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

                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 2005

     [ ]             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 registrant 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
                                 --------------
              (Registrant's telephone number, including area code)



Indicate  by check  mark  whether  the  registrant:  (1) has 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 [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 126-2 of the Exchange Act).

                                Yes [ ] No [ X ]

As  of  August  12,  2005,  there  were  5,554,500  outstanding  shares  of  the
Registrant's Common Stock.

<PAGE>

                               ASB HOLDING COMPANY

                                Table of Contents

<TABLE>
<CAPTION>

PART I - FINANCIAL INFORMATION (UNAUDITED)

<S>          <C>                                                                                          <C>
     Item 1.    Financial Statements                                                                          3
                Notes to Financial Statements                                                                 9

     Item 2.    Management's Discussion and Analysis of Financial Condition and
                Results of Operations                                                                        13

     Item 3.    Quantitative and Qualitative Disclosures About Market Risk                                   27

     Item 4.    Controls and Procedures                                                                      30

PART II - OTHER INFORMATION

     Item 1.    Legal Proceedings                                                                            31
     Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds                                  31
     Item 3.    Defaults Upon Senior Securities                                                              31
     Item 4.    Submission of Matters to a Vote of Securities Holders                                        31
     Item 5.    Other Information                                                                            31
     Item 6.    Exhibits                                                                                     31


FORM 10-Q SIGNATURE PAGE                                                                                     32

CERTIFICATIONS
</TABLE>

                                        2

<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

ASB Holding Company
Statements of Financial Condition
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
                                                                                    June 30,         September 30,
                                                                                      2005               2004
                                                                                      ----               ----
<S>                                                                              <C>             <C>
ASSETS
Cash and cash equivalents
     Cash and due from banks                                                       $      2,352    $      2,256
     Interest-bearing deposits                                                            6,335           5,778
                                                                                   ------------    ------------
         Total cash and cash equivalents                                                  8,687           8,034

Securities available-for-sale                                                            68,682          89,495
Securities held-to-maturity (fair value: June 30, 2005 -
  $8,162; September 30, 2004 - $2,806)                                                    8,251           2,794
Loans, net                                                                              338,856         308,970
Loans held for sale                                                                         675               -
Premises and equipment                                                                    4,133           3,910
Federal Home Loan Bank stock, at cost                                                     3,303           2,890
Cash surrender value of life insurance                                                    7,442           6,242
Accrued interest receivable                                                               1,494           1,359
Other assets                                                                              1,725           1,250
                                                                                   ------------    ------------
     Total assets                                                                  $    443,248    $    424,944
                                                                                   ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
     Deposits
         Noninterest-bearing                                                       $     26,259    $     22,599
         Interest-bearing                                                               305,132         300,117
                                                                                   ------------    ------------
              Total deposits                                                            331,391         322,716

     Advance payments by borrowers for taxes and insurance                                2,610           2,322
     Federal Home Loan Bank borrowings                                                   66,049          57,491
     Accrued interest payable and other liabilities                                       3,486           3,049
     Common stock in ESOP subject to contingent repurchase obligation                       427              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                                                          17,187          15,687
     Unearned ESOP shares                                                                (1,097)         (1,200)
     Unearned RSP shares                                                                 (1,283)              -
     Retained earnings                                                                   25,023          24,806
     Accumulated other comprehensive loss                                                  (673)           (482)
     Amount reclassified on ESOP shares                                                    (427)            (52)
                                                                                   -------------   -------------
         Total stockholders' equity                                                      39,285          39,314
                                                                                   ------------    ------------
              Total liabilities and stockholders' equity                           $    443,248    $    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>
                                                                 Nine Months                Three Months
                                                                Ended June 30,              Ended June 30,
                                                           ------------------------    ------------------------
                                                              2005          2004           2005          2004
                                                           ------------------------    ------------------------
<S>                                                      <C>           <C>           <C>           <C>
Interest and dividend income
    Loan, including fees                                   $   12,985    $   11,098    $    4,502    $    3,693
    Securities                                                  2,121         2,350           671           762
    Federal funds sold and other                                  111            41            50            16
                                                           ----------    ----------    ----------    ----------
       Total interest income                                   15,217        13,489         5,223         4,471

Interest expense
    NOW and money market                                          312           158           106            50
    Savings                                                     1,599         1,557           490           523
    Certificates of deposit                                     2,811         2,158         1,106           699
    Federal Home Loan Bank advances                             2,181         2,117           777           689
                                                           ----------    ----------    ----------    ----------
       Total interest expense                                   6,903         5,990         2,479         1,961
                                                           ----------    ----------    ----------    ----------

Net interest income                                             8,314         7,499         2,744         2,510

Provision for loan losses                                         105            96            (6)           42
                                                           ----------    ----------    ----------    ----------

Net interest income after provision for loan losses             8,209         7,403         2,750         2,468

Noninterest income
    Deposit service fees and charges                              502           519           182           170
    Income from cash surrender value of
     life insurance                                               200           156            67            41
    Gain on sale of loans                                           5            22             3             1
    Loss on sales of securities available-for-sale                (16)            -           (16)            -
    Other                                                         111           111            29            34
                                                           ----------    ----------    ----------    ----------
       Total noninterest income                                   802           808           265           246

Noninterest expense
    Salaries and employee benefits                              4,368         3,542         1,823         1,199
    Occupancy and equipment                                       606           648           197           207
    Data processing                                               471           500           177           165
    Advertising                                                   198           174            58            45
    Federal deposit insurance                                      34            35            12            11
    Other                                                         950           700           249           203
                                                           ----------    ----------    ----------    ----------
       Total noninterest expense                                6,627         5,599         2,516         1,830
                                                           ----------    ----------    ----------    ----------

Income before provision for income taxes                        2,384         2,612           499           884

Provision for income taxes                                        864         1,015           174           347
                                                           ----------    ----------    ----------    ----------

Net income                                                 $    1,520    $    1,597    $      325    $      537
                                                           ==========    ==========    ==========    ==========

Comprehensive income (loss)                                $    1,329    $      675    $      602    $     (896)
                                                           ==========    ==========    ==========    ==========

Dividends per share:                                       $     0.84    $        -    $     0.09    $        -
                                                           ==========    ==========    ==========    ==========
Earnings per share:
    Basic and diluted                                      $     0.28    $     0.29    $     0.06    $     0.10
                                                           ==========    ==========    ==========    ==========
</TABLE>
      See accompanying notes to unaudited consolidated financial statements.

                                       4

<PAGE>

ASB Holding Company
Statements of Stockholders' Equity
Nine months ended June 30, 2004
(in thousands)
(unaudited)

<TABLE>
<CAPTION>
                                                                                    Accumulated       Amount               Compre-
                                         Additional  Unearned   Unearned              Other        Reclassified            hensive
                                 Common    Paid-in     ESOP       RSP    Retained  comprehensive      On ESOP    Total     Income
                                 Stock    Capital     Shares     Shares  Earnings     Income          Shares     Equity    (Loss)
                                 -----    -------     ------     ------  --------     ------          ------     ------    ------
<S>                           <C>       <C>       <C>       <C>       <C>          <C>            <C>       <C>        <C>
Balance at
  September 30, 2003             $    -    $    100  $     -   $     -  $ 22,644     $    (405)     $      -  $ 22,339

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

ESOP shares earned                    -          81      133         -         -             -             -       214
Reclassification due to change
  in fair value of common stock
  in ESOP subject to contingent
  repurchase obligation               -           -        -         -         -             -           (52)      (52)

Comprehensive income
  Net income                          -           -        -         -     2,162             -             -     2,162
  Change in unrealized gain on
    securities available-for-
    sale,  net of taxes               -           -        -         -         -           (77)            -       (77)
     Total comprehensive income                                                                                           $2,085
                                 ------    -------- --------   -------  --------     ---------      --------  --------    ======

Balance at
  June 30, 2004                  $  555    $ 15,687 $ (1,200)  $     -  $ 24,806     $    (482)     $    (52) $ 39,314
                                 ======    ======== ========   =======  ========     =========      ========  ========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.








                                       5
<PAGE>

ASB Holding Company
Statements of Stockholders' Equity
Nine months ended June 30, 2005
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
                                                                                     Accumulated    Amount                 Compre-
                                         Additional Unearned  Unearned                 Other      Reclassified             hensive
                                  Common   Paid-in    ESOP      RSP        Retained Comprehensive   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                       -      1,419        -    (1,419)          -              -          -          -

RSP shares earned                      -                   -       136           -              -          -        136

ESOP shares earned                     -         81      103         -           -              -          -        184

Cash dividends paid -
  $0.84 per share                      -          -        -         -      (1,303)             -          -     (1,303)
Reclassification due to change
  in fair value of common stock
  in ESOP subject to contingent
  repurchase obligation                -          -        -         -           -              -       (375)      (375)

Comprehensive income
  Net income                           -          -        -         -       1,520              -          -      1,520
  Change in unrealized gain on
    securities available-for-
    sale,  net of taxes                -          -        -         -           -           (191)         -       (191)
     Total comprehensive income                                                                                             $1,329
                                 -------   -------- --------   -------    --------     ----------   --------   --------     ======
Balance at
  June 30, 2005                  $   555   $ 17,187 $ (1,097)  $(1,283)   $ 25,023     $     (673)  $   (427)  $ 39,285
                                 =======   ======== ========   =======    ========     ==========   ========   ========
</TABLE>
     See accompanying notes to unaudited consolidated financial statements.

                                       6

<PAGE>

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

<TABLE>
<CAPTION>
                                                                            Nine Months Ended
                                                                                June 30,
                                                                            -----------------
                                                                            2005        2004
                                                                          --------    --------
<S>                                                                     <C>         <C>
Cash flows from operating activities
    Net income                                                            $  1,520    $  1,597
    Adjustments to reconcile net income to net cash
      provided by operating activities
       Depreciation and amortization                                           267         319
       Net amortization of premiums and discounts                               93         253
       Losses on sales of securities available-for-sale                         16           -
       ESOP compensation expense                                               184         164
       RSP compensation expense                                                136           -
       Provision for loan losses                                               105          96
       Increase in cash surrender value of life insurance                     (200)       (156)
       Gain on sale of loans                                                     5         (22)
       Proceeds from sales of loans                                          1,007       3,809
       Net change in loans held for sale                                      (675)        500
       Change in accrued interest receivable                                  (135)        (80)
       Change in other assets                                                 (147)        194
       Change in deferred income taxes                                        (240)        (37)
       Increase in other liabilities                                           437         966
                                                                          --------    --------
              Net cash from operating activities                             2,373       7,603

Cash flows from investing activities
    Net increase in loans receivable                                       (31,003)    (26,028)
    Purchases of securities held-to-maturity                                (6,227)       (922)
    Principal paydowns on securities held-to-maturity                          762         752
    Purchases of securities available-for-sale                                   -     (21,459)
    Sales of securities available-for-sale                                   1,984           -
    Calls of securities available-for-sale                                   2,000       8,560
    Principal paydowns on securities available-for-sale                     16,449      19,745
    Purchase of Federal Home Loan Bank stock                                (2,524)     (1,513)
    Redemption of Federal Home Loan Bank stock                               2,111       1,448
    Purchase of bank-owned life insurance                                   (1,000)          -
    Purchase of premises and equipment                                        (490)       (330)
                                                                          --------    --------
              Net cash from investing activities                           (17,938)    (19,747)

Cash from financing activities
    Net increase in deposits                                                 8,675       8,169
    Net change in advance payments by borrowers for taxes and insurance        288         213
    Repayment of Federal Home Loan Bank of New York advances               (16,042)     (3,000)
    Federal Home Loan Bank of New York advances                             15,000       1,800
    Net change in Federal Home Loan Bank of New York OLOC                    9,600      10,100
    Net proceeds from stock issuance                                             -      14,728
    Cash dividends paid                                                     (1,303)          -
    Stock subscriptions refunded or applied                                      -     (52,137)
                                                                          --------    --------
              Net cash from financing activities                            16,218     (20,127)
                                                                          --------    --------

Net change in cash and cash equivalents                                        653     (32,271)

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

Cash and cash equivalents at end of period                                $  8,687    $  6,094
                                                                          ========    ========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                        7

<PAGE>

ASB Holding Company
Statements of Cash Flows
(in thousands)
(unaudited)
                                                             Nine Months Ended
                                                                  June 30,
                                                             -----------------
                                                                2005     2004
                                                               ------   ------
Supplemental cash flow information:
    Cash paid during the period for
       Interest                                                $6,908   $6,009
       Income taxes, net of refunds                             1,277      991

Supplemental disclosures of non-cash investing transactions:
    Transfer of loans to other real estate owned                    -      209


     See accompanying notes to unaudited consolidated financial statements.

                                        8


<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 Bank of New Jersey,  which was previously owned by American Savings,
MHC, a federally  chartered mutual holding company.  American Bank of New Jersey
converted  from a mutual to a stock  savings  bank in a mutual  holding  company
reorganization  in 1999 in which no stock  was  sold to any  person  other  than
American Savings, MHC. Currently,  all of the outstanding stock of American Bank
of New  Jersey  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 ("the Bank") and ASB Investment Corp.
("the Investment  Corp.") as of June 30, 2005 and September 30, 2004 and for the
three- and nine-months  ended June 30, 2005 and 2004.  Significant  intercompany
accounts and transactions have been eliminated in  consolidation.  References in
this Quarterly Report on Form 10-Q to the Company generally refer to the Company
and the Bank, unless the context indicates otherwise.  References to "we", "us",
or "our" refer to the Bank or Company, or both, as the context indicates.

         The primary  business of the Company is the  ownership  of the Bank and
the  Investment  Corp.  The Bank  provides a full range of banking  services  to
individual  and  corporate  customers  in New  Jersey.  The Bank is  subject  to
competition from other financial  institutions and to the regulations of certain
federal  and  state  agencies  and  undergoes  periodic  examinations  by  those
regulatory  authorities.  The Investment  Corp. was organized for the purpose of
selling insurance and investment products,  including annuities, to customers of
the Bank and the general public,  with initial activities limited to the sale of
fixed rate annuities. The Investment Corp. has had 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-Q and Article 10 of Regulation S-X. 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 ended  September  30, 2005. In
the opinion of management of the Company,  the  accompanying  unaudited  interim
consolidated financial statements reflect all of the adjustments  (consisting of
normal  recurring   adjustments)  necessary  for  a  fair  presentation  of  the
consolidated  financial position and consolidated  results of operations for the
periods presented.

         The results of operations for the three- and nine-months ended June 30,
2005 are not  necessarily  indicative of the results to be expected for the full
year or any other period.

                                        9

<PAGE>

Note 2 - Minority Offering

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

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

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

Note 3 - Earnings Per Share (EPS)

         Amounts  reported as basic  earnings per share of common stock  reflect
earnings available to common stockholders for the period divided by the weighted
average  number of commons  shares  outstanding  during the period less unearned
ESOP shares.  Diluted EPS reflects the  potential  dilution  that could occur if
securities  or other  contracts  to issue common stock (such as stock awards and
options)  were  exercised  or  converted  into  common  stock or resulted in the
issuance of common stock that then shared in the earnings of the entity. Diluted
EPS is  computed  by dividing  income by the  weighted-average  number of shares
outstanding  for the period plus  common-equivalent  shares  computed  using the
treasury stock method.


The factors used in the earnings per share computation follow.

<TABLE>
<CAPTION>
                                                                                  Nine Months Ended         Three Months Ended
                                                                                      June 30,                   June 30,
                                                                                 -----------------------   -----------------------
                                                                                    2005         2004         2005         2004
                                                                                 ----------   ----------   ----------   ----------
                                                                                             (Dollars in thousands
                                                                                               except share data)
<S>                                                                            <C>          <C>          <C>          <C>
Basic
     Net income                                                                  $    1,520   $    1,597   $      325   $      537

     Weighted average common shares outstanding                                   5,442,278    5,426,230    5,448,955    5,429,542

     Basic earnings per common share                                             $     0.28   $     0.29   $     0.06   $     0.10
                                                                                 ==========   ==========   ==========   ==========

Diluted
     Net income                                                                  $    1,520   $    1,597   $      325   $      537

         Weighted average common shares outstanding
         for basic earnings per common share                                      5,442,278    5,426,230    5,448,955    5,429,542

         Add:  Dilutive effects of assumed exercises of stock options                 5,131            -       32,847            -

         Add:  Dilutive effects of full vesting of stock awards
                                                                                      1,000            -        6,394            -
                                                                                 ----------   ----------   ----------   ----------
         Average shares and dilutive potential
         common shares                                                            5,448,409    5,426,230    5,488,197    5,429,542
                                                                                 ==========   ==========   ==========   ==========

         Diluted earnings per common share                                       $     0.28   $     0.29   $     0.06   $     0.10
                                                                                 ==========   ==========   ==========   ==========
</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 $1,333,080 from the Company and used those funds to
acquire 133,308 shares of the Company's stock at $10 per share.

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

         At June 30, 2005, the ESOP held 133,308 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
stockholder's  equity by an amount  that  represents  the fair  value of all the
shares of Company common stock held by the ESOP, without regard to whether it is
likely that the shares would be distributed or that the recipients of the shares
would be likely to exercise  their right to require the Company to purchase  the
shares.  At  June  30,  2005,  this  contingent  repurchase  obligation  reduced
stockholders' equity by $427,000.

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 Bank of New Jersey 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  that will be  effective  in the first  quarter of
fiscal 2006 beginning October 1, 2005. Under such accounting  requirements,  the
Company  will be required to  recognize  compensation  expense  related to stock
options  outstanding  based  upon the fair  value of such  awards at the date of
grant over the period that such awards are earned.

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

                                       11

<PAGE>

         Employee compensation expense under stock options is currently 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.

<TABLE>
<CAPTION>
                                                           Nine Months Ended         Three Months Ended
                                                               June 30,                   June 30,
                                                         ----------------------     ---------------------
                                                           2005         2004         2005          2004
                                                           ----         ----         ----          ----
                                                                      (Dollars in thousands
                                                                        except share data)
<S>                                                     <C>          <C>           <C>           <C>
Net income as reported                                    $ 1,520      $ 1,597      $   325       $   537

Deduct:  Stock-based compensation expense determined
under fair value based method                                 167            -           56             -
                                                          -------      -------      -------       -------

Pro forma net income                                      $ 1,353      $ 1,597      $   269       $   537
                                                          =======      =======      =======       =======

Basic earnings per share as reported                      $  0.28      $  0.29      $  0.06       $  0.10
                                                          =======      =======      =======       =======

Pro forma basic earnings per share                        $  0.25      $  0.29      $  0.05       $  0.10
                                                          =======      =======      =======       =======

Diluted earnings per share as reported                    $  0.28      $  0.29      $  0.06       $  0.10
                                                          =======      =======      =======       =======

Pro forma diluted earnings per share                      $  0.25      $  0.29      $  0.05       $  0.10
                                                          =======      =======      =======       =======
</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>
                                                            January 20, 2005      May 6, 2005,
                                                            ----------------      ------------
                        Options Awarded

<S>                                                             <C>             <C>
Risk free interest rate                                             3.67%           3.95%

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         $  5.00
                                                                  ======         =======
</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 Litigation 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;
and demand for financial  services in the Company's market area. 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 a result,  the
Company  reported a 16 basis point  improvement  in its net  interest  margin to
2.60%  for the year  ended  September  30,  2004 from  2.44% for the year  ended
September 30, 2003.

         The Company continued to realize modest improvement in its net interest
margin  through  the first nine months of fiscal  2005 when  compared  with that
reported for fiscal 2004. The Company  realized a 14 basis point increase in its
yield on earning  assets  from 4.69% for the year ended  September  30,  2004 to
4.83% for the nine months ended June 30, 2005. This increase was attributable to
a 21 basis point increase in the

                                       13

<PAGE>

yield on investment  securities  and a 115 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 nine months ended June
30,  2005 as  compared to the yield on loans for fiscal  2004.  Offsetting  this
overall improvement in earning asset yields was a 10 basis point increase in the
cost  of  interest-bearing  liabilities  from  2.41%  to  2.51%.  This  increase
resulted,   in  part,   from  a  19  basis   point   increase  in  the  cost  of
interest-bearing deposits. This increase was offset by a 26 basis point decrease
in the cost of  borrowings  due largely to  increased  utilization  of overnight
borrowings. In total, the Company's net interest margin increased 4 basis points
to 2.64% for the nine months ended June 30, 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  increased  modestly to 0.23% of total assets at
June 30, 2005 from 0.12% of total assets at September  30, 2004.  However,  this
increase in  nonperforming  assets has not  resulted in the need for  additional
loan loss  provisions.  Consequently,  loan loss  provisions in the current year
continue to result 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 and losses on sale of assets,  annualized  noninterest
income as a percentage of average assets totaled 0.25% for the nine months ended
June 30, 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  implemented  the  restricted  stock and stock option plans  approved by
shareholders at the Company's annual meeting held on January 20, 2005.

         During  fiscal  2004 we  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 future, we may evaluate the costs and benefits of further prepayments, which
may  result in  additional  one time  charges  to  earnings  in the form of FHLB
prepayment  penalties  to further  improve  the Bank's net  interest  spread and
margin and enhance future earnings..

         Excluding  penalties  for  prepayment  of  borrowed  funds,  annualized
noninterest expense as a percentage of average assets totaled 2.03% for the nine
months  ended June 30,  2005 - an  increase  of 14 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.  However, a portion of this increase
is also attributable to the restructuring of the Company's  Director  Retirement
Plan which  resulted  in a pre tax charge of  $444,000  during the three  months
ended  June  30,  2005.  Additionally,  the  Company  is also  recording  higher
consulting and  professional  fees  associated with evaluating and executing the
Company's balance sheet growth and diversification strategies.

                                       14

<PAGE>

         In relation to the rate of balance sheet growth,  these sharp increases
in  compensation,  benefit and  professional  service costs have been  partially
offset  by  slower  increases  - as  well  as  outright  reductions  - in  other
noninterest  expenses.  For the nine months ended June 30, 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 4 basis points which  partially
offset the 18 basis point combined  increase in all other non interest  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 incurred in fiscal 2004.

         Management  expects  occupancy  and  equipment  expense to  increase in
future  periods as we  implement  our de novo  branching  strategy to expand our
branch office  network.  Our current plan is to open up to five de novo branches
over  approximately  the  next  three  years,  and we  have  identified  several
potential  sites  for de novo  branches.  Costs  for land  purchase  and  branch
construction  will impact earnings going forward.  The expenses  associated with
opening new offices,  in addition to the personnel  and operating  costs that we
will have once these offices are open, will significantly  increase  noninterest
expenses.  Additional  expenses are also expected in connection with our need to
augment the office space available for our administrative operations in order to
add the personnel called for by our growth plans.

         In total,  our return on average  assets  decreased  7 basis  points to
0.47% for the nine  months  ended June 30, 2005 from 0.54% for fiscal 2004 while
return on average  equity  decreased 50 basis points to 5.27% from 5.77% for the
same comparative periods. However, absent the after-tax charge for restructuring
the Company's Director Retirement Plan of approximately  $267,000, our return on
average  assets and return on average  equity for the nine months ended June 30,
2005 would have been 0.55% and 6.20%, respectively.

         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 the first six months of fiscal 2005 while  interest rates
rose from their  historical  lows,  further  increases  in  interest  rates from
current  levels  could  trigger  continued  increases  in  the  Bank's  cost  of
interest-bearing  liabilities  that outpace that of its yield on earning  assets
causing  further net interest  margin  compression.  Such  compression  occurred
during the three months ended June 30, 2005 when our net interest  spread shrank
17 basis  point to 2.24% from 2.41% for the three month  period  ended March 31,
2005.  While yield on earning assets grew 6 basis points from 4.85% at March 31,
2005 to 4.91% at June 30, 2005,  that  improvement in yield was more than offset
by a 23 basis point increase in the cost of  interest-bearing  liabilities  from
2.44% to 2.67% during the same  comparative  period. A portion of this increased
cost was  attributable  to the  disintermediation  of lower  cost,  non-maturity
deposits into higher cost certificates of deposit.

         The risk of continued  disintermediation  of our  deposits  into higher
cost accounts continues to be noteworthy given the Bank's substantial net growth
in non-maturity  deposits during the prior 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 now being  rigorously
tested.

         Finally,  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.

                                       15

<PAGE>

Comparison of Financial Condition at June 30, 2005 and September 30, 2004

         Our total assets increased by $18.3 million, or 4.3%, to $443.2 million
at June 30,  2005 from  $424.9  million at  September  30,  2004.  The  increase
reflected  growth in securities held to maturity,  cash and cash equivalents and
loans receivable, net offset by declines in securities available for sale. Loans
receivable,  net increased by $29.9 million,  or 9.7%, to $338.9 million at June
30, 2005 from $309 million at September 30, 2004. Our increase in loans resulted
from a high volume of  multi-family  and commercial  real estate and one-to-four
family mortgage loan originations.

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

<TABLE>
<CAPTION>
                                                 June 30, 2005          September 30, 2004
                                                 -------------          ------------------
                                                          (Dollars in thousands)
                                                           Percent of              Percent of
                                                            Total                    Total
             Type of Loans                     Amount       Assets      Amount      Assets
             -------------                     ------       ------      ------     ---------
<S>                                         <C>              <C>      <C>            <C>
             Construction                   $   2,569        0.58%   $   3,075       0.72%
             1/1 and 3/3 ARMs                   4,895        1.10%       1,800       0.42%
             3/1 and 5/1 ARMs                 109,720       24.76%      89,694      21.11%
             5/5 and 10/10 ARMs                37,669        8.50%      24,619       5.79%
             7/1 and 10/1 ARMs                  1,748        0.40%       1,675       0.40%
             15 year fixed or less            109,233       24.65%     112,238      26.41%
             Greater than 15 year fixed        60,915       13.74%      64,702      15.23%
             Home equity lines of credit       11,711        2.64%      10,666       2.51%
             Consumer                             725        0.16%         746       0.18%
             Commercial                           993        0.22%         398       0.09%
                                            ---------       -----    ---------      -----
             Total                          $ 340,178       76.75%   $ 309,613      72.86%
                                            =========       ======   =========      =====
</TABLE>

          Securities classified as  available-for-sale  decreased $20.8 million,
or 23.2%,  to $68.7 million at June 30, 2005 from $89.5 million at September 30,
2004 as the Bank continued to reinvest cash flows from the investment securities
portfolio  into loans.  This  decrease  was  partially  offset by an increase in
securities  held to maturity of $5.5  million or 195.3% to $8.3  million at June
30, 2005 from $2.8 million at September  30, 2004.  Additionally,  cash and cash
equivalents  increased  by $653,000,  or 8.1%,  to $8.7 million at June 30, 2005
from $8 million at September 30, 2004.

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

<TABLE>
<CAPTION>
                                                 June 30, 2005          September 30, 2004
                                                 -------------          ------------------
                                                          (Dollars in thousands)
                                                           Percent of              Percent of
                                                            Total                    Total
             Type of Security                   Amount      Assets      Amount       Assets
             ----------------                  ------       ------      ------     ------------
<S>                                         <C>            <C>        <C>            <C>
             Fixed rate MBS                   $ 13,850       3.12%    $  15,923         3.75%
             ARM MBS                             8,442       1.90%        8,755         2.06%
             Fixed rate CMO                     30,731       6.93%       43,982        10.36%
             Floating rate CMO                   2,994       0.68%          435         0.10%
             ARM mutual fund                    10,000       2.26%       10,000         2.35%
             Fixed rate agency debentures       11,998       2.71%       13,997         3.29%
                                              --------      -----     ---------        -----

             Total                            $ 78,015      17.60%    $  93,092        21.91%
                                              ========      =====     =========        =====
</TABLE>

                                       16
<PAGE>

         Assuming no change in interest rates, the estimated average life of the
investment securities  portfolio,  excluding the ARM mutual fund, was 2.09 years
and 2.23 years at June 30, 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  extends to 2.69 years and
3.12 years at June 30, 2005 and September 30, 2004, respectively.

         Total deposits increased by $8.7 million, or 2.7%, to $331.4 million at
June 30, 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.  Certificate of deposit accounts  increased $31.5 million or
26.7% to $149.5 million.  Savings deposits decreased by $22.8 million,  or 15.9%
to $120.6 million.  Checking  deposits,  including demand,  NOW and money market
checking accounts, increased $6,000 or 0.01% to $61.3 million.

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

<TABLE>
<CAPTION>
                                         June 30, 2005              September 30, 2004
                                      -----------------------    ------------------------
                                                  (Dollars in thousands)
                                                   Percent of               Percent of
                                                    Total                     Total
             Deposit category            Amount     Assets          Amount    Assets
             ----------------            ------  ------------      ------  ------------
<S>                                  <C>         <C>           <C>          <C>
             Money market checking    $  20,066     4.53%        $  25,834     6.08%
             Other checking              41,235     9.30%           35,461     8.34%
             Money market savings        32,466     7.32%           44,880    10.56%
             Other savings               88,125    19.88%           98,521    23.18%
             Certificates of deposit    149,499    33.73%          118,020    27.78%
                                      ---------    -----         ---------    -----

             Total                    $ 331,391    74.76%        $ 322,716    75.94%
                                      =========    =====         =========    =====
</TABLE>

         FHLB advances  increased  $8.5 million,  or 14.8%,  to $66.0 million at
June 30, 2005 from $57.5 million at September 30, 2004. The net increase of $8.5
million  comprised a net increase of $9.6 million  drawn on overnight  repricing
lines of credit  offset by the  repayment of a maturing  $1.0 million fixed rate
term advance and $42,000 of amortization on fixed rate amortizing advances.

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

<TABLE>
<CAPTION>

                                           June 30, 2005          September 30, 2004
                                           -------------          ------------------
                                                  (Dollars in thousands)
                                                  Percent of                 Percent of
                                                     Total                      Total
             Remaining Term               Amount     Assets         Amount      Assets
             --------------               ------     ------         ------      ------
<S>                                   <C>           <C>        <C>           <C>
             Overnight                 $  12,300     2.77%       $   2,700      0.64%
             One year or less              6,059     1.37%           1,057      0.25%
             One to two years              8,063     1.82%           8,060      1.90%
             Two to three years            8,063     1.82%           8,062      1.90%
             Three to four years          11,564     2.61%          12,065      2.84%
             Four to five years            6,000     1.35%           7,547      1.77%
             More than five years         14,000     3.16%          18,000      4.23%
                                       ---------    -----        ---------     -----

             Total                     $  66,049    14.90%       $  57,491     13.53%
                                       =========    =====        =========     =====
</TABLE>
                                       17

<PAGE>

         Equity  decreased  $29,000,  or 0.07% to $39.3 million at June 30, 2005
from $39.3 million at September 30, 2004. The decrease  reflects  dividends paid
of $1.3 million,  offset by net income of $1.5 million for the nine months ended
June 30, 2005. In addition,  the amount  reclassified  on ESOP shares  increased
$375,000  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 in
Note 4 above.

Comparison of Operating Results for the Nine Months Ended June 30, 2005 and June
30, 2004

         General.  Net income for the nine  months  ended June 30, 2005 was $1.5
million,  a  decrease  of  $77,000,  or 4.8% from the same  period in 2004.  The
decrease in net income resulted from an increase in noninterest  expense and the
provision for loan losses offset by an increase in net interest  income  coupled
with a decrease in non interest income and the provision for income taxes.

         Interest Income.  Total interest income increased 12.8% or $1.7 million
to $15.2 million for the nine months ended June 30, 2005, from $13.5 million for
the same period in 2004. For those same comparative  periods,  the average yield
on  interest-earning  assets increased 14 basis points to 4.83% from 4.69% while
the average balance of  interest-earning  assets increased $36.1 million or 9.4%
to $419.7 million from $383.6 million.

         Interest  income on loans increased $1.9 million or 17%, to $13 million
for the nine months  ended June 30, 2005 from $11.1  million for the same period
in 2004.  This  increase was due, in part,  to a $52.0  million  increase in the
average balance of loans  receivable to $324.8 million for the nine months ended
June 30,  2005  from  $272.8  million  for same  period in 2004.  The  impact on
interest income  attributable to this growth more than offset the 9 basis points
decrease  in the average  yield on loans which  declined to 5.33% from 5.42% 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 borrower demand.

         The rise in  interest  income  on loans was  offset  by lower  interest
income on  securities,  which  decreased  $229,000 to $2.1  million for the nine
months  ended June 30, 2005 from $2.4  million for the same period in 2004.  The
decrease was due, in part, to a $16.7 million  decline in the average balance of
investment  securities  to $88.0 million for the nine months ended June 30, 2005
from $104.7 million for the same period in 2004.  The impact on interest  income
attributable  to this decline was partly offset by a 23 basis point  increase in
the average  yield on  securities  which grew to 3.22% from 2.99% 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  $70,000 to  $111,000  for the nine months
ended June 30, 2005 from $41,000 for the same period in 2004.  This increase was
due, in part, to an increase of $895,000 in the average  balance of these assets
to $6.9  million for the nine months  ended June 30, 2005 from $6.0  million for
the same period in 2004.  The impact on  interest  income  attributable  to this
growth was further  augmented by a 123 basis point rise in the average  yield on
these  assets  which  increased  to 2.13% from 0.90% for those same  comparative
periods.

         Interest Expense. Total interest expense increased by $913,000 or 15.2%
to $6.9  million for the nine months  ended June 30, 2005 from $6.0  million for
the same period in 2004. For those same comparative periods, the average cost of
interest-bearing liabilities increased 11 basis points to 2.51% from 2.40% while
the average balance of interest-bearing  liabilities  increased $34.0 million or
10.3% to $366.4 million from $332.4 million.

                                       18

<PAGE>

         Interest  expense  on  deposits  increased  $849,000  or  21.9% to $4.7
million for the nine months  ended June 30, 2005 from $3.9  million for the same
period in 2004.  This increase was due, in part, to a $28.8 million  increase in
the average balance of interest-bearing  deposits to $301.8 million for the nine
months ended June 30, 2005 from $273.0  million for the same period in 2004. The
components of this net increase for the comparative  periods include an increase
of $13.2  million in the average  balance of  certificates  of  deposit,  a $1.5
million  increase in the average balance of savings accounts and a $14.1 million
increase in the average balance of interest-bearing checking accounts.

         The impact on interest expense  attributable to the net growth in these
average  balances was  exacerbated  by a 20 basis point  increase in the average
cost of  interest-bearing  deposits to 2.09% for the nine months  ended June 30,
2005 from 1.89% for the same period in 2004. The components of this increase for
the comparative periods include a 42 basis point increase in the average cost of
certificates of deposit, a 2 basis point increase in the average cost of savings
accounts and a 19 basis point  increase in the average cost of  interest-bearing
checking accounts.

         Interest expense on FHLB advances increased $64,000 to $2.2 million for
the nine  months  ended June 30,  2005 from $2.1  million for the same period in
2004. This increase was due, in part, to a $5.2 million  increase in the average
balance of advances to $64.6  million for the nine months ended June 30, 2005 as
compared to the same period one year ago. The impact on expense  attributable to
this increase in average balance was modestly offset by a 26 basis point decline
in the average cost of advances for those same  comparative  periods.  The lower
average cost is primarily  due to  utilization  of overnight  repricing  line of
credit  borrowings  whose  current  cost is  less  than  that  of the  remaining
portfolio of fixed-rate term advances.

         Net Interest Income.  In total, net interest income for the nine months
ended June 30, 2005  increased  by $815,000 or 10.9%,  to $8.3 million from $7.5
million for the same period in 2004. For those same comparative periods, our net
interest  rate spread  increased 3 basis  points to 2.32% while our net interest
margin increased 3 basis points to 2.64% from 2.61%.

         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
June 30,  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  $105,000  for the nine months
ended June 30, 2005 representing an increase of $9,000 over the same comparative
period in 2004. The current year's loss provision was reduced by the reversal of
a $42,000 reserve previously established against an impaired loan which paid off
in full during the current year. Notwithstanding this reversal, other 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

                                       19

<PAGE>

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 three 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 nine months ended June 30, 2005,
total gross loan  balances,  excluding the  allowance for loan loss,  grew $30.7
million  or 9.9%.  The  growth  was  primarily  comprised  of net  increases  in
one-to-four  family mortgages  totaling $14.7 million,  increases in home equity
and  commercial  loans totaling $1.7 million and increases in  multi-family  and
commercial  real estate loans  totaling  $14.8  million,  offset by a decline in
consumer loan totaling $21,000 and the disbursed  balances of construction loans
totaling $500,000.

         By  comparison,  loan  growth for the nine  months  ended June 30, 2004
totaled $22.7 million or $8.0 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 $20.3 million,  an increase of
$2.5 million in multi-family and commercial real estate loans and an increase of
$594,000 in home  equity  loans,  offset by net  decreases  in  consumer  loans,
construction loans and commercial loans totaling $706,000.

         In total,  the allowance for loan losses as a percentage of gross loans
outstanding  decreased  2 basis  points to 0.49% at June 30,  2005 from 0.51% at
June 30, 2004.  These ratios  reflect  allowance  for loan loss balances of $1.7
million  and $1.5  million,  respectively.  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 $6,000 to $802,000 for
the nine  months  ended June 30, 2005  compared to the same period in 2004.  The
decrease   was   primarily   the   result   of  a   $16,000   loss  on  sale  of
available-for-sale  securities  coupled  with a decline  of  $17,000  in deposit
service fees attributable  primarily to reduced customer  utilization of deposit
services introduced in the prior fiscal year. In addition,  there was a decrease
of $17,000  in gains on sale of held for sale  loans as fewer  long term,  fixed
rate loans were originated and sold into the secondary  market.  These decreases
were offset by an increase in income from cash surrender value of life insurance
which grew  $44,000  from  $156,000  for the nine months  ended June 30, 2004 to
$200,000  for the same  quarter  ended this year  resulting  from higher  policy
balances  held  by the  Company.  Other  non-interest  income  remained  flat at
$111,000 from period to period.

         Noninterest  Expense.  Noninterest  expense increased $1.0 million,  or
18.4% to $6.6  million for the nine months ended June 30, 2005 from $5.6 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  $826,000 or 23.3% to $4.4
million for the nine months  ended June 30, 2005 as compared to $3.5 million for
the same period in 2004. A significant portion of this increase was attributable
to a charge  of  $444,000  resulting  from  restructuring  the  Bank's  director
retirement  plan. The plan was amended to provide that retirement  benefits will
be calculated based upon the sum of the annual retainer and regular meeting fees
paid by the  Company  as well as the  Bank.  Previously,  such  retirement  plan
benefits   were  based  upon  only  the  annual   retainer  paid  by  the  Bank.
Additionally,  compensation  and benefits  costs  increased  $136,000 due to the
implementation  of a  restricted  stock plan  during the  current  fiscal  year.
Salaries and wages  including  bonus and payroll  taxes,  increased  $204,000 or
7.98% due, in part, to executive  and lending  staffing  additions  coupled with
overall annual increases in employee  compensation.  Finally,  medical insurance
benefit premiums increased $20,000 or 6.57% for the same comparative periods.

                                       20

<PAGE>

         Occupancy and equipment  expense  decreased $42,000 to $606,000 for the
nine months  ended June 30, 2005 as compared to $648,000  for the same period in
2004. This decrease is primarily  attributable to a $54,000 decrease in computer
depreciation  expense. For the same comparative  periods,  data processing costs
also  decreased  $29,000  from  $500,000 to  $471,000  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 $250,000 for the nine months ended
June 30,  2005 as  compared  to the same  period in 2004.  Legal fees  increased
$104,000 to $187,000  for the nine months  ended June 30, 2005 from  $83,000 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 $104,000 to $217,000 for the nine months
ended June 30, 2005 as  compared  to the same period in 2004.  A portion of this
increase  is  attributable  to  the  Company's  operation  as a  public  company
including  implementation  costs associated with the Sarbanes-Oxley Act of 2002.
Other  comparative  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
$151,000  for the nine months  ended June 30, 2005 from the same period in 2004.
The  effective  tax rate was 36.2% and 38.9% for the nine months  ended June 30,
2005 and 2004,  respectively.  The modest  decrease in the effective tax rate is
primarily  attributable to the Company's funding of American Savings  Investment
Corporation  in November 2004, a wholly owned New Jersey  investment  subsidiary
formed in August  2004 by  American  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 Three  Months Ended June 30, 2005 and
June 30, 2004

         General.  Net  income  for the three  months  ended  June 30,  2005 was
$325,000,  a decrease of  $212,000,  or 39.5% from the same period in 2004.  The
decrease in net income  resulted from an increase in noninterest  expense offset
by an increase in net interest  income and non interest income and a decrease in
the provision for loan losses and income taxes.

         Interest  Income.  Total interest income increased 16.7% or $752,000 to
$5.2 million for the three months ended June 30, 2005, from $4.5 million for the
same period in 2004. For those same  comparative  periods,  the average yield on
interest-earning  assets increased 28 basis points to 4.91% from 4.63% while the
average balance of  interest-earning  assets increased $39.3 million or 10.2% to
$425.6 million from $386.3 million.

         Interest income on loans  increased  $809,000 or 21.9%, to $4.5 million
for the three  months  ended June 30, 2005 from $3.7 million for the same period
in 2004.  This  increase was due, in part,  to a $60.1  million  increase in the
average balance of loans receivable to $337.2 million for the three months ended
June 30,  2005  from  $277.1  million  for same  period in 2004.  The  impact on
interest  income  attributable  to this growth was  augmented by a 1 basis point
rise in the average yield on loans which increased to 5.34% from 5.33% 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 borrower demand.

                                       21

<PAGE>

         The rise in  interest  income  on loans was  offset  by lower  interest
income on securities,  which decreased  $91,000 to $671,000 for the three months
ended June 30, 2005 from $762,000 for the same period in 2004.  The decrease was
due  primarily to a $21.4 million  decline in the average  balance of investment
securities to $81.6 million for the three months ended June 30, 2005 from $103.0
million for the same period in 2004. The impact on interest income  attributable
to this decline was offset by a 33 basis point  increase in the average yield on
securities  which grew to 3.29% from 2.96% 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  $34,000 to $50,000  for the three  months
ended June 30, 2005 from $16,000 for the same period in 2004.  This increase was
due, in part, to an increase of $535,000 in the average  balance of these assets
to $6.7  million for the three  months ended June 30, 2005 from $6.2 million for
the same period in 2004.  The impact on  interest  income  attributable  to this
growth was  augmented  by a 191 basis point rise in the  average  yield on these
assets which increased to 2.97% from 1.06% for those same comparative periods.

         Interest Expense. Total interest expense increased by $518,000 or 26.4%
to $2.5  million for the three  months ended June 30, 2005 from $2.0 million for
the same period in 2004. For those same comparative periods, the average cost of
interest-bearing liabilities increased 31 basis points to 2.66% from 2.35% while
the average balance of interest-bearing  liabilities  increased $38.6 million or
11.6% to $372.1 million from $333.5 million.

         Interest  expense  on  deposits  increased  $430,000  or  33.8% to $1.7
million for the three  months ended June 30, 2005 from $1.3 million for the same
period in 2004.  This increase was due, in part, to a $26.9 million  increase in
the average balance of interest bearing deposits to $302.0 million for the three
months ended June 30, 2005 from $275.1  million for the same period in 2004. The
components of this net increase for the comparative  periods include an increase
of $29.1 million in the average  balance of certificates of deposit and an $11.7
million increase in the average balance of  interest-bearing  checking accounts,
offset by a decrease of $13.9 million increase in the average balance of savings
accounts. The impact on interest expense attributable to the net growth in these
average  balances was  exacerbated  by a 40 basis point  increase in the average
cost of interest-bearing deposits which rose to 2.25% for the three months ended
June 30, 2005 from 1.85% for the same period in 2004. The components of this net
increase for the comparative  periods  includes a 64 basis point increase in the
average cost of certificates of deposit, a 6 basis point increase in the average
cost of savings  accounts  and a 36 basis point  increase in the average cost of
interest-bearing checking accounts.

         Interest expense on FHLB advances increased $88,000 to $777,000 for the
three months ended June 30, 2005 from $689,000 for the same period in 2004. This
increase was due, in part, to a $11.8 million increase in the average balance of
FHLB  advances to $70.2  million for the three  months  ended June 30, 2005 from
$58.4 million for the same period in 2004. The impact on expense attributable to
this increase in average balance was modestly offset by a 29 basis point decline
in the average cost to 4.43% for the three months ended June 30, 2005 from 4.72%
for the same 2004 period. The lower average cost is primarily due to utilization
of overnight repricing line of credit borrowings whose current cost is less than
that of the remaining portfolio of fixed-rate term advances.

         Net Interest Income. In total, net interest income for the three months
ended June 30, 2005  increased  by $234,000 or 9.3%,  to $2.7  million from $2.5
million for the same period in 2004. For those same comparative periods, our net
interest rate spread  decreased 4 basis points to 2.24% from 2.28% while our net
interest margin decreased 2 basis points to 2.58% 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

                                       22

<PAGE>

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
June 30,  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  Company's  quarterly  analysis  of the  allowance  for loan losses
resulted  in a  required  loss  provision  of  $36,000  which was  offset by the
reversal of a $42,000 reserve  previously  established  against an impaired loan
which paid off in full during the quarter ended June 30, 2005. Consequently, the
Company reported a net reduction of the allowance  totaling $6,000 for the three
months  ended June 30, 2005  representing  a decrease  of $48,000  from the loss
provisions recorded for 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 three 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 three months ended June 30, 2005,
total  gross loan  balances,  excluding  the  allowance  for loan loss,  grew $6
million  or 1.8%.  The  growth  was  primarily  comprised  of net  increases  in
one-to-four family mortgages totaling $4 million,  increases in multi-family and
commercial real estate loans totaling $2.6 million, and increases in home equity
loans, consumer loans and commercial loans totaling $718,000 offset by a decline
in disbursed balances of construction loans totaling $1.3 million.

         By  comparison,  loan growth for the three  months  ended June 30, 2004
totaled $10.6 million or $4.6 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 $8.1 million,  an increase in  multi-family  and commercial real estate
loans  totaling $2.8 million and an increase of $29,000 in consumer loans offset
by net decreases in construction loans and commercial loans totaling $303,000.

         In total,  the allowance for loan losses as a percentage of gross loans
outstanding decreased 2 basis point to 0.49% at June 30, 2005 from 0.51% at June
30, 2004. These ratios reflect  allowance for loan loss balances of $1.7 million
and $1.5 million,  respectively. As noted earlier, the level of the allowance is
based on estimates and the ultimate losses may vary from those estimates.

                                       23

<PAGE>

         Noninterest  Income.  Noninterest  income increased $19,000 to $265,000
for the three  months  ended June 30, 2005  compared to the same period in 2004.
The  increase  was  primarily  the result of a rise in deposit  service fees and
charges  totaling  $12,000  primarily due to fees resulting from annuity program
sales.  For these same  comparative  periods,  income on cash surrender value of
life insurance  increased  $26,000 resulting from higher policy balances held by
the Company.  Additionally,  gain on sale of held for sale loans also  increased
$2,000. Offsetting these increases was a decline of $5,000 in other non interest
income and a loss of $16,000 on sale of available-for-sale securities.

         Noninterest Expense.  Noninterest expense increased $686,000,  or 37.5%
to $2.5  million for the three  months ended June 30, 2005 from $1.8 million for
the same period in 2004. The increase was primarily a result of higher  expenses
for  salaries  and  benefits,  advertising,  data  processing,  federal  deposit
insurance  expense  and  other  non-interest  expense,  offset by  decreases  in
occupancy and equipment expense.

         Salaries  and  employee  benefits  increased  $624,000  or 52% to  $1.8
million for the three months ended June 30, 2005 as compared to $1.2 million for
the same period in 2004. A significant portion of this increase was attributable
to a charge  of  $444,000  resulting  from  restructuring  the  Bank's  director
retirement  plan. The plan was amended to provide that retirement  benefits will
be calculated based upon the sum of the annual retainer and regular meeting fees
paid by the  Company  as well as the  Bank.  Previously,  such  retirement  plan
benefits   were  based  upon  only  the  annual   retainer  paid  by  the  Bank.
Additionally,  compensation  and  benefits  costs  increased  $69,500 due to the
implementation  of a  restricted  stock plan  during the  current  fiscal  year.
Salaries and wages including bonus and payroll taxes,  increased  $70,000 due in
part, to executive and lending  staffing  additions  coupled with overall annual
increases in employee  compensation  while medical insurance  premiums increased
$8,000.

         Occupancy and equipment  expense  decreased $10,000 to $197,000 for the
three  months ended June 30, 2005 as compared to $207,000 for the same period in
2004. This decrease is primarily  attributable to a $17,000 decrease in computer
depreciation  expense partly offset by small increases in various  miscellaneous
related  expenses.  For the same  comparative  periods,  data  processing  costs
increased  $12,000  to  $177,000  largely  due to  one-time  conversion  charges
resulting from a change in ATM service providers.

         Other noninterest expenses increased $46,000 for the three months ended
June 30,  2005 as  compared  to the same  period in 2004.  Legal fees  increased
$20,000 to $31,000 for the three months ended June 30, 2005 from $11,000 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  $14,000 to $51,000 for the three months ended June
30, 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
comparative  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
$173,000  for the three months ended June 30, 2005 from the same period in 2004.
The  effective  tax rate was 34.9% and 39.3% for the three months ended June 30,
2005 and 2004,  respectively.  The modest  decrease in the effective tax rate is
primarily  attributable to the Company's funding of American Savings  Investment
Corporation  in November 2004, a wholly owned New Jersey  investment  subsidiary
formed in August  2004 by  American  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

                                       24

<PAGE>

the Bank's  balance of bank-owned  life  insurance,  which  generates tax exempt
income from growth in the cash surrender value of policies, has also contributed
to reductions in the Company's effective income tax rate.

Liquidity and Commitments

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

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

         Liquidity management is both a daily and long-term function of business
management.  Excess  liquidity is generally  invested in short-term  investments
such as overnight  deposits or U.S. Agency  securities.  On a longer-term basis,
the Bank  maintains a strategy of  investing  in various  loan  products  and in
securities collateralized by loans. The Bank uses its sources of funds primarily
to meet its ongoing  commitments,  to pay maturing  certificates  of deposit and
savings  withdrawals,  to fund loan commitments and to maintain its portfolio of
mortgage-backed  securities  and  investment  securities.  At June 30, 2005, the
total  approved  loan  origination  commitments  outstanding  amounted  to $12.3
million.  At the same  date,  unused  lines of credit  were  $13.8  million  and
construction loans in process were $688,000.  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 June 30, 2005 to borrow
an  additional  $44.4  million from the FHLB of New York as a funding  source to
meet commitments and for liquidity purposes.

         In  addition  to the  above  commitments,  the  Company  has  financial
obligations  regarding  outstanding contracts for sale relating to future branch
sites. As of June 30, 2005 the Bank has paid deposits  totaling $417,500 on sale
contracts for future branch  locations.  Upon closing,  the Bank is committed to
disbursing  an  additional  $4,957,500  to fulfill its  obligations  under these
contracts.  These  commitments  are contingent  upon the  fulfillment of certain
conditions outlined in the sale contracts.

                                       25

<PAGE>

Capital

Consistent  with  its  goals  to  operate  a  sound  and  profitable   financial
organization,   the  Bank  actively  seeks  to  maintain  a  "well  capitalized"
institution in accordance with regulatory standards. The Bank's total equity was
$34.7  million at June 30, 2005,  or 7.85% of total  assets on that date.  As of
June 30,  2005,  the Bank  exceeded  all capital  requirements  of the Office of
Thrift  Supervision.  American Bank of New Jersey's regulatory capital ratios at
June 30, 2005 were as follows:  core capital  7.99%;  Tier 1 risk-based  capital
14.57%; and total risk-based capital 15.23%. The regulatory capital requirements
to be considered well capitalized are 5.0%, 6.0%, and 10.0%, respectively.

Impact of Inflation

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

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

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

Recent Regulatory and Accounting Developments

FAS 123, Revised,  requires all public companies to record compensation cost for
stock options provided to employees in return for employee service.  The cost is
measured  at the fair  value  of the  options  when  granted,  and this  cost is
expensed over the employee service period,  which is normally the vesting period
of the options.  This will apply to awards  granted or modified  after the first
quarter or year beginning after December 15, 2005.  Compensation  cost will also
be recorded  for prior option  grants that vest after the date of adoption.  The
effect on results of operations will depend on the level of future option grants
and the  calculation  of the fair value of the  options  granted at such  future
date,  as well as the  vesting  periods  provided,  and so cannot  currently  be
predicted.  Notwithstanding  options  granted  in  the  future,  management  has
evaluated the pro forma cost of the options  granted on January 20, 2005 and May
6, 2005.  The pro forma cost and impact on earnings  per share for the three and
nine months  ended June 30,  2005 are  presented  in Note 5 to the  Consolidated
Financial Statements.

         We will begin to record compensation costs for stock options granted on
January 20, 2005 and May 6, 2005  beginning  on October 1, 2005.  The  estimated
after-tax  cost of these  options for each of the next five  fiscal  years is as
follows:

                                    2006    $  223,302
                                    2007    $  223,302
                                    2008    $  223,302
                                    2009    $  223,302
                                    2010    $   58,277

                                       26

<PAGE>

         Notwithstanding  this  additional  cost,  there will be no  significant
effect on our  financial  position for options that vest after the adoption date
as total equity will not change.  The estimated  after-tax cost of options shown
above includes only the 272,171 options granted prior to June 30, 2005, and thus
does not reflect the options that may be granted under the new stock option plan
that we intend to adopt following this stock offering.


ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk

         Qualitative Analysis.  Because the income on the majority of our assets
and the cost of the  majority of our  liabilities  are  sensitive  to changes in
interest rates, a significant  form of market risk for us is interest rate risk,
or changes in interest rates.  Notwithstanding  the  unpredictability  of future
interest rates, we expect that changes in interest rates may have a significant,
adverse impact on our net interest income.

         Our  ability  to make a  profit  largely  depends  on our net  interest
income,  which could be negatively  affected by changes in interest  rates.  Net
interest income is the difference between:

o    The interest  income we earn on our  interest-earning  assets such as loans
     and securities; and

o    The interest  expense we pay on our  interest-bearing  liabilities  such as
     deposits and amounts we borrow.

         The rates we earn on our assets and the rates we pay on our liabilities
are  generally  fixed for a  contractual  period of time.  We, like many savings
institutions,   have  liabilities   that  generally  have  shorter   contractual
maturities  than our assets.  This  imbalance  can create  significant  earnings
volatility,  because  market  interest  rates  change over time.  In a period of
rising interest rates, the interest income earned on our assets may not increase
as rapidly as the  interest  paid on our  liabilities.  In a period of declining
interest  rates the  interest  income  earned on our  assets may  decrease  more
rapidly,  due  to  accelerated  prepayments,  than  the  interest  paid  on  our
liabilities.

         In addition,  changes in interest rates can affect the average lives of
loans and mortgage-backed and related securities.  A reduction in interest rates
results  in  increased  prepayments  of loans and  mortgage-backed  and  related
securities, as borrowers refinance their debt in order to reduce their borrowing
cost.  This  causes  reinvestment  risk,  because we are  generally  not able to
reinvest  prepayments  at rates that are  comparable  to the rates we previously
earned on the prepaid loans or securities.  At June 30, 2005,  78.1% of our loan
portfolio was comprised of one- to four-family mortgage loans, which experienced
very high prepayment rates during recent years.

         Our net  interest  rate  spread,  which is the  difference  between the
yields we  receive  on assets  and the  rates we pay on  liabilities,  increased
during fiscal 2004 after decreasing  during fiscal 2003 and continued to improve
during the first half of fiscal 2005. For the year ended  September 30, 2004 our
net  interest  rate  spread was 2.28%,  as  compared to 2.14% for the year ended
September  30, 2003.  Our net interest rate spread was 2.32% for the nine months
ended June 30, 2005. In large part, the  improvement in net interest rate spread
resulted from slowing asset  prepayments  attributable  to interest rates rising
from their  historical  lows of fiscal 2003.  During  fiscal 2003,  decreases in
market interest rates triggered rapid loan and security prepayments which caused
our net interest rate spread to shrink.  Our spread shrank  because the decrease
in the  yields  on our  securities  and loan  portfolios  was  greater  than the
decrease in the rates we paid on deposits and borrowings  during that year. This
caused  a  decrease  in our  earnings,  sometimes  referred  to as an  "earnings
squeeze" which eased somewhat in fiscal 2004.

         Depending upon the movement of market interest rates,  our earnings may
continue to be impacted by an "earnings squeeze" in the future. For example,  we
are vulnerable to an increase in interest rates because the majority of our loan
portfolio  consists of  longer-term,  fixed rate loans and  recently  originated

                                       27

<PAGE>

hybrid ARMs that are fixed rate for an initial period of time. At June 30, 2005,
excluding  allowance  for loan  losses and net  deferred  origination  costs and
including loans held for sale, loans totaled $340.2 million  comprising 76.8% of
total assets.  Of those loans,  fixed rate  mortgages  totaled $170.1 million or
38.4% of total assets while hybrid ARMs,  including  3/1, 5/1, 7/1 and 10/1 ARMs
totaled  $154  million  of  34.8%  of  total  assets.   In  an  increasing  rate
environment,  our cost of funds may  increase  more  rapidly  than the  interest
earned on our loan portfolio and  investment  securities  portfolio  because our
primary source of funds is deposits with  substantially  shorter maturities than
the maturities on our loans and investment securities.  Having  interest-bearing
liabilities  that reprice more frequently than  interest-earning  assets will be
detrimental  during  periods of rising  interest  rates and could  cause our net
interest  rate spread to shrink  because the increase in the rates we would earn
on our  securities  and loan  portfolios  would be less than the increase in the
rates we would pay on deposits  and  borrowings.  This could cause a decrease in
our earnings and an "earnings squeeze" just as the decrease in interest rates in
prior periods had impacted our earnings.

         The Board of Directors has  established an  Asset/Liability  Management
Committee,  comprised of Joseph Kliminski,  the Bank's Chief Executive  Officer,
Fred Kowal, the Bank's President and Chief Operating Officer, Richard Bzdek, the
Bank's Executive Vice President and Corporate Secretary,  Eric Heyer, the Bank's
Senior Vice President and Chief  Financial  Officer,  Catherine  Bringuier,  the
Bank's Senior Vice President and Chief Lending Officer,  Josephine Castaldo, the
Bank's Vice  President  of Branch  Administration,  and John  Scognamiglio,  the
Bank's  Vice  President  and  Controller  which is  responsible  for  monitoring
interest rate risk. The committee conducts regular, informal meetings, generally
on a weekly  basis,  to  address  the  day-to-day  management  of the assets and
liabilities  of the Bank,  including  review of the Bank's short term  liquidity
position;  loan and deposit  pricing  and  production  volumes  and  alternative
funding sources;  current  investments;  average lives,  durations and repricing
frequencies of loans and securities;  and a variety of other asset and liability
management  topics.  The  committee  meets  quarterly  to  formally  review such
matters.  The results of the  committee's  quarterly  review are reported to the
full Board,  which makes adjustments to the Bank's interest rate risk policy and
strategies, as it considers necessary and appropriate.

         To reduce the effect of interest  rate changes on net interest  income,
we seek to  utilize  various  strategies  aimed at  improving  the  matching  of
interest-earning asset maturities to interest-bearing  liability maturities. The
main elements of these strategies include seeking to:

(1)  Originate  and retain loans with  adjustable  rate  features and fixed rate
     loans with shorter maturities including commercial real estate loans;

(2)  Originate  longer term, fixed rate loans eligible for sale in the secondary
     market and, if warranted, sell such loans;

(3)  Lengthen the maturities of our liabilities  through  utilization of Federal
     Home Loan Bank advances;

(4)  Attract low cost checking and  transaction  accounts  which tend to be less
     interest rate sensitive; and

(5)  Purchase short to  intermediate  term  securities and maintain a securities
     portfolio that provides a stable cash flow,  thereby  providing  investable
     funds in varying interest rate cycles.

                                       28

<PAGE>

         Quantitative  Aspects of Market  Risk.  The  following  table  presents
American  Bank of New Jersey's  net  portfolio  value as of March 31, 2005,  the
latest date for which  information  is available.  The net  portfolio  value was
calculated by the Office of Thrift Supervision, based on information provided by
the Bank.


                                            Net Portfolio Value
                Net Portfolio Value     As % of Present Value of Assets
     Change                                           Net Portfolio  Basis Point
   in Rate(1)   $ Amount      $ Change      % Change   Value Ratio     Change
   ----------   --------      --------      --------   -----------     ------
                (Dollars in thousands)

     +300 bp     $24,991       -23,067        -48%        5.98%       -468 bp
     +200 bp      33,146       -14,912        -31         7.72%       -293 bp
     +100 bp      41,117        -6,940        -14         9.33%       -132 bp
        0 bp      48,058                                 10.66%
     -100 bp      53,007         4,950        +10        11.53%       + 87 bp
     -200 bp      53,372         5,314        +11        11.49%       + 84 bp

----------
(1)  The -300  basis  points  scenario  is not shown  due to the low  prevailing
     interest rate environment. One basis point is 0.01% or one one-hundredth of
     a percent.  Thus, a 100, 200 or 300 basis point change is  equivalent  to a
     change of 1.0%, 2.0% or 3.0%, respectively.

         Future  interest  rates or their effect on net  portfolio  value or net
interest  income are not  predictable.  Computations  of prospective  effects of
hypothetical interest rate changes are based on numerous assumptions,  including
relative levels of market interest rates, prepayments, and deposit run-offs, and
should not be relied upon as indicative of actual results.  Certain shortcomings
are  inherent  in  this  type  of  computation.   Although  certain  assets  and
liabilities may have similar maturity or periods of repricing, they may react at
different  times and in  different  degrees to  changes  in the market  interest
rates.  The interest  rate on certain  types of assets and  liabilities  such as
demand  deposits and savings  accounts,  may  fluctuate in advance of changes in
market interest rates,  while rates on other types of assets and liabilities may
lag behind changes in market interest  rates.  Certain assets such as adjustable
rate mortgages generally have features, which restrict changes in interest rates
on a short-term  basis and over the life of the asset.  In the event of a change
in  interest  rates,  prepayments  and early  withdrawal  levels  could  deviate
significantly  from  those  assumed  in making  calculations  set  forth  above.
Additionally,  an  increased  credit  risk may  result  as the  ability  of many
borrowers to service  their debt may  decrease in the event of an interest  rate
increase.

         Notwithstanding  the discussion  above,  the qualitative  interest rate
analysis  findings  presented  herein indicate that a rapid increase in interest
rates would adversely affect our net interest margin and earnings. Given the low
interest rates prevalent in the current marketplace, management is continuing to
evaluate a variety of  strategies to manage the earnings  risks  presented by an
upward movement in interest rates.  These strategies  include the continued sale
of longer term,  fixed rate  conforming  loan  originations  into the  secondary
market and the use of wholesale borrowings to match fund longer term, fixed rate
loan originations that are retained in portfolio.

         For the purpose of managing interest rate risk, we continue to maintain
a strategy  of selling a portion of our long  term,  fixed rate  mortgage  loans
originated into the secondary market.  For the year ended September 30, 2004, we
sold a  total  of  $4.8  million  of  loans  to the  Federal  National  Mortgage
Association.  Gains on sales of mortgage loans held for sale totaled $27,000 for
2004.  Such  sales  contributed  to a 14.9% or $11.3  million  reduction  in the
balance of fixed rate mortgage loans with original maturities  exceeding fifteen
years during 2004.

         We offer  borrowers the option to lock in their  interest rate prior to
closing their mortgage  loans.  Once a loan's rate is locked,  we are exposed to
market value risk because the price at which we can sell the loan will vary with
movements in market  interest  rates.  To manage that risk,  we may take forward
commitments to sell loans at a fixed price. At June 30, 2005, the Bank had three
outstanding  contracts to sell long term,  fixed rate  mortgage  loans  totaling
$675,000 to Federal National  Mortgage  Association.  Loans sold under contracts
drawn in the future may generate  additional gains or losses on sale of mortgage
loans in subsequent periods.

         Finally,  during fiscal 2004 we 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 future,  we may evaluate  the costs and benefits of further  prepayments,
which may result in additional  one time charges to earnings in the form of FHLB
prepayment  penalties  to further  improve  the Bank's net  interest  spread and
margin and enhance future earnings.

                                       29

<PAGE>

ITEM 4.  CONTROLS AND PROCEDURES

(a)  Evaluation  of  disclosure  controls and  procedures:  An evaluation of the
     Company's  disclosure  controls  and  procedures  (as  defined  in  Section
     13(a)-15(e) of the Securities  Exchange Act of 1934 ("the Act") was carried
     out under the supervision and with the participation of the Company's Chief
     Executive Officer, Chief Financial Officer and several other members of the
     Company's senior management.  Based on such evaluation, the Company's Chief
     Executive  Officer and Chief Financial Officer concluded that the Company's
     disclosure  controls and  procedures  in effect as of the end of the period
     covered  by this  quarterly  report  are  effective  in  ensuring  that the
     information required to be disclosed by the Company in the reports it files
     or  submits  under  the  Act is (i)  accumulated  and  communicated  to the
     Company's  management  (including  the Chief  Executive  Officer  and Chief
     Financial  Officer)  in a  timely  manner,  and (ii)  recorded,  processed,
     summarized and reported within the time periods specified in the Securities
     and Exchange Commission rules and forms.

(b)  Changes in internal controls: In the quarter ended June 30, 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.

                                       30

<PAGE>

PART II - - OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

At June 30,  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

                  None


ITEM 5.  OTHER INFORMATION

                  None


ITEM 6.  EXHIBITS

(a)      Exhibits

          31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14a
               and 15d-14a.
          31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14a
               and 15d-14a.
          32   Certification  of Chief  Executive  Officer  and Chief  Financial
               Officer  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
               2002.

                                       31

<PAGE>

                                   SIGNATURES


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


                             ASB Holding Company
                                 (Registrant)


Date: August 12, 2005        /s/Joseph Kliminski
                             ---------------------------------------------------
                             Joseph Kliminski
                             Chief Executive Officer


Date: August 12, 2005        /s/Eric B. Heyer
                             ---------------------------------------------------
                             Eric B. Heyer
                             Senior Vice President and Chief Financial Officer

                                       32