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 March 31, 2005

                [X] 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 May 13, 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>                                                                       <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                                               23


PART II - OTHER INFORMATION

     Item 1.    Legal Proceedings                                                     27
     Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds           27
     Item 3.    Defaults Upon Senior Securities                                       27
     Item 4.    Submission of Matters to a Vote of Security Holders                   27
     Item 5.    Other Information                                                     27
     Item 6.    Exhibits                                                              28


FORM 10-QSB SIGNATURE PAGE                                                            29

CERTIFICATIONS

</TABLE>
                                        2

<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                                                          March 31,  September 30,
                                                                            2005        2004
                                                                            ----        ----
<S>                                                                   <C>          <C>
ASSETS
Cash and cash equivalents
     Cash and due from banks                                            $   2,383    $   2,256
     Interest-bearing deposits                                              2,458        5,778
                                                                        ---------    ---------
         Total cash and cash equivalents                                    4,841        8,034

Securities available-for-sale                                              75,992       89,495
Securities held-to-maturity (fair value: March 31, 2005 -
  $8,392; September 30, 2004 - $2,806)                                      8,526        2,794
Loans, net                                                                333,252      308,970
Loans held for sale                                                           302            -
Premises and equipment                                                      4,059        3,910
Federal Home Loan Bank stock, at cost                                       3,513        2,890
Cash surrender value of life insurance                                      7,375        6,242
Accrued interest receivable                                                 1,471        1,359
Other assets                                                                1,623        1,250
                                                                        ---------    ---------
     Total assets                                                       $ 440,954    $ 424,944
                                                                        =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
     Deposits
         Noninterest-bearing                                            $  24,093    $  22,599
         Interest-bearing                                                 303,950      300,117
                                                                        ---------    ---------
              Total deposits                                              328,043      322,716

     Advance payments by borrowers for taxes and insurance                  2,491        2,322
     Federal Home Loan Bank borrowings                                     68,263       57,491
     Accrued interest payable and other liabilities                         3,034        3,049
     Common stock in ESOP subject to contingent repurchase obligation         312           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                                            17,066       15,687
     Unearned ESOP shares                                                  (1,131)      (1,200)
     Unearned RSP shares                                                   (1,265)           -
     Retained earnings                                                     24,848       24,806
     Accumulated other comprehensive loss                                    (950)        (482)
     Amount reclassified on ESOP shares                                      (312)         (52)
                                                                        ---------    ---------
         Total stockholders' equity                                        38,811       39,314
                                                                        ---------    ---------
              Total liabilities and stockholders' equity                $ 440,954    $ 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)

<TABLE>
<CAPTION>

                                                        Six Months        Three Months
                                                      Ended March 31,    Ended March 31,
                                                      ---------------    ---------------
                                                       2005     2004     2005     2004
                                                       ----     ----     ----     ----
<S>                                                  <C>      <C>      <C>      <C>
Interest and dividend income
    Loan, including fees                              $8,483   $7,405   $4,345   $3,713
    Securities                                         1,450    1,587      711      837
    Federal funds sold and other                          61       25       33       14
                                                      ------   ------   ------   ------
       Total interest income                           9,994    9,017    5,089    4,564

Interest expense
    NOW and money market                                 206      109      108       52
    Savings                                            1,108    1,033      532      471
    Certificates of deposit                            1,705    1,458      896      709
    Federal Home Loan Bank advances                    1,404    1,428      707      710
                                                      ------   ------   ------   ------
       Total interest expense                          4,423    4,028    2,243    1,942
                                                      ------   ------   ------   ------

Net interest income                                    5,571    4,989    2,846    2,622

Provision for loan losses                                112       54       70       13
                                                      ------   ------   ------   ------

Net interest income after provision for loan losses    5,459    4,935    2,776    2,609

Noninterest income
    Deposit service fees and charges                     320      349      146      172
    Income from cash surrender value of
     life insurance                                      133      115       73       64
    Gain on sale of loans                                  1       21        -       14
    Other                                                 83       78       71       33
                                                      ------   ------   ------   ------
       Total noninterest income                          537      563      290      283

Noninterest expense
    Salaries and employee benefits                     2,545    2,344    1,335    1,220
    Occupancy and equipment                              409      441      204      217
    Data processing                                      293      334      148      177
    Advertising                                          140      129       76       58
    Federal deposit insurance                             22       24       11       13
    Other                                                702      497      380      254
                                                      ------   ------   ------   ------
       Total noninterest expense                       4,111    3,769    2,154    1,939
                                                      ------   ------   ------   ------

Income before provision for income taxes               1,885    1,729      912      953

Provision for income taxes                               691      668      328      366
                                                      ------   ------   ------   ------

Net income                                            $1,194   $1,061   $  584   $  587
                                                      ======   ======   ======   ======

Comprehensive income                                  $  726   $1,572   $  114   $  911
                                                      ======   ======   ======   ======

Earnings per share:

    Basic  and diluted                                $ 0.22   $ 0.20   $ 0.11   $ 0.11
                                                      ======   ======   ======   ======
</TABLE>
     See accompanying notes to unaudited consolidated financial statements

                                       4

<PAGE>

ASB Holding Company
Statements of Stockholders' Equity
Six months ended March 31, 2005
(in thousands)
(unaudited)

<TABLE>
<CAPTION>
                                                                                             Accu-
                                                                                             mulated
                                                                                             Other        Amount             Compre-
                                               Additional  Unearned   Unearned               Compre-    Reclassified         hensive
                                      Common    Paid-in      ESOP       RSP        Retained  hensive      On ESOP    Total    Income
                                       Stock    Capital     Shares     Shares      Earnings  Income        Shares    Equity   (Loss)
                                       -----    -------     ------     ------      --------  ------        ------    ------   ------
<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

RSP stock grants                           -       1,332         -     (1,332)          -           -           -         0

RSP shares earned                          -           -         -         67           -           -           -        67

ESOP shares earned                         -          47        69          -           -           -           -       116

Cash dividends paid -
$0.75 per share                            -           -         -          -      (1,152)          -           -    (1,152)

Reclassification due to change
in fair value of common stock
in ESOP subject  to contingent
repurchase obligation                      -           -         -          -           -           -        (260)     (260)

Comprehensive income
  Net income                               -           -         -          -       1,194           -           -     1,194
  Change in unrealized gain on
  securities available-for-sale,
  net of taxes                             -           -         -          -           -        (468)          -      (468)
     Total  comprehensive
     income                                                                                                                   $726
                                        ----     -------   -------   --------     -------       -----       -----   -------   ====
Balance at
  March 31, 2005                        $555     $17,066   $(1,131)  $ (1,265)    $24,848       $(950)      $(312)  $38,811
                                        ====     =======   =======   ========     =======       =====       =====   =======
</TABLE>

     See accompanying notes to unaudited consolidated financial statements

                                        5

<PAGE>

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

<TABLE>
<CAPTION>
                                                                             Six Months Ended
                                                                                March 31,
                                                                             ----------------
                                                                             2005        2004
                                                                             ----        ----
<S>                                                                     <C>         <C>
Cash flows from operating activities
    Net income                                                            $  1,194    $  1,061
    Adjustments to reconcile net income to net cash
      provided by operating activities
       Depreciation and amortization                                           180         216
       Net amortization of premiums and discounts                               66         175
       ESOP compensation expense                                               116         113
       RSP compensation expense                                                 67           -
       Provision for loan losses                                               112          54
       Increase in cash surrender value of life insurance                     (133)       (115)
       Gain on sale of loans                                                    (1)        (21)
       Proceeds from sales of loans                                            144       2,137
       Net change in loans held for sale                                      (302)         99
       Change in accrued interest receivable                                  (112)         17
       Change in other assets                                                 (104)        396
       Change in deferred income taxes                                         (20)          9
       Increase in other liabilities                                           (15)       (125)
                                                                          --------    --------
              Net cash from operating activities                             1,192       4,016

Cash flows from investing activities
    Net increase in loans receivable                                       (24,537)    (13,728)
    Purchases of securities held-to-maturity                                (6,227)       (756)
    Principal paydowns on securities held-to-maturity                          490         606
    Purchases of securities available-for-sale                                   -      (9,016)
    Calls of securities available-for-sale                                   2,000           -
    Principal paydowns on securities available-for-sale                     10,725      18,238
    Purchase of Federal Home Loan Bank stock                                (1,828)       (745)
    Redemption of Federal Home Loan Bank stock                               1,205       1,025
    Purchase of bank-owned life insurance                                   (1,000)          -
    Purchase of premises and equipment                                        (329)       (301)
                                                                          --------    --------
       Net cash from investing activities                                  (19,501)     (4,677)

Cash from financing activities
    Net increase in deposits                                                 5,327         970
    Net change in advance payments by borrowers for taxes and insurance        169         141
    Repayment of Federal Home Loan Bank of New York advances                (1,028)     (2,000)
    Net change in Federal Home Loan Bank of New York OLOC                   11,800       4,400
    Net proceeds from stock issuance                                             -      14,728
    Cash dividends paid                                                     (1,152)          -
    Refund of stock subscriptions received                                       -     (52,137)
                                                                          --------    --------
       Net cash from financing activities                                   15,116     (33,898)
                                                                          --------    --------

Net change in cash and cash equivalents                                     (3,193)    (34,559)

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

Cash and cash equivalents at end of period                                $  4,841    $  3,806
                                                                          ========    ========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements

                                       6

<PAGE>

ASB Holding Company
Statements of Cash Flows
(in thousands)
(unaudited)
                                                                Six Months Ended
                                                                    March 31,
                                                                ----------------
                                                                   2005    2004
                                                                   ----    ----
Supplemental cash flow information:
    Cash paid during the period for
       Interest                                                   $4,422 $ 4,023
       Income taxes, net of refunds                                  910     626

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


     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 the Bank 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 Bank of New Jersey (formerly American Savings Bank of NJ)
("the Bank") and ASB Investment Corp.  ("the Investment  Corp.") as of March 31,
2005 and September 30, 2004 and for the three- and six-month periods ended March
31, 2005 and 2004. 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 Bank's name change to American
Bank of New Jersey was effective March 31, 2005.

         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 limited 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.

                                       8

<PAGE>

         The results of operations  for the three and six months ended March 31,
2005 are not  necessarily  indicative of the results to be expected for the full
year or any other period.


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.

                                       9

<PAGE>

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  plus  earned RSP shares less
unearned ESOP shares.

The factors used in the earnings per share computation follow.

<TABLE>
<CAPTION>
                                                                      Six Months Ended        Three Months Ended
                                                                          March 31,                March 31,
                                                                      ----------------        ------------------
                                                                    2005         2004         2005          2004
                                                                    ----         ----         ----          ----
                                                                                 (Dollars in thousands
                                                                                   except share data)
<S>                                                             <C>          <C>          <C>          <C>
Basic
     Net income                                                   $    1,194   $    1,061   $      584   $      587

     Weighted average common
     shares
     outstanding                                                   5,438,940    5,424,565    5,441,730    5,426,209

     Basic earnings per common share                              $     0.22   $     0.20   $     0.11   $     0.11
                                                                  ==========   ==========   ==========   ==========

Diluted
     Net income                                                   $    1,194   $    1,061   $      584   $      587

         Weighted average common shares outstanding for basic
         earnings per common share                                 5,438,940    5,424,565    5,441,730    5,426,209

         Add:  Dilutive effects of assumed exercises of stock
         options                                                           -            -          206            -

         Add:  Dilutive effects of full vesting of stock awards
                                                                           -            -           52            -
                                                                  ----------   ----------   ----------   ----------

         Average shares and dilutive potential
         common shares                                             5,438,940    5,424,565    5,441,988    5,426,209
                                                                  ==========   ==========   ==========   ==========

     Diluted earnings per common share                            $     0.22   $     0.20   $     0.11   $     0.11
                                                                  ==========   ==========   ==========   ==========
</TABLE>

                                       10

<PAGE>

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 March 31, 2005, 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 March  31,  2005,  this  contingent  repurchase  obligation  reduced
stockholders' equity by $312,000.


Note 5 - Other 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 of which all  received  regulatory  approval  for award.  On
January 20, 2005,  259,923 options were awarded with the remaining 12,248 shares
awarded on May 6, 2005. Also subject to regulatory  approval,  108,868 shares of
common stock were made available under the 2005  Restricted  Stock Plan of which
81,651  received  regulatory  approval for award.  On January 20,  2005,  76,752
shares of restricted  stock were awarded with the remaining 4,899 shares awarded
on May 6, 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 is recognizing  compensation expense
for shares of common stock awarded under the 2005 Restricted Stock Plan. Expense
is being recognized over the vesting period of five years from the date of award
at the fair market value of the shares on the date they were awarded.

         Employee compensation expense under stock options is reported using the
intrinsic  value method.  No stock-based  compensation  cost is reflected in net
income,  as all options  granted had an exercise  price equal to or greater than
the market price of the underlying  common stock at date of grant. The following
table illustrates the effect on net income and earnings per share if expense was
measured using the fair value recognition  provisions of FASB Statement No. 123,
Accounting for Stock-Based Compensation.

                                       11

<PAGE>

<TABLE>
<CAPTION>
                                                                      Six Months Ended    Three Months Ended
                                                                          March 31,           March 31,
                                                                      ----------------    ------------------
                                                                     2005         2004      2005      2004
                                                                     ----         ----      ----      ----
                                                                                 (Dollars in thousands
                                                                                   except share data)

<S>                                                             <C>         <C>         <C>       <C>
Net income as reported                                            $   1,194   $   1,061   $   584   $   587

Deduct:  Stock-based compensation expense determined under fair
value based method                                                       54           -        54         -
                                                                  ---------   ---------   -------   -------

Pro forma net income                                              $   1,140   $   1,061   $   530   $   587
                                                                  =========   =========   =======   =======

Basic earnings per share as reported                              $    0.22   $    0.20   $  0.11   $  0.11
                                                                  =========   =========   =======   =======

Pro forma basic earnings per share                                $    0.21   $    0.20   $  0.10   $  0.11
                                                                  =========   =========   =======   =======

Diluted earnings per share as reported                            $    0.22   $    0.20   $  0.11   $  0.11
                                                                  =========   =========   =======   =======

Pro forma diluted earnings per share                              $    0.21   $    0.20   $  0.10   $  0.11
                                                                  =========   =========   =======   =======
</TABLE>



The fair value of options  granted and pro forma effects are computed  using the
Black-Scholes  option  pricing  model,  using  the  following   weighted-average
assumptions as of grant date.

<TABLE>
<CAPTION>
                                                                    Six Months Ended      Three Months Ended
                                                                        March 31,             March 31,
                                                                    ----------------      ------------------
                                                                      2005      2004        2005      2004
                                                                      ----      ----        ----      ----
<S>                                                               <C>          <C>         <C>       <C>
Risk free interest rate                                               3.67%        -        3.67%        -

Expected option life                                                   5.0         -         5.0         -

Expected stock price volatility                                      22.00%        -       22.00%        -

Dividend yield                                                        0.00%        -        0.00%        -

Weighted average fair value of options granted during year         $  4.75         -     $  4.75         -
                                                                   =======      ====     =======      ====
</TABLE>

                                       12

<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 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

                                       13

<PAGE>

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 improvement in its net interest margin
through the first six months of fiscal 2005 when compared with that reported for
fiscal  2004.  The Company  realized an 11 basis point  increase in its yield on
earning assets from 4.69% for the year ended September 30, 2004 to 4.80% for the
six months ended March 31, 2005.  This increase was  attributable  to a 15 basis
point  increase  in the  yield on  investment  securities  and a 74 basis  point
increase in the yield on  interest-bearing  deposits and other  earning  assets.
These increases were offset by a 6 basis point decline in the yield on loans for
the six months ended March 31, 2005 as compared to the yield on loans for fiscal
2004. Offsetting this overall improvement in earning assets yields was a 2 basis
point increase in the cost of interest-bearing  liabilities from 2.41% to 2.43%.
This increase  resulted,  in part, from a 10 basis point increase in the cost of
interest-bearing deposits. This increase was offset by a 22 basis point decrease
in the cost of  borrowings  due largely to  increased  utilization  of overnight
borrowings.  In total,  the  Company's net interest  margin  improved by 7 basis
points to 2.67% for the six months  ended  March 31,  2005 from 2.60% for fiscal
2004.

         Our results of operations also depend on our provision for loan losses,
noninterest  income,  and  noninterest   expense.   Non-performing  loans  as  a
percentage  of total assets have  declined to 0.08% of total assets at March 31,
2005 from 0.12% of total assets at September 30, 2004.  Consequently,  loan loss
provisions in the current year  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 0.25% for the six months ended March 31,
2005 - a reduction  of 2 basis  points from 0.27% for fiscal  2004. A portion of
this  decrease  is  attributable  to overall  growth in average  earning  assets
outpacing that of fee income from deposits and loans.

         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. Generally,
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.  More  recently,  benefit  costs have  increased  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.

         Excluding  penalties  for  prepayment  of  borrowed  funds,  annualized
noninterest  expense as a percentage of average assets totaled 1.91% for the six
months  ended  March 31,  2005 - an  increase  of 2 basis  points from 1.89% for
fiscal 2004. In part, this increase is attributable to the implementation of the
restricted  stock plan benefits noted above.  Additionally,  the Company is also
recording higher consulting and

                                       14

<PAGE>

professional fees associated with evaluating and executing the Company's balance
sheet growth and diversification strategies.

         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  reductions  - in other  noninterest
expenses.  For the six months ended March 31, 2005, 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. Together,  reductions
in these expenses totaled 0.04% which offset the 0.06% combined  increase in all
other noninterest  expenses for the same period. In large part, these reductions
result from reduced depreciation and core processing expenses and the absence in
the current period of certain  non-recurring charges associated with information
technology infrastructure upgrades that were performed 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 1 basis point to 0.55%
for the six months  ended March 31, 2005 from 0.54% for fiscal 2004 while return
on average  equity  increased 45 basis  points to 6.22% from 5.77%.  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 half 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 and to date in 2005 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 increases,  if any, in
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, is only now beginning to
be tested.

         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 March 31, 2005 and September 30, 2004

         Our total assets increased by $16.1 million, or 3.8%, to $441.0 million
at March 31,  2005 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 $24.3 million, or 7.9%, to $333.3 million at
March 31, 2005 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.

                                       15

<PAGE>

         The following  table compares the  composition of the loan portfolio by
loan type as a percentage  of total assets at March 31, 2005 and  September  30,
2004.  Amounts  reported  exclude  allowance  for loan  losses and net  deferred
origination costs.

                                  March 31, 2005             September 30, 2004
                                  --------------             ------------------
                                              (Dollars in thousands)
                                           Percent of                Percent of
Type of Loans                   Amount    Total Assets     Amount   Total Assets
-------------                   ------    ------------     ------   ------------
Construction                    $3,913          0.89%   $  3,075          0.72%
1/1 and 3/3 ARMs                 5,550          1.26%      1,800          0.42%
3/1 and 5/1 ARMs               101,718         23.07%     89,694         21.11%
5/5 and 10/10 ARMs              35,122          7.96%     24,619          5.79%
7/1 and 10/1 ARMs                1,754          0.40%      1,675          0.40%
15 year fixed or less          111,504         25.29%    112,238         26.41%
Greater than 15 year fixed      62,092         14.08%     64,702         15.23%
Home equity lines of credit     11,249          2.55%     10,666          2.51%
Consumer                           701          0.16%        746          0.18%
Commercial                         663          0.15%        398          0.09%
                              --------         -----    --------         -----

Total                         $334,266         75.81%   $309,613         72.86%
                              ========         =====    ========         =====

          Securities classified as  available-for-sale  decreased $13.5 million,
or 15.1%, to $76.0 million at March 31, 2005 from $89.5 million at September 30,
2004 as the Bank continued to reinvest cash flows from the securities  portfolio
into  loans  rather  than  back  into the  securities  portfolio.  Cash and cash
equivalents decreased by $3.2 million, or 40%, to $4.8 million at March 31, 2005
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 $5.7  million or 203.6% to $8.5  million at March 31, 2005 from $2.8
million at September 30, 2004.

         The  following   table  compares  the   composition  of  the  Company's
securities  portfolio by security  type as a percentage of total assets at March
31, 2005 and September 30, 2004.  Amounts reported exclude  unrealized gains and
losses on the available for sale portfolio.

                                  March 31, 2005             September 30, 2004
                                  --------------             ------------------
                                              (Dollars in thousands)
                                           Percent of                Percent of
Type of Security                Amount    Total Assets     Amount   Total Assets
----------------                ------    ------------     ------   ------------
Fixed rate MBS                 $14,565        3.30%       $15,923       3.75%
ARM MBS                          9,142        2.07%         8,755       2.06%
Fixed rate CMO                  35,184        7.99%        43,982      10.36%
Floating rate CMO                3,150        0.71%           435       0.10%
ARM mutual fund                 10,000        2.27%        10,000       2.35%
Fixed rate agency debentures    13,997        3.17%        13,997       3.29%
                               -------       -----        -------      -----

Total                          $86,038       19.51%       $93,092      21.91%
                               =======       =====        =======      =====

         Assuming no change in interest rates, the estimated average life of the
investment securities  portfolio,  excluding the ARM mutual fund, was 2.54 years
and 2.23 years at March 31, 2005 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 would hypothetically  extend
to 3.13  years  and 3.12  years at  March  31,  2005  and  September  30,  2004,
respectively.

                                       16

<PAGE>

         Total deposits  increased by $5.3 million,  or 1.6%, to $328 million at
March 31, 2005 from $322.7  million at  September  30,  2004.  The  increase was
primarily due to increases in certificates  of deposit and non  interest-bearing
deposits, partially offset by a decline in savings deposits and interest-bearing
checking  deposits.  Certificates of deposit accounts increased $17.3 million or
14.7% to $135.3 million.  Savings deposits decreased by $8.8 million, or 6.1% to
$134.6  million.  Checking  deposits,  including  demand,  NOW and money  market
checking accounts, decreased $3.2 million or 5.2% to $58.1 million.

         The following table compares the  composition of the deposit  portfolio
by  category  as a  percentage  of total  assets at March 31,  2005 with that of
September 30, 2004.

                                  March 31, 2005             September 30, 2004
                                  --------------             ------------------
                                              (Dollars in thousands)
                                           Percent of                Percent of
Deposit category                Amount    Total Assets     Amount   Total Assets
----------------                ------    ------------     ------   ------------
Money market checking         $ 20,367         4.62%     $ 25,834         6.08%
Other checking                  37,744         8.56%       35,461         8.34%
Money market savings            38,804         8.80%       44,880        10.56%
Other savings                   95,833        21.73%       98,521        23.18%
Certificates of deposit        135,295        30.68%      118,020        27.78%
                              --------        -----      --------        -----

Total                         $328,043        74.39%     $322,716        75.94%
                              ========        =====      ========        =====

         FHLB advances  increased  $10.8 million,  or 18.8%, to $68.3 million at
March 31, 2005 from $57.5  million at September  30,  2004.  The net increase of
$10.8 was comprised of $11.8 million drawn on an overnight  line of credit which
replaced   $1.0  million  of  maturing   fixed  rate  advances  and  $28,000  of
amortization on fixed rate amortizing advances.

         The following table compares the composition of the borrowing portfolio
by  remaining  term to  maturity  at March  31,  2005 and  September  30,  2004.
Scheduled   principal   payments  on  amortizing   borrowings  are  reported  as
maturities.

                                  March 31, 2005             September 30, 2004
                                  --------------             ------------------
                                              (Dollars in thousands)
                                           Percent of                Percent of
Remaining Term                  Amount    Total Assets     Amount   Total Assets
--------------                  ------    ------------     ------   ------------
Overnight                      $14,500        3.29%       $ 2,700        0.64%
One year or less                 2,057        0.47%         1,057        0.25%
One to two years                 9,061        2.05%         8,060        1.90%
Two to three years               6,064        1.38%         8,062        1.90%
Three to four years             14,068        3.19%        12,065        2.84%
Four to five years               7,513        1.70%         7,547        1.77%
More than five years            15,000        3.40%        18,000        4.23%
                               -------       -----        -------       -----

Total                          $68,263       15.48%       $57,491       13.53%
                               =======       =====        =======       =====

         Equity decreased $503,000,  or 1.3%, to $38.8 million at March 31, 2005
from $39.3 million at September 30, 2004.  The decrease  reflects a special cash
dividend paid of $1.2 million,  offset by net income of $1.2 million for the six
months ended March 31, 2005. In addition, the amount reclassified on ESOP shares
increased $260,000 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 above.

                                       17

<PAGE>

Comparison  of  Operating  Results for the Three Months Ended March 31, 2005 and
March 31, 2004

         General.  Net  income for the three  months  ended  March 31,  2005 was
$584,000,  a  decrease  of  $3,000,  or 0.5% from the same  period in 2004.  The
decrease in net income  resulted from increases in  noninterest  expense and the
provision  for loan  losses,  offset by an increase in net  interest  income and
noninterest income coupled with a decrease in the provision for income taxes.

         Interest  Income.  Total interest income increased 11.4% or $525,000 to
$5.1 million for the three  months  ended March 31, 2005,  from $4.6 million for
the same period in 2004. For those same comparative  periods,  the average yield
on  interest-earning  assets  increased 9 basis points to 4.85% from 4.76% while
the average balance of  interest-earning  assets increased $36.1 million or 9.4%
to $419.8 million from $383.7 million.

         Interest income on loans  increased  $632,000 or 17.8%, to $4.3 million
for the three  months ended March 31, 2005 from $3.7 million for the same period
in 2004.  This  increase was due, in part,  to a $51.4  million  increase in the
average  balance of loans  receivable  to $324.4  million for the quarter  ended
March 31, 2005 from $273 million for same period in 2004. The impact on interest
income  attributable to this growth more than offset the 8 basis points decrease
in the average yield on loans which  declined to 5.36% from 5.44% 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 $126,000 to $711,000 for the three months
ended March 31, 2005 from $837,000 for the same period in 2004. The decrease was
due, in part,  to a $16.4 million  decline in the average  balance of investment
securities  to $88.5  million  for the three  months  ended  March 31, 2005 from
$104.9  million  for the same  period in 2004.  The  impact on  interest  income
attributable  to this decline was partly  offset by a 2 basis point  increase in
the average  yield on  securities  which grew to 3.21% from 3.19% for those same
comparative  periods.  This  increase in yield  primarily  resulted from slowing
prepayments  which  reduced  net  premium  amortization  and  higher  yields  on
adjustable  rate  securities  which have repriced  upward in accordance with the
general movement of market interest rates.

         Further,   interest   income   on   federal   funds   sold  and   other
interest-bearing  deposits  increased  $19,000 to $33,000 for the quarter  ended
March 31, 2005 from $14,000 for the same period in 2004.  This increase was due,
in part,  to an increase of $1.2 million in the average  balance of these assets
to $6.9  million for the quarter  ended March 31, 2005 from $5.7 million for the
same period in 2004. The impact on interest  income  attributable to this growth
was further  augmented  by a 95 basis  point rise in the average  yield on these
assets  resulting  from a rise in short  term  interest  rates.  Yields on these
assets increased to 1.92% from 0.97% for those same comparative periods.

         Interest Expense. Total interest expense increased by $301,000 or 15.8%
to $2.2  million for the three months ended March 31, 2005 from $1.9 million for
the same period in 2004. For those same comparative periods, the average cost of
interest-bearing  liabilities increased 9 basis points to 2.44% from 2.35% while
the average  balance of  interest-bearing  liabilities  increased $36 million or
10.9% to $367.2 million from $331.2 million.

         Interest expense on deposits  increased $304,000 or 25% to $1.5 million
for the three  months ended March 31, 2005 from $1.2 million for the same period
in 2004.  This  increase was due, in part,  to a $33.9  million  increase in the
average balance of interest  bearing  deposits to $303.6 million for the quarter
ended  March 31,  2005 from  $269.7  million  for the same  period in 2004.  The
components of this net increase for the comparative  periods include an increase
of $11.4 million or 9.8% in the average balance of  certificates  of deposit,  a
$7.3 million or 5.5% increase in the average  balance of savings  accounts and a
$15.2  million or 69.1%  increase  in the  average  balance of  interest-bearing
checking accounts.

                                       18

<PAGE>

         The impact on interest expense  attributable to the net growth in these
average  balances was  exacerbated  by a 19 basis point  increase in the average
cost of interest-bearing  deposits to 2.02% for the three months ended March 31,
2005 from 1.83% for the same period in 2004. The components of this increase for
the comparative  periods  includes a 37 basis point increase in the average cost
of  certificates  of deposit,  a 10 basis point  increase in the average cost of
savings  accounts  and  a 22  basis  point  increase  in  the  average  cost  of
interest-bearing checking accounts.

         Interest expense on FHLB advances  decreased $3,000 to $707,000 for the
three  months  ended March 31, 2005 from  $710,000  for the same period in 2004.
This  decrease  was due, in part,  to a 16 basis point  reduction in the average
cost of advances  which  declined to 4.45% for the three  months ended March 31,
2005 from 4.61% for same period in 2004. The impact on expense  attributable  to
this decline in average cost was modestly  offset by a $2.1 million  increase in
the average  balance of advances to $63.7  million from $61.6  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 March 31, 2005  increased  by $224,000 or 8.6%,  to $2.8 million from $2.6
million for the same period in 2004. For those same comparative periods, our net
interest  rate spread  remained  stable at 2.41% while our net  interest  margin
decreased 2 basis points to 2.71% from 2.73%.

         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
March 31, 2005 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  $70,000 for the three  months
ended  March  31,  2005  representing  an  increase  of  $57,000  over  the same
comparative  period in 2004.  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  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.

                                       19

<PAGE>

         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 March 31, 2005,
total gross loan  balances,  excluding the  allowance for loan loss,  grew $15.1
million  or 4.73%.  The growth  was  primarily  comprised  of net  increases  in
one-to-four family mortgages  totaling $10.2 million,  increases in multi-family
and  commercial  real estate  loans  totaling  $3.7  million,  and net growth in
disbursed balances of construction loans totaling $950,000.

         By comparison, loan growth for the quarter ended March 31, 2004 totaled
$3.4 million or $11.7 million less than the same  comparative  period this year.
The  growth in this  prior  comparative  period was  primarily  comprised  of an
increase in one-to-four  family mortgages  totaling $4.8 million,  offset by net
decreases in multi-family  and commercial real estate loans,  consumer loans and
commercial loans totaling $1.4 million.

         In total,  the allowance for loan losses as a percentage of gross loans
outstanding  decreased  2 basis  points to 0.50% at March 31, 2005 from 0.52% at
March 31, 2004.  These ratios  reflect  allowance for loan loss balances of $1.7
million and $1.4 million,  respectively.  Furthermore,  nonperforming loans as a
percentage of gross loans was 0.11% at March 31, 2005 compared to 0.13% at March
31, 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 increased $7,000 to $290,000 for
the three months ended March 31, 2005  compared to the same period in 2004.  The
increase was  primarily  the result of a $38,000  increase in other  noninterest
income due to a rise in loan  prepayment  penalties and late charges.  For these
same  comparative  periods,  income from cash surrender  value of life insurance
increased  $9,000 from  $64,000 for the quarter  ended March 31, 2004 to $73,000
for the same quarter ended this year resulting from higher policy  balances held
by the Company. Offsetting these increases was a $14,000 decline in gain on sale
of held for sale loans as fewer long term,  fixed rate loans were originated and
sold into the secondary  market.  In addition,  deposit service fees and charges
declined  $26,000 for the same  comparative  periods  primarily  attributable to
reduced customer utilization of deposit services introduced in 2004.

         Noninterest Expense.  Noninterest expense increased $215,000,  or 11.3%
to $2.2  million for the three months ended March 31, 2005 from $1.9 million for
the same period in 2004. The increase was primarily a result of higher  expenses
for salaries and benefits, advertising and other non-interest expense, offset by
decreases in occupancy  and  equipment  expense,  data  processing,  and federal
deposit insurance expense.

         Salaries  and  employee  benefits  increased  $115,000  or 9.4% to $1.3
million for the three  months  ended March 31, 2005 as compared to $1.2  million
for the same period in 2004. A large  portion of the increase was due to $67,000
in restricted stock plan benefit expense arising from the  implementation of the
plan during the current  quarter.  Additionally,  salaries and wages,  including
bonus and payroll taxes,  increased  $41,000 due largely to annual  increases in
employee compensation.

         Occupancy and equipment  expense  decreased $13,000 to $204,000 for the
three months ended March 31, 2005 as compared to $217,000 for the same period in
2004. This decrease is primarily  attributable to a $21,000 decrease in computer
depreciation  expense. For the same comparative  periods,  data processing costs
also  decreased  $29,000  from  $177,000 to  $148,000  due to the absence in the
current period of non recurring  information  technology  conversion and upgrade
expenses that were recognized during 2004.

         Other noninterest  expenses  increased  $126,000 or 49.6% for the three
months  ended March 31, 2005 as compared to the same period in 2004.  Legal fees
increased  $44,000 to $81,000  for the three  months  ended  March 31, 2005 from
$37,000 for the same period in 2004.  A portion 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  $53,000 to $99,000 for the
three  months  ended March 31,  2005 as  compared to the same period in 2004.  A
portion of this

                                       20

<PAGE>

increase  is  attributable  to  the  Company's  operation  as a  public  company
including  implementation  costs associated with the Sarbanes-Oxley Act of 2002.
Other  increases  in  both  legal  and  professional  and  consulting  fees  are
attributable   to  ongoing   evaluation   and   implementation   of  growth  and
diversification  strategies  relating to the execution of the Company's business
plan.

         Notwithstanding  these increases  mentioned above,  management  expects
ongoing  compliance costs of 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  decreased
$38,000 for the three  months ended March 31, 2005 from the same period in 2004.
The  effective tax rate was 36.0% and 38.4% for the three months ended March 31,
2005 and 2004,  respectively.  The modest  decrease in the effective tax rate is
primarily  attributable  to the Bank's  funding of American  Savings  Investment
Corp. in November 2004, a wholly owned New Jersey  investment  subsidiary formed
in August 2004 by American Bank of New Jersey. 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.

Comparison  of  Operating  Results  for the Six Months  Ended March 31, 2005 and
March 31, 2004

         General.  Net income for the six months  ended  March 31, 2005 was $1.2
million,  an increase of  $133,000,  or 12.5% from the same period in 2004.  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 10.8% or $977,000 to
$10.0 million for the six months ended March 31, 2005, from $9.0 million for the
same period in 2004. For those same  comparative  periods,  the average yield on
interest-earning  assets  increased 8 basis points to 4.80% from 4.72% while the
average balance of  interest-earning  assets  increased $32.4 million or 8.4% to
$416.7 million from $384.3 million.

         Interest  income on loans  increased  $1.1  million  or 14.6%,  to $8.5
million for the six months  ended March 31, 2005 from $7.4  million for the same
period in 2004.  This increase was due, in part, to a $47.8 million  increase in
the average  balance of loans  receivable  to $318.5  million for the six months
ended March 31, 2005 from $270.7  million for same period in 2004. The impact on
interest income  attributable to this growth more than offset the 14 basis point
decrease  in the average  yield on loans which  declined to 5.33% from 5.47% 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  $137,000  to $1.5  million for the six
months ended March 31, 2005 from $1.6  million for the same period in 2004.  The
decrease was due primarily to a $16.4 million  decline in the average balance of
investment  securities  to $91.1 million for the six months ended March 31, 2005
from $107.5 million for the same period in 2004.  The impact on interest  income
attributable  to this  decline  was offset by a 23 basis  point  increase in the
average  yield on  securities  which  grew to 3.18%  from  2.95% for those  same
comparative  periods.  This  increase in yield  primarily  resulted from slowing
prepayments  which  reduced  net  premium  amortization  and  higher  yields  on
adjustable  rate  securities  which have repriced  upward in accordance with the
general movement of market interest rates.

                                       21

<PAGE>

         Further,   interest   income   on   federal   funds   sold  and   other
interest-bearing  deposits increased $36,000 to $61,000 for the six months ended
March 31, 2005 from $25,000 for the same period in 2004.  This increase was due,
in part,  to an increase of $1.1 million in the average  balance of these assets
to $7.1  million for the six months  ended March 31, 2005 from $6.0  million for
the same period in 2004.  The impact on  interest  income  attributable  to this
growth was  augmented  by an 89 basis point rise in the  average  yield on these
assets which increased to 1.72% from 0.83% for those same comparative periods.

         Interest Expense. Total interest expense increased by $395,000 or 9.80%
to $4.4  million for the six months  ended March 31, 2005 from $4.0  million for
the same period in 2004. For those same comparative periods, the average cost of
interest-bearing  liabilities remained stable at 2.43% while the average balance
of  interest-bearing  liabilities  increased  $31.9  million  or 9.6% to  $363.6
million from $331.7 million.

         Interest  expense  on  deposits  increased  $419,000  or  16.1% to $3.0
million for the six months  ended March 31, 2005 from $2.6  million for the same
period in 2004.  This increase was due, in part, to a $29.9 million  increase in
the average balance of  interest-bearing  deposits to $301.8 million for the six
months ended March 31, 2005 from $271.9 million for the same period in 2004. The
components of this net increase for the comparative  periods include an increase
of $5.2 million or 4.4% in the average  balance of  certificates  of deposit,  a
$9.2 million or 7.0% increase in the average  balance of savings  accounts and a
$15.4  million or 70.3%  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 exacerbated by a 9 basis point increase in the average cost
of interest-bearing  deposits which rose to 2.00% for the six months ended March
31,  2005 from 1.91% for the same  period in 2004.  The  components  of this net
decrease for the comparative  periods  includes a 30 basis point increase in the
average cost of  certificates  of deposit,  and a 12 basis point increase in the
average cost of interest-bearing checking accounts. The cost of savings deposits
remained stable at 1.57% for the same comparative periods.

         Interest expense on FHLB advances  decreased  $24,000 to $1,404,000 for
the six months ended March 31, 2005 from $1,428,000 for the same period in 2004.
This  decrease  was due, in part,  to a 24 basis point  reduction in the average
cost of advances which declined to 4.54% for the six months ended March 31, 2005
from 4.78% for the same period in 2004.  The impact on expense  attributable  to
this decline in average cost was partially  offset by a $2.0 million increase in
the average  balance of advances to $61.8  million from $59.8  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 six months
ended March 31, 2005  increased by $582,000 or 11.7%,  to $5.6 million from $5.0
million for the same period in 2004. For those same comparative periods, our net
interest rate spread increased 10 basis points to 2.36% from 2.26% while our net
interest margin increased 7 basis points to 2.67% from 2.60%.

         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.

                                       22

<PAGE>

         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, 2005 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 $112,000 for the six months ended
March 31, 2005  representing  an increase of $58,000  over the same  comparative
period in 2004.  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  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 six months ended March 31, 2005,
total gross loan  balances,  excluding the  allowance for loan loss,  grew $24.6
million  or 8.0%.  The  growth  was  primarily  comprised  of net  increases  in
one-to-four family mortgages  totaling $10.7 million,  increases in multi-family
and  commercial  real estate loans  totaling  $12.3  million,  and net growth in
disbursed balances of construction loans totaling $845,000.

         By  comparison,  loan  growth for the six months  ended  March 31, 2004
totaled  $11.3 million or $13.3  million less than the same  comparative  period
this year. The growth in this prior comparative  period was primarily  comprised
of net increases in one-to-four family mortgages and home equity lines of credit
totaling $12.6 million,  a decrease in  multi-family  and commercial real estate
loans totaling  $830,000,  and net growth in disbursed  balances of construction
loans totaling $145,000.

         In total,  the allowance for loan losses as a percentage of gross loans
outstanding  decreased  2 basis  points to 0.50% at March 31, 2005 from 0.52% at
March 31, 2004.  These ratios  reflect  allowance for loan loss balances of $1.7
million and $1.4 million,  respectively.  Furthermore,  nonperforming loans as a
percentage of gross loans was 0.11% at March 31, 2005 compared to 0.13% at March
31, 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 $26,000 to $537,000
for the six months ended March 31, 2005 compared to the same period in 2004. The
decrease  was  primarily  the result of a decline in  deposit  service  fees and
charges totaling $29,000 largely due to reduced customer  utilization of deposit
services  introduced  in the  prior  fiscal  year.  For these  same  comparative
periods, gain on sale of held for sale loans also declined $20,000 as fewer long
term,  fixed rate  loans were  originated  and sold into the  secondary  market.
Offsetting  these  decreases was an $18,000  increase in income from  bank-owned
life  insurance  policies  resulting  from higher  policy  balances  held by the
Company and an increase of $5,000 in other noninterest income.

         Noninterest Expense. Noninterest expense increased $342,000, or 9.1% to
$4.1  million for the six months  ended March 31, 2005 from $3.8 million for the
same period in 2004. The increase was primarily a

                                       23

<PAGE>

result of higher  expenses  for  salaries and  benefits,  advertising  and other
non-interest  expense,  offset by decreases in occupancy and equipment  expense,
data processing, and federal deposit insurance expense.

         Salaries  and  employee  benefits  increased  $201,000  or 8.6% to $2.5
million for the six months  ended March 31, 2005 as compared to $2.3 million for
the same period in 2004.  A large  portion of the increase was due to $67,000 in
restricted stock plan expense arising from the implementation of the plan during
the current fiscal year.  Additionally,  salaries and wages  including bonus and
payroll  taxes,  increased  $134,000.  Of  this  increase,  $75,000  is  due  to
comparatively  higher  management  incentive plan expense in the current quarter
when  compared  with  the same  period  in 2004  when  significant  cutbacks  in
management  incentive  plan  compensation  resulted from  corporate  performance
targets not being  achieved.  The  remaining  increase  of $59,000 is  primarily
attributable annual increases in employee compensation

         Occupancy and equipment  expense  decreased $32,000 to $409,000 for the
six months  ended March 31, 2005 as compared to $441,000  for the same period in
2004. This decrease is primarily  attributable to a $37,000 decrease in computer
depreciation  expense. For the same comparative  periods,  data processing costs
also  decreased  $41,000 to $293,000 due to the absence in the current period of
non recurring  information  technology conversion and upgrade expenses that were
recognized during 2004.

         Other  noninterest  expenses  increased  $205,000  or 41.3% for the six
months  ended March 31, 2005 as compared to the same period in 2004.  Legal fees
increased  $84,000 to  $156,000  for the six months  ended  March 31,  2005 from
$72,000 for the same period in 2004.  A portion 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  $89,000 to $166,000 for the
six months  ended  March 31,  2005 as  compared  to the same  period in 2004.  A
portion of this increase is due largely to the  Company's  operation as a public
company including implementation costs associated with the Sarbanes-Oxley Act of
2002.  Other  increases in both legal and  professional  and consulting fees are
attributable   to  ongoing   evaluation   and   implementation   of  growth  and
diversification  strategies  relating to the execution of the Company's business
plan.

         Notwithstanding  these increases  mentioned above,  management  expects
ongoing  compliance costs of 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
$23,000  for the six months  ended  March 31, 2005 from the same period in 2004.
The  effective  tax rate was 36.6% and 38.6% for the six months  ended March 31,
2005 and 2004, respectively. The decrease in the effective tax rate is primarily
attributable  to the Bank's  funding of American  Savings  Investment  Corp.  in
November 2004, a wholly owned New Jersey investment  subsidiary formed in August
2004 by American Bank of New Jersey. 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.

                                       24

<PAGE>

         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 March 31, 2005, the
total  approved  loan  origination  commitments  outstanding  amounted  to $16.0
million.  At the same  date,  unused  lines of credit  were  $13.2  million  and
construction  loans in  process  were $4.2  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 March 31, 2005 to borrow
an  additional  $41.0  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. The Bank's total equity was
$33.9  million at March 31, 2005,  or 7.76% of total assets on that date.  As of
March 31,  2005,  the Bank  exceeded all capital  requirements  of the Office of
Thrift Supervision.  The Bank's regulatory capital ratios at March 31, 2005 were
as follows:  core capital 7.96%;  Tier 1 risk-based  capital  14.64%;  and total
risk-based capital 15.34%. 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

                                       25

<PAGE>

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.  Notwithstanding  options  granted  in  the  future,  management  has
evaluated the pro forma cost of the options granted on January 20, 2005. The pro
forma  cost and  impact on  earnings  per share  are  presented  in Note 5 Other
Stock-Based  Compensation.  However,  there  will be no  significant  effect  on
financial  position  for options that vest after  adoption  date 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  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 March 31,  2005,
          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.

                                       26

<PAGE>

PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

At March 31,  2005,  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.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

                  None


ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

                  None

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

At the Company's Annual Stockholder's  Meeting (the Meeting) held on January 20,
2005,  all the nominees for director  proposed by the Company were elected.  The
votes cast for each nominee were as follows:

                                                       For              Withheld
                                                       ---              --------
           Stanley Obal..............................5,303,162           13,690
           Vincent S. Rospond........................5,238,322           78,530

Directors  whose terms of office as a director  continued after the meeting are:
W. George  Parker,  H. Joseph North,  Joseph  Kliminski,  Robert A. Gaccione and
James H. Ward, III.

At the Meeting,  the  shareholders  also  approved the ASB Holding  Company 2005
Stock Option Plan.  The votes cast for and against and the number of abstentions
and broker non-votes were as follows:

           For              Against          Abstain        Non-Vote
           ---              -------          -------        --------
           4,593,201        142,787           8,976         571,888

At the Meeting,  the shareholders  also approved the American Bank of New Jersey
2005  Restricted  Stock  Plan.  The votes cast for and against and the number of
abstentions and broker non-votes were as follows:

           For              Against          Abstain        Non-Vote
           ---              -------          -------        --------
           4,582,083        145,885          17,056         571,888

At the Meeting,  the shareholders  also ratified the appointment of Crowe Chizek
and Company LLC as independent  auditors for the fiscal year ending December 31,
2005.  The votes  cast for and  against  and the number of  abstentions  were as
follows:

           For              Against          Abstain
           ---              -------          -------
           5,300,420         10,042           6,390


ITEM 5.  OTHER INFORMATION

                  None


                                       27


<PAGE>

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.


                                       28

<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: May 13, 2005             /s/Joseph Kliminski
                               -------------------------------------------------
                               Joseph Kliminski
                               President and Chief Executive Officer


Date: May 13, 2005             /s/Eric B. Heyer
                               -------------------------------------------------
                               Eric B. Heyer
                               Senior Vice President and Chief Financial Officer

                                       29