2005 ANNUAL REPORT TO STOCKHOLDERS


<PAGE>

                                TABLE OF CONTENTS

<TABLE>

<S>                                                                                        <C>
Letter from the Chief Executive Officer.......................................................1

Financial Highlights..........................................................................3

Management's Discussion and Analysis of Financial Condition and Results of Operations.........5

Report of Independent Registered Public Accounting Firm......................................32

Consolidated Statements of Financial Condition...............................................33

Consolidated Statements of Income............................................................34

Consolidated Statements of Changes in Equity.................................................35

Consolidated Statements of Cash Flows........................................................37

Notes to Consolidated Financial Statements...................................................39

Directors and Officers.......................................................................68

Investor and Corporate Information...........................................................69

Office Locations.............................................................................70
</TABLE>

<PAGE>

                     LETTER FROM THE CHIEF EXECUTIVE OFFICER



Dear Fellow Stockholders:

       On  behalf of the Board of  Directors  and  employees,  I am  pleased  to
present the 2005 Annual Report to Stockholders.

         This was a significant year for American Bank of New Jersey. On October
5,  2005,  we  completed  our  conversion  from the mutual to the stock form and
became a fully public company.  A newly incorporated  holding company,  American
Bancorp of New Jersey,  Inc. became the successor to ASB Holding  Company.  In a
stock offering  completed as part of the conversion,  American  Bancorp sold the
70% ownership interest  previously held by the mutual holding company,  American
Savings,  MHC, and the 30% ownership  interest  held by the ASB Holding  Company
stockholders  was converted into an equivalent  ownership of American Bancorp of
New Jersey,  Inc. Shares of American Bancorp began trading on October 6, 2005 on
the Nasdaq National Market under the symbol "ABNJ." After offering  expenses and
funding the employee stock ownership plan's purchase of 8% of the shares sold in
the offering,  investable  net proceeds were  approximately  $89.6  million.  We
believe  this  additional  capital  and  the  flexibility  afforded  by our  new
structure will better position us to achieve our business plan.

         During 2005,  we  commenced  payment of a regular  quarterly  dividend,
which was an important step in our evolution as a public company that began with
the completion of the initial 30% stock offering by ASB Holding Company in 2003.
The Board was  pleased  to  continue  providing  a return to  stockholders,  and
American  Bancorp  paid its  first  quarterly  dividend  of $0.04  per  share in
December 2005.

         In addition to our continued  development as a public  company,  during
2005 we also expanded our  management  team as we welcomed our new President and
Chief Operating  Officer Fred G. Kowal. We believe that Mr. Kowal has the skills
and  background  necessary  to assist us as we pursue the goals of our  business
plan, which includes expanding our deposit branch network and commercial lending
activities.

         Movements in market  interest  rates  present a challenge for financial
institutions  and 2005 was no exception as rates  continued to increase from the
historical  lows of prior  periods.  Through the first half of fiscal  2005,  we
realized  improvements  in our net interest margin as increases in yields on our
interest-earning  assets  outpaced  the  increases  in  costs  of  our  interest
bearing-liabilities.  However,  that trend  reversed  in the latter half of 2005
when upward  pressure on our cost of deposits  resulted in greater  increases in
the cost of our  interest-bearing  liabilities than in the yield on our interest
earning  assets.  On  the  whole,  during  2005  we saw  our  average  yield  on
interest-earning  assets  improve to 4.84% from 4.68% while our average  cost of
interest-bearing  liabilities  increased  to 2.56%  from  2.41%.  Thus,  our net
interest margin remained  unchanged at 2.60% for 2005, the same as 2004. Our net
interest spread also remained constant at 2.28%. Average interest-earning assets
grew by  $36.9  million  to  $425.9  million  for  fiscal  2005,  while  average
interest-bearing liabilities grew by $36.3 million to $372.6 million.

                                       1
<PAGE>

         Loans receivable,  net grew by 10.4% to $341.0 million at September 30,
2005 from $309.0  million at September 30, 2004.  Deposits  increased by 5.6% to
$340.9  million at September 30, 2005 from $322.7 million at September 30, 2004.
This  overall  growth  in loans  and  deposits  contributed  significantly  to a
$956,000,  or 9.5%,  improvement in net interest income. This, however, was more
than offset by higher  noninterest  expense which increased by $1.3 million,  or
16.5% primarily due to salaries and benefits expense and legal, professional and
consulting fees.

         On behalf of the Board of Directors and the employees,  I thank you for
your investment and your continued  confidence.  We are excited about our vision
for American Bank of New Jersey,  and we are committed to steady progress toward
our #1 goal - enhancing your investment in us.

                                        Sincerely,

                                        /s/Joseph Kliminski

                                        Joseph Kliminski
                                        Chief Executive Officer


                                       2
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                              FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
                                                         At September 30,
                                         2005       2004       2003       2002       2001
                                         ----       ----       ----       ----       ----
                                                          (In thousands)

<S>                                  <C>        <C>        <C>        <C>        <C>
SELECTED FINANCIAL DATA:
Total assets                          $555,860   $424,944   $427,066   $334,879   $258,208
Cash and cash equivalents              125,773      8,034     38,365     17,330     22,109
Securities available-for-sale           62,337     89,495    107,391     90,134     52,022
Securities held-to-maturity              7,824      2,794      2,839      6,970     10,187
Loans held for sale                        280          -        500          -          -
Loans receivable, net                  341,006    308,970    262,844    208,374    166,322
Federal Home Loan Bank stock             3,119      2,890      3,150      2,200      2,300
Deposits                               340,925    322,716    292,826    264,587    188,828
Stock subscriptions received           115,201          -     52,137          -          -
Total borrowings                        53,734     57,491     55,000     44,000     46,000
Total equity                            39,506     39,314     22,339     21,872     20,155
</TABLE>

<TABLE>
<CAPTION>
                                                           Years ended
                                                           September 30,
                                        2005       2004       2003       2002       2001
                                        ----       ----       ----       ----       ----
                                                          (In thousands)
<S>                                  <C>        <C>        <C>        <C>        <C>
SELECTED OPERATING DATA:
Total interest income                 $ 20,601   $ 18,204   $ 17,476   $ 17,578   $ 16,052
Total interest expense                   9,546      8,105      8,870      8,829      9,140
                                      --------   --------   --------   --------   --------
    Net interest income                 11,055     10,099      8,606      8,749      6,912
Provision for loan losses                   81        207        254        105          2
                                      --------   --------   --------   --------   --------
Net interest income after provision
  for loan losses                       10,974      9,892      8,352      8,644      6,910
Noninterest income                       1,196      1,298        718        595        458
Noninterest expense                      8,924      7,657      6,862      6,274      4,923
                                      --------   --------   --------   --------   --------
Income before income taxes               3,246      3,533      2,208      2,965      2,445
Income tax provision                     1,203      1,371        805      1,075        888
                                      --------   --------   --------   --------   --------

    Net income                        $  2,043   $  2,162   $  1,403   $  1,890   $  1,557
                                      ========   ========   ========   ========   ========
</TABLE>

                                       3

<PAGE>

<TABLE>
<CAPTION>
                                                                At or for the year ended
                                                                     September 30,
                                                   2005       2004       2003      2002      2001
                                                   ----       ----       ----      ----      ----
<S>                                             <C>        <C>        <C>       <C>       <C>
SELECTED FINANCIAL DATA*:
Performance Ratios:
    Return on average assets (1)                   0.46%      0.54%      0.39%     0.63%     0.68%
    Return on average equity (2)                   5.30       5.77       6.48      9.30      8.28
    Net interest rate spread (3)                   2.28       2.28       2.14      2.63      2.49
    Net interest margin (4)                        2.60       2.60       2.44      3.00      3.10
    Operating (noninterest) expense to
      average total assets                         2.02       1.92       1.89      2.09      2.16
    Efficiency ratio (5)                          72.84      67.18      73.60     67.14     66.80
    Average interest-earning assets to
      average interest-bearing liabilities       114.30     115.67     111.69    112.30    115.01

Capital Ratios:
    Equity to total assets at end of period        7.11       9.25       5.23      6.53      7.81
    Average equity to average assets               8.74       9.37       5.98      6.78      8.24

Asset Quality Ratios:
    Non-performing loans to total
      loans (6)                                    0.34       0.17       0.20      0.27      0.36
    Non-performing assets to total
      assets (6)                                   0.21       0.12       0.12      0.17      0.24
    Net charge-offs to average loans
      outstanding                                  0.00       0.00       0.00      0.00      0.00
    Allowance for loan losses to
      non-performing loans (6)                   142.62     304.05     265.18    195.96    160.67
    Allowance for loan losses to total
      loans                                        0.48       0.50       0.52      0.53      0.58

PER SHARE DATA:
Earnings per share: (7)
    Basic                                         $0.38      $0.40      $0.36     $0.49     $0.40
    Diluted                                       $0.37      $0.40      $0.36     $0.49     $0.40

Cash Dividends Paid                               $0.93      $0.00      $0.00     $0.00     $0.00
</TABLE>

   * Certain ratios were significantly  affected by stock subscriptions received
     pending  completion of the Company's first and second public offerings.  At
     September 30, 2003, stock subscriptions  received relating to the Company's
     first public  offering  which closed October 3, 2003 totaled $52.1 million.
     At  the  time  of  closing,  approximately  $15.3  million,  less  offering
     expenses,  became  capital of the Company  with the  remainder  returned on
     oversubscriptions.  At September  30, 2005,  stock  subscriptions  received
     relating to the Company's  second public  offering  which closed October 5,
     2005 totaled $115.2 million.  At the time of closing,  approximately  $91.3
     million,  less offering  expenses,  became  capital of the Company with the
     remainder returned on oversubscriptions.

(1)  Net income  divided  by average  total  assets.
(2)  Net income divided by average total equity.
(3)  Difference  between weighted average yield on  interest-earning  assets and
     weighted average cost of interest-bearing liabilities.
(4)  Net interest income as a percentage of average interest-earning assets.
(5)  Noninterest  expense  divided  by  the  sum  of  net  interest  income  and
     noninterest income.
(6)  Nonperforming  loans consist of nonaccrual  loans and loans greater than 90
     days delinquent and still accruing.
(7)  Earnings per share for the fiscal years ended  September 30, 2003, 2002 and
     2001 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  which closed on October 3,
     2003.

                                       4
<PAGE>

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;  real estate values in northern New Jersey;
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.

Business Strategy

         Our  business  strategy  has  been  to  operate  as a  well-capitalized
independent  financial  institution dedicated to providing convenient access and
quality service at competitive prices.  During recent years, we have experienced
significant growth, with total loans receivable, net growing from $208.4 million
at September 30, 2002 to $341.0 million at September 30, 2005 and total deposits
growing from $264.6 million at September 30, 2002 to $340.9 million at September
30, 2005.

         Our current  strategy  seeks to continue the growth of the last several
years. The highlights of our business strategy include the following:

          o    Grow and  diversify the deposit mix by  emphasizing  non-maturity
               account  relationships  acquired  through de novo  branching  and
               existing deposit growth.  We currently plan to open up to five de
               novo branches over approximately the next three years.

          o    Grow and diversify the loan mix by (i) increasing commercial real
               estate and  business  lending  capacity  and (ii)  enhancing  the
               Bank's one-to-four family mortgage loan origination capacity.

                                       5
<PAGE>

          o    Grow  and  diversify   noninterest  income  through  supplemental
               deposit and lending related services and strategies.

          o    Explore alternative loan and deposit product and service delivery
               channels.

          o    Broaden and strengthen customer relationships by bolstering cross
               marketing  strategies  and  tactics  with  a  focus  on  multiple
               account/service relationships.

          o    Utilize  capital  markets  tools  to  grow  capital  and  enhance
               shareholder value.

Summary

         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.

         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.

         Through the first half of fiscal 2005, the Company continued to realize
improvements  in its net interest  margin as  increases in earning  asset yields
continued to outpace those of its

                                       6

<PAGE>

interest bearing-liabilities. However, that trend reversed in the latter half of
2005 when upward  pressure  on the  Company's  cost of  deposits  resulted in an
increase in the Company's cost of interest-bearing  liabilities greater than the
increase  in the  yield of its  interest  earning  assets.  For the  year  ended
September 30, 2005,  the Company  experienced  a 16 basis point  increase in its
yield on earning  assets to 4.84% from 4.68% for year ended  September 30, 2004.
This  increase  was  attributable  to a 22 basis point  increase in the yield on
investment   securities  and  a  207  basis  point  increase  in  the  yield  on
interest-bearing  deposits and other earning assets. These increases were offset
by a 7 basis  point  decline  in the yield on  loans.  Offsetting  this  overall
improvement in earning asset yields was an equivalent 15 basis point increase in
the cost of  interest-bearing  liabilities  to 2.56%from  2.41%.  This  increase
resulted,   in  part,   from  a  26  basis   point   increase  in  the  cost  of
interest-bearing  deposits.  This  increase  was  offset  by an 18  basis  point
decrease  in  the  cost  of  borrowings   resulting   primarily  from  increased
utilization of overnight borrowings. In total, the Company's net interest margin
remained unchanged at 2.60% for fiscal 2005 and 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 0.21% of total assets at
September  30, 2005 from 0.12% of total assets at September  30, 2004.  However,
management  did not perceive  this increase in  nonperforming  assets to require
additional  loan loss  provisions.  Consequently,  loan loss  provisions  in the
current year continue to be made primarily in connection with 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  0.27% for the year  ended
September 30, 2005 matching that of fiscal 2004.

         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 fiscal 2004. More recently, benefit costs have increased as the Company

                                       7

<PAGE>

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,  noninterest
expense as a  percentage  of  average  assets  totaled  2.02% for the year ended
September  30, 2005 - an increase of 13 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. 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  fiscal 2005.  Additionally,  during fiscal
2005 the Company  recorded higher  consulting and  professional  fees associated
with   evaluating   and  executing  the  Company's   balance  sheet  growth  and
diversification strategies.

         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 year ended  September 30,
2005, both occupancy and equipment and data  processing  costs have been reduced
as an absolute  dollar  amount as well as a  percentage  of average  assets when
compared  with fiscal 2004.  Together,  reductions in these  expenses  totaled 4
basis points which partially offset the 17 basis point combined  increase in all
other noninterest  expenses for the same period. In large part, these reductions
result from reduced depreciation and core processing expenses and the absence in
the current period of certain  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.  As  discussed  in  our  financial
statements,  we have identified  three specific sites for de novo branches while
we continue to evaluate and pursue  additional  retail branching  opportunities.
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 lending and  administrative  operations in order to add the personnel called
for by our growth plans.

         In total,  our return on average  assets  decreased  8 basis  points to
0.46% for the year ended  September  30,  2005 from 0.54% for fiscal  2004 while
return on average  equity  decreased 47 basis points to 5.30% 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 year ended  September  30,
2005 would have been 0.52% and 5.99%, respectively.

                                       8
<PAGE>

         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 half of fiscal  2005,  further  increases  in
interest rates from current levels could trigger increases in the Bank's cost of
interest-bearing  liabilities  that  continue  to  outpace  that of its yield on
earning assets causing further net interest margin compression. Such compression
occurred  during the three months ended September 30, 2005 when our net interest
spread  shrank 10 basis  point to 2.14%  from 2.24% for the  three-month  period
ended June 30, 2005. This net interest  spread  compression was due, in part, to
yield on earning assets  decreasing from 4.91% for the June quarter to 4.84% for
the  September  quarter.  This  reduction  resulted  largely from the  increased
investment  in  short  term,  liquid  assets  funded  by the  receipt  of  stock
subscriptions. That reduction was exacerbated by a 4 basis point increase in the
cost of  interest-bearing  liabilities  from  2.67%  to  2.71%  during  the same
comparative  period.  This  increased  cost  was  largely  attributable  to  the
disintermediation  of  lower  cost,   non-maturity  deposits  into  higher  cost
certificates  of deposit whose impact on earnings was  diminished by the balance
of stock  subscriptions held during the period on which the Bank paid a passbook
savings rate of interest.

         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.

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

         Our total  assets  increased  by $130.9  million,  or 30.8%,  to $555.9
million at September  30, 2005 from $424.9  million at September  30, 2004.  The
increase  reflected  growth  in cash and cash  equivalents,  securities  held to
maturity,  and loans receivable,  net offset by declines in securities available
for sale.

         At September 30, 2005,  the Bank's total assets were inflated by $115.2
million of stock  subscriptions held pending the closing of the Company's second
step  conversion.  To better  reflect the  allocation of the Company's  interest
earning assets and interest costing liabilities,  the 2005 information presented
in the tables below utilizes the pro forma balance of total assets  discussed in
Note 2 of the financial statements in percentage of total assets calculations.

         Cash and cash equivalents  increased by $117.8 million, or 1,472.5%, to
$125.8  million at September  30, 2005 from $8.0 million at September  30, 2004.
The increase in cash and cash equivalents is largely  attributable to the $115.2
million of stock subscriptions held at September 30, 2005 pending the closing of
the Company's second step conversion.

                                       9

<PAGE>

         Securities classified as available-for-sale decreased $27.2 million, or
30.4%,  to $62.3  million at September  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 $5.0  million  or 178.6% to $7.8
million at June 30, 2005 from $2.8 million at September 30, 2004.

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

                                 September 30, 2005        September 30, 2004
                                 ------------------        ------------------
                                           Percent of
                                           Pro Forma
                                           ---------              Percent of
Type of Securities              Amount    Total Assets    Amount  Total Assets
------------------              ------    ------------    ------  ------------
                                            (Dollars in thousands)

Fixed rate MBS                 $13,007        2.49%      $15,923       3.75%
ARM MBS                          7,770        1.49         8,755       2.06
Fixed rate CMO                  26,111        5.00        43,982      10.36
Floating rate CMO                2,809        0.54           435       0.10
ARM mutual fund                 10,000        1.92        10,000       2.35
Fixed rate agency debentures    11,998        2.30        13,997       3.29
                               -------       -----       -------      -----
Total                          $71,695       13.74%      $93,092      21.91%
                               =======       =====       =======      =====

         Assuming no change in interest rates, the estimated average life of the
investment securities  portfolio,  excluding the ARM mutual fund, was 2.26 years
and 2.23 years at  September  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 2.67
years and 3.12 years at September 30, 2005 and September 30, 2004, respectively.

         Loans receivable,  net increased by $32.0 million,  or 10.4%, to $341.0
million at September  30, 2005 from $309.0  million at September  30, 2004.  The
growth was primarily  comprised of a $15.4 million net increase in  multi-family
and  commercial  real estate loans  coupled with a $15.6 million net increase in
one-to-four family mortgages.

                                       10

<PAGE>

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

                                  September 30, 2005        September 30, 2004
                                  ------------------        ------------------
                                           Percent of
                                           Pro Forma
                                           ---------                 Percent of
Type of Loans                    Amount   Total Assets     Amount   Total Assets
-------------                    ------   ------------     ------   ------------
                              (Dollars in thousands)

Construction                   $  1,100        0.21%     $  3,075       0.72%
1/1 and 3/3 ARMs                  3,664        0.70         1,800       0.42
3/1 and 5/1 ARMs                115,878       22.22        89,694      21.11
5/5 and 10/10 ARMs               37,079        7.11        24,619       5.79
7/1 and 10/1 ARMs                 1,743        0.33         1,675       0.40
15 year fixed or less           108,731       20.85       112,238      26.41
Greater than 15 year fixed       58,852       11.28        64,702      15.23
Home equity lines of credit      13,413        2.57        10,666       2.51
Consumer                            702        0.13           746       0.18
Commercial                          746        0.14           398       0.09
                               --------       -----      --------      -----

Total                          $341,908       65.54%     $309,613      72.86%
                               ========       =====      ========      =====

         Total deposits  increased by $18.2 million,  or 5.6%, to $340.9 million
at September 30, 2005 from $322.7  million at September  30, 2004.  The increase
was  primarily  due to increases in  certificates  of deposit,  interest-bearing
checking  deposits  and non  interest-bearing  deposits,  partially  offset by a
decline in savings  deposits.  Certificate of deposit  accounts  increased $34.8
million or 29.5% to $152.8  million.  This growth in certificates  resulted,  in
part, from the  disintermediation  of savings  deposits which decreased by $20.1
million,  or 14.0% to $123.3 million.  Checking deposits,  including demand, NOW
and money  market  checking  accounts,  increased  $3.6 million or 5.8% to $64.8
million.

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

                               September 30, 2005        September 30, 2004
                               ------------------        ------------------
                                         Percent of
                                         Pro Forma
                                         ---------               Percent of
Deposit category              Amount    Total Assets    Amount   Total Assets
----------------              ------    ------------    ------   ------------
                                           (Dollars in thousands)

Money market checking      $ 25,759        4.94%      $ 25,834       6.08%
Other checking               39,088        7.49         35,461       8.34
Money market savings         32,736        6.28         44,880      10.56
Other savings                90,534       17.36         98,521      23.18
Certificates of deposit     152,808       29.29        118,020      27.78
                           --------       -----       --------      -----

Total                      $340,925       65.36%      $322,716      75.94%
                           ========       =====       ========      =====

         FHLB  advances  decreased  $3.8  million,  or 6.6%, to $53.7 million at
September 30, 2005 from $57.5 million at September 30, 2004. The net decrease of
$3.8  million  comprised  a net

                                       11

<PAGE>

decrease of $2.7  million  drawn on  overnight  repricing  lines of credit,  the
repayment  of a maturing  $1.0  million  fixed rate term  advance and $57,000 of
amortization on fixed rate amortizing advances.

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


                           September 30, 2005         September 30, 2004
                           ------------------         ------------------
                                    Percent of
                                    Pro Forma
                                    ---------                   Percent of
Remaining Term          Amount     Total Assets     Amount     Total Assets
--------------          ------     ------------     ------     ------------
                                    (Dollars in thousands)

Overnight              $     -          -%         $ 2,700          0.64%
One year or less         8,060       1.55            1,057          0.25
One to two years         8,062       1.55            8,060          1.90
Two to three years      12,065       2.30            8,062          1.90
Three to four years      7,547       1.45           12,065          2.84
Four to five years       6,000       1.15            7,547          1.77
More than five years    12,000       2.30           18,000          4.23
                       -------      -----          -------         -----

Total                  $53,734      10.30%         $57,491         13.53%
                       =======      =====          =======         =====

         Equity increased  $192,000,  or 0.50% to $39.5 million at September 30,
2005 from $39.3 million at September 30, 2004. The increase  reflects net income
of $2.0  million  for the  fiscal  year  ended  September  30,  2005,  offset by
dividends paid of $1.4 million.  In addition,  the amount  reclassified  on ESOP
shares  increased  $421,000  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 11 to the consolidated financial statements.  On October 5,
2005, the Company  completed its second step offering (as discussed in Note 2 to
the consolidated  financial  statements).  On October 6, 2005, the Company began
trading on Nasdaq which is  considered to be an  established  market under ERISA
regulations.  As a result,  effective  October 6, 2005, the Company is no longer
required to establish a liability to reflect this repurchase obligation.

Comparison of Operating Results for the Years Ended September 30, 2005 and 2004

         General.  Net  income for the year ended  September  30,  2005 was $2.0
million,  a decrease of $119,000,  or 5.5% from 2004. The decrease in net income
resulted from an increase in  noninterest  expense  offset by an increase in net
interest income coupled with decreases in non-interest income, the provision for
loan losses and the provision for income taxes.

         Interest Income.  Total interest income increased 13.2% or $2.4 million
to $20.6  million for the year ended  September  30, 2005 from $18.2 million for
the year ended  September 30, 2004.  For those same years,  the average yield on
interest-earning  assets increased 16 basis points to 4.84% from 4.68% while the
average balance of  interest-earning  assets  increased $37.0 million or 9.5% to
$425.9 million from $388.9 million.

                                       12

<PAGE>

         Interest  income on loans  increased  $2.5 million or 16.77%,  to $17.5
million for the year ended  September 30, 2005 from $15.0 million for 2004. This
increase was due, in part, to a $49.3 million increase in the average balance of
loans  receivable to $327.9  million for the year ended  September 30, 2005 from
$278.6 million 2004. The impact on interest  income  attributable to this growth
more than offset the 7 basis points decrease in the average yield on loans which
declined to 5.32% from 5.39% 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  and a growing  strategic
emphasis on commercial real estate lending.

         The rise in  interest  income  on loans was  partially  offset by lower
interest income on securities, which decreased $391,000 or 12.5% to $2.7 million
for the year ended  September 30, 2005 from $3.1 million for 2004.  The decrease
was due in part, to a $19.4 million decline in the average balance of investment
securities  to $84.6  million for the year ended  September 30, 2005 from $104.0
million for 2004. The impact on interest income attributable to this decline was
partly  offset by a 22 basis point  increase in the average  yield on securities
which grew to 3.23% from 3.01% 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  $346,000 to  $408,000  for the year ended
September  30, 2005 from $62,000 for the same period in 2004.  This increase was
due, in part,  to an increase  of $7.0  million in the average  balance of these
assets to $13.3  million  for the year ended  September  30,  2005 from $6.3 for
2004.  The impact on  interest  income  attributable  to this growth was further
augmented  by a 207 basis point rise in the average  yield on these assets which
increased to 3.06% from 0.98%.

         Interest  Expense.  Total interest expense increased by $1.4 million or
17.8% to $9.5  million for the year ended  September  30, 2005 from $8.1 million
for  2004.   For  those  same   comparative   periods,   the  average   cost  of
interest-bearing liabilities increased 15 basis points from 2.41% to 2.56% while
the average balance of interest  bearing  liabilities  increased 36.3 million or
10.8% to $372.6 million for fiscal 2005 from $336.2 million for 2004.

         Interest  expense on deposits  increased  $1.5 million or 27.8% to $6.7
million for the year ended  September 30, 2005 from $5.2 million for 2004.  This
increase was due, in part, to a $34.4 million increase in the average balance of
interest-bearing  deposits to $310.5  million for the year ended  September  30,
2005 from $276.1  million for 2004.  The components of this net increase for the
comparative  periods include an increase of $18.6 million in the average balance
of  certificates of deposit,  a $1.6 million  increase in the average balance of
savings  accounts  and a  $14.2  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 26 basis point  increase in the average
cost of interest-bearing deposits to 2.16% for the year ended September 30, 2005
from 1.90% for 2004.  The  components of this increase  include a 52 basis point
increase in the  average  cost of  certificates  of deposit and a 35 basis point
increase in the average cost of  interest-bearing  checking  accounts  while the
average cost of savings accounts remained the same at 1.55%.

                                       13

<PAGE>

         Interest expense on FHLB advances decreased $15,000 to $2.8 million for
the year ended September 30, 2005 from $2.9 million for the same period in 2004.
This decrease was due, in part, to an 18 basis point decline in the average cost
of  advances  from  4.76%  in 2004 to  4.58%  in 2005.  The  impact  on  expense
attributable  to this  decrease  in  average  cost was  partly  offset by a $1.9
million  increase  in the average  balances to $62.1  million for the year ended
September  30,  2005 from $60.1  million  for 2004.  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. Net interest income increased by $956,000 or 9.5%,
to $11.1  million for the year ended  September  30, 2005 from $10.1 million for
the year ended  September 30, 2004.  The net interest  rate spread  remained the
same in fiscal 2005 at 2.28%,  while the net interest  margin also  remained the
same at 2.60%.

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

         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
September 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  $81,000  for the year  ended
September 30, 2005  representing  a decrease of $126,000 over 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
fiscal  2005.  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  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

                                       14

<PAGE>

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.

         Specific  changes to  environmental  factors  used in the  Bank's  loss
provision  calculations  reflected the Company's  strategic  focus on commercial
real  estate and  construction  lending.  Environmental  factors  applied to the
outstanding  balance of construction and commercial  mortgages reflect increased
balances of unseasoned loans and concerns about potentially inflated real estate
values.  However,  the impact of these  increases has been  partially  offset by
reductions in environmental factors attributable to the experience,  ability and
depth of lending  management  and staff both of which were  enhanced  during the
year.

       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 year ended  September 30, 2005,  loans
receivable,  net  increased  10.4% to $341.0  million  from  $309.0  million  at
September 30, 2004.  Total gross loan balances,  excluding  loans held for sale,
net deferred loan costs and the  allowance for loan loss,  grew $32.0 million or
10.3%.  The growth was primarily  comprised of net increases in multi-family and
commercial  real estate loans totaling $15.4 million  coupled with net increases
in one-to-four family mortgages totaling $15.5 million. Additional components of
the net change in gross loan balances included increases in home equity loans of
$2.7  million and net  increases  in  commercial  and  consumer  loans  totaling
$304,000.  This  growth  was  offset by a decline  in the  disbursed  balance of
construction loans totaling $1.9 million.

         By  comparison,  loan  growth for the year  ended  September  30,  2004
totaled  $46.4 million or $14.0  million more 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  $36.3  million,  an
increase of $7.0 million in  multi-family  and commercial  real estate loans, an
increase of $2.6 million in the disbursed  balances of construction loans and an
increase  of $1.8  million in home  equity  loans,  offset by net  decreases  in
consumer loans and commercial loans totaling $1.2 million.

         In total,  the allowance for loan losses as a percentage of gross loans
outstanding  decreased 2 basis points to 0.48% at September  30, 2005 from 0.50%
at September 30, 2004. These ratios reflect  allowance for loan loss balances of
$1.7 million and $1.6 million, respectively. The level of the allowance is based
on estimates and the ultimate losses may vary from those estimates.

         Noninterest  Income.  Noninterest  income  decreased  $102,000  to $1.2
million for the year ended  September  30,  2005  compared to the same period in
2004. A significant  portion of that decrease  resulted from the absence in 2005
of $176,000 in gain on sale of other real estate that had been  recorded  during
2004.  The remaining  components of the decrease are  attributable  to a $16,000
loss on sale of  available-for-sale  securities coupled with a decline of $7,000
in deposit service fees resulting from reduced  customer  utilization of deposit
services introduced in the prior fiscal year. In addition,  there was a decrease
of $11,000  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

                                       15

<PAGE>

insurance which grew $63,000 from $207,000 for the year ended September 30, 2004
to $270,000  for fiscal  2005  reflecting  higher  policy  balances  held by the
Company. Other non-interest income increased $45,000 from year to year primarily
due to collection of comparatively higher loan prepayment penalties.

         Noninterest  Expense.  Noninterest  expense increased $1.3 million,  or
16.6% to $8.9  million for the year ended  September  30, 2005 from $7.7 million
for the year ended  September  30, 2004.  The increase was primarily a result of
higher  expenses  for  salaries and  employee  benefits,  advertising  and other
non-interest expenses, partially offset by decreases in occupancy and equipment,
data processing and borrowed funds prepayment penalty.

         Salaries and employee benefits  increased $1.1 million or 22.5% to $5.9
million for the year ended  September  30, 2005 as compared to $4.8  million for
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,  deferred compensation
benefits  costs  increased  $207,000 due to the  implementation  of a restricted
stock plan during fiscal 2005 while expenses  associated with the employee stock
ownership  plan grew  $54,000 due to increases in the market value of the shares
of  Company's  stock held by the plan.  Salaries and wages  including  bonus and
payroll taxes, increased $324,000 or 9.3% due, in part, to executive and lending
staffing   additions   coupled  with  overall   annual   increases  in  employee
compensation.  Finally,  medical insurance benefit premiums increased $36,000 or
8.9%.

         Occupancy and equipment  expense  decreased $23,000 to $830,000 for the
year ended September 30, 2005 as compared to $853,000 for 2004. This decrease is
primarily  attributable to a $67,000 decrease in computer  depreciation expense.
For the same comparative  periods,  data processing costs also decreased $19,000
from  $652,000  to  $633,000  due  to  the  absence  in the  current  period  of
information  technology  conversion  and upgrade  expenses that were  recognized
during 2004.

         Legal fees increased  $129,000 to $234,000 for the year ended September
30,  2005 from  $105,000  for 2004.  A portion of the  increase in legal fees is
attributable  to  organizational  and  benefits  related  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 $131,000 to $274,000 for the year ended September 30,
2005 as compared to 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.

         The Bank did not prepay any borrowings  during the year ended September
30, 2005. As such, no borrowed funds  prepayment  penalties were incurred during
the year.  By  comparison,  in fiscal 2004 the Bank prepaid $3.0 million of FHLB
advances  with a weighted  average  cost of 6.28% which  resulted in  prepayment
penalties totaling $125,000.

                                       16

<PAGE>

         Finally,  other  noninterest  expenses  increased  $85,000 for the year
ended  September  30, 2005 as compared  2004 due, in large part, to increases in
net loan processing charges and other general and administrative expenses.

         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
$168,000 for the year ended September 30, 2005 from 2004. The effective tax rate
was 37.1% and 38.8% for the years ended  September 30, 2005 and 2004. 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 Years Ended September 30, 2004 and 2003

         General.  Net  income for the year ended  September  30,  2004 was $2.2
million, an increase of $759,000, or 54.1% from 2003. The increase in net income
resulted from an increase in net interest income and non-interest income, offset
by increases in non-interest expense and the provision for income taxes.

         Interest  Income.  Total interest income increased by $728,000 or 4.2%,
to $18.2  million for the year ended  September  30, 2004 from $17.5 million for
the year ended  September  30,  2003.  The  primary  factor for the  increase in
interest income was an increase of $36.2 million or 10.3% in the average balance
of  interest  earnings  assets for the year ended  September  30, 2004 to $388.9
million from $352.7 million for the year ended September 30, 2003. This increase
in the average balance was partially  offset by a 27 basis points decline in the
average yield to 4.68% in fiscal 2004 from 4.95% in fiscal 2003.

         Interest income on loans  increased  $674,000 or 4.7%, to $15.0 million
for the year ended  September  30, 2004 from $14.3  million for the 2003 period.
The average balance of loans  receivable,  net increased $40.2 million to $278.6
million  for the year ended  September  30,  2004,  which  more than  offset the
decrease in the average yield on loans receivable, net from 6.01% in fiscal 2003
to 5.39% in fiscal 2004.

         The  increase in  interest  income on loans was offset by a decrease in
interest income on federal funds sold and other interest-bearing deposits, which
declined $153,000 or 71.2% to $62,000 for the year ended September 30, 2004. The
decrease  resulted  from  declines in the average  yield and average  balance of
those  assets.  There was a 62 basis  point  decrease  in the  average  yield on
federal funds sold and other interest-bearing deposits from 1.60% in fiscal 2003

                                       17

<PAGE>

to 0.98% in fiscal 2004.  This decrease in interest  income was exacerbated by a
decline in the average balance of federal funds sold and other  interest-bearing
deposits from $13.5 million for fiscal 2003 to $6.3 million for fiscal 2004.

         Interest  income  on  securities  increased  $207,000  or  7.1% to $3.1
million for the year ended September 30, 2004. The average balance of securities
increased $3.2 million to $104.0  million for the year ended  September 30, 2004
from $100.8  million for the year ended  September 30, 2003.  Additionally,  the
average yield on securities increased 11 basis points in the current fiscal year
to 3.01% from 2.90% in fiscal 2003.

         Interest Expense.  Total interest expense decreased by $765,000 or 8.6%
to $8.1 million for the year ended September 30, 2004 from $8.9 million in 2003.
For  those  same  periods,  the  average  cost of  interest-bearing  liabilities
decreased 40 basis  points from 2.81% to 2.41.  This decline in the average cost
was offset by an  increase of $20.4  million in the average  balance of interest
bearing  liabilities  to $336.2  million in fiscal 2004 from  $315.8  million in
fiscal 2003.

         The  average  balance of  interest  bearing  deposits  increased  $15.2
million or 5.8% for the year ended  September 30, 2004.  The average  balance of
certificates of deposit  decreased $4.4 million to $116.9 million in fiscal 2004
from  $121.3  million  in  fiscal  2003.  In  addition,   the  average  cost  of
certificates  of deposit  decreased  from 2.83% to 2.49%.  The  average  cost of
savings accounts  decreased from 1.97% in 2003 to 1.55% in 2004, which more than
offset the increase of $19.0 million or 16.3% in the average  balance of savings
accounts.

         Interest expense on FHLB advances  increased $25,000 to $2.9 million as
a result of an increase in the average balance from $54.9 million in fiscal 2003
to $60.1 million in fiscal 2004. This was partially  offset by a decrease in the
average cost of advances from 5.16% in 2003 to 4.76% in 2004.  The lower average
cost is primarily due to utilization of overnight line of credit  borrowings and
new term borrowings with an average cost that is less than those that matured or
were prepaid by the Company during the year.

         Net Interest  Income.  Net interest income increased by $1.5 million or
17.4%,  to $10.1 million for the year ended September 30, 2004 from $8.6 million
for the year ended September 30, 2003. The net interest rate spread increased 14
basis points to 2.28% in 2004 from 2.14% in 2003 while the net  interest  margin
increased  16  basis  points  to  2.60%  from  2.44%.   Both  increases  reflect
interest-bearing  liabilities  repricing  downward  slightly  more  rapidly than
assets.

         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.  The provision for loan losses decreased $47,000 to $207,000 for
the year ended  September  30,  2004  compared  to  $254,000  for the year ended
September 30, 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 year
ended September 30, 2004, total  one-to-four  family  mortgages  increased $36.3
million  representing  an increase of 16.8% and  reflecting  the majority of the
Bank's loan growth. Multi-family and commercial real estate loans increased $7.0
million or 19.3% and

                                       18

<PAGE>

commercial  loans  decreased  $1.2 million or 75.3%.  Consumer  loans  decreased
$34,000 or 4.4% and home  equity  loans  increased  $1.8  million or 19.9% while
construction loans, net of loans in process, increased $2.6 million or 581.1%.

         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  declined  slightly  to 0.50% for  September  30, 2004
compared to 0.52% at September 30, 2003 reflecting  balances of $1.6 million and
$1.4 million, respectively.  Non-performing loans as a percentage of gross loans
was 0.17% at September  30, 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 those estimates.

         Noninterest Income.  Noninterest income increased $580,000, or 80.8% to
$1.3  million  for the year  ended  September  30,  2004  compared  to  2003.  A
significant  portion  of that  increase  resulted  from the  absence  in 2004 of
$188,000 in loss on sale of available-for-sale securities that had been recorded
during 2003.  Additionally,  service  charges on deposit  accounts  increased by
$245,000 primarily due to the  implementation of new deposit services.  Gains on
sale of  held-for-sale  loans  decreased  $124,000 to $27,000 for the year ended
September 30, 2004 from $151,000 for 2003.  Income from cash surrender  value of
life  insurance  decreased  $20,000 for the  comparative  periods due to reduced
yields  reflecting lower market interest rates.  Finally,  gain on sale of other
real estate owned increased $173,000 and other non-interest  income increased by
$118,000,  due in large part to collection of comparatively  higher loan related
fees, which were primarily prepayment penalties.

         Noninterest Expense.  Noninterest expense increased $795,000,  or 11.6%
to $7.7 million for the year ended  September 30, 2004 from $6.9 million for the
year ended  September  30, 2003.  The increase was  primarily a result of higher
expenses for  salaries and employee  benefits,  occupancy  and  equipment,  data
processing, advertising, and other non-interest expenses.

         Salaries  and  benefits  increased  $305,000 or 6.8% for the year ended
September  30,  2004.  A large  portion of the  increase  was due to $215,000 in
employee stock  ownership plan expense  arising from the  implementation  of the
plan during the current fiscal year.  Medical and related  benefit plan premiums
increased  $35,000 while salaries and wages  including  bonus and payroll taxes,
increased  $178,000 or 5.3% for the year ended September 30, 2004 as compared to
the  same  period  in 2003.  These  increases  were  offset  by  lower  deferred
compensation  plan benefit  expenses of $98,000,  which had been adjusted in the
prior year for a decrease in the discount  rate used to calculate  the liability
in a lower rate  environment.  In addition,  expense for temporary help declined
$23,000 in 2004 as a result of decreased  utilization of temporary services that
were required in 2003 to augment loan processing and accounting staff and due to
strong loan origination volume and extended staff absences.

                                       19

<PAGE>

         Occupancy and equipment  expense  increased $31,000 to $853,000 for the
year ended  September  30, 2004 as compared to $822,000 for 2003,  due to higher
computer expenses  primarily related to upgrades and enhancements to information
technology support and security  services.  Data processing costs also increased
$109,000  mainly  due to  increases  in service  bureau  core  processing  costs
resulting  from  growth in deposit and loan  accounts  as well as  non-recurring
costs associated with comprehensive system upgrades.

         Advertising  expenses  were higher by $18,000 for 2004  resulting  from
increased print, radio, and television ads, and higher agency fees. Professional
and consulting  fees,  including legal fees,  increased  $12,000 due to expenses
associated with being a public company.

         The Bank recognized $125,000 in borrowed funds prepayment penalties for
the year ended  September 30, 2004 compared to none in fiscal 2003.  The current
year's  expense  resulted  from the  prepayment of $3.0 million of FHLB advances
with a weighted average cost of 6.28%.

         Other  non-interest  expenses  increased  $195,000  for the year  ended
September  30,  2004 as compared to 2003.  General and  administrative  expenses
increased  $74,000  consisting  primarily  of  $38,000 in  comparatively  higher
expenses  relating to printing and the bulk  purchase of brochures and forms and
$25,000 in higher costs  associated  with new deposit  service  programs.  Other
expense increases  included $4,000 for corporate  insurance,  $9,000 in transfer
agent fees and $18,000 for regulatory  fees resulting from increased  regulatory
assessments  due to asset  growth and the  establishment  of a holding  company.
These  additional  costs were offset by minor  decreases in other  miscellaneous
expenses.  Further,  net loan  processing  charges  increased  primarily  due to
reduced  recognition of loan  modification  fees  offsetting  related costs as a
result  of the  deferral  of loan  modification  fees and  related  costs in the
current period.

         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 the ongoing costs associated with being a
public company such as periodic  reporting,  annual meeting materials,  transfer
agent services,  and accounting and other  professional  fees.  Furthermore,  we
intend to expand our branch office network in the future,  and expenses  related
to such expansion may impact earnings in future periods.

         Provision  for Income Taxes.  The provision for income taxes  increased
$566,000 for the year ended September 30, 2004 from the same period in 2003. The
effective  tax rate was 38.8% and 36.5% for the years ended  September  30, 2004
and 2003. The slight  increase in the effective tax rate results  primarily from
an increase in  nondeductible  expenses  related to the employee stock ownership
plan.

Critical Accounting Policies

         Note 1 to our  Consolidated  Financial  Statements  for the year  ended
September 30, 2005 contains a summary of our  significant  accounting  policies.
Various  elements of our accounting  policies,  by their nature,  are inherently
subject to estimation  techniques,  valuation  assumptions and other  subjective
assessments.  The following is a description of our critical  accounting  policy
and an explanation of the methods and assumptions underlying its application.

                                       20

<PAGE>

ALLOWANCE FOR LOAN LOSSES

         Our policy with  respect to the  methodologies  used to  determine  the
allowance for loan losses is our most critical accounting policy. This policy is
important  to the  presentation  of  our  financial  condition  and  results  of
operations,  and  it  involves  a  higher  degree  of  complexity  and  requires
management  to make  difficult  and  subjective  judgments,  which often require
assumptions or estimates about highly  uncertain  matters.  The use of different
judgments, assumptions and estimates could result in material differences in our
results of operations or financial condition.

         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,  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
September 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 reasonably estimable.

         Based on the  allowance  for loan  loss  methodology  discussed  above,
management expects provisions for loan losses to increase as a result of the net
growth in loans called for in the  Company's  business  plan.  Specifically,  as
discussed earlier,  our business strategy calls for increased strategic emphasis
in  commercial  real estate and business  lending.  The loss factors used in the
Bank's loan loss  calculations are generally higher for such loans compared with
those applied to one-to-four  family  mortgage loans.  Consequently,  future net
growth in commercial  real estate and business loans may result in required loss
provisions that exceed those recorded in prior years when comparatively  greater
strategic  emphasis  had been  placed on growing  the 1-4 family  mortgage  loan
portfolio.

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 on 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.

                                       21

<PAGE>

         The  Bank's  short  term  liquidity,   represented  by  cash  and  cash
equivalents, is a product of its operating,  investing and financing activities.
The Bank's primary sources of funds are deposits, amortization,  prepayments and
maturities of outstanding loans and  mortgage-backed  securities,  maturities of
investment  securities and other short-term  investments and funds provided from
operations.  While  scheduled  payments  from  the  amortization  of  loans  and
mortgage-backed  securities  and maturing  investment  securities and short-term
investments are relatively  predictable sources of funds, deposit flows and loan
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 investment 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 September 30, 2005, the
total  approved  loan  origination  commitments  outstanding  amounted  to $21.3
million.  At the same  date,  unused  lines of credit  were  $16.0  million  and
construction  loans in process were $350,000.  Certificates of deposit scheduled
to mature in one year or less at September  30,  2005,  totaled  $97.6  million.
Management's  policy is to maintain deposit rates at levels that are competitive
with other local financial  institutions.  Based on the competitive rates and on
historical  experience,  management  believes  that  a  significant  portion  of
maturing  deposits  will remain  with the Bank.  In  addition,  the Bank has the
ability at September  30, 2005 to borrow an  additional  $85.2  million from the
Federal Home Loan Bank of New York as a funding source to meet  commitments  and
for liquidity purposes. In calculating our borrowing capacity, the Bank utilizes
the Federal Home Loan Bank's guideline,  which generally limits advances secured
by  residential  mortgage  collateral  to 25% of the  Bank's  total  assets.  At
September 30, 2005,  the Bank's total assets were inflated by $115.2  million of
stock  subscriptions  held  pending  the  closing of the  Company's  second step
conversion,   which  increased  the  Bank's  reported   borrowing   capacity  by
approximately  $28.7 million as of that date. Upon completion of the conversion,
$33.7 million of the $115.2 million was returned on oversubscriptions.

                                       22

<PAGE>

         The  following   tables  disclose  our   contractual   obligations  and
commercial commitments as of September 30, 2005. Scheduled principal payments on
amortizing borrowings are reported as maturities.

<TABLE>
<CAPTION>
                                                        Less Than                                      After
                                           Total         1 Year        1-3 Years      4-5 Years       5 Years
                                           -----         ------        ---------      ---------       -------
                                                                    (In thousands)
<S>                                    <C>            <C>           <C>            <C>            <C>
     Time Deposits                      $   152,808    $   97,646    $    38,563    $     6,518    $    10,081
     Federal Home Loan Bank
       advances(1)                           53,734         8,060         20,127         13,547         12,000
                                        -----------    ----------    -----------    -----------    -----------

         Total                          $   206,542    $  105,706    $    58,690    $    20,065    $    22,081
                                        ===========    ==========    ===========    ===========    ===========
</TABLE>

     (1)  At September 30, 2005, the total  collateralized   borrowing limit was
          $140 million of which we had $53.7 million outstanding.
<TABLE>
<CAPTION>
                                           Total
                                          Amounts       Less Than                                      Over
                                         Committed       1 Year        1-3 Years      4-5 Years       5 Years
                                           -----         ------        ---------      ---------       -------
                                                                    (In thousands)
                                                                        (In thousands)
<S>                                    <C>            <C>           <C>            <C>            <C>

     Lines of credit(1)                 $    15,956    $    1,273    $       311    $       149    $    14,223
     Construction loans in
       process                                  350           350              -              -              -
     Other commitments to
       extend credit                         21,284        21,284              -              -              -
                                        -----------    ----------    -----------    -----------    -----------

         Total                          $    37,590    $   22,907    $       311    $       149    $    14,223
                                        ===========    ==========    ===========    ===========    ===========
</TABLE>
     (1)  Represents amounts committed to customers.

         In  addition  to the  above  commitments,  the  Company  has  financial
obligations  regarding  outstanding contracts for sale relating to future branch
sites. As of September 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.


                                       23
<PAGE>

Capital

         Consistent  with its goals to operate a sound and profitable  financial
organization,  American  Bank of New Jersey  actively  seeks to maintain a "well
capitalized"  institution in accordance  with regulatory  standards.  The Bank's
total equity was $35.1  million at September  30, 2005, or 6.33% of total assets
on  that  date.  As of  September  30,  2005,  the  Bank  exceeded  all  capital
requirements of the Office of Thrift Supervision.  The Bank's regulatory capital
ratios at  September  30,  2005 were as  follows:  core  capital  6.49%;  Tier I
risk-based capital, 13.54%; and total risk-based capital, 14.13%. The regulatory
capital requirements to be considered well capitalized are 5.0%, 6.0% and 10.0%,
respectively.

Impact of Inflation

         The  consolidated  financial  statements  presented  herein  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 maturity  structure 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(R) (As Amended) - Share Based Payments

                  FAS   123(R)   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 during fiscal
2005.  The

                                       24

<PAGE>

pro forma cost and impact on earnings per share for the year ended September 30,
2005 are presented in Note 1 to the Consolidated Financial Statements.

         We will begin to record  compensation  costs for stock options  granted
during fiscal 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                                  58,278

         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.

                                       25
<PAGE>

Average Balances, Interest, and Average Yields/Cost

The  following  table  presents  certain  information  at and  for  the  periods
indicated  regarding  average  balances of assets and liabilities as well as the
total dollar amounts of interest income from average interest-earning assets and
interest expense on average interest-bearing  liabilities and average yields and
costs.  The yields and costs for the periods  indicated  are derived by dividing
income  or  expense  by  the  average   balances   of  assets  or   liabilities,
respectively,  for the periods  presented.  Average  balances  were derived from
average daily balances.

<TABLE>
<CAPTION>
                                 At September 30,
                                  Years Ended      --------------------------------Years Ended September 30,------------------------
                                -------2005------  -------------2005----------- -------------3004---------- ----------2003----------
                                                              Interest Average             Interest Average         Interest Average
                                           Yield/   Average    Earned/  Yield/   Average    Earned/ Yield/  Average Earned/   Yield/
                                 Balance    Cost    Balance     Paid     Cost    Balance     Paid    Cost   Balance  Paid      Cost
                                 -------    ----    -------     ----     ----    -------     ----    ----   -------  ----      ----
                                                                                (Dollars in thousands)
<S>                           <C>         <C>     <C>       <C>        <C>    <C>        <C>        <C>   <C>       <C>       <C>
Interest-earning assets:
   Loans receivable, net(1)    $ 341,286   5.38%   $327,948  $17,459    5.32%  $278,632   $ 15,017   5.39% $ 238,474 $14,343   6.01%
   Investment securities(2)       70,161   3.27      84,565    2,734    3.23    103,978      3,125   3.01    100,787   2,918   2.90
   Other interest-earning
     assets(3)                   108,970   3.74      13,343      408    3.06      6,302         62   0.98     13,462     215   1.60
                               ---------   ----    --------  -------    ----   --------   --------   ----   -------- -------   ----
   Total interest-earning assets 520,417   4.75     425,856   20,601    4.84    388,912     18,204   4.68    352,723  17,476   4.95
   Non-interest-earning assets    35,443             15,286  -------             10,755   --------             9,459 -------
                               ---------           --------                    --------                     --------
   Total assets                $ 555,860           $441,142                    $399,667                     $362,182
                               =========           ========                    ========                     ========
Interest-bearing liabilities:
   NOW & money market          $  39,264   1.87%   $ 37,243      490    1.32%  $ 23,086        225   0.97%  $ 22,511 $   290   1.29%
   Savings deposits(4)           238,471   1.13     137,723    2,130    1.55    136,100      2,109   1.55    117,052   2,307   1.97
   Certificates of deposit       152,808   3.45     135,547    4,082    3.01    116,926      2,912   2.49    121,310   3,439   2.83
                               ---------   ----    --------  -------    ----   --------   --------   ----   -------- -------   ----
   Total interest-bearing
     deposits                    430,543   2.02     310,513    6,702    2.16    276,113      5,246   1.90    260,873   6,036   2.31
   FHLB advances                  53,734   4.84      62,056    2,844    4.58     60,125      2,859   4.76     54,923   2,834   5.16
                               ---------   ----    --------  -------    ----   --------   --------   ----   -------- -------   ----
   Total interest-bearing
     liabilities                 484,277   2.33     372,569    9,546    2.56    336,238      8,105   2.41    315,796   8,870   2.81
   Non-interest-bearing deposits  25,583             23,954  -------             22,080   --------            20,303 -------
   Other non-interest-bearing
     liabilities                   6,494              6,070                       3,884                        4,441
                               ---------           --------                    --------                     --------
   Total liabilities             516,354            402,593                     362,202                      340,540
   Accumulated other
     comprehensive income           (959)              (649)                       (508)                          74
   Retained earnings &
     other equity                 40,465             39,198                      37,973                       21,568
                               ---------           --------                    --------                     --------
   Total liabilities and
     equity                    $ 555,860           $441,142                    $399,667                     $362,182
                               =========           ========                    ========                     ========

   Net interest spread(5)                  2.42%             $11,055    2.28%              $ 10,099   2.28%          $ 8,606   2.14%
                                           ====              =======    ====               ========   ====           =======   ====
   Net interest margin(6)                  2.58%                        2.60%                         2.60%                    2.44%
                                           ====                         ====                          ====                     ====
   Ratio of interest-earning
     assets to interest-bearing
     liabilities                  107.46%                     114.30%                        115.67%                  111.69%
                                  ======                      ======                         ======                   ======
</TABLE>
--------------------
(1)  Calculated net of deferred fees and loss reserves.  Non-accruing loans have
     been included as loans carrying a zero yield. Includes loans held for sale.
(2)  Calculated   based  on  amortized  cost  excluding  FAS  115  market  value
     adjustment.
(3) Includes  Federal Home Loan Bank stock at cost and term  deposits with other
    financial institutions.
(4)  2003  average  balances  include  money market  savings  accounts and stock
     subscriptions  received  in  connection  with the  Company's  first  public
     offering which closed October 3, 2003. 2005 average  balances include money
     market savings accounts and stock subscriptions received in connection with
     the Company's second public offering which closed October 5, 2005.
(5)  Interest rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(6)  Net  interest  margin  represents  net interest  income as a percentage  of
     average interest-earning assets.

                                       26

<PAGE>

Rate/Volume Analysis

         The following  table presents the effects of changing rates and volumes
on the  interest  income and interest  expense of the  Company.  The rate column
shows the effects attributable to changes in rate (changes in rate multiplied by
prior volume).  The volume column shows the effects  attributable  to changes in
volume  (changes in volume  multiplied by prior rate).  The  rate/volume  column
shows changes  attributable to changes in both rate and volume,  which cannot be
segregated.

<TABLE>
<CAPTION>

                                                                    2005 - 2004
                                                                    -----------
                                                                 Increase (Decrease)
                                                                              Rate/
                                                        Volume      Rate      Volume      Net
                                                        ------      ----      ------      ---
                                                               (Dollars in thousands)
<S>                                                   <C>        <C>        <C>        <C>
Interest-earning assets:
    Loans receivable                                   $ 2,658    $  (183)   $   (32)   $ 2,442
    Securities                                            (583)       236        (44)      (391)
    Other interest-earning assets                           69        131        146        346
                                                       -------    -------    -------    -------
       Total interest-earning assets                     2,144        184         70      2,397

Interest-bearing liabilities:
    NOW and money market accounts                          138         79         48        265
    Savings accounts                                        25         (4)         -         21
    Certificates of deposit                                464        609         97      1,170
                                                       -------    -------    -------    -------
       Total interest bearing deposits                     627        684        145      1,456
    Federal Home Loan Bank advances                         92       (104)        (3)       (15)
                                                       -------    -------    -------    -------
       Total interest-bearing liabilities                  719        580        142      1,441
                                                       -------    -------    -------    -------
          Increase (decrease) in net interest income   $ 1,425    $  (396)   $   (72)   $   956
                                                       =======    =======    =======    =======
</TABLE>

<TABLE>
<CAPTION>
                                                                      2004 - 2003
                                                                      -----------
                                                                 Increase (Decrease)
                                                                               Rate/
                                                        Volume      Rate      Volume      Net
                                                        ------      ----      ------      ---
                                                               (Dollars in thousands)
<S>                                                  <C>        <C>        <C>        <C>
Interest-earning assets:
    Loans receivable                                   $ 2,416    $(1,491)   $  (251)   $   674
    Securities                                              91        112          4        207
    Other interest-earning assets                         (114)       (83)        44       (153)
                                                       -------    -------    -------    -------
       Total interest-earning assets                     2,393     (1,462)      (203)       728

Interest-bearing liabilities:
    NOW and money market accounts                            7        (70)        (2)       (65)
    Savings accounts                                       375       (493)       (80)      (198)
    Certificates of deposit                               (124)      (418)        15       (527)
                                                       -------    -------    -------    -------
       Total interest bearing deposits                     258       (981)       (67)      (790)
    Federal Home Loan Bank advances                        268       (222)       (21)        25
                                                       -------    -------    -------    -------
       Total interest-bearing liabilities                  526     (1,203)       (88)      (765)
                                                       -------    -------    -------    -------

          Increase (decrease) in net interest income   $ 1,867    $  (259)   $  (115)   $ 1,493
                                                       =======    =======    =======    =======
</TABLE>

                                       27

<PAGE>

Management of Interest Rate Risk and 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 September 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.

         Tables  presenting  the  composition  and  allocation  of the Company's
interest earning assets and interest  costing  liabilities from an interest rate
risk  perspective  are presented in the preceding  section of this report titled
"Comparison  of  Financial  Condition at September  30, 2005 and  September  30,
2004". These tables present the Company's investment securities, loans, deposits
and   borrowings  by   categories   that  reflect  the   contractual   repricing
characteristics  of  the  underlying  assets  or  liabilities.  Presented  as  a
percentage of total assets,  the year-to-year  comparative data presents changes
in the repricing  characteristics  of the Company's balance sheet - an important
component of interest rate risk.

         Our net  interest  rate  spread,  which is the  difference  between the
yields we receive on assets and the rates we pay on  liabilities,  remained flat
during fiscal 2005 after increasing from 2003 levels during fiscal 2004. For the
years ended  September 30, 2005 and  September  30, 2004,  our net interest rate
spread was 2.28%, as compared to 2.14% for the year ended September 30,

                                       28

<PAGE>

2003.  In large  part,  the  improvement  in net  interest  rate  spread in 2004
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.

         As noted  earlier,  through the first half of fiscal 2005,  the Company
continued to realize  improvements  in its net  interest  margin as increases in
earning asset yields continued to outpace  increases in the cost of its interest
bearing-liabilities.  However,  that trend  reversed  in the latter half of 2005
when upward  pressure  on the  Company's  cost of  deposits  resulted in greater
increases in the Company's cost of  interest-bearing  liabilities  than those of
its interest earning assets.

         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
hybrid ARMs that are fixed rate for an initial  period of time. At September 30,
2005, excluding allowance for loan losses and net deferred origination costs and
including loans held for sale, loans totaled $341.6 million  comprising 61.5% of
total assets.  Of those loans,  fixed rate  mortgages  totaled $167.6 million or
30.1% of total assets while hybrid ARMs,  including  3/1, 5/1, 7/1 and 10/1 ARMs
totaled  $158.4  million  of  28.5%  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 the Bank's Chief Executive Officer, the Bank's President
and Chief Operating  Officer,  the Bank's Executive Vice President and Corporate
Secretary,  the Bank's Senior Vice President and Chief  Financial  Officer,  the
Bank's  Senior  Vice  President  and Chief  Lending  Officer,  the  Bank's  Vice
President of Branch Administration, and 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.

                                       29

<PAGE>

         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, construction and business 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.

         Quantitative  Aspects of Market  Risk.  The  following  table  presents
American Bank of New Jersey's net portfolio  value as of September 30, 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.

<TABLE>
<CAPTION>
                                      Net Portfolio
                                      Value as % of                    Board
         Net Portfolio Value      Present Value of Assets         Established Limits
         -------------------      -----------------------         ------------------
                                                 Net                 Net
                                              Portfolio    Basis  Portfolio   Basis
Changes in                                      Value      Point    Value     Point
 Rates (1)    $ Amount   $ Change  % Change     Ratio     Change    Ratio    Change
 ---------    --------   --------  --------     -----     ------    -----    ------
             (Dollars in thousands)

<S>           <C>        <C>        <C>       <C>        <C>       <C>     <C>
  +300 bp       46,276    -14,300    -24%       8.32%     -213 bp    5.00%  -450 bp
  +200 bp       51,487     -9,089    -15%       9.12%     -132 bp    6.00%  -300 bp
  +100 bp       56,389     -4,187     -7%       9.85%      -59 bp    7.00%  -150 bp
     0 bp       60,576                         10.44%                8.00%
  -100 bp       62,471      1,895     +3%      10.68%      +22 bp    7.00%  -150 bp
  -200 bp       60,645         69     +0%      10.32%      -12 bp    6.00%  -300 bp

</TABLE>
----------------------
(1)  The -300bp  scenario is not shown due to the low  prevailing  interest rate
     environment.


         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

                                       30

<PAGE>

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 year ended September
30,  2005,  we sold a total of $2.4  million  of loans to the  Federal  National
Mortgage  Association.  Gains on sales of mortgage  loans held for sale  totaled
$16,000 for 2005.  Such sales  contributed to a 9% or $5.9 million  reduction in
the balance of fixed rate  mortgage  loans with  original  maturities  exceeding
fifteen years during 2005.

         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 September 30, 2005, the Bank had
two outstanding  contracts to sell long term, fixed rate mortgage loans totaling
$640,000 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%.
Although no such prepayments were transacted in fiscal 2005, 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.

                                       31


<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Board of Directors
ASB Holding Company
Bloomfield, New Jersey


We have audited the accompanying  consolidated statements of financial condition
of ASB Holding  Company and  subsidiaries as of September 30, 2005 and 2004, and
the related consolidated statements of income, changes in equity, and cash flows
for the three years ended  September 30, 2005,  2004 and 2003.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of ASB  Holding  Company and
subsidiaries  as of  September  30,  2005  and  2004,  and  the  results  of its
operations and its cash flows for the three years ended September 30, 2005, 2004
and 2003 in conformity with U.S. generally accepted accounting principles.


                                           /s/Crowe Chizek and Company LLC

                                           Crowe Chizek and Company LLC

Livingston, New Jersey
November 4, 2005

                                       32

<PAGE>

                               ASB HOLDING COMPANY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           September 30, 2005 and 2004
                        (In thousands except share data)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------

                                                                          2005          2004
                                                                     -----------   -----------
<S>                                                                 <C>           <C>
ASSETS
Cash and cash equivalents
    Cash and due from banks                                          $     2,622   $     2,256
    Interest-bearing deposits                                            105,851         5,778
    Federal funds sold                                                    17,300             -
                                                                     -----------   -----------
       Total cash and cash equivalents                                   125,773         8,034

Securities available-for-sale                                             62,337        89,495
Securities held-to-maturity (fair value: 2005 - $7,694,
  2004 - $2,806)                                                           7,824         2,794
Loans held for sale                                                          280             -
Loans receivable, net of allowance for loan losses
  2005 - $1,658; 2004 - $1,578                                           341,006       308,970
Premises and equipment                                                     4,131         3,910
Federal Home Loan Bank stock, at cost                                      3,119         2,890
Cash surrender value of life insurance                                     7,512         6,242
Accrued interest receivable                                                1,468         1,359
Other assets                                                               2,410         1,250
                                                                     -----------   -----------
    Total assets                                                     $   555,860   $   424,944
                                                                     ===========   ===========

LIABILITIES AND EQUITY
Deposits
    Non-interest-bearing                                             $    25,583   $    22,599
    Interest-bearing                                                     315,342       300,117
                                                                     -----------   -----------
       Total deposits                                                    340,925       322,716

Stock subscriptions received                                             115,201             -
Advance payments by borrowers for taxes
  and insurance                                                            2,443         2,322
Federal Home Loan Bank advances                                           53,734        57,491
Accrued expenses and other liabilities                                     3,578         3,049
Common Stock in ESOP subject to contingent repurchase obligation             473            52
                                                                     -----------   -----------
    Total liabilities                                                    516,354       385,630

Commitments and contingent liabilities

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                                            17,242        15,687
    Unearned ESOP shares                                                  (1,064)       (1,200)
    Unearned RSP shares                                                   (1,212)            -
    Retained earnings                                                     25,417        24,806
    Accumulated other comprehensive loss                                    (959)         (482)
    Amount reclassified on ESOP shares                                      (473)          (52)
                                                                     -----------   -----------
       Total equity                                                       39,506        39,314
                                                                     -----------   -----------

          Total liabilities and equity                               $   555,860   $   424,944
                                                                     ===========   ===========

----------------------------------------------------------------------------------------------
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       33
<PAGE>
                               ASB HOLDING COMPANY
                        CONSOLIDATED STATEMENTS OF INCOME
                 Years Ended September 30, 2005, 2004, and 2003
                        (In thousands except share data)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
                                                             2005        2004       2003
                                                             ----        ----       ----
<S>                                                     <C>         <C>        <C>
Interest and dividend income
    Loans, including fees                                $ 17,459    $ 15,017   $ 14,343
    Securities                                              2,734       3,125      2,918
    Federal funds sold and other                              408          62        215
                                                         --------    --------   --------
       Total interest income                               20,601      18,204     17,476

Interest expense
    NOW and money market                                      490         225        290
    Savings                                                 2,130       2,109      2,307
    Certificates of deposit                                 4,082       2,912      3,439
    Federal Home Loan Bank advances                         2,844       2,859      2,834
                                                         --------    --------   --------
       Total interest expense                               9,546       8,105      8,870
                                                         --------    --------   --------

Net interest income                                        11,055      10,099      8,606

Provision for loan losses                                      81         207        254
                                                         --------    --------   --------

Net interest income after provision for loan losses        10,974       9,892      8,352

Noninterest income
    Deposit service fees and charges                          690         697        452
    Income from cash surrender value of life insurance        270         207        227
    Gain on sale of loans                                      16          27        151
    Loss on sales of securities available-for- sale           (16)          -       (188)
    Gain on sale of other real estate owned                     -         176          3
    Other                                                     236         191         73
                                                         --------    --------   --------
       Total noninterest income                             1,196       1,298        718

Noninterest expense
    Salaries and employee benefits                          5,896       4,812      4,507
    Occupancy and equipment                                   830         853        822
    Data processing                                           633         652        543
    Advertising                                               252         247        229
    Professional & Consulting                                 274         143        129
    Legal                                                     234         105        107
    Borrowed funds prepayment penalty                           -         125          -
    Other                                                     805         720        525
                                                         --------    --------   --------
       Total noninterest expense                            8,924       7,657      6,862
                                                         --------    --------   --------

Income before provision for income taxes                    3,246       3,533      2,208

Provision for income taxes                                  1,203       1,371        805
                                                         --------    --------   --------
Net income                                               $  2,043    $  2,162   $  1,403
                                                         ========    ========   ========
Earnings per share:
    Basic                                                $   0.38    $   0.40   $   0.36
    Diluted                                              $   0.37    $   0.40   $   0.36

--------------------------------------------------------------------------------------------
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       34
<PAGE>
                                               ASB HOLDING COMPANY
                                  CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
                                  Years Ended September 30, 2005, 2004 and 2003
                                                 (In thousands)

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

<S>                                    <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>
Balance at September 30, 2002           $      -   $     -   $      -   $      -  $ 21,341   $    531  $      -   $ 21,872

Initial funding of ASB Holding
  Company                                      -       100          -          -      (100)         -         -          -

Comprehensive income
   Net income                                  -         -          -          -     1,403          -         -      1,403  $ 1,403
   Unrealized holding loss on
     securities available-for-sale,
     net of reclassification and
     tax effects                               -         -          -          -         -       (936)        -       (936)    (936)
                                                                                                                            -------
      Total comprehensive income                                                                                            $   467
                                             ---    ------     ------   --------    ------       ----       ---     ------  =======


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 of common stock
  in ESOP to contingent repurchase
  obligation                                   -         -          -                    -          -       (52)       (52)

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

Balance at September 30, 2004                555    15,687     (1,200)              24,806       (482)      (52)    39,314

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
                                                  (Continued)
                                                       35
<PAGE>
                                              ASB HOLDING COMPANY
                                  CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
                                  Years Ended September 30, 2005, 2004 and 2003
                                                 (In thousands)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------


                                                                                            Accumulated
                                                                                               Other     Amount
                                                                                              Compre- Reclassified
                                                 Additional  Unearned   Unearned              hensive      on                Compre-
                                         Common    Paid-in     ESOP        RSP    Retained    Income      ESOP       Total   hensive
                                          Stock    Capital    Shares     Shares   Earnings    (Loss)     Shares     Equity   Income
                                          -----    -------    ------     ------   --------    ------     ------     ------   ------


<S>                                    <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>
RSP stock grants                        $      -   $ 1,419   $      -   $ (1,419) $      -   $      -  $      -   $      -

RSP shares earned                              -         -          -        207         -          -         -        207

ESOP shares earned                             -       136        136          -         -          -         -        272

Cash dividends paid -
$0.93 per share                                -         -          -          -    (1,432)         -         -     (1,432)

Reclassification of
  common stock in ESOP
  to contingent repurchase
  obligation                                   -         -          -          -         -          -      (421)      (421)

Comprehensive income
   Net income                                  -         -          -          -     2,043          -         -      2,043  $ 2,043
   Change in unrealized
     gain (loss) on securities
     available-for-sale,
     net of taxes                              -         -          -          -         -       (477)        -       (477)    (477)
                                                                                                                            -------
      Total comprehensive
        income                                                                                                              $ 1,566
                                        --------   -------   --------   --------  --------   --------  --------   --------  =======
Balance at September 30, 2005           $    555   $17,242   $ (1,064)  $ (1,212) $ 25,417   $   (959) $   (473)  $ 39,506
                                        ========   =======   ========   ========  ========   ========  ========   ========

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       36
<PAGE>

                               ASB HOLDING COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 Years Ended September 30, 2005, 2004, and 2003
                                 (In thousands)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------

                                                                              2005         2004         2003
                                                                              ----         ----         ----
<S>                                                                    <C>          <C>          <C>
Cash flows from operating activities
    Net income                                                           $   2,043    $   2,162    $   1,403
    Adjustments to reconcile net income to net cash
      provided by operating activities
       Depreciation and amortization                                           353          417          371
       Net amortization of premiums and discounts                              126          292        1,036
       Losses on sales of securities available-for-sale                         16            -          188
       ESOP compensation expense                                               272          214            -
       RSP compensation expense                                                207            -            -
       Provision for loan losses                                                81          207          254
       Increase in cash surrender value of life insurance                     (270)        (207)        (227)
       Gain on sale of other real estate owned                                   -         (176)          (3)
       Gain on sale of loans                                                   (16)         (27)        (151)
       Proceeds from sales of loans                                          2,431        4,774        9,561
       Origination of loans held for sale                                   (2,695)      (4,247)      (9,910)
       Decrease (increase) in accrued interest receivable                     (109)        (104)          58
       Decrease (increase) in other assets                                    (732)         591         (979)
       Change in deferred income taxes                                        (174)         (34)         142
       Increase (decrease) in other liabilities                                529          364          (22)
                                                                         ---------    ---------    ---------
          Net cash provided by operating activities                          2,062        4,226        1,721

Cash flows from investing activities
    Net increase in loans receivable                                       (32,117)     (46,542)     (54,784)
    Purchases of securities held-to-maturity                                (6,227)        (922)           -
    Principal paydowns on securities held-to-maturity                        1,183          954        4,133
    Purchases of securities available-for-sale                                   -      (21,459)    (111,503)
    Sales of securities available-for-sale                                   1,984            -       21,026
    Calls of securities available-for-sale                                   2,000       13,560            -
    Principal paydowns on securities available-for-sale                     22,315       25,387       70,435
    Purchase of Federal Home Loan Bank stock                                (2,734)      (2,222)      (1,660)
    Redemption of Federal Home Loan Bank stock                               2,505        2,482          710
    Purchase of bank-owned life insurance                                   (1,000)      (1,007)        (324)
    Purchase of premises and equipment                                        (574)        (388)        (524)
    Proceeds from sale of other real estate owned                                -          385           63
                                                                         ---------    ---------    ---------
       Net cash used in investing activities                               (12,665)     (29,772)     (72,428)

Cash flows from financing activities
    Net increase in deposits                                                18,209       29,890       28,239
    Stock subscriptions held for parent received (refunded or applied)     115,201      (52,137)      52,137
    Net change in advance payments by borrowers for taxes and
      insurance                                                                121          243          366
    Repayment of Federal Home Loan Bank of New York advances               (16,057)      (7,009)      (4,000)
    Federal Home Loan Bank of New York advances                             15,000        6,800       15,000
    Net change in Federal Home Loan Bank of New York overnight
      lines of credit                                                       (2,700)       2,700            -
    Cash dividends paid                                                     (1,432)           -            -
    Net proceeds from stock issuance                                             -       14,728            -
                                                                         ---------    ---------    ---------
       Net cash provided by (used in) financing activities                 128,342       (4,785)      91,742
                                                                         ---------    ---------    ---------

Net change in cash and cash equivalents                                    117,739      (30,331)      21,035

Cash and cash equivalents at beginning of year                               8,034       38,365       17,330
                                                                         ---------    ---------    ---------

Cash and cash equivalents at end of year                                 $ 125,773    $   8,034    $  38,365
                                                                         =========    =========    =========

-------------------------------------------------------------------------------------------------------------
</TABLE>

                                  (Continued)

                                       37
<PAGE>

                               ASB HOLDING COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 Years Ended September 30, 2005, 2004, and 2003
                                 (In thousands)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------

                                                                           2005           2004          2003
                                                                           ----           ----          ----

<S>                                                                   <C>           <C>           <C>
Supplemental cash flow information:
    Cash paid during the period for
       Interest                                                         $     9,544   $     8,101   $     8,839
       Income taxes, net of refunds                                           1,675         1,166         1,049

Supplemental disclosures of noncash investing transactions:
    Conversion of loans to other real estate owned                      $         -   $       209   $        60

-----------------------------------------------------------------------------------------------------------------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       38

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of  Consolidation:  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.

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.

After the sale of the  stock,  the MHC held 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.

On October 5, 2005, the Company completed a second step conversion at which time
ASB Holding  Company  ceased to exist and American  Bancorp of New Jersey,  Inc.
became the new holding company for the Bank. See Note 2 for further discussion.

The consolidated financial statements include ASB Holding Company and its wholly
owned subsidiaries,  American Bank of New Jersey ("the Bank") and ASB Investment
Corp  ("the  Investment   Corp"),   together   referred  to  as  "the  Company."
Intercompany transactions and balances are 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 accounting and reporting  policies of the Company are based upon  accounting
principles  generally  accepted  in the United  States of America and conform to
predominant  practices  within  the  banking  industry.  Significant  accounting
polices followed by the Company are presented below.

--------------------------------------------------------------------------------

                                  (Continued)

                                       39
<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates: In preparing the financial statements,  management is required
to make  estimates  and  assumptions  that  affect the  amounts  reported in the
financial statements and the disclosures  provided.  Actual results could differ
significantly  from those  estimates.  Material  estimates that are particularly
susceptible to significant  change in the near term relate to the  determination
of the allowance for losses on loans,  prepayment speed  assumptions  related to
mortgage-backed  securities and  collateralized  mortgage  obligations,  and the
valuation  of  real  estate  acquired  in  connection  with  foreclosures  or in
satisfaction of loans.

A substantial  portion of the Bank's loans are secured by real estate in the New
Jersey  market.  In  addition,  a  substantial  portion of real estate  owned is
located in that same market. Accordingly, as with most financial institutions in
the market area,  the ultimate  collectibility  of a substantial  portion of the
Bank's loan  portfolio  and the recovery of the  carrying  amount of real estate
owned are susceptible to changes in market conditions.

Cash and Cash  Equivalents:  For purposes of the statements of cash flows,  cash
and  cash  equivalents  include  cash on  hand  and in  banks;  interest-bearing
deposits;  and federal funds sold, which are generally sold for one-day periods.
Net  cash  flows  are  reported  for  customer  loan and  deposit  transactions,
interest-bearing  deposits in other  financial  institutions,  and federal funds
purchased.

Securities:  Debt  securities  are classified as held to maturity and carried at
amortized cost when  management has the positive intent and ability to hold them
to maturity.  Debt  securities  are  classified  as available for sale when they
might be sold before maturity.  Equity securities,  including mutual funds, with
readily   determinable  fair  values  are  classified  as  available  for  sale.
Securities available for sale are carried at fair value, with unrealized holding
gains and losses  reported  in other  comprehensive  income,  net of tax.  Other
securities such as Federal Home Loan Bank stock are carried at cost.

Interest income includes amortization of purchase premium or discount.  Premiums
and discounts are  amortized  using the level yield method.  Gains and losses on
sales are based on the amortized cost of the security sold.

Declines  in the fair value of  securities  below their cost that are other than
temporary are reflected as realized losses.  In estimating  other-than-temporary
losses,  management considers: (1) the length of time and extent that fair value
has been less than cost, (2) the financial  condition and near term prospects of
the issuer,  and (3) the Company's ability and intent to hold the security for a
period sufficient to allow for any anticipated recovery in fair value.

--------------------------------------------------------------------------------

                                  (Continued)

                                       40
<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans:  Mortgages  on real estate and other loans are stated at the  outstanding
principal  amount of the loans,  net of deferred loan fees and the allowance for
loan losses. Interest income on loans is accrued and credited to interest income
as earned.  Loans are  generally  placed on  nonaccrual  status when they become
delinquent  90 days or more as to  principal or interest or when it appears that
principal or interest is  uncollectible.  Interest accrued prior to a loan being
placed  on  nonaccrual  status  is  subsequently  reversed.  Interest  income on
nonaccrual  loans is  recognized  only in the  period in which it is  ultimately
collected.  Loans are  returned  to an accrual  status when  factors  indicating
doubtful collectibility no longer exist.

The  Bank  defines  the  population  of  impaired  loans  to be  all  nonaccrual
commercial  real  estate,  multi-family,  and land  loans.  Impaired  loans  are
individually  assessed to determine  whether the loan's carrying value is not in
excess of the fair value of the  collateral  or the present  value of the loan's
expected  future  cash  flows.  Smaller  balance  homogeneous  loans that may be
collectively  evaluated for impairment  such as  residential  mortgage loans and
installment loans, are specifically excluded from the impaired loan portfolio.

Loans  Held-For-Sale:  Loans  held-for-sale  are carried at the lower of cost or
market,  using the aggregate method. Gains and losses on sales of mortgage loans
are recognized at the time of sale.

Allowance  For Loan  Losses:  The  allowance  for  loan  losses  is a  valuation
allowance for probable  incurred  credit losses,  increased by the provision for
loan losses and decreased by charge-offs less recoveries.  Management  estimates
the  allowance  balance  required  using past loan loss  experience,  peer group
information, the nature and volume of the portfolio,  information about specific
borrower situations and estimated collateral values,  economic  conditions,  and
other factors.  Allocations of the allowance may be made for specific loans, but
the entire  allowance is available for any loan that, in management's  judgment,
should be charged  off.  Loan losses are  charged  against  the  allowance  when
management believes that the uncollectibility of a loan balance is confirmed.

A loan is impaired when full payment under the loan terms is not expected.  If a
loan is  impaired,  a portion of the  allowance is allocated so that the loan is
reported  net,  at the  present  value of  estimated  future cash flow using the
loan's existing rate or at the fair value of collateral if repayment is expected
solely from the collateral.

Loan Fees: Loan fees and certain direct loan  origination  costs for originating
mortgage loans are deferred and the net fee or cost is recognized  into interest
income using the interest method over the contractual lives of the loans.

--------------------------------------------------------------------------------

                                  (Continued)

                                       41

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Real Estate Owned:  When properties are acquired through  foreclosure,  they are
transferred  at the lower of the carrying value or estimated  fair value of  the
collateral  and any required  write-downs are charged to the allowance for  loan
losses.  Subsequently,  such properties are carried at the lower of the adjusted
cost or fair value less  estimated  selling costs.  Estimated fair value of  the
property is generally based on an appraisal. The Bank maintains an allowance for
real  estate  owned  losses for  subsequent declines in  estimated  fair  value.
Expenses of holding foreclosed  properties, net of other income, are charged  to
operations  as  incurred.  Gains and losses  from sales of such  properties  are
recognized at the time of sale.

Premises and Equipment: Land is carried at cost. Office properties and equipment
are  carried  at cost,  less  accumulated  depreciation.  Office  buildings  and
improvements are depreciated  using the  straight-line  method with useful lives
ranging from 20 to 40 years. Furniture,  fixtures, and equipment are depreciated
using the straight-line method with useful lives ranging from 3 to 10 years.

Mortgage  Servicing  Rights:  Servicing  assets represent the allocated value of
retained  servicing  rights on loans  sold.  Servicing  assets are  expensed  in
proportion  to,  and over the  period  of,  estimated  net  servicing  revenues.
Impairment is evaluated  based on the fair value of the assets,  using groupings
of the  underlying  loans as to  interest  rates  and then,  secondarily,  as to
prepayment  characteristics.  Fair value is determined  using prices for similar
assets with similar  characteristics,  when available,  or based upon discounted
cash flows  using  market-based  assumptions.  Any  impairment  of a grouping is
reported as a valuation allowance. Mortgage servicing rights totaled $77,667 and
$80,930 at September 30, 2005 and 2004 and are included with other assets on the
balance sheet.

Income  Taxes:  The  provision for income taxes is the total of the current year
income  tax due or  refundable  and the  change in the  deferred  tax assets and
liabilities.  Deferred tax assets and liabilities  are the estimated  future tax
consequences  attributable  to  differences  between the  financial  statements'
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases,  computed using enacted tax rates. The realization of deferred tax assets
is assessed and a valuation allowance provided, when necessary, for that portion
of the asset which is not likely to be realized.

--------------------------------------------------------------------------------

                                  (Continued)

                                       42

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Employee  Stock  Ownership  Plan: The cost of shares issued to the ESOP, but not
yet allocated to participants,  is shown as a reduction of shareholders' equity.
Compensation  expense  is  based  on the  market  price  of  shares  as they are
committed to be released to  participant  accounts.  Dividends on allocated ESOP
shares reduce retained  earnings;  dividends on unearned ESOP shares reduce debt
and accrued interest. Participants may put their ESOP shares back to the Company
upon  termination,  and an amount of equity equal to these shares times  current
market price is reclassified out of shareholders' equity.

Stock-Based  Compensation:  Employee compensation expense under stock options is
reported using the intrinsic value method.  No stock-based  compensation cost is
reflected in net income,  as all options  granted had an exercise price equal to
or  greater  than the market  price of the  underlying  common  stock at date of
grant.

The following table  illustrates the effect on net income and earnings per share
if expense was  measured  using the fair value  recognition  provisions  of FASB
Statement No. 123, Accounting for Stock-Based Compensation.


                                                             September 30, 2005
                                                             ------------------

    Net income as reported                                      $     2,043
    Deduct:  Stock-based compensation expense determined
      under fair value based method                                     223
                                                                -----------
         Pro forma net income                                   $     1,820
                                                                ===========

    Basic earnings per share as reported                        $      0.38
    Pro forma basic earnings per share                          $      0.33
    Diluted earnings per share as reported                      $      0.37
    Pro forma diluted earnings per share                        $      0.33

For accounting purposes, the Bank is recognizing compensation expense for shares
of common  stock  awarded  under the 2005  Restricted  Stock  Plan.  Expense  is
recognized  over the vesting  period of five years from the date of award at the
fair market value of the shares on the date they were awarded.

Earnings Per Common Share: Basic earnings per common share is net income divided
by the weighted average number of common shares  outstanding  during the period.
ESOP shares are considered  outstanding for this  calculation  unless  unearned.
Diluted  earnings per common share  includes the dilutive  effect of  additional
potential  common  shares  issuable  under stock  options and  restricted  stock
awards.  The weighted average common shares outstanding were 5,445,820 for basic
and 5,474,122 for diluted for the year ended September 30, 2005 and 5,427,906

--------------------------------------------------------------------------------

                                  (Continued)

                                       43

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

for the year ended  September  30,  2004.  Earnings per share for the year ended
September 30, 2003 has 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.  There  were no  potentially
dilutive securities for the years ended September 30, 2004 and 2003.

As  described  in Note 2, on October 5, 2005,  the  Company  completed  a public
offering  associated  with  its  second  step  conversion  in  which a total  of
9,918,750  common  shares were issued  while each  outstanding  public share was
converted into 2.55102 shares of the new holding company. This transaction would
have materially  changed the number of common shares  outstanding if this change
had occurred before the end of the period.

Comprehensive  Income:  Comprehensive  income  consists  of net income and other
comprehensive   income  (loss).   Other  comprehensive  income  (loss)  includes
unrealized  gains and losses on  securities  available-for-sale,  which are also
recognized as separate components of equity.

Loss  Contingencies:  Loss  contingencies,  including  claims and legal  actions
arising in the ordinary course of business, are recorded as liabilities when the
likelihood  of loss is probable and an amount or range of loss can be reasonably
estimated. Management does not believe there now are such matters that will have
a material effect on the financial statements.

Reclassifications:  Some  items in the  prior  year  financial  statements  were
reclassified to conform to the current presentation.

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 year beginning  after June 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
during fiscal 2005.

--------------------------------------------------------------------------------

                                  (Continued)

                                       44

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

We will begin to record  compensation  costs for stock  options  granted  during
fiscal 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
                          2007                 223
                          2008                 223
                          2009                 223
                          2010                  58

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.


NOTE 2 - SUBSEQUENT EVENT

On October 5, 2005, the Company  completed a second step conversion in which the
3,888,150  shares of ASB  Holding  Company  held by American  Savings,  MHC were
converted and sold in a subscription  offering.  Through this  transaction,  ASB
Holding  company ceased to exist and was  supplanted by American  Bancorp of New
Jersey as the  holding  company  for the Bank.  A total of  9,918,750  shares of
common  stock  were  sold in the  offering  at $10 per share  through  which the
Company  received  proceeds of $97,524,302  net of offering costs of $1,663,198.
The Company contributed  $48,762,151 or approximately 50% of the net proceeds to
the Bank in the form of a capital contribution. The Company loaned $7,935,000 to
the  Bank's  employee  stock  ownership  plan and the ESOP used  those  funds to
acquire 793,500 shares of common stock at $10 per share.

As part of the conversion,  the 1,666,350 outstanding shares ASB Holding Company
were each  exchanged for 2.55102 shares of American  Bancorp of New Jersey,  the
new holding Company of American Bank of New Jersey. This exchange resulted in an
additional  4,250,719 of outstanding  shares of American  Bancorp of New Jersey,
Inc. for a total of 14,269,469 outstanding shares.

The Company had stock subscriptions  received totaling $115,201,806 at September
30, 2005 pending completion of the conversion and stock offering. At the time of
closing on October 5, 2005, approximately  $91,252,500,  less offering expenses,
became capital of the Company with the remainder returned on  oversubscriptions.
The following table  summarizes the pro forma impact of the conversion and stock
offering results on the Company's September 30, 2005 balance sheet.

--------------------------------------------------------------------------------

                                  (Continued)

                                       45

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

   Actual and Pro Forma Summary Consolidated Statement of Financial Condition
                               September 30, 2005

<TABLE>
<CAPTION>
                                                                         Actual    Pro Forma
ASSETS
<S>                                                                  <C>          <C>
Cash and cash equivalents(1)                                          $ 125,773    $  92,166
Securities available-for-sale                                            62,337       62,337
Securities held-to-maturity                                               7,824        7,824
Loans held for sale                                                         280          280
Loans receivable, net of allowance for loan losses                      341,006      341,006
Premises and equipment                                                    4,131        4,131
Federal Home Loan Bank stock, at cost                                     3,119        3,119
Cash surrender value of life insurance                                    7,512        7,512
Accrued interest receivable                                               1,468        1,468
Other assets                                                              2,410        1,797
                                                                      ---------    ---------
    Total assets                                                      $ 555,860    $ 521,640
                                                                      =========    =========

LIABILITIES AND EQUITY
Deposits(2)                                                             340,925      331,167
Stock subscriptions received(3)                                         115,201            -
Advance payments by borrowers for taxes and insurance                     2,443        2,443
Federal Home Loan Bank advances                                          53,734       53,734
Accrued expenses and other liabilities                                    3,578        4,629
Common stock in ESOP subject to contingent repurchase obligation(6)         473            -
                                                                      ---------    ---------
    Total liabilities                                                   516,354      391,973

Equity
    Common stock and additional paid in capital(4)                       17,797      115,420
    Unearned ESOP shares(5)                                              (1,064)      (8,999)
    Unearned RSP shares                                                  (1,212)      (1,212)
    Retained earnings                                                    25,417       25,417
    Accumulated other comprehensive loss                                   (959)        (959)
    Amount reclassified on ESOP shares(6)                                  (473)           -
                                                                      ---------    ---------
       Total equity                                                      39,506      129,667
                                                                      ---------    ---------

          Total liabilities and equity                                $ 555,860    $ 521,640
                                                                      =========    =========
</TABLE>

(1)  Pro forma  balance  reflects  reduction  of cash for  funding the return of
     approximately  $33.7  million in  oversubscriptions.
(2)  Pro forma balance reflects  approximately  $9.8 million of deposit balances
     withdrawn to purchase  shares in the stock  offering.
(3)  Pro forma balance  reflects  refund of $33.7  million of  oversubscriptions
     plus the utilization of $81.5 million of  subscriptions  to purchase shares
     in the stock offering.
(4)  Pro forma balance reflects additional capital from deposits,  subscriptions
     and ESOP  purchases  of $9.8  million,  $81.5  million  and  $7.9  million,
     respectively.  An  additional  $99,000 of capital was received  through the
     merger of American  Savings,  MHC into the Bank. These additions to capital
     were offset by stock offering expenses of approximately $1.6 million.
(5)  Pro forma  balance  reflects of the  addition  of $7.9  million of unearned
     shares  purchased  by the ESOP  during  the stock  offering.
(6)  Pro forma balance  reflects the elimination of ESOP  contingent  repurchase
     obligation of $473,000.

--------------------------------------------------------------------------------

                                  (Continued)

                                       46

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 3 - SECURITIES

The fair value of securities available-for-sale was as follows:

<TABLE>
<CAPTION>
                                                                        Gross          Gross
                                                          Fair       Unrealized     Unrealized
                                                          Value         Gains         Losses
                                                          -----         -----         ------
<S>                                                  <C>             <C>           <C>
     2005
     ----
         U.S. Government and federal agency           $      9,805    $       -     $    (193)
         Mortgage-backed
              FHLMC                                          4,090            1           (25)
              FNMA                                          12,782            9          (498)
              GNMA                                             148            1             -
         Collateralized mortgage obligations
              Agency                                        25,763            2          (580)
              Non-agency                                         -            -             -
         Mutual fund                                         9,749            -          (251)
                                                      ------------    ---------     ---------

                                                      $     62,337    $      13     $  (1,547)
                                                      ============    =========     =========

     2004
     ----
         U.S. Government and federal agency           $     13,840    $       -     $    (157)
         Mortgage-backed
              FHLMC                                          5,219           20           (26)
              FNMA                                          16,261           54          (359)
              GNMA                                             202            1             -
         Collateralized mortgage obligations
              Agency                                        42,870           41          (246)
              Non-agency                                     1,234            3            (3)
         Mutual fund                                         9,869            -          (131)
                                                      ------------    ---------     ---------
                                                      $     89,495    $     119     $    (922)
                                                      ============    =========     =========
</TABLE>

--------------------------------------------------------------------------------

                                  (Continued)

                                       47

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 3 - SECURITIES (Continued)

The  amortized  cost  and  fair  value of  securities  held-to-maturity  were as
follows:

<TABLE>
<CAPTION>
                                                                    Gross       Gross
                                                    Amortized     Unrealized  Unrealized    Fair
                                                      Cost           Gains      Losses      Value
                                                      ----           -----      ------      -----
<S>                                                <C>           <C>          <C>          <C>
     2005
     ----
         U.S. Government and federal agency          $2,000         $  -        $ (38)      $1,962
         Mortgage-backed
              FHLMC                                     385            1           (1)         385
              FNMA                                    2,616            6          (31)       2,591
              GNMA                                      244            2            -          246
         Collateralized mortgage obligations
              Agency                                     76            1            -           77
              Non-agency                              2,503            -          (70)       2,433
                                                     ------         ----        -----       ------

                                                     $7,824         $ 10        $(140)      $7,694
                                                     ======         ====        =====       ======
     2004
     ----
         Mortgage-backed
              FHLMC                                  $  490         $  2        $  (1)      $  491
              FNMA                                    1,870           11           (6)       1,875
              GNMA                                      327            3            -          330
         Collateralized mortgage obligations
              Agency                                    107            3            -          110
                                                     ------         ----        -----       ------

                                                     $2,794         $ 19        $  (7)      $2,806
                                                     ======         ====        =====       ======
</TABLE>

Proceeds from sales of securities  amounted to $1,983,620 and $21,026,000 during
the years ended  September 30, 2005 and 2003 resulting in gross gains of $0 both
years and gross losses of $16,380 and $188,000.  There were no  securities  sold
during the year ended September 30, 2004.

The fair  value  of debt  securities  and  carrying  amount,  if  different,  at
September 30, 2005 by contractual  maturity were as follows.  Securities not due
at a single  maturity  date,  primarily  mortgage-backed  securities,  are shown
separately.

<TABLE>
<CAPTION>

                                                                             Available
                                                Held-to-Maturity             for Sale
                                            Carrying          Fair             Fair
                                             Amount           Value            Value
                                             ------           -----            -----

<S>                                       <C>              <C>             <C>
     Due from one to five years              $2,000          $1,962          $ 9,805
     Mortgage-backed                          5,824           5,732           42,783
     Mutual fund                                  -               -            9,749
                                             ------          ------          -------
         Total                               $7,824          $7,694          $62,337
                                             ======          ======          =======

</TABLE>

--------------------------------------------------------------------------------

                                  (Continued)

                                       48

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 3 - SECURITIES (Continued)

Securities  with carrying values of $11,805,048 and $11,386,213 at September 30,
2005 and 2004, respectively, were pledged to secure public deposits and advances
as required or permitted by law.

Available-for-sale  securities with unrealized  losses at September 30, 2005 not
recognized in income are presented  below by length of time the securities  have
been in an unrealized loss position:

<TABLE>
<CAPTION>
                                   Less than 12 Months          12 Months or More                 Total
                                   -------------------          -----------------                 -----
                                     Fair       Unrealized       Fair       Unrealized        Fair      Unrealized
Description of Securities           Value          Loss         Value          Loss          Value         Loss
-------------------------           -----          ----         -----          ----          -----         ----
<S>                              <C>           <C>           <C>           <C>          <C>            <C>
U.S. Government and federal
 agency                           $       -     $       -     $   9,805     $   (193)    $     9,805    $    (193)
Mortgage backed                       3,456           (70)        9,777         (453)         13,233         (523)
Collateralized mortgage
 obligations                          6,651           (89)       18,880         (491)         25,531         (580)
Mutual fund                               -             -         9,749         (251)          9,749         (251)
                                  ---------     ---------     ---------     --------      ----------    ---------

   Total temporarily impaired     $  10,107     $    (159)    $  48,211     $ (1,388)     $   58,318    $  (1,547)
                                  =========     =========     =========     ========      ==========    =========
</TABLE>

Available-for-sale  securities with unrealized  losses at September 30, 2004 not
recognized in income are presented  below by length of time the securities  have
been in an unrealized loss position:

<TABLE>
<CAPTION>
                                   Less than 12 Months           12 Months or More                 Total
                                   -------------------           -----------------                 -----
                                     Fair       Unrealized       Fair       Unrealized        Fair      Unrealized
Description of Securities           Value          Loss         Value          Loss          Value         Loss
-------------------------           -----          ----         -----          ----          -----         ----
<S>                              <C>           <C>           <C>           <C>          <C>            <C>
U.S. Government and federal
 agency                           $   8,885     $    (112)    $   4,955     $    (45)    $    13,840    $    (157)
Mortgage backed                       6,520           (80)        8,649         (305)         15,169         (385)
Collateralized mortgage
 obligations                         29,307          (209)        4,831          (40)         34,138         (249)
Mutual fund                               -             -         9,869         (131)          9,869         (131)
                                  ---------     ---------     ---------     --------      ----------    ---------

   Total temporarily impaired     $  44,712     $    (401)    $  28,304     $   (521)     $   73,016    $    (922)
                                  =========     =========     =========     ========      ==========    =========
</TABLE>

--------------------------------------------------------------------------------

                                  (Continued)

                                       49

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 3 - SECURITIES (Continued)

Held-to-maturity  securities  with  unrealized  losses at September 30, 2005 not
recognized in income are as follows:

<TABLE>
<CAPTION>
                                   Less than 12 Months           12 Months or More                 Total
                                   -------------------           -----------------                 -----
                                     Fair       Unrealized       Fair       Unrealized        Fair      Unrealized
Description of Securities           Value          Loss         Value          Loss          Value         Loss
-------------------------           -----          ----         -----          ----          -----         ----
<S>                              <C>           <C>           <C>           <C>          <C>            <C>
U.S. Government and federal
 agency                           $   1,962     $     (38)    $       -     $      -     $     1,962    $     (38)
Mortgage-backed                       1,538           (23)           382          (9)          1,920          (32)
Collateralized mortgage
 obligations                          2,434           (70)            -            -           2,434          (70)
                                  ---------     ---------     ---------     --------      ----------    ---------
   Total temporarily impaired     $   5,934     $    (131)    $     382     $     (9)     $    6,316    $    (140)
                                  =========     =========     =========     ========      ==========    =========
</TABLE>

Held-to-maturity  securities  with  unrealized  losses at September 30, 2004 not
recognized in income are as follows:

<TABLE>
<CAPTION>
                                   Less than 12 Months           12 Months or More                Total
                                   -------------------           -----------------                -----
                                     Fair       Unrealized       Fair       Unrealized        Fair      Unrealized
Description of Securities           Value          Loss         Value          Loss          Value         Loss
-------------------------           -----          ----         -----          ----          -----         ----
<S>                              <C>           <C>           <C>           <C>           <C>           <C>
Mortgage-backed                   $     562     $      (6)    $     117     $     (1)     $      679    $      (7)
                                  ---------     ---------     ---------     --------      ----------    ---------
   Total temporarily impaired     $     562     $      (6)    $     117     $     (1)     $      679    $      (7)
                                  =========     =========     =========     ========      ==========    =========
</TABLE>

The Company evaluates securities for other-than-temporary impairment at least on
a quarterly  basis, and more frequently when economic or market concerns warrant
such evaluation.  Consideration is given to the length of time and the extent to
which the fair value has been less cost,  the financial  condition and near-term
prospects of the issuer, and the intent and ability of the Company to retain its
investment  in the  issuer  for a period  of time  sufficient  to allow  for any
anticipated   recovery  in  fair  value.  In  analyzing  an  issuer's  financial
condition,  the Company may consider  whether the  securities  are issued by the
federal  government or its agencies,  whether downgrades by bond rating agencies
have occurred, and the results of reviews of the issuer's financial condition.

--------------------------------------------------------------------------------

                                  (Continued)

                                       50

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 3 - SECURITIES (Continued)

At September 30, 2005,  securities with unrealized  losses had depreciated  2.4%
from the Company's  amortized  cost basis.  The Company  evaluated the near-term
prospects  of the  issuers in  relation  to the  severity  and  duration  of the
impairment.  The Company concluded that the financial strength of the issuers of
its securities - primarily U.S.  agencies - did not contribute to any impairment
of value.  Rather,  these  unrealized  losses related  principally to changes in
market  interest  rates.  The Company then evaluated the expected  timeframe and
conditions  within  which a recovery  of such  impairments  could be  reasonably
forecasted.  For example, the Company's debenture,  mortgage backed security and
collateralized mortgage obligation portfolios are expected to reprice, amortize,
prepay or mature within a timeframe  that is supported by the Company's  ability
and  intent to hold  such  securities.  Forecasted  repricing  of the  Company's
adjustable rate investments to market levels is one means by which an impairment
resulting  from a security's  "below  market"  yields can be recovered.  Another
means of impairment recovery is through the timely return of principal invested.
Given the relatively short duration of these investment securities,  the Company
can  reasonably  forecast a timely  and full  return of the  principal  invested
thereby  recovering  the  impairment  that had resulted from movements in market
interest rates.

The mutual fund held by the Company is also  comprised  primarily of  adjustable
rate and other short duration mortgage-related  securities. The fund's net asset
value directly reflects the market value of the securities  underlying the fund.
The mutual  fund itself  generates  no regular  repayment  of  principal  to the
investor.  However, the securities  underlying the fund regularly reprice and/or
amortize,  prepay or mature.  The  principal  proceeds  received by the fund are
regularly reinvested into similar securities at current market yields. Given the
relatively short duration of the investment  securities underlying the fund, the
Company can reasonably  forecast a timely  recovery of the  impairment  that had
resulted from movements in market interest rates.

Based on that  evaluation  and the  Company's  ability  and intent to hold those
securities for a reasonable period of time sufficient for a forecasted  recovery
of  fair  value,   the  Company  does  not  consider  those   securities  to  be
other-than-temporarily impaired at September 30, 2005.

--------------------------------------------------------------------------------

                                  (Continued)

                                       51

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 4 - LOANS

Loans at period-end were as follows:

                                                      2005             2004
                                                      ----             ----
     Mortgage loans:
         One-to-four-family                     $    267,052    $    251,531
         Multi-family and commercial                  58,615          43,197
         Construction                                  1,450           7,175
     Consumer                                            702             746
     Home equity                                      13,413          10,666
     Commercial                                          746             398
                                                ------------    ------------
         Total loans                                 341,978         313,713
     Allowance for loan losses                        (1,658)         (1,578)
     Net deferred loan costs                           1,036             935
     Loans in process                                   (350)         (4,100)
                                                ------------    ------------
         Loans, net                             $    341,006    $    308,970
                                                ============    ============

Certain  directors  and officers of the Bank and  companies  with which they are
affiliated have obtained loans from the Bank on various occasions.  A summary of
such loans made by the Bank is as follows:

                                                     2005            2004
                                                     ----            ----

     Beginning balance                          $      1,007    $      1,142
         New loans                                         1               3
         Effect of changes in related parties              -              32
         Repayments                                      (86)           (170)
                                                ------------    ------------
              Ending balance                    $        922    $      1,007
                                                ============    ============

Mortgage  loans  serviced  for  others  are  not  included  in the  accompanying
financial  statements.  At  September  30, 2005 and 2004,  the unpaid  principal
balances of these loans totaled $15,898,971 and $16,936,826, respectively.

--------------------------------------------------------------------------------

                                  (Continued)

                                       52

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 4 - LOANS (Continued)

Activity in the allowance for loan losses was as follows:

<TABLE>
<CAPTION>
                                                              2005     2004     2003
                                                              ----     ----     ----
<S>                                                        <C>      <C>      <C>
     Balance at beginning of year                           $1,578   $1,371   $1,117
     Provision charged to income                                81      207      254
     Charge-offs                                                 -        -        -
     Recoveries                                                  -        -        -
                                                            ------   ------   ------
         Balance at end of year                             $1,658   $1,578   $1,371
                                                            ======   ======   ======
</TABLE>

Impaired loans were as follows:

<TABLE>
<CAPTION>
                                                              2005     2004     2003
                                                              ----     ----     ----
<S>                                                        <C>      <C>      <C>
     Period-end loans with no allocated allowance
       for loan losses                                      $    -   $    -   $  294
     Period-end loans with allocated allowance
       for loan losses                                         174      259      250
                                                            ------   ------   ------
         Total                                              $  174   $  259   $  544
                                                            ======   ======   ======
</TABLE>

<TABLE>
<CAPTION>
                                                              2005     2004     2003
                                                              ----     ----     ----
<S>                                                         <C>      <C>      <C>
     Amount of the allowance for loan losses allocated      $   87   $  129   $  125
     Average of impaired loans during the period               225      398      623
     Interest income recognized during impairment               10       19       18
     Cash-basis interest income recognized                      10       19       18
</TABLE>

Nonperforming loans were as follows:

<TABLE>
<CAPTION>
                                                              2005     2004     2003
                                                              ----     ----     ----

<S>                                                        <C>      <C>      <C>
     Loans past due over 90 days still on accrual           $    -   $    -   $    -
     Nonaccrual loans                                        1,163      519      517
</TABLE>

Nonperforming  loans includes both smaller  balance  homogeneous  loans that are
collectively  evaluated for  impairment  and  individually  classified  impaired
loans.

--------------------------------------------------------------------------------

                                  (Continued)

                                       53

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 5 - ACCRUED INTEREST RECEIVABLE

Accrued interest receivable is summarized as follows:

                                                               2005     2004
                                                               ----     ----

     Securities                                              $  249   $  307
     Loans receivable                                         1,219    1,052
                                                             ------   ------
                                                             $1,468   $1,359
                                                             ======   ======


NOTE 6 - PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows:

                                                               2005     2004
                                                               ----     ----

     Land                                                    $  840   $  840
     Office buildings and improvements                        3,295    3,206
     Furniture and equipment                                  3,611    3,528
     Future branch site costs                                   584      207
                                                             ------   ------
                                                              8,330    7,781
     Less accumulated depreciation                            4,199    3,871
                                                             ------   ------
         Total                                               $4,131   $3,910
                                                             ======   ======

An agreement  dated  February  22, 2004 was signed to purchase  real estate at a
cost of $1,700,000 for the  acquisition of a future branch site in Essex County.
The above  amounts  include  $249,381  incurred for a deposit on the contract of
sale and professional  fees in connection with the  acquisition.  The balance of
$1,530,000 is due in cash at closing and will be recorded upon closing.

A second  agreement  dated  December 17, 2004 was signed to purchase real estate
for the  acquisition of a future branch site in Passaic  County.  Total purchase
price is $1,475,000.  The March 31, 2005 amounts above include $158,651 incurred
for a deposit on the contract of sale and  professional  fees in connection with
the acquisition. The balance of $1,327,500 is due in cash at closing and will be
recorded upon closing.

A third  agreement  dated April 15, 2005 to purchase  real estate was signed for
the acquisition of a future branch site in Essex County. Total purchase price is
$2,200,000. The September 30, 2005 amounts above include $107,195 incurred for a
deposit on the contract of sale and  professional  fees in  connection  with the
acquisition.  The  balance of  $2,100,000  is due in cash at closing and will be
recorded upon closing.

--------------------------------------------------------------------------------

                                  (Continued)

                                       54
<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 6 - PREMISES AND EQUIPMENT (Continued)

The three  agreements noted above are contingent on certain items as detailed in
the  contract  including  but not limited to (i) Title to be  conveyed  shall be
marketable and insurable;  (ii) Municipal and county approvals shall be obtained
by the buyer and the closing will be extended to the extent such  approvals  are
delayed  by no  fault  of the  buyer;  and  (iii)  To the  extent  environmental
inspections result in a clean up or other action by governmental authorities the
seller  will  have  completed  all  environmental  requests  made  by the  buyer
including  removal of underground tanks at its own cost and expense and complete
any and all site investigation and remediation activities.


NOTE 7 - DEPOSITS

Deposit accounts are summarized as follows:

                                                         2005          2004
                                                         ----          ----

     Demand deposits                                 $   25,583    $   22,599
     NOW and money market accounts                       39,264        38,696
     Savings accounts                                   123,270       143,401
     Certificates of deposit                            152,808       118,020
                                                     ----------    ----------
         Total deposits                              $  340,925    $  322,716
                                                     ==========    ==========

Certificates of deposit accounts with balances over $100,000 totaled $47,856,093
and $31,536,775 at September 30, 2005 and 2004, respectively.  All other deposit
accounts with balances over $100,000  totaled  $97,558,011  and  $97,668,361  at
September  30, 2005 and 2004,  respectively.  Generally,  deposit  balances over
$100,000 are not federally insured.

Scheduled maturities of certificates of deposit were as follows:

                  2006                               $     97,646
                  2007                                     30,961
                  2008                                      7,602
                  2009                                      5,391
                  2010 and thereafter                      11,208
                                                     ------------
                                                     $    152,808
                                                     ============

--------------------------------------------------------------------------------

                                  (Continued)

                                       55

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 8 - FEDERAL HOME LOAN BANK OF NEW YORK ADVANCES

The Bank has multiple  advances with the Federal Home Loan Bank with  maturities
through 2013 and fixed rate rates  ranging from 2.80% to 6.19% at September  30,
2005. None of the advances are callable prior to maturity.  One advance for $1.7
million with a coupon of 4.57% has a five-year final maturity in June 2009, with
a twenty-year  amortization  schedule. The remaining $52 million of Federal Home
Loan  Bank  advances  are  non-amortizing  term  advances.  The Bank also has an
overnight  line of credit with the ability to borrow $42.2 million of which none
is drawn at September 30, 2005.  Scheduled  repayments  and  maturities of fixed
rate advances from the Federal Home Loan Bank are as follows:

                                      Weighted
                                    Average Rate
                                        2005              2005           2004
                                        ----              ----           ----

     Maturing in 2005                      -%       $         -    $     1,057
     Maturing in 2006                   3.51              8,060          8,060
     Maturing in 2007                   4.39              8,062          8,062
     Maturing in 2008                   5.51             12,065         12,065
     Maturing in 2009                   4.88              7,547          7,547
     Maturing in 2010                   5.15              6,000          6,000
     Maturing in 2011                   5.18              6,000          6,000
     Maturing in 2012                   5.22              5,000          5,000
     Maturing in 2013                   4.79              1,000          1,000
     Overnight line of credit              -                  -          2,700
                                        ----        -----------    -----------
                                        4.84%       $    53,734    $    57,491
                                        ====        ===========    ===========

At September 30, 2005, advances are secured primarily by mortgage loans totaling
$120,845,601,  and all stock in the Federal Home Loan Bank  totaling  $3,118,700
under a blanket  collateral  agreement for the amount of the notes  outstanding.
Additionally,  specific  investment  securities  with a carrying  value totaling
$11,766,890  also  secure such  advances.  At  September  30,  2005,  the Bank's
borrowing limit with the Federal Home Loan Bank was approximately $85.2 million.

--------------------------------------------------------------------------------

                                  (Continued)

                                       56

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 9 - INCOME TAXES

An analysis of the provision for income taxes is as follows:

<TABLE>
<CAPTION>
                                                             2005            2004           2003
                                                             ----            ----           ----
<S>                                                    <C>            <C>            <C>
     Current
         Federal                                        $     1,227    $     1,078    $       687
         State and local                                        228            327            205
                                                        -----------    -----------    -----------
                                                              1,455          1,405            892
     Deferred
         Federal                                               (224)           (16)           (64)
         State and local                                        (48)           (18)           (23)
                                                        -----------    -----------    -----------
                                                               (272)           (34)           (87)
     Change in valuation allowance                               20              -              -
                                                        -----------    -----------    -----------
                                                        $     1,203    $     1,371    $       805
                                                        ===========    ===========    ===========
</TABLE>

A reconciliation  of income tax expense at the statutory federal income tax rate
and the actual income tax expense was as follows:

<TABLE>
<CAPTION>
                                                             2005           2004            2003
                                                             ----           ----            ----
<S>                                                    <C>            <C>            <C>
     Federal income tax expense at statutory rate       $     1,104    $     1,201    $       751
     Increase in taxes resulting from
         State income taxes, net of federal benefit             132            204            120
         Tax-exempt income from life insurance                  (92)           (70)           (77)
         Nondeductible ESOP expense                              46             28              -
         Other, net                                              13              8             11
                                                        -----------    -----------    -----------
              Income tax expense                        $     1,203    $     1,371    $       805
                                                        ===========    ===========    ===========
</TABLE>

--------------------------------------------------------------------------------

                                  (Continued)

                                       57

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 9 - INCOME TAXES (Continued)

The tax effects of temporary  differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities are as follows:

                                                          2005       2004
                                                          ----       ----
Deferred tax assets
    Unrealized loss on securities available-for-sale   $   575    $   321
    Provision for loan losses                              662        630
    Deferred loan origination fees                           3          3
    Accrued expenses and other liabilities               1,027        693
                                                       -------    -------
         Total gross deferred tax assets                 2,267      1,647

Deferred tax liabilities
    Depreciation                                          (218)      (203)
    Deferred loan origination costs                       (703)      (623)
    Other                                                 (197)      (198)
                                                       -------    -------
         Total gross deferred tax liabilities           (1,118)    (1,024)
         Valuation allowance                               (20)         -
                                                       -------    -------

             Net deferred tax asset                    $ 1,129    $   623
                                                       =======    =======

The valuation allowance consists of the tax effect of state net operating losses
of the  stand-alone  holding  company  which  will  not  be  utilized  upon  the
dissolution of the company upon completion of the second step conversion.

Retained  earnings   includes   allocations  for  federal  income  tax  purposes
representing  tax  bad  debt  deductions  of  approximately  $1,500,000  through
September 30, 2005 on which no tax has been paid and no deferred  federal income
taxes have been  provided.  The related  amount of  deferred  tax  liability  is
approximately  $599,000.  Reductions of amounts so allocated for purposes  other
than tax bad debt losses will create income for tax purposes only, which will be
subject to the then current corporate income tax rate.


NOTE 10 - BENEFIT PLANS

The Bank has a directors'  retirement plan that provides  retirement benefits to
all members of the Board of Directors  vested under the plan in accordance  with
the plan document. During the years ended September 30, 2005, 2004, and 2003 the
Bank  accrued  expenses  related to the plan  totaling  $476,860,  $55,179,  and
$124,404, respectively.

--------------------------------------------------------------------------------

                                  (Continued)

                                       58

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 10 - BENEFIT PLANS (Continued)

The Bank has a 401(k) profit sharing plan covering  substantially all employees.
Contributions  to the plan are made at the  discretion of the Board of Directors
and  charged  to  expense  annually.  The plan also  allows  participant  salary
deferrals into the plan along with a matching contribution provided by the Bank.
Total expenses related to the plan,  including employer match and profit sharing
contributions,  were  $247,906,  $248,163,  and  $242,450  for the  years  ended
September 30, 2005, 2004, and 2003.

During 2002, the Bank implemented a supplemental  executive retirement plan that
provides  benefits to certain key officers in accordance with the plan document.
During the years ended September 30, 2005, 2004, and 2003, Bank expenses related
to the plan totaled $235,611, $204,632, and $233,332. During 2002, the Bank also
purchased   bank-owned  life  insurance  on  the  individuals   covered  by  the
supplemental executive retirement plan.

The Bank has entered into employment agreements with its Chief Executive Officer
(CEO),  President & Chief  Operating  Officer  (COO),  Executive  Vice President
(EVP),  and two Senior Vice Presidents  (SVPs).  The CEO's and President & COO's
employment  agreements  have a term of three  years  while  the  EVP's and SVPs'
agreements  have a term of two years.  Each of the  agreements  provides  for an
annual one-year extension of the term of the agreement upon determination of the
Board of Directors that the executive's performance has met the requirements and
standards of the Board, so that the remaining term of the agreement continues to
be three years,  in the case of the CEO and  President & COO, and two years,  in
the case of the EVP and SVPs. If the Bank  terminates the officer  without "just
cause" as defined in the agreement,  they will be entitled to a continuation  of
their salary from the date of  termination  through the remaining  term of their
agreement at a minimum.  The agreements  also provide for various payouts if the
officer is terminated without just cause following a change in control.

The  Company  has also  entered  into an  employment  agreement  with the  Chief
Executive  Officer  with  terms  of  which  are  substantially  the  same as the
employment  agreement with the Bank.  However, it provides that if employment is
terminated  without just cause as defined in the agreement,  he will be entitled
to a continuation of his salary for three years from the date of termination.

--------------------------------------------------------------------------------

                                  (Continued)

                                       59

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 11 - ESOP PLAN

Employees participate in an employee stock option plan (ESOP). The ESOP borrowed
from the Company to purchase  133,308  shares of stock at $10.00 per share.  The
Company makes discretionary contributions to the ESOP, as well as pays dividends
on unallocated  shares to the ESOP, and the ESOP uses funds it receives to repay
the loan. When loan payments are made, ESOP shares are allocated to participants
based on relative  compensation and expense is recorded.  Dividends on allocated
shares increase participant accounts.

Participants receive the shares at the end of employment. Under the terms of the
plan and in accordance  with ERISA  regulation,  a participant may require stock
received to be repurchased unless the stock is traded on an established  market.
The Over The  Counter  Bulletin  Board is not  considered  to be an  established
market for purposes of this  regulation and a liability has been  established to
reflect  this  repurchase  obligation.  On October 6, 2005,  the  Company  began
trading on Nasdaq which is  considered to be an  established  market under ERISA
regulations.  As a result,  effective  October 6, 2005, the Company is no longer
required to establish a liability to reflect this repurchase obligation.

There were no  discretionary  contributions  to the ESOP  during the years ended
September  30, 2005 and  September  30,  2004.  ESOP expense for the years ended
September 30, 2005 and 2004 was $269,360 and $215,237, respectively.

Shares held by the ESOP were as follows:

                                                2005       2004
                                                ----       ----

Allocated to participants                    $ 16,913   $  3,333
Unearned                                      116,395    129,975
                                             --------   --------

    Total ESOP shares                         133,308    133,308
                                             --------   --------

    Fair value of unearned shares            $  3,256   $  2,015
                                             ========   ========

    Fair value of allocated shares subject
      to repurchase obligation               $    473   $     52
                                             ========   ========


--------------------------------------------------------------------------------

                                  (Continued)

                                       60

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 12 - STOCK-BASED COMPENSATION

At the annual  meeting  held on January 20,  2005,  stockholders  of ASB Holding
Company approved the ASB Holding Company 2005 Stock Option Plan and the American
Savings Bank of NJ 2005 Restricted Stock Plan.  Subject to regulatory  approval,
272,171  options 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 at a strike  price of $17.35 with the  remaining
12,248 shares  awarded on May 6, 2005 at a strike price of $17.83.  The weighted
average  strike price of options  awarded is $17.37.  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.  Options to buy stock are granted
to  directors,  officers and employees  under the  Company's  Stock Option Plan.
Exercise price is the market price at date of grant, so there is no compensation
expense  recognized  in the income  statement.  The  maximum  option term is ten
years, and options vest over five years.

A summary of the activity in the plan for the period ended September 30, 2005 is
as follows.

                                                                       Weighted
                                                                        Average
                                                                       Exercise
                                                    Shares               Price
                                                    ------               -----

         Outstanding at beginning
           of period                                       -         $         -
         Granted                                     272,171               17.37
         Exercised                                         -                   -
         Forfeited or expired                              -                   -
                                                     -------         -----------
         Outstanding at
           end of period                             272,171         $     17.37
                                                     =======         ===========

         Options exercisable at
           period end                                      -                   -
                                                     =======         ===========
         Weighted average remaining
           contractual life                                            9.3 years

--------------------------------------------------------------------------------

                                  (Continued)

                                       61

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 12 - STOCK-BASED COMPENSATION (continued)

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

                                                   January 20, 2005  May 6, 2005
                                                   ----------------  -----------

         Risk free interest rate                         3.67%            3.95%
         Expected option life                            5.00             5.00
         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


NOTE 13 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Bank is party to financial  instruments with  off-balance-sheet  risk in the
normal course of business to meet the financing  needs of its  customers.  These
financial  instruments include commitments to fund loans and previously approved
unused  lines of credit.  The  Bank's  exposure  to credit  loss in the event of
nonperformance  by the parties to these financial  instruments is represented by
the contractual amount of the instruments.  The Bank uses the same credit policy
for commitments as it uses for on-balance-sheet items.

The contract amounts of these financial instruments are summarized as follows:

                                                         2005           2004
                                                         ----           ----

     Commitments to extend credit                    $    21,284    $    14,771
     Unused lines of credit                               15,956         13,130
     Construction loans in process                           350          4,100

Fixed rate loan  commitments  totaled  $5,727,200 at September 30, 2005 and have
interest rates ranging from 4.99% to 8.25%.

Since many  commitments  expire  without  being used,  the amounts  above do not
necessarily  represent future cash commitments.  Collateral may be obtained upon
exercise of a  commitment.  The amount of collateral is determined by management
and may include  commercial and  residential  real estate and other business and
consumer assets.

--------------------------------------------------------------------------------

                                  (Continued)

                                       62
<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 14 - EARNINGS PER SHARE (EPS)

The factors used in the earnings per share computation follow.

                                                    2005     2004     2003
                                                    ----     ----     ----

      Net income                                  $2,043   $2,162   $1,403
                                                  ======   ======   ======

      Weighted average common shares
        outstanding                                5,446    5,428    3,888
      Add:  Dilutive effects of assumed
        exercises of stock options                    23        -        -
      Add:  Dilutive effects of assumed
        exercises of stock awards                      5        -        -
                                                  ------   ------   ------

          Average shares and dilutive potential
            common shares                          5,474    5,428    3,888
                                                   =====    =====    =====

      Basic earnings per common share             $  .38   $  .40   $  .36
                                                  ======   ======   ======

      Diluted earnings per common share           $  .37   $  .40   $  .36
                                                  ======   ======   ======


NOTE 15 - REGULATORY CAPITAL REQUIREMENTS

ASB  Holding  Company as a unitary  thrift  holding  company  is not  subject to
specific  regulatory  capital  guidelines.   The  Bank  is  subject  to  various
regulatory  capital  requirements  administered by the federal banking agencies.
Under  capital  adequacy  guidelines  and the  regulatory  framework  for prompt
corrective  action,  the Bank must meet specific capital guidelines that involve
quantitative   measures  of  the  Bank's   assets,   liabilities,   and  certain
off-balance-sheet items as calculated under regulatory accounting practices. The
Bank's  capital  amounts and  classifications  are also  subject to  qualitative
judgments  by the  regulators  about  components,  risk  weightings,  and  other
factors.

Prompt  corrective  action  regulations  provide  five   classifications:   well
capitalized,    adequately    capitalized,    undercapitalized,    significantly
undercapitalized, and critically undercapitalized,  although these terms are not
used to  represent  overall  financial  condition.  If  adequately  capitalized,
regulatory   approval   is   required   to   accept   brokered   deposits.    If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion, and capital restoration plans are required.

--------------------------------------------------------------------------------

                                  (Continued)

                                       63

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 15 - REGULATORY CAPITAL REQUIREMENTS (Continued)

The Bank's actual and required capital amounts and ratios are presented below.

<TABLE>
<CAPTION>
                                                                                                  To Be Well
                                                                        For Capital            Capitalized Under
                                                                         Adequacy              Prompt Corrective
                                                    Actual               Purposes                   Action
                                          ------------------------ ---------------------   -----------------------
                                              Amount      Ratio       Amount      Ratio      Amount        Ratio
                                              ------      -----       ------      -----      ------        -----
<S>                                       <C>            <C>      <C>             <C>      <C>            <C>
As of September 30, 2005
------------------------
    Total capital (to risk-weighted
      assets)                              $   37,639     14.13%   $   21,308      8.00%    $  26,635      10.00%
    Tier I capital (to risk-weighted)
      assets)                                  36,068     13.54        10,654      4.00        15,981       6.00
    Tier I (core) capital (to adjusted
      total assets)                            36,068      6.49        22,221      4.00        27,776       5.00

As of September 30, 2004
------------------------
    Total capital (to risk-weighted
      assets)                              $   34,857     15.93%   $   17,505      8.0%     $  21,881      10.0%
    Tier I capital (to risk-weighted)
      assets)                                  33,279     15.21         8,752      4.0         13,129       6.0
    Tier I (core) capital (to adjusted
      total assets)                            33,279      7.89        16,865      4.0         21,081       5.0
</TABLE>

As of September 30, 2005, the most recent notification from the Office of Thrift
Supervision  categorized  the  Bank as well  capitalized  under  the  regulatory
framework for prompt corrective action.  There are no conditions or events since
that notification that management believes have changed the Bank's category.

Upon the closing of the second step conversion on October 5, 2005, approximately
$48.8 million -  representing  50% of stock offering  proceeds,  net of offering
costs - were added to the Bank's  capital.  This growth in capital was partially
offset by the additional  unearned ESOP which reduced  capital by  approximately
$7.9 million. In total, the second step conversion resulted in a net increase to
the Bank's capital  totaling  approximately  $40.8 million.  Had this additional
capital  been  recorded at  September  30,  2005,  the Bank's pro forma  capital
amounts and ratios would be as follows:

                                                            Amount       Ratio
                                                            ------       -----

         Total capital (to risk-weighted assets)         $   78,466      30.58%
         Tier 1 capital (to risk-weighted assets)            76,895      29.97
         Tier 1 capital (to adjusted total assets)           76,895      13.84

--------------------------------------------------------------------------------

                                  (Continued)

                                       64

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 15 - REGULATORY CAPITAL REQUIREMENTS (Continued)

The  following  is a  reconciliation  of  the  Bank's  equity  under  accounting
principles  generally  accepted  in the  United  States of America  ("GAAP")  to
regulatory capital as of the dates indicated:

                                                          2005         2004
                                                          ----         ----

     GAAP equity                                       $  35,123    $  32,818
     Accumulated other comprehensive loss                    945          461
                                                       ---------    ---------
         Tier I capital                                   36,068       33,279
     General regulatory allowance for loan losses          1,571        1,578
                                                       ---------    ---------

         Total capital                                 $  37,639    $  34,857
                                                       =========    =========


NOTE 16 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying  amount and estimated fair value of financial  instruments  were as
follows:

<TABLE>
<CAPTION>
                                                              2005                              2004
                                                              ----                              ----
                                                                     Estimated                       Estimated
                                                    Carrying           Fair           Carrying         Fair
                                                     Amount            Value           Amount          Value
                                                     ------            -----           ------          -----
<S>                                            <C>             <C>               <C>             <C>
     Financial assets
         Cash and cash equivalents              $    125,773    $     125,773     $      8,034    $      8,034
         Securities available-for-sale                62,337           62,337           89,495          89,495
         Securities held-to-maturity                   7,824            7,694            2,794           2,806
         Loans receivable, net                       341,006          340,176          308,970         309,268
         Loans held for sale                             280              278                -               -
         Federal Home Loan Bank stock                  3,119            3,119            2,890           2,890
         Accrued interest receivable                   1,468            1,468            1,359           1,359

     Financial liabilities
         Deposits                                    340,925          340,654          322,716         323,434
         Stock subscriptions received                115,201          115,201                -               -
         Advance payments by
           borrowers for taxes and
           insurance                                   2,443            2,443            2,322           2,322
         Federal Home Loan Bank
           advances                                   53,734           54,307           57,491          59,959
         Accrued interest payable                        266              266              264             264
</TABLE>

--------------------------------------------------------------------------------

                                  (Continued)

                                       65
<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 16 - FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The  methods  and  assumptions  used to  estimate  fair value are  described  as
follows:

Carrying  amount is the  estimated  fair  value  for cash and cash  equivalents,
Federal Home Loan Bank stock,  accrued interest  receivable and payable,  demand
deposits, stock subscriptions received, short-term debt, and variable rate loans
or deposits that reprice frequently and fully. Security fair values are based on
market prices or dealer quotes and, if no such information is available,  on the
rate and term of the security and information  about the issuer.  For fixed rate
loans or  deposits  and for  variable  rate loans or  deposits  with  infrequent
repricing  or repricing  limits,  fair value is based on  discounted  cash flows
using current market rates applied to the estimated  life and credit risk.  Fair
values for impaired loans are estimated  using  discounted cash flow analysis or
underlying  collateral values.  Fair value of debt,  including Federal Home Loan
Bank advances,  is based on current rates for similar financing.  The fair value
of off-  balance-sheet  items is based on the current fees or cost that would be
charged to enter into or terminate  such  arrangements.  The fair value of these
off-balance-sheet items is not material.


NOTE 17 - OTHER COMPREHENSIVE LOSS

Other comprehensive loss components and related taxes were as follows.

                                                     2005       2004       2003
                                                     ----       ----       ----

Unrealized holding losses on available-for-sale
  Securities                                      $  (810)   $  (129)   $(1,746)
Reclassification adjustments for losses later
  recognized in income                                 16          -        188
                                                  -------    -------       ----
Net unrealized gains and (losses)                    (794)      (129)    (1,558)
Tax effect                                            317         52        622
                                                  -------    -------       ----

    Other comprehensive income (loss)             $  (477)   $   (77)      (936)
                                                  =======    =======       ====

--------------------------------------------------------------------------------

                                  (Continued)

                                       66

<PAGE>

                               ASB HOLDING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 2005, 2004, and 2003
                              (Tables in Thousands)

--------------------------------------------------------------------------------

NOTE 18 - QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         Earnings per Share
                                 Interest        Net Interest           Net              ------------------
                                  Income            Income            Income           Basic       Fully Diluted
                                  ------            ------            ------           -----       -------------
<S>                          <C>               <C>                <C>              <C>            <C>
2005
----
    First quarter             $      4,904      $      2,724       $     610        $    0.11      $     0.11
    Second quarter                   5,089             2,846             584             0.11            0.11
    Third quarter(1)                 5,223             2,744             325             0.06            0.06
    Fourth quarter                   5,385             2,741             524             0.10            0.09

2004
----
    First quarter             $      4,453      $      2,367       $     474        $    0.09      $     0.09
    Second quarter                   4,564             2,622             587             0.11            0.11
    Third quarter                    4,471             2,510             537             0.10            0.10
    Fourth quarter                   4,716             2,600             564             0.10            0.10
</TABLE>

(1)  Net income in the third quarter of fiscal 2005 included an after tax charge
     of approximately  $267,000 resulting from restructuring the Bank's director
     retirement plan.


--------------------------------------------------------------------------------

                                       67

<PAGE>

<TABLE>
<CAPTION>

                                       DIRECTORS AND OFFICERS

<S>                                 <C>                                       <C>
Directors of American Bancorp          Officers of American                     Officers of American Bank
  of New Jersey and American           Bancorp of New Jersey                    of New Jersey
  Bank of New Jersey                    --------------------                    -------------
  ------------------
                                           Joseph Kliminski                         Joseph Kliminski
    Joseph Kliminski                       Chief Executive Officer                  Chief Executive Officer
    Chief Executive Officer
                                           Fred G. Kowal                            Fred G. Kowal
    Fred G. Kowal                          President and Chief                      President and Chief
    President and Chief                    Operating Officer                        Operating Officer
    Operating Officer
                                           Richard M. Bzdek                         Richard M. Bzdek
    W. George Parker                       Executive Vice President,                Executive Vice President,
    Chairman of the Board                  Corporate Secretary                      Corporate Secretary
    President and Chief
    Executive Officer of Adco              Eric B. Heyer                            Eric B. Heyer
    Chemical Company                       Sr. Vice President, Treasurer            Sr. Vice President, Treasurer
                                           and Chief Financial Officer              and Chief Financial Officer
    James H. Ward III
    Vice Chairman,                                                                  Catherine M. Bringuier
    Retired Investor                                                                Sr. Vice President and Chief
                                                                                    Lending Officer
    Robert A. Gaccione
    Partner of the law firm                                                         Josephine Castaldo
    Gaccione, Pomaco &                                                              Vice President Branch
    Malanga P.C.                                                                    Administration

    H. Joseph North                                                                 John Scognamiglio
    Retired Town Administrator                                                      Vice President Controller
    of Bloomfield, NJ
                                                                                    Robert A. Gaccione, Jr.
    Stanley Obal                                                                    Vice President
    Retired owner of Obal's Inn
    tavern and restaurant                                                           Christopher R. Ford
                                                                                    Vice President
    Vincent S. Rospond
    Attorney and majority
    stockholder of the law firm
    Rospond,  Rospond & Conte,
    P.A.

</TABLE>

                                       68

<PAGE>

                       INVESTOR AND CORPORATE INFORMATION


Stock Listing

American  Bancorp of New Jersey  common  stock is listed on the Nasdaq  National
Market under the symbol "ABNJ."

Stockholder and General Inquiries              Transfer Agent

American Bancorp of New Jersey                 Registrar and Transfer Company
365 Broad Street                               10 Commerce Drive
Bloomfield, New Jersey 07003                   Cranford, New Jersey 07016
(973) 748-3600                                 (800) 525-7686
Attention:  Eric B. Heyer
Investor Relations


Annual Reports

A copy of the Annual  Report on Form 10-K  without  exhibits  for the year ended
September 30, 2005, as filed with the Securities and Exchange Commission, may be
obtained  without  charge  by  contacting  Eric B.  Heyer,  Investor  Relations,
American Bancorp of New Jersey, 365 Broad Street, Bloomfield, New Jersey, 07003.

                                       69

<PAGE>

                                OFFICE LOCATIONS

Main Office
-----------
     365 Broad Street
     Bloomfield, New Jersey 07003
     (973) 748-3600

              Main Office Drive Up Facility
              16 Pitt Street
              Bloomfield, New Jersey 07003

Cedar Grove Branch
------------------
     310 Pompton Avenue
     Cedar Grove, New Jersey 07009
     (973) 239-6450



                                       70