principal paydowns on securities available-for-sale                                   19,745         55,090
    Purchase of Federal Home Loan Bank stock                                              (1,513)        (1,035)
    Redemption of Federal Home Loan Bank stock                                             1,448            435
    Purchase of bank-owned life insurance                                                      -           (324)
    Purchase of premises and equipment                                                      (330)          (416)
    Proceeds from sale of other real estate owned                                              -             63
                                                                                     -----------    -----------
       Net cash from investing activities                                                (19,747)       (41,332)

Cash from financing activities
    Net increase in deposits                                                               8,169         20,132
    Net change in advance payments by borrowers for taxes and insurance                      213            276
    Repayment of Federal Home Loan Bank of New York advances                              (3,000)        (3,000)
    Federal Home Loan Bank of New York advances                                            1,800         15,000
    Net change in Federal Home Loan Bank of New York OLOC                                 10,100              -
    Refund of stock subscriptions received                                               (52,137)             -
    Net proceeds from stock issuance                                                      14,728              -
                                                                                     -----------    -----------
       Net cash from financing activities                                                (20,127)        32,408
                                                                                     -----------    -----------

Net change in cash and cash equivalents                                                  (32,271)        (9,197)

Cash and cash equivalents at beginning of period                                          38,365         17,330
                                                                                     -----------    -----------

Cash and cash equivalents at end of period                                           $     6,094    $     8,133
                                                                                     ===========    ===========
</TABLE>
      See accompanying notes to unaudited consolidated financial statements

                                       6
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                           Nine Months Ended
                                                                                               June 30,
                                                                                     --------------------------
                                                                                          2004           2003
                                                                                     -----------    -----------
<S>                                                                                <C>            <C>
Supplemental cash flow information:
    Cash paid during the period for
       Interest                                                                      $     6,009    $     6,651
       Income taxes, net of refunds                                                          991            474

Supplemental disclosures of non-cash investing transactions:
    Transfer of loans to other real estate owned                                             209             60
    Due to broker                                                                              -          5,070

</TABLE>

      See accompanying notes to unaudited consolidated financial statements

                                       7
<PAGE>

NOTES TO 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 June 30, 2004 and September 30, 2003 and for the
three-  and  nine-month  periods  ended  June  30,  2004 and  2003.  Significant
intercompany accounts and transactions have been eliminated in consolidation.

         The only  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, 2003 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, 2004. 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 and nine months ended June 30,
2004 and 2003 are not  necessarily  indicative of the results to be expected for
the full year.

                                       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  conversion  expenses  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.

         Accordingly, 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 "well 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.  Earnings per
share for prior  periods  have been  restated to reflect the  conversion  of 100
shares of Bank stock into 3,888,150  shares of Company stock  representing  100%
ownership of the Bank prior to the minority stock offering.


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 June 30, 2004, the ESOP held 133,000 shares of the Company's  common
stock  and  3,333  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 Co.  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 June
30, 2004, this contingent  repurchase obligation reduced stockholders' equity by
$50,000.

                                      9

<PAGE>

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.

           Declining  interest rates in the two years preceding our prior fiscal
year ending 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  current  fiscal year, the general level of market
interest  rates has increased  from the  historical  lows of the prior year. One
initial impact of such  increases has been to slow the pace of loan  refinancing
thereby reducing the rate at which the Company's earning assets prepay.  Slowing
prepayments  have,  in  turn,  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  has
lagged  the  upward  movement  in  current  market  interest  rates  and,  after
decreasing  for thirteen  consecutive  quarters,  was  unchanged for the quarter
ended June 30,  2004 as  compared to the  quarter  ended  March 31,  2004.  As a
result,  the  Company  is  reporting  a 43 basis  point  improvement  in its net
interest

                                       10
<PAGE>

margin to 2.60% for the three  months  ended  June 30,  2004 from  2.17% for the
three months ended September 30, 2003.

         Our results of operations also depend on our provision for loan losses,
noninterest income, and noninterest  expense.  Non-performing  loans continue to
shrink  as a  percentage  of  total  assets.  Consequently,  current  year  loss
provisions  result from the overall growth in portfolio loans with no additional
provisions being required for specifically impaired 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,  and loan  related  fees and  charges.  As a  percentage  of average
assets,  annualized  noninterest  income has ranged  from 0.25% to 0.29% for the
first three  quarters of the current fiscal year and averaged 0.27% for the nine
month period ended June 30, 2004.  Excluding  gains and losses on sales of loans
and  securities,  non-interest  income has increased in the current  fiscal year
from both a dollar and  percentage  of assets basis when compared with the prior
fiscal year. Much of this increase results from  comparatively  higher levels of
recurring  deposit  service  fees and  charges.  A lesser  portion  results from
comparatively higher loan prepayment fees which are expected to diminish as such
prepayments continue to slow.

         The 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.  As a
percentage of average  assets,  annualized  noninterest  expense has ranged from
1.84% to 1.97% for the first  three  quarters  of the  current  fiscal  year and
averaged 1.89% for the nine month period ended June 30, 2004. On a percentage of
assets basis, this level of noninterest expense is consistent with that reported
in the prior fiscal year. However,  the dollar amount of noninterest expense has
increased  significantly  during the current  fiscal year when compared with the
Company's  2003  fiscal  year.  A portion of these  increases  results  from the
Company's operation as a public entity and include  comparatively  higher legal,
accounting and compliance costs.  Additionally,  the Company is recording higher
employee compensation and benefit expense than it had in the prior year. Much of
this increase is attributable to the  implementation of an ESOP benefit that did
not exist prior to the Company's initial public offering.  Finally, increases in
occupancy  and  equipment  expenses  and data  processing  expenses  represent a
combination of  non-recurring  charges  associated with  information  technology
infrastructure upgrades as well as additional,  ongoing costs of enhancements to
core processing  systems and other information  technology  support and security
services.

         In total, our return on average assets has increased 26 basis points to
0.54% for the three  months  ended June 30, 2004 from 0.28% for the three months
ended September 30, 2003. In a stable interest rate environment,  we expect that
our net interest  margin will continue to stabilize at the levels  reported over
the past three  quarters.  However,  our net  interest  margin may be at risk of
further declines 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  experienced  during the latter half of the Company's
2003 fiscal year.  Conversely,  notwithstanding  the recent  earning asset yield
improvement  resulting from interest rates rising from their  historical lows, a
sharp upturn in interest  rates from current  levels could trigger  increases in
the  Company's  cost of interest  bearing  liabilities  that outpace that of its
yield on earning assets  resulting in further net interest  margin  compression.
This risk is particularly  noteworthy given the Bank's substantial net growth in
non-maturity  deposits over the past two years. Like many banks, the Company was
successful  in  growing   deposits  while  interest  rates  decreased  to  their
historical lows. However, the Company's ability to

                                       11

<PAGE>

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.

Comparison of Financial Condition at June 30, 2004 and September 30, 2003

         Our total assets decreased by $18.3 million, or 4.3%, to $408.7 million
at June 30,  2004 from  $427.1  million at  September  30,  2003.  The  decrease
reflected refunds of stock  oversubscriptions  in connection with the October 3,
2003 closing of the Company's stock offering.  Loans receivable increased by $22
million,  or 8.4%,  to $284.8  million at June 30, 2004 from  $262.8  million at
September  30, 2003.  Our  increase in loans  resulted  from a higher  volume of
one-to  four-family  mortgage loan originations  reflecting  increased demand as
borrowers sought to take advantage of continued low market interest rates.

         The following  table  compares the  composition  of the Company's  loan
portfolio  by loan type as a  percentage  of total  assets at June 30, 2004 with
that of September 30, 2003.  Amounts reported exclude  allowance for loan losses
and net deferred origination costs.

                                    June 30, 2004            September 30, 2003
                                    -------------            ------------------
                                              (Dollars in thousands)
                                            Percent of                Percent of
                                               Total                      Total
Type of Loans                      Amount     Assets         Amount      Assets
-------------                      ------     ------         ------      ------
Construction                     $    354      0.09%        $   450       0.11%
1/1 and 3/3 ARMs                    1,668      0.41%          1,383       0.32%
3/1 and 5/1 ARMs                   69,842     17.09%         46,356      10.85%
5/5 and 10/10 ARMs                 20,365      4.98%         16,892       3.96%
7/1 and 10/1 ARMs                   1,681      0.41%          2,462       0.58%
15 year fixed or less             112,868     27.61%        108,659      25.44%
Greater than 15 year fixed         67,303     16.46%         76,005      17.80%
Home equity lines of credit         9,479      2.32%          8,894       2.08%
Consumer                              735      0.18%            848       0.20%
Commercial                          1,047      0.26%          1,470       0.34%
                                ---------     -----       ---------      -----
Total                           $ 285,342     69.81%      $ 263,419      61.68%
                                =========     =====       =========      =====

          Securities classified as available-for-sale decreased $8.6 million, or
8.0%,  to $98.8  million at June 30, 2004 from $107.4  million at September  30,
2003 as the  Company  continued  to  reinvest  cash  flows  from its  investment
securities  portfolio into loans.  Cash and cash equivalents  decreased by $32.3
million,  or 84.1%,  to $6.1  million  at June 30,  2004 from  $38.4  million at
September 30, 2003 to provide funding for refunds of stock oversubscriptions.

                                       12
<PAGE>

         The  following   table  compares  the   composition  of  the  Company's
investment securities portfolio by security type as a percentage of total assets
at June 30, 2004 with that of  September  30,  2003.  Amounts  reported  exclude
unrealized gains and losses on the available for sale portfolio.

                                    June 30, 2004            September 30, 2003
                                    -------------            ------------------
                                              (Dollars in thousands)
                                            Percent of                Percent of
                                               Total                     Total
Type of Securities                Amount      Assets        Amount      Assets
------------------                ------      ------        ------      ------
Fixed rate MBS                  $ 16,698       4.09%      $ 15,401       3.61%
ARM MBS                            9,354       2.29%         4,893       1.15%
Fixed rate CMO                    48,449      11.85%        66,373      15.54%
Floating rate CMO                    490       0.12%           699       0.16%
ARM mutual fund                   10,000       2.45%        10,000       2.34%
Fixed rate agency debentures      18,985       4.64%        13,538       3.17%
                                --------      -----       --------      -----
Total                           $103,976      25.44%      $110,904      25.97%
                                ========      =====       ========      =====

         Assuming no change in interest rates, the estimated average life of the
investment securities  portfolio,  excluding the ARM mutual fund, was 3.13 years
and 2.37 years at June 30, 2004 and September 30, 2003, respectively.

         Total deposits increased by $8.2 million, or 2.8%, to $301.0 million at
June 30, 2004 from $292.8  million at  September  30,  2003.  The  increase  was
primarily due to an increase in savings deposits,  partially offset by a decline
in certificates of deposit. Savings accounts increased $15.1 million or 11.8% to
$142.8 million.  Certificates of deposit  decreased by $7.8 million,  or 6.4% to
$113.9  million.  Checking  deposits,  including  demand,  NOW and money  market
checking accounts,  increased $892,000 or 2.1% to $44.3 million. The increase in
savings  accounts is primarily due to a new statement  savings  account  product
which became available during the fourth quarter of 2003.

         The following table compares the  composition of the Company's  deposit
portfolio by category as a percentage of total assets at June 30, 2004 with that
of September 30, 2003.

                                    June 30, 2004            September 30, 2003
                                    -------------            ------------------
                                              (Dollars in thousands)
                                            Percent of                Percent of
                                               Total                     Total
Deposit category                  Amount      Assets        Amount      Assets
----------------                  ------      ------        ------      ------
Money market checking             $7,206       1.76%      $ 10,442        2.45%
Other checking                    37,083       9.07%        32,956        7.72%
Money market savings              49,518      12.11%        55,498       13.00%
Other savings                     93,314      22.83%        72,222       16.91%
Certificates of deposit          113,874      27.87%       121,708       28.49%
                                --------      -----       --------       -----
Total                           $300,995      73.64%      $292,826       68.57%
                                ========      =====       ========       =====

         FHLB advances  increased  $8.9 million,  or 16.2%,  to $63.9 million at
June 30, 2004 from $55.0 million at September 30, 2003. The net increase of $8.9
million was  comprised of $10.1  million  drawn on an  overnight  line of credit
which replaced $3.0 million of maturing fixed rate advances and funded portfolio
loan  originations  and  a  shorter  duration   investment   security  purchase.
Additionally,  a $1.8 million  amortizing advance was drawn to fund a commercial
real estate loan on an apartment building in a moderate-income  tract within the
Bank's CRA assessment area.

                                       13
<PAGE>
         The following table compares the composition of the Company's borrowing
portfolio by remaining  term to maturity as a percentage of total assets at June
30,  2004 with that of  September  30,  2003.  Scheduled  principal  payments on
amortizing borrowings are reported as maturities.

                                    June 30, 2004            September 30, 2003
                                    -------------            ------------------
                                              (Dollars in thousands)
                                            Percent of                Percent of
                                               Total                     Total
Remaining Term                    Amount      Assets        Amount      Assets
--------------                    ------      ------        ------      ------
Overnight                        $10,100       2.47%       $     -          -%
One year or less                   2,051       0.50%         4,000       0.94%
One to two years                   9,059       2.22%         2,000       0.47%
Two to three years                 4,062       0.99%         9,000       2.11%
Three to four years                7,064       1.73%         4,000       0.94%
Four to five years                11,564       2.83%        12,000       2.81%
More than five years              20,000       4.89%        24,000       5.61%
                                 -------      -----        -------      -----
Total                            $63,900      15.63%       $55,000      12.88%
                                 =======      =====        =======      =====

         Equity increased $15.5 million,  or 69.5%, to $37.9 million at June 30,
2004 from $22.3  million at  September  30,  2003.  The  increase  reflects  the
completion of the minority  stock  offering  whereby the Company sold  1,666,350
shares of common stock at $10 per share and received  proceeds of $16.1 million,
net of conversion  costs.  Further,  the Company  recognized  net income of $1.6
million  for the nine  months  ended June 30,  2004,  in  addition to a $922,000
increase in accumulated other comprehensive loss for unrealized after-tax losses
on securities available-for-sale.

Comparison  of  Operating  Results for the Three  Months Ended June 30, 2004 and
June 30, 2003

         General.  Net  income  for the three  months  ended  June 30,  2004 was
$537,000,  an  increase of  $36,000,  or 7.2% 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  and  increases  in
noninterest expense and provision for income taxes.

         Interest  Income.  Total interest  income  increased 1.3% or $59,000 to
$4.5 million for the three months ended June 30, 2004, from $4.4 million for the
same period in 2003. The average yield on interest  earning assets  decreased 36
basis  points from 4.99% for the three  months  ended June 30, 2003 to 4.63% for
the comparative period this year.

         Interest income on loans increased $48,000 or 1.3%, to $3.7 million for
the three  months  ended June 30, 2004 from $3.6  million for the same period in
2003. The average balance of loans receivable  increased $31.3 million to $277.1
million for the three  months  ended June 30,  2004,  which more than offset the
decrease in the  average  yield from 5.93% for the three  months  ended June 30,
2003 to 5.33% for the same period in 2004.  The increase in the average  balance
of loans receivable was the result of loan originations exceeding repayments due
to strong demand resulting from generally lower interest rates.

         The  rise in  interest  income  on loans  was  supplemented  by  higher
interest income on securities, which increased $43,000 to $762,000 for the three
months ended June 30, 2004 from the same period in 2003. The increase was due to
an 8 basis point increase in the average yield on securities  from 2.88% for the
three  months  ended June 30,  2003 to 2.96% for the same  period in 2004.  This
primarily  resulted  from  declining  prepayments  which  resulted  in lower net
premium  amortization  and therefore  higher  yields.  In addition,  the average
balance of securities increased $3.1 million or 3.2%, from $99.8 million for the
three  months  ended June 30, 2003 to $102.9  million for the three months ended
June 30, 2004.

         Further,   interest   income   on   federal   funds   sold  and   other
interest-bearing  deposits  declined $33,000 to $16,000 due to a decrease in the
average balance of $2.2 million to $6.2 million for the 2004 period. The average
yield also declined 129 basis points, from 2.35% for the three months ended June
30, 2003 to 1.06% for the same three months in 2004.

         Interest Expense. Total interest expense decreased by $225,000 or 10.3%
to $2.0  million for the three  months ended June 30, 2004 from $2.2 million for
the same  period in 2003.  The  average  cost of  interest  bearing  liabilities
decreased  41 basis  points from 2.76% for the three months ended June 30, 2003,
to 2.35% for the same  period in 2004.  This  decline  in the  average  cost was
offset by an  increase  of $16.7  million in the  average  balance  of  interest
bearing  liabilities for the three months ended June 30, 2004, to $333.5 million
from $316.8 million for the same three months in 2003.

                                       14
<PAGE>

         The  average  balance of  interest  bearing  deposits  increased  $15.6
million to $275.1  million for the three  months ended June 30, 2004 as compared
to the same period last year.  The average  balance of  certificates  of deposit
decreased  $6.6  million to $114.5  million for the three  months ended June 30,
2004 from $121.1 million from the same period in 2003. In addition,  the average
cost of  certificates  of  deposit  decreased  from  2.72% to 2.44% for the 2004
comparative  period.  The average cost of savings accounts  decreased from 1.95%
for the three  months  ended June 30, 2003 to 1.51% for the same period in 2004,
which also more than offset the increase of $21.7 million in the average balance
of savings accounts for the 2004 period.

         Interest  expense on FHLB advances  decreased  $41,000 to $689,000 as a
result of a decrease  in the average  cost of advances  from 5.10% for the three
months  ended June 30, 2003 to 4.72% for the same  period in 2004,  offset by an
increase in the average  balance  from $57.3  million for the three months ended
June 30, 2003 to $58.4  million for the same period in 2004.  The lower  average
cost is primarily  due to  utilization  of overnight  line of credit  borrowings
whose  current  cost is less than that of the  Company's  laddered  portfolio of
fixed rate advances.

         Net  Interest  Income.  Net  interest  income  increased by $283,000 or
12.7%,  to $2.5  million  for the three  months  ended  June 30,  2004 from $2.2
million for the same period in 2003.  The net interest  rate spread  increased 6
basis  points to 2.28% for the three  months  ended June 30, 2004 from 2.22% for
the same period in 2003.  The net  interest  margin  increased 8 basis points to
2.60% for the three months ended June 30, 2004  compared with 2.52% for the same
period in 2003.

         Provision  for Loan Losses.  Provisions  for loan losses are charged to
operations at a level required to reflect probable incurred credit losses in the
loan  portfolio.  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.

         The provision for loan losses increased to $42,000 for the three months
ended June 30, 2004 compared to $41,000 for the same period in 2003.  Provisions
for  nonperforming  assets and historical  losses based on net charge-offs  were
nominal  due  to  a  history  of  low  charge-offs  and  relative  stability  of
nonperforming  assets.   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 the quarter ended June 30, 2004,
total one-to-four  family mortgages  increased $7.7 million as compared to March
31, 2004,  representing  an increase of 3.4% and  reflecting the majority of the
Bank's loan growth. Multi-family and commercial real estate loans increased $2.8
million or 7.8% and commercial loans decreased  $64,000 or 5.8%.  Consumer loans
increased $29,000 or 4.1% and home equity loans increased $390,000 or 4.3% while
construction loans decreased $239,000 or 40.5%.

         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  considered  in the  environmental
factors used in the Bank's loss provision calculations as described above.

         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.  The allowance for loan losses as a percentage of
gross loans outstanding  remained stable at 0.52% for June 30, 2004 and June 30,
2003

                                       15
<PAGE>

reflecting   balances  of  $1.47  million  and  $1.29   million,   respectively.
Nonperforming  loans as a  percentage  of gross loans was 0.07% at June 30, 2004
compared  to 0.21% at June 30,  2003.  The  level of the  allowance  is based on
estimates and the ultimate losses may vary from those estimates.

         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
June 30,  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.

         Noninterest  Income.  Noninterest  income decreased $41,000 to $246,000
for the three  months  ended June 30, 2004  compared to the same period in 2003.
The decrease was primarily the result of an $83,000  decline in the gain on sale
of held for sale loans plus a decline of $18,000 in income  from cash  surrender
value of life insurance  reflecting lower market interest rates. Service charges
on deposit accounts  increased by $61,000 primarily due to the implementation of
new deposit services.

         Noninterest Expense. Noninterest expense increased $156,000, or 9.3% to
$1.8  million for the three months ended June 30, 2004 from $1.7 million for the
three months ended June 30, 2003.  The increase was primarily a result of higher
expenses  for salaries and  benefits,  occupancy  and  equipment  expense,  data
processing, and advertising offset by a decrease in other noninterest expenses.

         Salaries  and  employee  benefits  increased  $119,000  or 11% to  $1.2
million for the three months ended June 30, 2004 as compared to $1.1 million for
the same period in 2003.  A large  portion of the increase was due to $51,000 in
ESOP  expense  arising  from the  implementation  of the plan during the current
fiscal year. Additionally, salaries and wages including bonus and payroll taxes,
increased  $68,000 for the three  months  ended June 30, 2004 as compared to the
same period in 2003.

         Occupancy and equipment  expense  increased  $2,000 to $207,000 for the
three  months ended June 30, 2004 as compared to $205,000 for the same period in
2003.  Data processing  costs also increased  $33,000 mainly due to increases in
service  bureau  core  processing  resulting  from  growth in  deposit  and loan
accounts as well as  non-recurring  costs associated with  comprehensive  system
upgrades.

         Other noninterest  expenses decreased $4,000 for the three months ended
June 30,  2004 as  compared  to the same three  months  last year.  General  and
administrative  expenses  decreased  $13,000  offset by an increase of $5,000 in
regulatory assessments.  Net loan processing charges increased $6,000, primarily
due to reduced recognition of loan modification fees offsetting related costs as
a result of the  deferral of loan  modification  fees and  related  costs in the
current period.

         Management  expects increased expenses in the future resulting from the
ongoing  expenses  associated  with the employee  stock  ownership  plan and the
potential stock benefit plans, as well as increased costs  associated with being
a public company such as periodic reporting, annual meeting materials, retention
of a transfer agent, and professional fees. 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
$49,000 for the three  months  ended June 30, 2004 from the same period in 2003.
The  effective  tax rate was 39.3% and 37.3% for the three months ended June 30,
2004 and 2003.  The  slight  increase  in the  effective  tax rate is  primarily
reflective of an increase in  nondeductible  expenses  primarily  related to the
ESOP.

                                       16

<PAGE>

Comparison of Operating Results for the Nine Months Ended June 30, 2004 and June
30, 2003

         General.  Net  income  for the nine  months  ended  June  30,  2004 was
$1,597,000,  an increase of $464,000,  or 41% from the same period in 2003.  The
increase in net income  resulted from an increase in net interest income as well
as  an  increase  in  noninterest  income,  partially  offset  by  increases  in
noninterest expense and the provision for income taxes.

         Interest  Income.  Total interest  income  increased  $233,000 to $13.5
million for the nine months ended June 30, 2004, from $13.3 million for the same
period in 2003. The average yield of interest  earning assets decreased 43 basis
points  from  5.12% for the nine  months  ended  June 30,  2003 to 4.69% for the
comparable period this year.

         Interest income on loans increased $325,000 or 3%, to $11.1 million for
the nine months ended June 30, 2004 from $10.8 million for the 2003 period.  The
average  balance of loans  receivable  increased $39.5 million to $272.8 million
for the nine months ended June 30, 2004,  which more than offset the decrease in
the average yield on loans  receivable  from 6.16% to 5.42% for the same year to
year  comparative  periods.  The  increase  in  the  average  balance  of  loans
receivable  was the  result of loan  originations  exceeding  repayments  due to
strong demand resulting from generally lower interest rates.

         The  increase in interest  income on loans was offset by  decreases  in
interest income on federal funds sold and other interest-bearing deposits, which
declined  $141,000 to $41,000  for the nine months  ended June 30, 2004 from the
period in 2003.  The decrease  resulted  from  declines in the average yield and
average  balance.  There was a 98 basis point  decrease in the average  yield on
federal funds sold and other  interest-bearing  deposits from 1.88% for the nine
months ended June 30, 2003 to 0.90% for the same period in 2004. The decrease in
interest  income was  exacerbated by a decline in the average balance of federal
funds sold and other  interest-bearing  deposits from $12.9 million for the nine
months  ended June 30, 2003 to $6.0  million for the same nine months ended June
30, 2004.

         Interest income on securities increased $49,000 to $2.3 million for the
nine months ended June 30, 2004.  The average  balance of  securities  increased
$5.6  million to $104.7  million  for the nine  months  ended June 30, 2004 from
$99.1  million  for the nine months  ended June 30,  2003.  The  increase in the
average balance of securities was offset by a decline in the average yield of 12
basis points from 3.11% for the nine months ended June 30, 2003 to 2.99% for the
comparable period in 2004.

         Interest Expense. Total interest expense decreased by $701,000 or 10.5%
to $6.0  million for the nine months  ended June 30, 2004 from $6.7  million for
the same  period in 2003.  The  average  cost of  interest  bearing  liabilities
decreased 49 basis points from 2.89% for the nine months ended June 30, 2003, to
2.40% for the same period in 2004.  This  decline in the average cost was offset
by an increase  of $23.6  million in the  average  balance of  interest  bearing
liabilities  for the nine months  ended June 30,  2004,  to $332.4  million from
$308.8 million for the same nine months in 2003.

         The  average  balance of  interest  bearing  deposits  increased  $17.7
million or 6.9% for the nine month comparative 2004 period.  The average balance
of certificates of deposit decreased $4.4 million to $117.0 million for the nine
months ended June 30, 2004 from $121.4  million from the same period in 2003. In
addition,  the average cost of certificates  of deposit  decreased from 2.91% to
2.46% for the  respective  comparative  periods.  The  average  cost of  savings
accounts  decreased  from 2.05% for the nine months ended June 30, 2003 to 1.55%
for the same  period in 2004,  which  more than  offset  the  increase  of $23.3
million or 21.0% in the  average  balance of  savings  accounts  during the same
period.

         Interest expense on FHLB advances  increased $18,000 to $2.1 million as
a result of an increase in the average  balance from $53.5  million for the nine
months  ended June 30, 2003 to $59.3  million for the same period in 2004.  This
was  partially  offset by a decrease in the average cost of advances  from 5.23%
for the nine  months  ended June 30,  2003 to 4.76% for the same period in 2004.
The lower  average cost is primarily  due to  utilization  of overnight  line of
credit borrowings whose current cost is less than that of the Company's laddered
portfolio of fixed rate advances.

         Net  Interest  Income.  Net  interest  income  increased by $934,000 or
14.2%, to $7.5 million for the nine months ended June 30, 2004 from $6.6 million
for the same period in 2003.  The net  interest  rate  spread  increased 5 basis
points to 2.29% for the nine months  ended June 30, 2004 from 2.24% for the same
period in 2003.  The net interest  margin  increased 8 basis points to 2.61% for
the nine months ended June 30, 2004  compared  with 2.53% for the same period in
2003. Both increases reflect  interest-bearing  liabilities  repricing  downward
slightly more rapidly than assets.


                                       17
<PAGE>

         Provision  for Loan Losses.  Provisions  for loan losses are charged to
operations at a level required to reflect probable incurred credit losses in the
loan  portfolio.  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.

         The provision for loan losses  decreased to $96,000 for the nine months
ended June 30, 2004 compared to $171,000 for the same period in 2003. Provisions
for  nonperforming  assets and historical  losses based on net charge-offs  were
nominal  due  to  a  history  of  low  charge-offs  and  relative  stability  of
nonperforming  assets.   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 the nine month period ended June
30,  2004,  total   one-to-four   family   mortgages   increased  $20.3  million
representing  an increase of 9.4% and reflecting the majority of the Bank's loan
growth.  Multi-family and commercial real estate loans increased $2.5 million or
7% and commercial  loans decreased  $567,000 or 35.1%.  Consumer loans decreased
$45,000  or 5.8%  and  home  equity  loans  increased  $594,000  or  6.6%  while
construction loans decreased $94,000 or 21.2%.

         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  considered  in the  environmental
factors used in the Bank's loss provision calculations as described above.

         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.  The allowance for loan losses as a percentage of
gross loans outstanding  remained stable at 0.52% for June 30, 2004 and June 30,
2003  reflecting  balances  of $1.47  million and $1.29  million,  respectively.
Nonperforming  loans as a  percentage  of gross loans was 0.07% at June 30, 2004
compared  to 0.21% at June 30,  2003.  The  level of the  allowance  is based on
estimates and the ultimate losses may vary from those estimates.

         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
March 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 reasonably estimable.

                                       18
<PAGE>

         Noninterest Income.  Noninterest income increased $346,000, or 74.9% to
$808,000 for the nine months ended June 30, 2004  compared to the same period in
2003. The significant  portion of that increase resulted from the absence in the
current period of $188,000 in loss on sale of available-for-sale securities that
had been recorded during the comparative period one year earlier.  Additionally,
service charges on deposit accounts  increased by $183,000  primarily due to the
implementation  of new deposit  services.  Gains on sale of held-for-sale  loans
decreased  $62,000  to $22,000  for the nine  months  ended  June 30,  2004 from
$84,000 for the same comparative  nine-month  period last year. Income from cash
surrender  value  of  life  insurance   decreased  $21,000  for  the  nine-month
comparative  periods due to reduced  yields  reflecting  lower  market  interest
rates. Finally, other noninterest income increased by $58,000, due in large part
to collection of  comparatively  higher loan related fees,  which were primarily
prepayment penalties.

         Noninterest Expense.  Noninterest expense increased $529,000,  or 10.4%
to $5.6  million for the nine months  ended June 30, 2004 from $5.1  million for
the nine months  ended June 30, 2003.  The  increase  was  primarily a result of
higher  expenses for salaries and employee  benefits,  occupancy and  equipment,
data processing, advertising, and other noninterest expenses.

         Salaries  and benefits  increased  $145,000 or 4.3% for the nine months
ended June 30, 2004. A large portion of the increase was due to $165,000 in ESOP
expense  arising from the  implementation  of the plan during the current fiscal
year. Medical and related benefit plan premiums increased $28,000 while salaries
and wages including bonus and payroll taxes,  increased  $55,000 or 2.2% for the
nine months  ended June 30,  2004 as compared to the same period in 2003.  These
increases were offset by lower deferred  compensation  plan benefit  expenses of
$83,000,  which  had been  adjusted  in the  prior  year for a  decrease  in the
discount rate used to calculate the  liability in a lower rate  environment.  In
addition,  expense for temporary help declined  $20,000 as a result of decreases
in temporary hires during the current  nine-month period as compared to the same
prior period one year ago.

         Occupancy and equipment  expense  increased $52,000 to $648,000 for the
nine months  ended June 30, 2004 as compared to $596,000  for the same period in
2003,  due to  higher  computer  expenses  primarily  related  to  upgrades  and
enhancements  to  information  technology  support and security  services.  Data
processing  costs also  increased  $104,000  mainly due to  increases in service
bureau core processing  costs resulting from growth in deposit and loan accounts
as well as non-recurring costs associated with comprehensive system upgrades.

         Other noninterest expenses increased $193,000 for the nine months ended
June 30, 2004 as compared  to the same nine months last year.  Professional  and
consulting  fees,  including  legal  fees,  increased  $25,000  due to  expenses
associated  with being a public  company.  Further,  general and  administrative
expenses  increased  $45,000  consisting  primarily of $30,000 in  comparatively
higher expenses relating to the bulk purchase of brochures and forms and $15,000
in higher costs  associated  with new deposit  service  programs.  Other expense
increases  included  $5,000 for corporate  insurance and $15,000 for  regulatory
fees  offset  by minor  decreases  of $9,000  in other  miscellaneous  expenses.
Further,  net  loan  processing  charges  increased  primarily  due  to  reduced
recognition of loan  modification  fees offsetting  related costs as a result of
the deferral of loan modification fees and related costs in the current period.

         Finally,  advertising  expenses  were  higher by  $32,000  for the 2004
comparative  period as a result of increased  print,  radio, and television ads,
and higher agency fees.

         Management  expects increased expenses in the future resulting from the
ongoing  expenses  associated  with the employee  stock  ownership  plan and the
potential stock benefit plans, as well as increased costs  associated with being
a public company such as periodic reporting, annual meeting materials, retention
of a transfer agent, and professional fees. 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.

                                       19
<PAGE>

         Provision  for Income Taxes.  The provision for income taxes  increased
$362,000  for the nine months  ended June 30, 2004 from the same period in 2003.
The  effective  tax rate was 38.9% and 36.6% for the nine months  ended June 30,
2004 and 2003.  The  slight  increase  in the  effective  tax rate is  primarily
reflective of an increase in pre tax net income and an increase in nondeductible
expenses primarily related to the ESOP.


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 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
FHLB  advances to leverage its capital base and provide a portion of the funding
needed to manage  the  interest  rate risk  presented  by its core  business  of
attracting and retaining retail deposits to fund mortgage and consumer loans.

         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.  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 June 30, 2004, the total  approved loan  origination
commitments  outstanding  amounted to $24.9  million.  At the same date,  unused
lines of credit were $13.7 million and  construction  loans in process were $1.5
million. Certificates of deposit scheduled to mature in one year or less at June
30, 2004 totaled $71.0 million.  Although the average cost of deposits decreased
throughout 2003 and early 2004, 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,
at June 30, 2004 the total collateralized  borrowing limit was $101.2 million of
which we had $63.9 million  outstanding,  giving us the ability at June 30, 2004
to borrow an  additional  $37.3  million  from the FHLB of New York as a funding
source to meet commitments and for liquidity purposes.

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.  Total equity was $31.4
million at June 30, 2004,  or 7.76% of total assets on that date. As of June 30,
2004,  the  Bank  exceeded  all  capital  requirements  of the OTS.  The  Bank's
regulatory capital ratios at June 30, 2004 were as follows:  core capital 8.05%;
Tier 1 risk-based  capital 16.02%;  and total  risk-based  capital  16.74%.  The
regulatory  capital  requirements  to be considered  well  capitalized are 5.0%,
6.0%, and 10.0%, respectively.

                                       20
<PAGE>

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.

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  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 June 30,  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.



<PAGE>

PART II - - OTHER INFORMATION

The Company and its  subsidiaries  are 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 AND REPORTS

           (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.

           (b) Reports

                  None

                                       22

<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: August 13, 2004          /s/Joseph Kliminski
                               -------------------------------------------------
                               Joseph Kliminski
                               President and Chief Executive Officer


Date: August 13, 2004          /s/Eric B. Heyer
                               -------------------------------------------------
                               Eric B. Heyer
                               Senior Vice President and Chief Financial Officer





                                       23