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

                                   FORM 10-QSB

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

                  For the quarterly period ended March 31, 2004

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

               For the transition period from ________ to ________

                        COMMISSION FILE NUMBER 000-31789

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

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


                 365 BROAD STREET, BLOOMFIELD, NEW JERSEY 07003
                 ----------------------------------------------
                    (Address of Principal Executive Offices)


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



Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act  during  the past 12 months  (or such  shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

                                Yes [ X ]    No [ ]


As of May 14, 2004, there were 5,554,500  outstanding shares of the Registrant's
Common Stock.

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

<PAGE>

                               ASB HOLDING COMPANY

                                TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION (UNAUDITED)

     Item 1.    Financial Statements                                          3
                Notes to Financial Statements                                 8

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

     Item 3.    Controls and Procedures                                      19


PART II - OTHER INFORMATION

     Item 1.    Legal Proceedings                                            20
     Item 2.    Changes in Securities and Issuer Purchases of Equity
                Securities                                                   20
     Item 3.    Defaults Upon Senior Securities                              20
     Item 4.    Submission of Matters to a Vote of Securities Holders        20
     Item 5.    Other Information                                            20
     Item 6.    Exhibits and Reports                                         20


FORM 10-QSB SIGNATURE PAGE                                                   21

CERTIFICATIONS                                                               22

                                       2
<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

ASB HOLDING COMPANY
STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
                                                                                     MARCH 31,     SEPTEMBER 30,
                                                                                       2004            2003
                                                                                       ----            ----
<S>                                                                                <C>             <C>
ASSETS
Cash and cash equivalents
     Cash and due from banks                                                       $      2,042    $      1,206
     Interest-bearing deposits                                                            1,764          31,259
     Federal funds sold                                                                       -           5,900
                                                                                   ------------    ------------
         Total cash and cash equivalents                                                  3,806          38,365

Securities available-for-sale                                                            98,853         107,391
Securities held-to-maturity (fair value: March 31, 2004 -
  $3,002; September 30, 2003 - $2,864)                                                    2,981           2,839
Loans, net                                                                              274,193         262,844
Loans held for sale                                                                         401             500
Premises and equipment                                                                    4,024           3,939
Federal Home Loan Bank stock, at cost                                                     2,870           3,150
Cash surrender value of life insurance                                                    5,143           5,028
Accrued interest receivable                                                               1,238           1,255
Other real estate owned                                                                     209               -
Other assets                                                                              1,010           1,755
                                                                                   ------------    ------------
     Total assets                                                                  $    394,728    $    427,066
                                                                                   ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
     Deposits
         Noninterest-bearing                                                       $     20,994    $     21,676
         Interest-bearing                                                               272,802         271,150
                                                                                   ------------    ------------
              Total deposits                                                            293,796         292,826

     Stock subscriptions received                                                             -          52,137
     Advance payments by borrowers for taxes and insurance                                2,220           2,079
     Federal Home Loan Bank advances                                                     57,400          55,000
     Accrued interest payable and other liabilities                                       2,560           2,685

     Common stock in ESOP subject to contingent repurchase obligation                        57               -

Stockholders' Equity
     Preferred stock, $.10 par value, 5,000,000 shares authorized                             -               -
     Common stock, $.10 par value; 20,000,000 shares
       authorized; 5,554,500 shares issued and outstanding                                  555               -
     Additional paid-in capital                                                          15,652             100
     Unearned ESOP shares                                                                (1,266)              -
     Retained earnings                                                                   23,705          22,644
     Accumulated other comprehensive income (loss)                                          106            (405)
     Amount reclassified on ESOP shares                                                     (57)              -
                                                                                   ------------    ------------
         Total stockholders' equity                                                      38,695          22,339
                                                                                   ------------    ------------
              Total liabilities and stockholders' equity                           $    394,728    $    427,066
                                                                                   ============    ============
</TABLE>

            See accompanying notes to unaudited financial statements

                                       3
<PAGE>
ASB HOLDING COMPANY
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
                                                                  SIX MONTHS                 THREE MONTHS
                                                                ENDED MARCH 31,             ENDED MARCH 31,
                                                           ------------------------    ------------------------
                                                              2004          2003           2004          2003
                                                           ----------    ----------    ----------    ----------
<S>                                                        <C>           <C>           <C>           <C>
Interest and dividend income
    Loan, including fees                                   $    7,405    $    7,128    $    3,713    $    3,624
    Securities                                                  1,587         1,582           837           719
    Federal funds sold and other                                   25           133            14            63
                                                           ----------    ----------    ----------    ----------
       Total interest income                                    9,017         8,843         4,564         4,406

Interest expense
    NOW and money market                                          109           178            52            76
    Savings                                                     1,033         1,132           471           554
    Certificates of deposit                                     1,458         1,826           709           886
    Federal Home Loan Bank advances                             1,428         1,369           710           736
                                                           ----------    ----------    ----------    ----------
       Total interest expense                                   4,028         4,505         1,942         2,252
                                                           ----------    ----------    ----------    ----------

Net interest income                                             4,989         4,338         2,622         2,154

Provision for loan losses                                          54           130            13            79
                                                           ----------    ----------    ----------    ----------

Net interest income after provision for loan losses             4,935         4,208         2,609         2,075

Noninterest income
    Deposit service fees and charges                              349           227           172           109
    Income from cash surrender value of
     life insurance                                               115           118            64            58
    Gain on sale of loans                                          21             -            14             -
    Loss on sales of securities available-for-sale                  -          (188)            -          (188)
    Other                                                          78            18            33             6
                                                           ----------    ----------    ----------    ----------
       Total noninterest income                                   563           175           283           (15)

Noninterest expense
    Salaries and employee benefits                              2,344         2,317         1,220         1,088
    Occupancy and equipment                                       441           391           217           200
    Data processing                                               334           264           177           139
    Advertising                                                   129           103            58            55
    Federal deposit insurance                                      24            21            13            11
    Other                                                         497           300           254           154
                                                           ----------    ----------    ----------    ----------
       Total noninterest expense                                3,769         3,396         1,939         1,647
                                                           ----------    ----------    ----------    ----------

Income before provision for income taxes                        1,729           987           953           413

Provision for income taxes                                        668           355           366           145
                                                           ----------    ----------    ----------    ----------
Net income                                                 $    1,061    $      632    $      587    $      268
                                                           ==========    ==========    ==========    ==========
Comprehensive income                                       $    1,572    $      303    $      911    $      660
                                                           ==========    ==========    ==========    ==========
Earnings per share:

    Basic and diluted                                      $     0.20    $     0.16    $     0.11    $     0.07
                                                           ==========    ==========    ==========    ==========
Weighted average shares                                     5,424,565     3,888,150     5,426,209     3,888,150
</TABLE>

            See accompanying notes to unaudited financial statements

                                       4
<PAGE>

ASB HOLDING COMPANY
STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED MARCH 31, 2004
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
                                                                                  Accumulated     Amount
                                                                                     Other     Reclassified
                                          Additional    Unearned                 Comprehensive     on
                               Common       Paid-in       ESOP        Retained      Income         ESOP      Total
                                Stock       Capital      Shares       Earnings      (Loss)        Shares    Equity
                             ---------    ----------   ----------   ----------   ----------   ----------  ----------
<S>                          <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                   -            46           67                                                113

Reclassification of
  common stock in ESOP
  to contingent repurchase
  obligation                         -             -            -            -            -          (57)        (57)

    Net income                       -             -            -        1,061                                 1,061
Change in unrealized
  gain on securities
  available-for-sale,
  net of taxes                       -             -            -            -          511                      511
                             ---------    ----------   ----------   ----------   ----------   ----------  ----------
Balance at
  March 31, 2004             $     555    $   15,652   $   (1,266)  $   23,705   $      106   $      (57) $   38,695
                             =========    ==========   ==========   ==========   ==========   ==========  ==========
</TABLE>

            See accompanying notes to unaudited financial statements

                                       5
<PAGE>

ASB HOLDING COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
                                                                             SIX MONTHS ENDED
                                                                                MARCH 31,
                                                                          --------------------
                                                                             2004       2003
                                                                          --------    --------
<S>                                                                       <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                            $  1,061    $    632
    Adjustments to reconcile net income to net cash
      provided by operating activities
       Depreciation and amortization                                           216         177
       Net amortization of premiums and discounts                              175         616
       Losses on sales of securities available-for-sale                         --         188
       ESOP compensation expense                                               113          --
       Provision for loan losses                                                54         130
       Increase in cash surrender value of life insurance                     (115)       (118)
       Gain on sale of other real estate owned                                  --          (3)
       Gain on sale of loans                                                   (21)         --
       Proceeds from sales of loans                                          2,137          --
       Net change in of loans held for sale                                     99          --
       Change in accrued interest receivable                                    17          62
       Change in other assets                                                  396        (275)
       Change in deferred income taxes                                           9          19
       Decrease in other liabilities                                          (125)       (527)
                                                                          --------    --------
              Net cash from operating activities                             4,016         901

CASH FLOWS FROM INVESTING ACTIVITIES
    Net increase in loans receivable                                       (13,728)    (33,938)
    Purchases of securities held-to-maturity                                  (756)         --
    Principal paydowns on securities held-to-maturity                          606       2,849
    Purchases of securities available-for-sale                              (9,016)    (62,223)
    Sales of securities available-for-sale                                      --      21,026
    Principal paydowns on securities available-for-sale                     18,238      37,822
    Purchase of Federal Home Loan Bank stock                                  (745)       (750)
    Redemption of Federal Home Loan Bank stock                               1,025          50
    Purchase of bank-owned life insurance                                       --        (324)
    Purchase of premises and equipment                                        (301)       (310)
    Proceeds from sale of other real estate owned                               --          63
                                                                          --------    --------
       Net cash from investing activities                                   (4,677)    (35,735)

CASH FROM FINANCING ACTIVITIES
    Net increase in deposits                                                   970      11,270
    Net change in advance payments by borrowers for taxes and insurance        141         137
    Repayment of Federal Home Loan Bank of New York advances                (2,000)     (2,000)
    Federal Home Loan Bank of New York advances                                 --      15,000
    Net change in Federal Home Loan Bank of New York OLOC                    4,400          --
    Refund of stock subscriptions received                                 (52,137)         --
    Net proceeds from stock issuance                                        14,728          --
                                                                          --------    --------
       Net cash from financing activities                                  (33,898)     24,407
                                                                          --------    --------
Net change in cash and cash equivalents                                    (34,559)    (10,427)

Cash and cash equivalents at beginning of period                            38,365      17,330
                                                                          --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                $  3,806    $  6,903
                                                                          ========    ========
</TABLE>
            See accompanying notes to unaudited financial statements

                                       6
<PAGE>

ASB HOLDING COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
                                                            SIX MONTHS ENDED
                                                                 MARCH 31,
                                                          ----------------------
                                                           2004           2003
                                                          ------         ------
<S>                                                        <C>            <C>
Supplemental cash flow information:
Cash paid during the period for
   Interest                                                $4,023         $4,452
   Income taxes, net of refunds                               626            445
</TABLE>


            See accompanying notes to unaudited financial statements

                                       7
<PAGE>
NOTES TO FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

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

         The accompanying  unaudited  consolidated  financial statements include
the  accounts  of ASB  Holding  Company  ("the  Company")  and its wholly  owned
subsidiaries,  American Savings Bank of NJ ("the Bank") and ASB Investment Corp.
("the Investment Corp.") as of March 31, 2004 and September 30, 2003 and for the
three-  and  six-month  periods  ended  March  31,  2004 and  2003.  Significant
intercompany accounts and transactions have been eliminated in consolidation.

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

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States  of  America  for  interim  financial  information  and  with the
instructions to Form 10-QSB and Article 10 of Regulation S-B. Accordingly,  they
do not include all the information  and notes required by accounting  principles
generally  accepted  in the United  States of  America  for  complete  financial
statements.  These interim  statements  should be read in  conjunction  with the
consolidated  financial  statements  and notes  included in the Annual Report on
Form 10-KSB.  The  September 30, 2003 balance  sheet  presented  herein has been
derived  from the audited  financial  statements  included  in the  consolidated
financial  statements  and notes  included  in the Annual  Report on Form 10-KSB
filed with the  Securities  and  Exchange  Commission,  but does not include all
disclosures  required by accounting  principles generally accepted in the United
States of America.

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

         Interim  statements  are subject to possible  adjustment  in connection
with the annual audit of the Company for the year ending  September 30, 2004. In
the opinion of management of the Company,  the  accompanying  unaudited  interim
consolidated financial statements reflect all of the adjustments  (consisting of
normal  recurring   adjustments)  necessary  for  a  fair  presentation  of  the
consolidated  financial position and consolidated  results of operations for the
periods presented.

         The results of operations  for the three and six months ended March 31,
2004 and 2003 are not  necessarily  indicative of the results to be expected for
the full year.

                                       8
<PAGE>


NOTE 2 - MINORITY OFFERING

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

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

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


Note 3 - Earnings Per Share

         Amounts reported as earnings per share of common stock reflect earnings
available to stockholders  for the period divided by the weighted average number
of commons shares outstanding during the period less unearned ESOP shares. There
were no potentially dilutive securities for any periods presented.  Earnings per
share for prior  periods  have been  restated to reflect the  conversion  of 100
shares of Bank stock into 3,888,150  shares of Company stock  representing  100%
ownership of the Bank prior to the minority stock offering.


Note 4 - Employee Stock Ownership Plan

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

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

         At March 31, 2004, the ESOP held 133,000 shares of the Company's common
stock  and  3,333  shares  held  by the  ESOP  were  allocated  to the  accounts
maintained for participants.  Participants become eligible to receive payment of
the vested benefits under the plan upon retirement, disability or termination of
employment. Participants who elect to receive their benefit payments in the form
of ASB Holding Co.  common  stock may require the Company to purchase the common
stock  distributed at fair value during two 60-day  periods.  The first purchase
period  begins on the date the  benefit is paid and the second  purchase  period
begins on the first anniversary of the payment date. This contingent  repurchase
obligation is reflected in the Company's  financial  statements as "Common stock
in ESOP subject to contingent  repurchase  obligation" and reduces shareholder's
equity by an amount that  represents the  independently  appraised fair value of
all the  shares of Company  common  stock  held by the ESOP,  without  regard to
whether it is likely that the shares would be distributed or that the recipients
of the shares would be likely to exercise  their right to require the Company to
purchase the shares.  At March 31, 2004, this contingent  repurchase  obligation
reduced stockholders' equity by $57,000.

                                       9
<PAGE>

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

Forward-Looking Statements

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


GENERAL

         The  Company's  results  of  operations  depend  primarily  on its  net
interest  income.  Net interest  income is the  difference  between the interest
income  we earn  on our  interest-earning  assets  and  the  interest  we pay on
interest-bearing  liabilities. It is a function of the average balances of loans
and investments versus deposits and borrowed funds outstanding in any one period
and the  yields  earned  on those  loans and  investments  and the cost of those
deposits and borrowed funds. Our  interest-earning  assets consist  primarily of
residential  mortgage  loans,  multi-family  and commercial real estate mortgage
loans,  residential  mortgage-related  securities  and U.S.  Agency  debentures.
Interest-bearing liabilities consist primarily of retail deposits and borrowings
from the Federal Home Loan Bank of New York.  As a result of declining  interest
rates throughout the last two years, our net interest margin generally reflected
a declining trend which subsequently  reduced our net income.  With increases in
the level of market  interest rates since the  historical  lows of mid 2003, the
declining  trend in net interest  margin has reversed and improved for the first
two  quarters  of fiscal  2004 from a low of 2.17%  for the three  months  ended
September 30, 2003 to 2.51% for the three months ended  December 31, 2003 and to
2.73% for the three months ended March 31,  2004.  Consequently,  net income has
also increased for the first two quarters of fiscal 2004 as well.

         Our results of operations also depend on our provision for loan losses,
noninterest income, and noninterest expense. Noninterest income includes deposit
service fees and charges,  income on the cash surrender  value of life insurance
and gains on sales of loans available for sale. Annualized noninterest income as
a percentage  of average  assets has improved  slightly in recent  quarters from
0.26% for the three months  ended  September  30,  2003,  to 0.29% for the three
months ended March 31, 2004.  Noninterest expense includes salaries and employee
benefits,  occupancy and equipment expenses and other general and administrative
expenses.  Annualized  noninterest expense as a percentage of average assets has
increased from 1.86% for the three months ended  September 30, 2003 to 1.97% for
the three months ended March 31, 2004.

         In total,  our return on average  assets has increased to 0.59% for the
three  months  ended  March 31,  2004 from  0.28%  for the  three  months  ended
September 30, 2003. In a stable  interest rate  environment,  we

                                       10
<PAGE>

expect that our net interest margin will stabilize at these levels. However, our
net  interest  margin may be at risk of further  declines in a rising or falling
rate environment.

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

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2004 AND SEPTEMBER 30, 2003

         Our total assets decreased by $32.3 million, or 7.6%, to $394.7 million
at March 31,  2004 from $427.1  million at  September  30,  2003.  The  decrease
reflected refunds of stock  oversubscriptions  in connection with the October 3,
2003 closing of the Company's stock offering.  Loans increased by $11.4 million,
or 4.3%,  to $274.2  million at March 31, 2004 from $262.8  million at September
30,  2003.  Our  increase  in loans  resulted  from a higher  volume  of  one-to
four-family mortgage loan originations  reflecting increased demand as borrowers
sought to take advantage of continued low market  interest  rates.  Beginning in
June of 2003, for the purpose of managing  interest rate risk, the Bank returned
to a strategy of selling a portion of its  long-term,  fixed rate mortgage loans
originated  into the  secondary  market,  resulting  in  loans  held for sale of
$401,000  at  March  31,  2004.   Securities  classified  as  available-for-sale
decreased $8.5 million,  or 8.0%, to $98.9 million at March 31, 2004 from $107.4
million at September  30,  2003.  Cash and cash  equivalents  decreased by $34.6
million,  or 90.1%,  to $3.8  million at March 31,  2004 from  $38.4  million at
September 30, 2003 to provide funding for refunds of stock oversubscriptions.

         Total deposits increased by $1.0 million, or 0.3%, to $293.8 million at
March 31, 2004 from $292.8  million at  September  30,  2003.  The  increase was
primarily  due to an  increase  in  savings  deposits,  offset by a  decline  in
certificates  of deposit.  Savings  accounts  increased  $6.0 million or 4.6% to
$133.7 million.  Certificates of deposit  decreased by $5.2 million,  or 4.3% to
$116.5  million.  Checking  deposits,  including  demand,  NOW and money  market
checking accounts,  increased $252,000 or 0.6% to $43.6 million. The increase in
savings  accounts is primarily due to a new statement  savings  account  product
which became available during the fourth quarter of 2003.

         FHLB  advances  increased  $2.4  million,  or 4.4%, to $57.4 million at
March 31, 2004 from $55.0  million at September  30,  2003.  The net increase of
$2.4 million was comprised of $4.4 million drawn on an overnight  line of credit
offset by a $2.0 million repayment of maturing fixed rate advances. The increase
in  FHLB  advances  was  used to  fund  new  loan  originations  and  continuing
operations. New advances drawn were overnight line of credit borrowings.

         Equity increased $16.4 million, or 73.2%, to $38.7 million at March 31,
2004 from $22.3  million at  September  30,  2003.  The  increase  reflects  the
completion of the minority  stock  offering  whereby the Company sold  1,666,350
shares of common stock at $10 per share and received  proceeds of $16.1  million
net of conversion  costs.  Further,  the Company  recognized  net income of $1.1
million  for the six months  ended  March 31,  2004,  in addition to a change in
accumulated  other  comprehensive  income of $511,000 for  unrealized  after-tax
gains on securities available-for-sale.


COMPARISON  OF  OPERATING  RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND
MARCH 31, 2003

         General.  Net  income for the three  months  ended  March 31,  2004 was
$587,000,  an increase of $319,000,  or 119.3% from the same period in 2003. The
increase in net income  resulted from an increase in net interest income as well
as  an  increase  in  noninterest  income,  partially  offset  by  increases  in
noninterest expense and the provision for income taxes.

                                       11
<PAGE>

         Interest  Income.  Total interest income  increased 3.6% or $158,000 to
$4.6 million for the three  months  ended March 31, 2004,  from $4.4 million for
the same period in 2003. The average yield on interest  earning assets decreased
31 basis  points from 5.07% for the three  months  ended March 31, 2003 to 4.76%
for the comparative period this year.

         Interest income on loans increased $89,000 or 2.5%, to $3.7 million for
the three  months  ended  March 31,  2004  from $3.6  million  for the same 2003
period.  The average  balance of loans  receivable  increased  $37.5  million to
$273.0 million for the three months ended March 31, 2004, which more than offset
the  decrease in the average  yield from 6.15% for the three  months ended March
31,  2003 to 5.44% for the same  period in 2004.  The  increase  in the  average
balance  of loans  receivable  was the  result  of loan  originations  exceeding
repayments due to strong demand, reflecting generally lower interest rates.

         The  rise in  interest  income  on loans  was  supplemented  by  higher
interest  income on  securities,  which  increased  $118,000 to $837,000 for the
three months ended March 31, 2004 from the same period in 2003. The increase was
due to a 27 basis point  increase in the average yield on securities  from 2.92%
for the three  months ended March 31, 2003 to 3.19% for the same period in 2004,
as prepayments  declined,  resulting in lower premium amortization and therefore
higher yields.  In addition,  the average  balance of securities  increased from
$98.5  million for the three months  ended March 31, 2003 to $104.9  million for
the three months ended March 31, 2004.

         Further,   interest   income   on   federal   funds   sold  and   other
interest-bearing  deposits  declined  $49,000 to $14,000 due to a decline in the
average balance of $8.1 million to $5.7 million for the 2004 period.

         Interest Expense. Total interest expense decreased by $310,000 or 13.8%
to $1.9  million for the three months ended March 31, 2004 from $2.2 million for
the same  period in 2003.  The  average  cost of  interest  bearing  liabilities
decreased  53 basis points from 2.88% for the three months ended March 31, 2003,
to 2.35% for the same  period in 2004.  This  decline  in the  average  cost was
offset by an  increase  of $18.1  million in the  average  balance  of  interest
bearing liabilities for the three months ended March 31, 2004, to $331.2 million
from $313.1 million for the same three months in 2003.

         The  average  balance of  interest  bearing  deposits  increased  $14.5
million to $269.7  million for the three months ended March 31, 2004 as compared
to the same period last year.  The average  balance of  certificates  of deposit
decreased  $5.6  million to $116.8  million for the three months ended March 31,
2004 from $122.4 million from the same period in 2003. In addition,  the average
cost of  certificates  of  deposit  decreased  from  2.90% to 2.43% for the 2004
comparative  period.  The average cost of savings accounts  decreased from 2.01%
for the three  months ended March 31, 2003 to 1.44% for the same period in 2004,
which also more than offset the increase of $20.4 million in the average balance
of savings accounts for the 2004 period.

         Interest  expense on FHLB advances  decreased  $26,000 to $710,000 as a
result of a decrease  in the average  cost of advances  from 5.08% for the three
months  ended March 31, 2003 to 4.61% for the same period in 2004,  offset by an
increase in the average  balance  from $57.9  million for the three months ended
March 31, 2003 to $61.6  million for the same period in 2004.  The lower average
cost is primarily due to  utilization  of overnight  line of credit  borrowings,
which generally are at lower rates than term advances.  As noted below, however,
these FHLB advances continue to adversely affect net interest income.

         Net  Interest  Income.  Net  interest  income  increased by $468,000 or
21.7%,  to $2.6  million  for the three  months  ended  March 31, 2004 from $2.2
million for the same period in 2003.  The net interest rate spread  increased 22
basis  points to 2.41% for the three  months ended March 31, 2004 from 2.19% for
the same period in 2003.  The net interest  margin  increased 25 basis points to
2.73% for the three months ended March 31, 2004 compared with 2.48% for the same
period in 2003.

                                       12
<PAGE>

         Over the past two years,  the decrease in the cost of interest  bearing
liabilities has generally  lagged that of interest  earning assets due, in large
part, to the balance of fixed rate Federal Home Loan Bank advances maintained by
the Bank.  At March 31, 2004,  these  "laddered"  borrowings  range in remaining
maturity  from  less  than one year to eight  and  three  quarter  years  with a
weighted average remaining  maturity of 4.5 years and a weighted average cost of
5.16%.  These fixed rate  advances,  drawn for  purposes  of interest  rate risk
management,  were initially used primarily to partially fund a growing portfolio
of originated  fixed-rate mortgage loans. Over the past two years, many of these
loans have  refinanced  to lower rates  thereby  substantially  reducing the net
interest  margin earned on this funding.  The Bank is currently  evaluating  the
costs and benefits of  restructuring  its portfolio of FHLB  advances.  To do so
will  result in a  significant  one time  charge to earnings in the form of FHLB
prepayment penalties which, in turn, would lower the interest paid on borrowings
and should improve the Bank's net interest  spread and margin and enhance future
earnings.  Depending  on  the  amount  of  prepayment  of  FHLB  advances,  this
restructuring   could  cause   significant  loss  in  net  income  and  decrease
stockholders equity.

         Provision  for Loan Losses.  Provisions  for loan losses are charged to
operations at a level required to reflect probable incurred credit losses in the
loan  portfolio.  In  evaluating  the level of the  allowance  for loan  losses,
management  considers  historical  loss  experience,  the types of loans and the
amount of loans in the loan  portfolio,  adverse  situations that may affect the
borrower's ability to repay, estimated value of any underlying collateral,  peer
group information,  and prevailing economic conditions.  Large groups of smaller
balance  homogeneous  loans,  such as residential real estate,  small commercial
real estate,  and home equity and consumer loans, are evaluated in the aggregate
using  historical loss factors and peer group data adjusted for current economic
conditions.  Large balance and/or more complex loans,  such as multi-family  and
commercial real estate loans, are evaluated individually for impairment.

         The provision for loan losses decreased to $13,000 for the three months
ended March 31, 2004 compared to $79,000 for the same period in 2003. Provisions
for  nonperforming  assets and historical  losses based on net charge-offs  were
nominal  due  to  a  history  of  low  charge-offs  and  relative  stability  of
nonperforming  assets.   However,  the  application  of  the  Bank's  loan  loss
methodology  outlined  above results,  in part, in historical and  environmental
loss factors being applied to the outstanding  balance of homogeneous  groups of
loans to estimate probable credit losses.  For the quarter ended March 31, 2004,
total  one-to-four  family  mortgages  increased  $5.0  million as  compared  to
December 31, 2003,  representing an increase of 2.2% and reflecting the majority
of the Bank's  loan  growth.  Multi-family  and  commercial  real  estate  loans
decreased  $736,000 or 2.0% and commercial  loans  decreased  $418,000 or 27.8%.
Consumer  loans  decreased  $167,000  or 19.1% and home equity  loans  decreased
$95,000 or 1.02% while construction loans remained stable.

         As a result of recent  loan  growth,  a large part of the  Bank's  loan
portfolio is considered  "unseasoned,"  meaning the loans were  originated  less
than two years ago.  Generally,  unseasoned loans  demonstrate a greater risk of
credit losses than their seasoned  counterparts.  Moreover, in many cases, these
unseasoned  loans are  obligations  of  borrowers  with whom the Bank has had no
prior  payment  experience.  These  risks are  considered  in the  environmental
factors used in the Bank's loss provision calculations as described above.

         This evaluation is inherently subjective, as it requires estimates that
are susceptible to significant  revision,  as more information becomes available
or as projected events change.  The allowance for loan losses as a percentage of
gross  loans  outstanding  remained  stable  at 0.52%  for  March  31,  2004 and
September  30, 2003,  reflecting  balances of $1.42  million and $1.37  million,
respectively.  Nonperforming  loans as a percentage  of gross loans was 0.13% at
March  31,  2004  compared  to 0.20% at  September  30,  2003.  The level of the
allowance is based on estimates and the ultimate losses may vary from estimates.

         Management  assesses the  allowance  for loan losses  quarterly.  While
management uses available  information to recognize losses on loans, future loan
loss  provisions may be necessary  based on changes in economic  conditions.  In
addition, regulatory agencies, as an integral part of their examination process,
periodically  review the  allowance  for loan losses and may require the Bank to
recognize additional

                                       13
<PAGE>

provisions based on their judgment of information  available to them at the time
of their  examination.  The  allowance  for loan losses as of March 31, 2004 was
maintained at a level that represented  management's  best estimate of losses in
the loan  portfolio  to the extent they were both  probable  and  reasonable  to
estimate.

         Noninterest  Income.  Noninterest income increased $298,000 to $283,000
for the three months  ended March 31, 2004  compared to the same period in 2003.
The  increase  was  primarily a result of the  absence in the current  period of
$188,000 in loss on sale of available-for-sale securities that had been recorded
during the comparative period one year earlier. Additionally, service charges on
deposit accounts increased by $63,000 primarily due to the implementation of new
deposit services. Gains on sale of held-for-sale loans increased from $0 for the
three months ended March 31, 2003,  to $14,000 for the  comparative  three-month
period  this year.  Income  from cash  surrender  value of life  insurance  also
increased  $6,000  for the  three  month  comparative  periods.  Finally,  other
noninterest  income  increased by $27,000,  due in large part to  collection  of
comparatively higher loan related fees including prepayment penalties.

         Noninterest Expense.  Noninterest expense increased $293,000,  or 17.8%
to $1.9  million for the three months ended March 31, 2004 from $1.6 million for
the three months ended March 31,  2003.  The increase was  primarily a result of
higher expenses for salaries and benefits, occupancy and equipment expense, data
processing, advertising and other noninterest expenses.

         Salaries  and  employee  benefits  increased  $133,000 or 12.2% to $1.2
million for the three  months  ended March 31, 2004 as compared to $1.1  million
for the same period in 2003. A large  portion of the increase was due to $57,000
in ESOP expense arising from the  implementation  of the plan during the current
fiscal year. Additionally,  benefits expenses,  including medical plan expenses,
increased by $8,000 for the 2004 comparative period. Finally, salaries and wages
including bonus and payroll taxes,  increased $68,000 for the three months ended
March 31, 2004 as compared to the same period in 2003.

         Occupancy and equipment  expense  increased $17,000 to $217,000 for the
three months ended March 31, 2004 as compared to $200,000 for the same period in
2003,  due to  higher  computer  expenses  primarily  related  to  upgrades  and
enhancements to administrative and security services. Data processing costs also
increased  $38,000  mainly due to  increases in service  bureau core  processing
resulting  from  growth in deposit and loan  accounts  as well as  non-recurring
costs associated with comprehensive system upgrades.

         Other  noninterest  expenses  increased  $100,000  for the three months
ended March 31, 2004 as  compared  to the same three  months last year.  Part of
this increase  included legal fees, which were higher by $17,000 due to expenses
associated with being a public company. In addition,  general and administrative
expenses  increased  $21,000  consisting  primarily  of $9,700 in  comparatively
higher expenses  relating to the bulk purchase of brochures and forms and $9,800
in higher costs associated with new deposit service programs.  Further, net loan
processing  charges  increased  primarily  due to  reduced  recognition  of loan
modification  fees offsetting  related costs as a result of the deferral of loan
modification fees and related costs in the current period. In addition,  various
other expenses  increased as a result of the continued growth of the Company and
costs associated with being a public Company.

         Management  expects increased expenses in the future resulting from the
ongoing  expenses  associated  with the employee  stock  ownership  plan and the
potential stock benefit plans, as well as increased costs  associated with being
a public company such as periodic reporting, annual meeting materials, retention
of a transfer agent, and professional fees. Furthermore,  we currently intend to
expand our branch  office  network  over the next  several  years,  and expenses
related to such expansion may impact earnings in future periods.

         Provision  for Income Taxes.  The provision for income taxes  increased
$221,000 for the three months ended March 31, 2004 from the same period in 2003.
The  effective tax rate was 38.4% and 35.0% for the three months ended March 31,
2004 and 2003.  The  slight  increase  in the  effective  tax rate is  primarily
reflective of an increase in  nondeductible  expenses  primarily  related to the
ESOP.

                                       14
<PAGE>

COMPARISON  OF  OPERATING  RESULTS  FOR THE SIX MONTHS  ENDED MARCH 31, 2004 AND
MARCH 31, 2003


         General.  Net  income  for the six  months  ended  March  31,  2004 was
$1,061,000,  an increase of $429,000, or 67.9% from the same period in 2003. The
increase in net income  resulted from an increase in net interest income as well
as  an  increase  in  noninterest  income,  partially  offset  by  increases  in
noninterest expense and the provision for income taxes.

         Interest  Income.  Total  interest  income  increased  $174,000 to $9.0
million for the six months ended March 31, 2004,  from $8.8 million for the same
period in 2003. The average yield of interest  earning assets decreased 51 basis
points  from  5.20% for the six  months  ended  March 31,  2003 to 4.69% for the
comparative period this year.

         Interest  income on loans  increased  $277,000 or 3.9%, to $7.4 million
for the six months  ended March 31, 2004 from $7.1  million for the 2003 period.
The  average  balance  of loans  receivable  increased  $43.6  million to $270.7
million  for the six months  ended  March 31,  2004,  which more than offset the
decrease in the average yield on loans  receivable from 6.28% for the six months
ended March 31, 2003 to 5.47% for the same period in 2004.  The  increase in the
average  balance  of  loans  receivable  was the  result  of  loan  originations
exceeding  repayments due to strong demand,  reflecting generally lower interest
rates.

         The  increase in interest  income on loans was offset by  decreases  in
interest income on federal funds sold and other interest-bearing deposits, which
declined  $108,000 to $25,000  for the six months  ended March 31, 2004 from the
period in 2003.  The decrease  resulted  from  declines in the average yield and
average  balance.  There was a 98 basis point  decrease in the average  yield on
federal  funds sold and other  interest-bearing  deposits from 1.81% for the six
months  ended March 31, 2003 to 0.83% for the same period in 2004.  The decrease
in  interest  income  was  exacerbated  by a decline in the  average  balance of
federal  funds sold and other  interest-bearing  deposits from $14.7 million for
the six months  ended  March 31, 2003 to $6.0  million for the six months  ended
March 31, 2004.

         Interest  income on securities  increased  $5,000 to $1,587,000 for the
six months ended March 31, 2004.  The average  balance of  securities  increased
$9.2  million to $107.5  million  for the six months  ended  March 31, 2004 from
$98.3  million for the six months  ended  March 31,  2003.  The  increase in the
average balance of securities was offset by a decline in the average yield of 27
basis points from 3.22% for the six months ended March 31, 2003 to 2.95% for the
comparable period in 2004.

         Interest Expense. Total interest expense decreased by $477,000 or 10.6%
to $4.0  million for the six months  ended March 31, 2004 from $4.5  million for
the same  period in 2003.  The  average  cost of  interest  bearing  liabilities
decreased 53 basis points from 2.96% for the six months ended March 31, 2003, to
2.43% for the same period in 2004.  This  decline in the average cost was offset
by an increase  of $26.8  million in the  average  balance of  interest  bearing
liabilities  for the six months  ended March 31,  2004,  to $331.7  million from
$304.9 million for the same six months in 2003.

         The  average  balance of  interest  bearing  deposits  increased  $18.7
million or 7.4% for the six-month  comparative 2004 period.  The average balance
of certificates of deposit  decreased $3.3 million to $118.3 million for the six
months ended March 31, 2004 from $121.6 million from the same period in 2003. In
addition,  the average cost of certificates  of deposit  decreased from 3.00% to
2.46% for the  respective  comparative  periods.  The  average  cost of  savings
accounts  decreased  from 2.10% for the six months ended March 31, 2003 to 1.57%
for the same  period in 2004,  which  more than  offset  the  increase  of $24.1
million or 22.4% in the  average  balance of  savings  accounts  during the same
period.

                                       15
<PAGE>

         Interest expense on FHLB advances  increased $59,000 to $1.4 million as
a result of an increase in the average  balance  from $51.7  million for the six
months ended March 31, 2003 to $59.8  million for the same period in 2004.  This
was  partially  offset by a decrease in the average cost of advances  from 5.30%
for the six months ended March 31, 2003 to 4.78% for the same period in 2004.

         Net  Interest  Income.  Net  interest  income  increased by $651,000 or
15.0%, to $5.0 million for the six months ended March 31, 2004 from $4.3 million
for the same period in 2003. The net interest rate spread increased to 2.26% for
the six months ended March 31, 2004 from 2.25% for 2003. The net interest margin
increased  5 basis  points  to 2.60% for the six  months  ended  March 31,  2004
compared  with 2.55% for the same  period in 2003  reflecting  interest  bearing
liabilities repricing downward slightly more rapidly than assets.

         Over the past two years,  the decrease in the cost of interest  bearing
liabilities has generally  lagged that of interest  earning assets due, in large
part, to the balance of fixed rate Federal Home Loan Bank advances maintained by
the Bank.  At March 31, 2004,  these  "laddered"  borrowings  range in remaining
maturity  from one to eight and three  quarter  years  with a  weighted  average
remaining  maturity  of 4.5 years and a weighted  average  cost of 5.16%.  These
fixed rate advances,  drawn for purposes of interest rate risk management,  were
initially  used  primarily to partially  fund a growing  portfolio of originated
fixed-rate  mortgage  loans.  Over the past two years,  many of these loans have
refinanced to lower rates thereby substantially reducing the net interest margin
earned on this funding.  The Bank is currently evaluating the costs and benefits
of  restructuring  its  portfolio  of FHLB  advances.  To do so will result in a
significant one time charge to earnings in the form of FHLB prepayment penalties
which,  in turn,  would lower the interest paid on borrowings and should improve
the Bank's net interest spread and margin and enhance future earnings. Depending
on the amount of prepayment of FHLB  advances,  this  restructuring  could cause
significant loss in net income and decrease stockholders equity.

         Provision  for Loan Losses.  Provisions  for loan losses are charged to
operations at a level required to reflect probable incurred credit losses in the
loan  portfolio.  In  evaluating  the level of the  allowance  for loan  losses,
management  considers  historical  loss  experience,  the types of loans and the
amount of loans in the loan  portfolio,  adverse  situations that may affect the
borrower's ability to repay, estimated value of any underlying collateral,  peer
group information,  and prevailing economic conditions.  Large groups of smaller
balance  homogeneous  loans,  such as residential real estate,  small commercial
real estate,  and home equity and consumer loans, are evaluated in the aggregate
using  historical loss factors and peer group data adjusted for current economic
conditions.  Large balance and/or more complex loans,  such as multi-family  and
commercial real estate loans, are evaluated individually for impairment.

         The provision  for loan losses  decreased to $54,000 for the six months
ended  March  31,  2004  compared  to  $130,000  for the  same  period  in 2003.
Provisions  for  nonperforming   assets  and  historical  losses  based  on  net
charge-offs  were  nominal  due to a history  of low  charge-offs  and  relative
stability of nonperforming  assets.  However, the application of the Bank's loan
loss   methodology   outlined  above   results,   in  part,  in  historical  and
environmental  loss  factors  being  applied  to  the  outstanding   balance  of
homogeneous  groups of loans to estimate  probable  credit  losses.  For the six
months ended March 31, 2004, total one-to-four family mortgages  increased $12.5
million  representing  an increase of 5.8% and  reflecting  the  majority of the
Bank's loan growth.  Multi-family  and  commercial  real estate loans  decreased
$830,000 or 2.3% and  commercial  loans  decreased  $494,000 or 31.3%.  Consumer
loans decreased $74,000 or 9.5% and home equity loans increased $204,000 or 2.3%
while construction loans increased $145,000 or 32.5%.

         As a result of recent  loan  growth,  a large part of the  Bank's  loan
portfolio is considered  "unseasoned,"  meaning the loans were  originated  less
than two years ago.  Generally,  unseasoned loans  demonstrate a greater risk of
credit losses than their seasoned  counterparts.  Moreover, in many cases, these
unseasoned  loans are  obligations  of  borrowers  with whom the Bank has had no
prior  payment  experience.  These  risks are  considered  in the  environmental
factors used in the Bank's loss provision calculations as described above.

                                       16
<PAGE>

         This evaluation is inherently subjective, as it requires estimates that
are susceptible to significant  revision,  as more information becomes available
or as projected events change.  The allowance for loan losses as a percentage of
gross  loans  outstanding  remained  stable  at 0.52%  for  March  31,  2004 and
September  30, 2003,  reflecting  balances of $1.42  million and $1.37  million,
respectively.  Nonperforming  loans as a percentage  of gross loans was 0.13% at
March  31,  2004  compared  to 0.20% at  September  30,  2003.  The level of the
allowance is based on estimates and the ultimate losses may vary from estimates.

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

         Noninterest Income. Noninterest income increased $388,000, or 221.7% to
$563,000 for the six months ended March 31, 2004  compared to the same period in
2003.  The increase was primarily a result of the absence in the current  period
of  $188,000  in loss on sale of  available-for-sale  securities  that  had been
recorded during the comparative period one year earlier.  Additionally,  service
charges  on  deposit  accounts  increased  by  $122,000  primarily  due  to  the
implementation  of new deposit  services.  Gains on sale of held-for-sale  loans
increased  from $0 for the six months ended March 31,  2003,  to $21,000 for the
comparative six-month period this year. Income from cash surrender value of life
insurance decreased $3,000 for the six-month comparative periods. Finally, other
noninterest  income  increased by $60,000,  due in large part to  collection  of
comparatively higher loan related fees including prepayment penalties.

         Noninterest Expense.  Noninterest expense increased $373,000,  or 11.0%
to $3.8  million for the six months  ended March 31, 2004 from $3.4  million for
the six months  ended March 31, 2003.  The  increase  was  primarily a result of
higher  expenses for salaries and employee  benefits,  occupancy and  equipment,
data processing, advertising, and other noninterest expenses.

         Salaries  and  benefits  increased  $27,000  or 1.2% for the six months
ended March 31, 2004. Medical plan premiums increased $22,000 with the remainder
of the increase attributable to increases in salaries and staff. These increases
were offset by lower  management  incentive  plan expenses as annual bonuses for
executive  officers declined  significantly  from the prior year because certain
predetermined  plan targets such as return on average  equity,  growth in loans,
deposits, and earnings were not fully achieved.

         Occupancy and equipment  expense  increased $50,000 to $441,000 for the
six months  ended March 31, 2004 as compared to $391,000  for the same period in
2003,  due to higher  computer  expenses  primarily  related  to,  upgrades  and
enhancements to administrative and security services. Data processing costs also
increased  $70,000  mainly due to  increases in service  bureau core  processing
resulting  from  growth in deposit and loan  accounts  as well as  non-recurring
costs associated with comprehensive system upgrades.

         Other noninterest  expenses increased $197,000 for the six months ended
March 31,  2004 as  compared  to the same six  months  last  year.  Part of this
increase  included  legal  fees,  which were  higher by $26,000  due to expenses
associated  with being a public  company.  Further,  general and  administrative
expenses  increased  $66,000  consisting  primarily of $30,000 in  comparatively
higher expenses relating to the bulk purchase of brochures and forms and $14,000
in higher costs associated with new deposit service programs.  Other general and
administrative  expense  increases  included  $6,000  for  corporate  insurance,
$11,000 for regulatory fees and $7,000 for transfer agent and related charges.

         Finally,  advertising  expenses  were  higher by  $26,000  for the 2004
comparative  period as a result of increased  print,  radio, and television ads,
and higher agency fees.

                                       17
<PAGE>

         Management  expects increased expenses in the future resulting from the
ongoing  expenses  associated  with the employee  stock  ownership  plan and the
potential stock benefit plans, as well as increased costs  associated with being
a public company such as periodic reporting, annual meeting materials, retention
of a transfer agent, and professional fees. Furthermore,  we currently intend to
expand our branch  office  network  over the next  several  years,  and expenses
related to such expansion may impact earnings in future periods.

         Provision  for Income Taxes.  The provision for income taxes  increased
$313,000  for the six months  ended March 31, 2004 from the same period in 2003.
The  effective  tax rate was 38.6% and 36.0% for the six months  ended March 31,
2004 and 2003.  The  slight  increase  in the  effective  tax rate is  primarily
reflective of an increase in pre tax net income and an increase in nondeductible
expenses primarily related to the ESOP.


LIQUIDITY AND COMMITMENTS

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

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

         Liquidity management is both a daily and long-term function of business
management.  Excess  liquidity is generally  invested in short-term  investments
such as overnight  deposits or U.S. Agency  securities.  On a longer-term basis,
the Bank  maintains a strategy of investing in various loan  products.  The Bank
uses its  sources of funds  primarily  to meet its ongoing  commitments,  to pay
maturing  certificates  of  deposit  and  savings  withdrawals,   to  fund  loan
commitments  and to maintain its  portfolio of  mortgage-backed  securities  and
investment  securities.  At March 31, 2004, the total approved loan  origination
commitments  outstanding  amounted to $14.2  million.  At the same date,  unused
lines of credit  were $12.0  million  and  construction  loans in  process  were
$639,000.  Certificates  of deposit  scheduled  to mature in one year or less at
March 31, 2004  totaled  $68.6  million.  Although  the average cost of deposits
decreased  throughout 2003,  management's policy is to maintain deposit rates at
levels that are competitive  with other local financial  institutions.  Based on
the competitive rates and on historical  experience,  management believes that a
significant portion of maturing deposits will remain with the Bank. In addition,
at March 31, 2004 the total collateralized  borrowing limit was $97.6 million of
which we had $57.4 million outstanding,  giving us the ability at March 31, 2004
to borrow an  additional  $40.2  million  from the FHLB of New York as a funding
source to meet commitments and for liquidity purposes.

                                       18
<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.  Total equity was $32.2
million at March 31, 2004,  or 8.24% of total  assets on that date.  As of March
31,  2004,  the Bank  exceeded all capital  requirements  of the OTS. The Bank's
regulatory capital ratios at March 31, 2004 were as follows: core capital 8.22%;
Tier 1 risk-based  capital 16.33%;  and total  risk-based  capital  17.05%.  The
regulatory  capital  requirements  to be considered  well  capitalized are 5.0%,
6.0%, and 10.0%, respectively.



ITEM 3.  CONTROLS AND PROCEDURES

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

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

                                       19
<PAGE>

PART II - - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

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

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

                  None


ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

                  None

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

         The Annual Meeting of Stockholders  for ASB Holding Company was held on
January 20, 2004 in Bloomfield,  New Jersey. At the meeting stockholders elected
the  following  persons to three-year  terms to the Board of  Directors:  Joseph
Kliminski by a vote of 5,068,370 for and 4,454 withheld, Robert A. Gaccione by a
vote of 5,068,720 for and 4,804  withheld,  and James H. Ward,  III by a vote of
5,066,795 for and 6,379 withheld.  Stanley Obal,  Vincent S. Rospond,  W. George
Parker  and H.  Joseph  North  also  continue  to serve as  directors  after the
meeting. Additionally, stockholders ratified the appointment of Crowe Chizek and
Company  LLC as the  Company's  independent  auditor  for the fiscal year ending
September 30, 2004 by a vote of 5,068,570 for, 3,644 against and 960 abstaining.


ITEM 5.  OTHER INFORMATION

                  None


ITEM 6.  EXHIBITS AND REPORTS

     (a)  Exhibits

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

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

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

     (b)  Reports

               None

                                       20
<PAGE>

                                   SIGNATURES


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


                               ASB Holding Company
                                  (Registrant)


Date:  May 14, 2004            /s/ Joseph Kliminski
                               -------------------------------------------------
                               Joseph Kliminski
                               President and Chief Executive Officer


Date:  May 14, 2004            /s/ Eric B. Heyer
                               -------------------------------------------------
                               Eric B. Heyer
                               Senior Vice President and Chief Financial Officer



                                       21