******TABLE OF CONTENTS**

|                                                                                      |   
|------------------------------------------------------------------------------------- | --
|Letter from the President & Chief Operating Officer                                   | 1 
|                                                                                      |   
|Financial Highlights                                                                  | 3 
|                                                                                      |   
|Management's Discussion and Analysis of Financial Condition and Results of Operations | 5 
|                                                                                      |   
|Management's Report on Internal Control Over Financial Reporting                      | 36
|                                                                                      |   
|Report of Independent Registered Public Accounting Firm                               | 37
|                                                                                      |   
|Consolidated Statements of Financial Condition                                        | 39
|                                                                                      |   
|Consolidated Statements of Income                                                     | 40
|                                                                                      |   
|Consolidated Statements of Changes in Stockholders' Equity                            | 41
|                                                                                      |   
|Consolidated Statements of Cash Flows                                                 | 44
|                                                                                      |   
|Notes to Consolidated Financial Statements                                            | 46
|                                                                                      |   
|Directors and Officers                                                                | 85
|                                                                                      |   
|Investor and Corporate Information                                                    | 86
|                                                                                      |   
|Office Locations                                                                      | 88



**LETTER FROM THE PRESIDENT & CHIEF OPERATING OFFICER**

****Dear Fellow Stockholders:

On behalf of the Board of Directors and employees, I am pleased to present the 2007
Annual Report to Stockholders. This was a challenging year for American Bank of New Jersey that was highlighted by a
number of strategic accomplishments in the face of a difficult market environment.  In
accordance with our de novo branching strategy, we opened a total of three full service
branches during fiscal 2007.  Our newest branches, located in Verona, Nutley and Clifton, New
Jersey, expanded our branch network to a total five locations.  At September 30, 2007, total
deposits at our three newest branches grew to $55.1 million, $23.5 million and $15.2 million,
respectively. Deposits at our Bloomfield and Cedar Grove branches also increased to $223.6
million and $111.0 million, respectively.  In total, our deposits increased $101.5 million or 31.0%
from $327.1 million at September 30, 2006 to $428.6 million at September 30, 2007. A portion of the increase in our total deposits provided the funding for continued
growth in loans during the same period.   Our loans receivable, net increased by $39.3 million,
or 9.8%, from $398.6 million at September 30, 2006 to $437.9 million at September 30, 2007.  Our
loan growth during fiscal 2007 was highlighted by a $45.7 million or 47.5% increase in the
balance of commercial loans.  As a percentage of loans receivable, net, our commercial loans
increased from 24.1% September 30, 2006 to 32.4% at September 30, 2007. The level of  market interest rates during 2007 continued to present a challenge for
community financial institutions.  The inversion of the yield curve which persisted throughout
much of fiscal 2007 placed significant upward pressure on our cost of funds which outpaced the
growth in our yield on earning assets for the year.  As such, our net interest spread declined
from 1.80% for fiscal 2006 to 1.44% for fiscal 2007.  The factors resulting in the compression of
the Company's net interest spread also impacted the Company's net interest margin which
decreased from 2.73%% for fiscal 2006 to 2.39% for fiscal 2007. In addition to the impact of the yield curve, the change in the Company's net interest
margin was also significantly impacted by our capital management strategies.  During fiscal
2007, we repurchased 2.2 million shares, or approximately 15% of the Company's stock.  These
share repurchases utilized approximately $26.0 million of our earning assets whose foregone
interest income reduced the Company's net interest margin.   Based upon the growth in the
average balance of the Company's treasury stock account during fiscal 2007 and its average
yield on earning assets reported for fiscal 2006, we estimate that approximately $777,000, or
63%,of the $1.2 million decrease in net interest income in fiscal 2007 from fiscal 2006 was
attributable our share repurchases. While the strategies noted above are expected to increase shareholder value over time,
their execution during fiscal 2007 came at a near term cost.  Noninterest expense increased by
$1.9 million to $12.5 million from $10.7 million for fiscal 2006.  A significant portion of this
increase was attributable to additional personnel, occupancy and equipment and
administrative




costs associated with the expansion of our branch network and increased strategic focus on commercial lending.

In total, net income decreased to $557,000 for the fiscal year ended September 30, 2007
from $2.1 million for fiscal 2006.  Notwithstanding, payment of a regular quarterly dividend
continued throughout fiscal 2007.  The Board was pleased to provide a quarterly dividend of
$0.04 to stockholders for each of the four fiscal quarters of fiscal 2007. Fiscal 2008 will be another building year for American Bancorp of New
Jersey as we continue to execute the various strategies of our business plan.  In
addition to expanding the Company's commercial lending portfolio and enhancing non-traditional service delivery channels, such as online cash management and remote capture
services, we expect to direct significant strategic effort toward achieving profitability within
each of the three branches opened during fiscal 2007.  With that strategic focus,  we currently
expect to revisit additional branching opportunities after fiscal 2008. On behalf of the Board of Directors and the employees, I would like to thank you once
again for your investment and your continued confidence in our people and our plan.  We are
genuinely pleased about our vision for American Bancorp of New Jersey, and are committed to
making steady progress toward our #1 goal - enhancing your investment in us.


| | Sincerely,

/s/ Fred G. Kowal

Fred G. Kowal
President & Chief Operating Officer
| | --------------------------------------------------------------------------------



**FINANCIAL HIGHLIGHTS**

|                                       | **At September 30,**
|-------------------------------------- | --------------------
|                                       | **2007**            
|                                       | **(In thousands)**  
|**SELECTED FINANCIAL DATA:**           |                     
|Total assets                           | $     573,738       
|Cash and cash equivalents              | 37,421              
|Securities available-for-sale          | 58,093              
|Securities held-to-maturity            | 6,730               
|Loans held for sale                    | 1,243               
|Loans receivable, net                  | 437,883             
|Federal Home Loan Bank stock           | 2,553               
|Cash surrender value of life insurance | 13,214              
|Deposits                               | 428,600             
|Stock subscriptions received           | -                   
|Federal Home Loan Bank advances        | 37,612              
|Total stockholders' equity             | 100,593             

|                                                      | **Years EndedSeptember 30,**
|----------------------------------------------------- | ----------------------------
|                                                      | **2007**                    
|                                                      | **(In thousands)**          
|**SELECTED OPERATING DATA:**                          |                             
|Total interest income                                 | $       29,029              
|Total interest expense                                | 16,731                      
|Net interest income                                   | 12,298                      
|Provision for loan losses                             | 445                         
|Net interest income after provision   for loan losses | 11,853                      
|Noninterest income                                    | 1,422                       
|Noninterest expense                                   | 12,544                      
|Income before income taxes                            | 731                         
|Income tax provision                                  | 174                         
|Net income                                            | $    557                    



|                                                                             | **At or for the year endedSeptember 30,**
|---------------------------------------------------------------------------- | -----------------------------------------
|                                                                             | **2007**                                 
|**SELECTED FINANCIAL DATA*:**                                                |                                          
|***Performance Ratios:***                                                    | ****                                     
|Return on average assets (1)                                                 | 0.10                                     
|Return on average equity (2)                                                 | 0.51                                     
|Net interest rate spread (3)                                                 | 1.44                                     
|Net interest margin (4)                                                      | 2.39                                     
|Operating (noninterest) expense to      average total assets                 | 2.31                                     
|Efficiency ratio (5)                                                         | 91.43                                    
|Average interest-earning assets to      average interest-bearing liabilities | 129.35                                   
|***Capital Ratios:***                                                        | ****                                     
|Equity to total assets at end of period                                      | 17.53                                    
|Average equity to average assets                                             | 20.23                                    
|***Asset Quality Ratios:***                                                  |                                          
|Non-performing loans to total loans (6)                                      | 0.28                                     
|Non-performing assets to total assets (6)                                    | 0.22                                     
|Net charge-offs to average loans      outstanding                            | 0.00                                     
|Allowance for loan losses to      non-performing loans (6)                   | 205.56                                   
|Allowance for loan losses to total loans                                     | 0.58                                     
|**PER SHARE DATA:**                                                          |                                          
|Earnings per share: (7)                                                      |                                          
|Basic                                                                        | $   0.05                                 
|Diluted                                                                      | $   0.05                                 
|Cash Dividends Paid (8)                                                      | $   0.16                                 
|Dividend Payout Ratio                                                        | 335.19                                   

|*   | 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 year ended September 30, 2003 have been restated to reflect the conversion of
100 shares of Bank stock into 9,918,750 shares of Company stock representing 100% ownership of the Bank prior
to the minority stock offering which closed on October 3, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(8) | Cash dividends paid in fiscal 2005 include a special dividend of $0.294 per share paid in December 2004 and
regular quarterly dividends paid in June 2005 and September 2005 of $0.035 each.  American Savings, MHC
waived receipt of all dividends in 2005.  Consequently, cash dividends were paid only to public shareholders
during fiscal 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                             



**MANAGEMENT'S DISCUSSION AND ANALYSIS OF
  FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

**Forward-Looking Statements**

****

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


**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 loan and deposit growth.  Our current
strategy seeks to continue that growth while we evolve from a traditional thrift institution into
a full service, community bank.   Our key business strategies are highlighted below
accompanied by a brief overview of our progress in implementing each of these strategies:


- **Grow and diversify the deposit mix by emphasizing non-maturity account
relationships acquired through de novo branching and existing deposit growth.
Our current business plan calls for us to open up to three de novo branches over
approximately the next five years.**

Having opened three full service branches located in Verona, Nutley and Clifton,
New Jersey during fiscal 2007, the Company currently has no plans or commitments
to open additional de novo deposit branches during fiscal 2008.  Rather, the
Company expects to direct significant strategic effort toward achieving profitability
within each of these three branches while revisiting additional branching
opportunities after fiscal 2008.  Notwithstanding this current focus, the Company
would consider additional branching projects during fiscal 2008 if appropriate
opportunities were to arise.



- **Grow and diversify the loan mix by increasing commercial loan origination
volume while increasing the balance of such loans as a percentage of total loans.**

For the fiscal year ended September  30, 2007, our commercial loans, including
multi-family, nonresidential real estate, construction and business loans, grew $45.7
million, or 47.5%, from $96.2 million to $141.9 million.  This increase has resulted in
commercial loans growing from 24.1% to 32.4% of loans receivable, net over that
same twelve month period.  We expect to continue our strategic emphasis on
commercial lending during fiscal 2008 and thereafter.
- **Continue to implement or enhance alternative delivery channels for the
origination and servicing of loan and deposit products.**

In support of this objective, during fiscal 2007, we completed a significant overhaul
of our Internet website which serves as a portal through which our customers access
a growing menu of online services.  While enhancing our online services for retail
customers, we are concurrently addressing the growth in business demand for such
services.  Toward that end, we have expanded our business online banking product
and service offering to now include remote check deposit, online cash management
and online bill payment services for business.
- **Broaden and strengthen customer relationships by bolstering cross marketing
strategies and tactics with a focus on multiple account/service relationships.**

We will continue to cross market other products and services to promote multiple
account/service relationships and the retention of long term customers and core
deposits.  These efforts are expected to be directed to customers within all five of the
Bank's branches.
- **Utilize capital markets tools to effectively manage capital and enhance
shareholder value.**

Toward that end, during the quarter ended March 31, 2007, the Company completed
the repurchase of ten percent of its outstanding shares in accordance with its share
repurchase plan announced in October 2006.  A second share repurchase plan for an
additional five percent of its shares was announced in April 2007 and completed in
August 2007.  On August 29, 2007, the Company announced a third plan to
repurchase an additional five percent of its shares.  Of the 605,774 shares to be
repurchased in accordance with this third plan, approximately 169,000 shares or 28%
were repurchased by the year ended September 30, 2007.

A number of the strategies outlined above have had a detrimental impact on near term
earnings.  That impact was exacerbated by challenging market conditions during fiscal 2007
that resulted from an inverted yield curve. Notwithstanding the near term earnings consequences, we expect to continue to execute
these growth and diversification strategies designed to enhance future earnings and their




resiliency to changes in market conditions toward the goal of enhancing shareholder value.
Toward that end, we expect that our deposit pricing strategy in fiscal 2008 may reduce interest
costs by continuing to incrementally lower interest rates paid on de novo branch deposits
acquired during fiscal 2007 from the higher promotional rates initially offered.  Additionally,
we would expect that  continued reductions in market interest rates and further steepening of
the yield curve during fiscal 2008 may also have a beneficial impact on earnings.  The resiliency
of the Bank's de novo branch deposits to further interest rate reductions and movements in
market interest rates and their respective impact on earnings, however, can not be assured.

**Executive 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 our 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 versus the cost of those deposits
and borrowed funds.  Our loans consist primarily of residential mortgage loans, comprising
first and second mortgages and home equity lines of credit, and commercial loans, comprising
multi-family and nonresidential real estate mortgage loans, construction loans and business
loans.  Our investments primarily include residential mortgage-related securities and U.S.
Agency debentures.  Our interest-bearing liabilities consist primarily of retail deposits and
borrowings from the Federal Home Loan Bank of New York. During fiscal 2007, the Company's net interest spread declined 36 basis points to 1.44%
in comparison to 1.80% for fiscal 2006, as increases in the yield on earning assets lagged the
continued increases in the Company's cost of interest-bearing liabilities.  This decline was
primarily attributable to increases in the cost of retail deposits which outpaced the improved
yields on loans.  Contributing to this increase in the cost of deposits was the impact of higher
promotional interest rates paid on new deposit accounts at the Bank's Verona, Nutley and
Clifton branches which each opened during the current fiscal year - Verona in the quarter
ended December 31, 2006, Nutley in the quarter ended June 30, 2007 and Clifton in the quarter
ended September 30, 2007.  However, a portion of that increase continued to be attributable to
upward pressure on overall deposit interest rates in the highly competitive markets serviced by
the Bank whose effects were exacerbated by the inverted yield curve. The factors resulting in the compression of the Company's net interest spread also
impacted the Company's net interest margin.  During fiscal 2007, the Company's net interest
margin shrank 34 basis points to 2.39% from 2.73%.  However, the change in the Company's net
interest margin was also significantly impacted by the Company's share repurchase plans
through which approximately $26.0 million of interest earning assets was utilized to repurchase
2.2 million shares, or approximately 15%, of the Company's stock. The effects of net interest margin compression contributed significantly to decreases in
net interest income.  For the year ended September 30, 2007, net interest income decreased $1.2
million compared with that reported for fiscal 2006.  Based upon the growth in the average
balance of the Company's treasury stock account during fiscal 2007 and its average yield on
earning assets reported for fiscal 2006, the Company estimates that approximately $777,000, or
63%, of the comparative decrease in net interest income was attributable to interest earned




during fiscal 2006 on the earning assets that were subsequently utilized in fiscal 2007 to
repurchase shares.

Our net interest spread and margin may be adversely affected throughout several
possible interest rate environments.  The risks presented by movements in interest rates is
addressed more fully under Item 3. Quantitative and Qualitative Disclosures About Market
Risk found later in this report. Our results of operations are also affected by our provision for loan losses.    For the year
ended September 30, 2007, the Company recorded net loan loss provision expense of $445,000
representing a decrease of $20,000 from fiscal 2006.  The decrease in fiscal 2007 reflected the
reversal of an $86,000 loss reserve against a previously impaired loan participation during the
quarter ended December 31, 2006.  Excluding this adjustment, the Company's provision
expense for the year ended September 30, 2007 increased $66,000 compared with that of fiscal
2006.  The reported growth in the provision for loan losses reflects the Bank's increased
strategic emphasis in commercial lending and the comparatively higher rate of growth in such
loan balances in the fiscal 2007.  No additions to the allowance for loan losses were required
during fiscal 2007 for nonperforming loans which decreased to 0.22% of total assets at
September 30, 2007 from 0.41% at September 30, 2006.  Net loan loss provision expense reflected
as a percentage of average earning assets was consistent with that reported for fiscal 2006 at
0.09%. Our results of operations also depend on our noninterest income and noninterest
expense.  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, noninterest income as a percentage of average assets increased 0.01% to 0.26% for fiscal
2007 from 0.25% in fiscal 2006.  As described at greater length within the section titled
Comparison of Operating Results for the Years Ended September 30, 2007 and 2006, the
increase was primarily attributable to an increase in income from the cash surrender value of
life insurance partially offset by reductions in other non-interest income resulting primarily
from lower collections of loan prepayment penalties. Gains and losses on sale of assets, excluded in the comparison above, typically resulted
from the Company selling long term, fixed rate mortgage loan originations into the secondary
market.  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 has historically retained in its portfolio rather than selling into the
secondary market.  Consequently, the gains and losses on sale of loans reported by the
Company have fluctuated with market conditions.  Additionally, such gains and losses also
reflected the impact of infrequent investment security sales for asset/liability management
purposes.  This was the case in fiscal 2006 when the Company realized a $271,000 loss on sale of
an underperforming investment security.  For fiscal 2007, the gains and losses on asset sales
resulted in net gains totaling approximately 0.01% of average assets.  By comparison, the gains
and losses on asset sales during 2006 resulted in net losses of -0.05% of average assets. Noninterest expense includes salaries and employee benefits, occupancy and equipment
expenses, data processing and other general and administrative expenses. Generally, operating




costs have increased from those reported for fiscal 2006.  As described at greater length within
the section titled "Comparison of Operating Results for the Years Ended September 30, 2007
and 2006", a significant portion of this increase was attributable to additional personnel costs
associated with executing the Company's business plan which calls for further branching and
increased strategic focus on commercial lending.  Benefit costs have also increased as we
granted shares and options under the equity incentive plan approved by shareholders during
fiscal 2006.  In the aggregate, annualized noninterest expense as a percentage of average assets
totaled 2.31% for fiscal 2007 - an increase of 23 basis points from 2.08% for fiscal 2006.

Management expects occupancy and equipment expense to increase in future periods as
we continue to implement our de novo branching strategy to expand our branch office
network.  As noted earlier, having opened three full service branches located in Verona, Nutley
and Clifton, New Jersey during fiscal 2007, the Company currently has no plans or
commitments to open additional de novo branches during fiscal 2008.  Rather, the Company
expects to direct significant strategic effort toward achieving profitability within each of these
three branches while revisiting additional branching opportunities after fiscal 2008.
Notwithstanding the expected de novo branching hiatus for fiscal 2008, our current business
plan targets the opening of up to three additional de novo branches over approximately the
next five years.  The costs for land purchases or leases, branch construction costs and ongoing
operating costs for additional branches will impact future earnings as will those related to the
three branches opened during fiscal 2007. The Company also expects occupancy expense to increase in future periods as a result of
the relocation of the Bank's Bloomfield branch site which is expected to commence in January,
2008.  This relocation will significantly upgrade and modernize the Bloomfield branch facility
supporting the Company's deposit growth and customer service enhancement objectives.  The
relocation will also support potential expansion of the administrative and lending office space
within the Company's existing headquarters facility where the branch is currently located
should such expansion be required to support the Company's business plan. In an effort to reduce ongoing operating expenses, the Company enacted a reduction in
workforce during the first quarter of fiscal 2008 resulting in the elimination of five managerial
and administrative support positions.  Salary and employee benefit expense reductions
resulting from this strategy are expected to total approximately $388,000 per year beginning in
the second quarter of fiscal 2008, equal to annual after-tax earnings of approximately $0.02 per
share based upon the Company's outstanding shares at September 30, 2007.  The Company will
continue to monitor its employee staffing levels in relation to the goals and objectives of its
business plan and may consider further opportunities to adjust such staffing levels, as
appropriate, to support the achievement of  those goals and objectives. In total, our annualized return on average assets decreased 32 basis points to 0.10% for
the fiscal 2007 from 0.42% for fiscal 2006, while annualized return on average equity decreased
117 basis points to 0.51% from 1.68% for the same comparative periods. In addition to the items discussed above, 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 New Jersey and the
New York metropolitan area, downturns in the regional economy could have a negative impact
on our earnings.

**Comparison of Financial Condition at September 30, 2007 and September 30, 2006**

Our total assets increased by $59.4 million, or 11.5%, to $573.7 million at September 30,
2007 from $514.3 million at September 30, 2006.  The increase reflected net growth in cash and
cash equivalents, loans receivable, net, premises and equipment and the cash surrender value
of life insurance partially offset by decreases in securities available for sale and  securities held
to maturity. Cash and cash equivalents increased by $30.3 million, or 422.3%, to $37.4 million at
September 30, 2007 from $7.2 million at September 30, 2006.  The increase in cash and cash
equivalents was largely attributable to the accumulation of short term, interest earning
investments which resulted from the net cash inflows associated with deposit growth during
the year.  The cash inflows from a portion of this deposit growth were retained in short term
liquid assets given the favorable yields of such assets at the time compared with that of other
shorter duration investment security alternatives.  The Company may reinvest a portion of its
short term liquid assets into investment securities when and if that comparative yield
relationship changes. Notwithstanding this short term investment strategy, the Company expects to reinvest
proceeds received through its growth in deposits into the loan portfolio over time as lending
opportunities arise.  To the extent supported by commercial loan demand and origination
volume , the Company expects to reinvest deposit proceeds into such loans.  However, the net
addition of residential mortgages to the loan portfolio, including longer term, fixed rate 1-4
family mortgages previously sold into the secondary market, is expected to augment the
growth in commercial loans as a reinvestment alternative for a portion of the accumulated
balance of cash and cash equivalents.  (See further discussion in the subsequent section titled
"Quantitative and Qualitative Disclosures About Market Risk".) Securities classified as available-for-sale decreased $16.4 million, or 22.1%, to $58.1
million at September 30, 2007 from $74.5 million at September 30, 2006.  Additionally, securities
held to maturity decreased approximately $3.8 million, or 36.2% to $6.7 million at September 30,
2007 from $10.5 million at September 30, 2006.  The net decline in investment balances reflects
the Company's continued strategy of utilizing a portion of the cash flows from the investment
securities portfolio to augment the funding of its growth in commercial real estate and business
loans and repay maturing borrowings.  However, the net declines in investment balances also
reflect the purchase of approximately $18.8 million of available for sale securities during fiscal
2007. 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, 2007 and September
30, 2006.  Amounts reported exclude unrealized gains and losses on the available for sale
portfolio.




|                             | September 30, 2007     | September 30, 2006
|---------------------------- | ---------------------- | ------------------
|Type of Securities           | Amount                 |                   
|                             | (Dollars in thousands)
|                             |                        |                   
|Fixed rate MBS               | $11,454                |                   
|ARM MBS                      | 14,470                 |                   
|Fixed rate CMO               | 35,280                 |                   
|Floating rate CMO            | 2,047                  |                   
|Fixed rate agency debentures | 2,000                  |                   
|Total                        | $	65,251               |                   

Assuming no change in interest rates, the estimated average life of the investment
securities portfolio was 2.24 years and 2.37 years, respectively, at September 30, 2007 and
September 30, 2006.  Assuming a hypothetical immediate and permanent increase in interest
rates of 300 basis points, the estimated average life of the portfolio would have extended to 2.65
years and 2.83 years at September 30, 2007 and September 30, 2006, respectively. Loans receivable, net increased by $39.3 million, or 9.8%, to $437.9 million at September
30, 2007 from $398.6 million at September 30, 2006.  The growth was comprised of net increases
in commercial loans totaling $45.7 million or 47.5%.  Such loans include multi-family,
nonresidential real estate, construction and business loans.  The increase in loans receivable, net
also included net increases in home equity loans and home equity lines of credit totaling $3.0
million.  Offsetting the growth in these categories was an $8.9 million decrease in the balance of
1-4 family first mortgages resulting from reduced strategic emphasis on the origination of such
loans and net increases to the allowance for loan losses totaling $445,000. The following two tables compare the composition of the Company's loan portfolio by
loan type as a percentage of total assets at September 30, 2007 with that of September 30, 2006.
Amounts reported exclude allowance for loan losses and net deferred origination costs.




The table below generally defines loan type by loan maturity and/or repricing
characteristics:


|                           | September 30, 2007     | September 30, 2006
|-------------------------- | ---------------------- | ------------------
|Type of Loans              | Amount                 |                   
|                           | (Dollars in thousands)
|                           |                        |                   
|Construction               | $	32,592               |                   
|1/1 and 3/3 ARMs           | 7,642                  |                   
|3/1 and 5/1 ARMs           | 142,254                |                   
|5/5 and 10/10 ARMs         | 46,017                 |                   
|7/1 and 10/1 ARMs          | 3,500                  |                   
|15 year fixed or less      | 129,158                |                   
|Greater than 15 year fixed | 52,012                 |                   
|HELOC                      | 19,756                 |                   
|Consumer                   | 655                    |                   
|Business                   | 7,024                  |                   
|Total                      | $	440,610              |                   

At September 30, 2007 and September 30, 2006, respectively, the balance of one- to four-family
mortgage loans included $22.6 million and $20.0 million of thirty year adjustable rate loans
with initial fixed interest rate periods of three to five years during which time monthly loan
payments comprise interest only.  After the initial period, the monthly payments on such loans
are adjusted to reflect the collection of both interest and principal over the loan's remaining
term to maturity.

The table below generally defines loan type by collateral or purpose:


|                          | September 30, 2007     | September 30, 2006
|------------------------- | ---------------------- | ------------------
|Type of Loans             | Amount                 |                   
|                          | (Dollars in thousands)
|                          |                        |                   
|Construction              | $	32,592               |                   
|1-4 family mortgage       | 278,183                |                   
|Multifamily (5+) mortgage | 30,585                 |                   
|Nonresidential mortgage   | 68,474                 |                   
|Land                      | 3,341                  |                   
|1-4 family HELOC          | 19,756                 |                   
|Consumer                  | 655                    |                   
|Business                  | 7,024                  |                   
|Total                     | $	440,610              |                   



Total deposits increased by $101.5 million, or 31.0%, to $428.6 million at September 30,
2007 from $327.1 million at September 30, 2006.  This increase was primarily attributable to the
opening of the Bank's newest full service branches located in Verona, Nutley and Clifton, New
Jersey which opened in the quarters ended December 31, 2006, June 30, 2007 and September 30,
2007, respectively.  In total, noninterest bearing checking accounts increased approximately $6.9
million or 29.5% while interest bearing checking accounts, including a promotional, high yield
money market account offered in conjunction with the Bank's newest branches, grew $80.4
million or 255.7%.  For that same period, time deposits grew $28.4 million or 17.2% while
savings deposit balances declined $14.2 million or 13.3%.  The decline in savings account
balances was due largely to the disintermediation of such balances into higher yielding
accounts. At September 30, 2007, the Bank held approximately $5.6 million of municipal deposits,
representing a reduction of approximately $11.3 million from $16.9 million at September 30,
2006.  The outflow of municipal deposits included the closing of one municipal account
relationship whose balances at September 30, 2006 totaled approximately $11.8 million. The following table compares the composition of the Company's deposit portfolio by
category as a percentage of total assets at September 30, 2007 with that of September 30, 2006.


|                             | September 30, 2007     | September 30, 2006
|---------------------------- | ---------------------- | ------------------
|Deposit category             | Amount                 |                   
|                             | (Dollars in thousands)
|                             |                        |                   
|Money market checking        | $	92,550               |                   
|Noninterest bearing checking | 30,494                 |                   
|Interest bearing checking    | 19,245                 |                   
|Money market savings         | 10,263                 |                   
|Other savings                | 82,515                 |                   
|Certificates of deposit      | 193,533                |                   
|Total                        | $	428,600              |                   



The following table compares the composition of the Company's deposit portfolio by
branch as a percentage of total assets at September 30, 2007 with that of September 30, 2006.


|                 | September 30, 2007     | September 30, 2006
|---------------- | ---------------------- | ------------------
|Deposit category | Amount                 |                   
|                 | (Dollars in thousands)
|                 |                        |                   
|Bloomfield       | $223,557               |                   
|Cedar Grove      | 111,030                |                   
|Verona           | 55,193                 |                   
|Nutley           | 23,534                 |                   
|Clifton          | 15,286                 |                   
|Total            | $428,600               |                   

FHLB advances decreased $18.5 million, or 32.9%, to $37.6 million at September 30, 2007
from $56.1 million at September 30, 2006.  The reduction was primarily attributable to the
repayment of fixed rate FHLB advances totaling $8.1 million and the repayment of overnight
borrowings totaling $10.4 million. 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, 2007 with that of
September 30, 2006.  Scheduled principal payments on amortizing borrowings are reported as
maturities.


|                     | September 30, 2007     | September 30, 2006
|-------------------- | ---------------------- | ------------------
|Remaining Term       | Amount                 |                   
|                     | (Dollars in thousands)
|                     |                        |                   
|Overnight            | $      -               |                   
|One year or less     | 12,065                 |                   
|One to two years     | 7,547                  |                   
|Two to three years   | 6,000                  |                   
|Three to four years  | 6,000                  |                   
|Four to five years   | 5,000                  |                   
|More than five years | 1,000                  |                   
|Total                | $ 37,612               |                   

Equity decreased $24.3 million, or 19.4% to $100.6 million at September 30, 2007 from
$124.9 million at September 30, 2006.  The reported decrease in equity was primarily
attributable to a $26.0 million increase in Treasury stock resulting from the Company's share
repurchases during fiscal 2007.




**Comparison of Operating Results for the Years Ended September 30, 2007 and 2006**

**General.**  Net income for the year ended September 30, 2007 was $557,000, a decrease of
$1.6 million, or 73.9% from the year ended September 30, 2006.  The decrease in net income
resulted from a decrease in net interest income and an increase in noninterest expense partially
offset by a decrease in the provision for loan losses, an increase in noninterest income and a
decrease in the provision for income taxes. **Interest Income.**  Total interest income increased 14.5% or $3.7 million to $29.0 million
for the year ended September 30, 2007 from $25.3 million for the year ended September 30,
2006.  For those same comparative years, the average yield on interest-earning assets increased
52 basis points to 5.64% from 5.12% while the average balance of interest-earning assets
increased $19.0 million to $514.4 million from $495.4 million. Interest income on loans increased $4.4 million or 21.5%, to $24.7 million for fiscal 2007
from $20.3 million for fiscal 2006.  This increase was due, in part, to a $49.1 million increase in
the average balance of loans receivable, including loans held for sale, to $419.0 million for fiscal
2007 from $369.9 million for fiscal 2006.  In addition, the average yield on loans increased 39
basis points to 5.88% from 5.49% for those same comparative periods.  The increase in the
average balance and yield on loans receivable was primarily attributable to the Company's
strategic emphasis on commercial lending. The rise in interest income on loans was partially offset by lower interest income on
securities, which decreased $975,000 or 24.8% to $3.0 million for fiscal 2007 from $3.9 million for
fiscal 2006.  The decrease was due in part, to a $28.1 million decline in the average balance of
investment securities to $70.3 million for fiscal 2007 from $98.4 million for fiscal 2006.  The
impact on interest income attributable to this decrease was partially offset by a 21 basis point
increase in the average yield on securities which grew to 4.20% from 3.99% for the same
comparative periods.  The increase in yield primarily resulted from the maturity and
repayment of lower yielding investment securities coupled with higher yields on newly
purchased securities and existing adjustable rate securities in portfolio which have repriced
upward in accordance with the general movement of market interest rates. Further, interest and dividend income on federal funds sold, other interest-bearing
deposits and FHLB stock increased $295,000 to $1.4 million for fiscal 2007 from $1.1 million for
fiscal 2006.  This growth in income was due, in part, to an increase in the average yield on these
assets which grew 150 basis points to 5.66% in fiscal 2007 from 4.16% in fiscal 2006.  The impact
of the increase in average yield was partially offset by a decline in the average balance of these
assets which decreased $2.0 million to $25.1 million in fiscal 2007 from $27.1 million in fiscal
2006.  The average balances reported and used for yield calculations reflect, where appropriate,
the reduction for outstanding checks issued against such accounts.  This has the effect of
increasing the reported yield on such assets. **Interest Expense.**  Total interest expense increased by $4.9 million or 41.8% to $16.7
million for fiscal 2007 from $11.8 million for fiscal 2006.  For those same comparative years, the
average cost of interest-bearing liabilities increased 89 basis points from 3.32% to 4.21%, while




the average balance of interest-bearing liabilities increased $41.8 million or 11.7% to $397.6
million for fiscal 2007 from $355.9 million for fiscal 2006.

Interest expense on deposits increased $5.3 million or 57.3% to $14.5 million for fiscal
2007 from $9.2 million for fiscal 2006.  This increase was due largely to growth in the average
balance of interest-bearing deposits which grew $50.3 million to $353.4 million for fiscal 2007
from $303.1 million for fiscal 2007.  The reported net growth in average interest-bearing
deposits comprised $39.7 million and $21.3 million of growth in the average balance of interest-bearing checking accounts and certificates of deposit, respectively.  Offsetting this growth was
a net decline in the average balance of savings accounts totaling $10.7 million. The growth in the average balance of interest-bearing deposits for fiscal 2007 was primarily
attributable to the Bank's branch in Verona, New Jersey which opened in the first quarter of
fiscal 2007.  To a lesser extent, average balance of interest bearing deposits was also influenced
by the growth in the Nutley and Clifton branches which opened later in the year.  The growth
in deposits at the Bank's three newest branches, coupled with higher promotional interest rates
paid on those deposits, contributed significantly to the reported increase in deposit interest
expense.  However, a portion of this increase was also attributable to continued upward
pressure on deposit interest rates in the other highly competitive markets serviced by the Bank. In total, the average cost of interest-bearing deposits increased 106 basis points to 4.09%
for fiscal 2007 from 3.03% for fiscal 2006.  The components of this increase include a 225 basis
point increase in the average cost of interest-bearing checking accounts to 4.41% from 2.16%, a
90 basis point increase in the average cost of certificates of deposit to 4.77% from 3.87%, and a
52 basis point increase in the average cost of savings accounts to 2.66% from 2.14%. Interest expense on FHLB advances decreased $337,000 to $2.3 million for fiscal 2007
from $2.6 million for fiscal 2006.  This decrease was due, in part, to a $8.5 million decrease in the
average balance of advances to $44.3 million for fiscal 2007 from $52.7 million for fiscal 2006.
The impact on interest expense from the lower average balances reported were offset, in part,
by a 19 basis point increase in the average cost of advances to 5.14% for fiscal 2007 from 4.95%
for fiscal 2006.  The higher average cost for the current period was primarily attributable to the
repayment of maturing term advances since the close of the earlier comparative period whose
total weighted average cost was below that of the average outstanding balance of the remaining
advances during fiscal 2007. **Net Interest Income.**  Net interest income decreased by $1.2 million or 9.2%, to $12.3
million for fiscal 2007 from $13.5 million for fiscal 2006.  The Company's net interest rate spread
declined 36 basis points to 1.44% from 1.80% for the same comparative periods, while the net
interest margin decreased 34 basis points to 2.39% from 2.73%.  As noted earlier, the change in
the Company's net interest margin was also significantly impacted by the Company's share
repurchase plans through which approximately $26.0 million of interest earning assets was
utilized to repurchase 2.2 million shares, or approximately 15%, of the Company's stock.  Based
upon the growth in the average balance of the Company's treasury stock account during fiscal
2007 and its average yield on earning assets reported for fiscal 2006, the Company estimates
that approximately $777,000, or 63%, of the $1.2 million decrease in net interest income was




attributable to interest earned during fiscal 2006 on the earning assets that were subsequently
utilized in fiscal 2007 to repurchase shares.

**Provision for Loan Losses.**Using the allowance methodology described under Critical
Accounting Policies found later in this discussion, the provision for loan losses totaled $445,000
for fiscal 2007, representing a decrease of $20,000 from fiscal 2006.  The provision expense for
2007 reflected the reversal of an $86,000 loss reserve against a previously impaired loan
participation.  Management's review of the loan conducted as of December 31, 2006 concluded
that, based upon the loan's consistent payment history and the improved financial performance
of the underlying commercial property, the loan was no longer impaired resulting in the
reversal of the prior impairment reserve.  The loan's classification was also upgraded from
doubtful to substandard.  Excluding this adjustment, the Bank's provision expense for 2007
totaled $531,000 or an increase of $66,000 compared with that recorded during fiscal 2006.  This
adjusted variance reflects the increase in loan loss provision generally attributable to the
comparatively higher net growth in our commercial loan portfolio between the two fiscal years.
Specifically, as adjusted, each period's provision resulted largely from the incremental growth
in the outstanding balance of the loans on which historical and environmental loss factors are
applied.  For the year ended September 30, 2007, outstanding loan balances, excluding the
allowance for loan loss and loans held for sale, increased $39.8 million to $440.5 million from
$400.7 million at September 30, 2006.  The growth was comprised of net increases in commercial
loans totaling $45.7 million.  Such loans include multi-family, nonresidential real estate,
construction and business loans.  The increase in loans receivable net also included net
increases in home equity loans and home equity lines of credit totaling $3.0 million.  Offsetting
the growth in these categories was a $8.9 million decrease in the balance of 1-4 family first
mortgages. By comparison, for the year ended September 30, 2006, total outstanding loan balances,
excluding the allowance for loan loss and loans held for sale, grew by $58.1 million - an
amount exceeding that of the current year.  However, the growth was comprised of net
increases in the outstanding balance of commercial loans, as defined above, of approximately
$35.8 million - comparatively lower net growth on those loans on which the Bank applies
relatively higher historical and environment loss factors.  Loan growth in the earlier period also
included net increases in one- to four-family mortgages totaling $13.0 million coupled with
increases in home equity loans and home equity lines of credit of $9.2 million - loan types for
which the Bank applies comparatively lower historical and environmental loss factors. In total, the allowance for loan losses as a percentage of gross loans outstanding
increased to 0.58% at September 30, 2007- an increase of 5 basis points from 0.53% at September
30, 2006.  These ratios reflect allowance for loan loss balances of $2.6 million and $2.1 million,
respectively.  The overall increase in the ratio of allowance to gross loans reported reflects the
changing composition of the portfolio with greater strategic emphasis on loans with higher risk
factors.  As noted earlier, no additions to the allowance for loan losses were required for
nonperforming loans, which decreased to 0.22% of total assets at September 30, 2007 from
0.41% at September 30, 2006.  The level of the allowance is based on estimates and the ultimate
losses may vary from those estimates.




**Noninterest Income.**  Noninterest income increased $401,000 to $1.4 million for fiscal
2007 from $1.0 million for fiscal 2006.  The net increase was attributable, in large part, to a
comparative decrease in losses on sale of investment securities totaling $260,000.  The losses
reported in the prior period included a $271,000 loss on sale of one underperforming
investment security.  The Company also reported an increase of $153,000 in income from the
cash surrender value of life insurance attributable to a combination of higher average balances
and improved yields on those assets.  The Company also recognized a $28,000 increase in the
gain on sale of loans resulting from comparatively greater 1-4 family mortgage loan sales than
had been recorded in the prior period.  Offsetting these increases in noninterest income were
comparative reductions in other noninterest income of $39,000.  This decline resulted primarily
from comparatively lower receipts of loan prepayment penalties due to lower commercial loan
prepayments partially offset by increases in loan withdrawal fees and loan servicing fees. **Noninterest Expense.**  Noninterest expense increased $1.9 million to $12.5 million for
fiscal 2007 from $10.7 million for fiscal 2006.  Significant components of this growth in
operating costs include comparative increases to salaries and employee benefits of $1.7 million,
increased occupancy and equipment costs of $149,000, increases in data processing costs of
$95,000, increases in advertising and marketing costs of $95,000 and increases to other
noninterest expenses of $124,000.  Offsetting these increases were decreases of $150,000 and
$123,000 in legal costs and professional and consulting fees, respectively. The $1.7 million increase in salaries and employee benefits for the comparative periods
includes increases of approximately $551,000 that were directly attributable to the Bank's three
full service branches that were opened during fiscal 2007.  Salary and employee benefit
expenses for 2007 also increased approximately $113,000 due to net staffing additions in the
Bank's commercial lending department.  Other noteworthy increases to salaries and employee
benefits resulted from the implementation of the Company's 2006 Equity Incentive Plan
approved by shareholders in May, 2006.  Specifically, total expenses associated with the
Company's restricted stock and stock option plans increased approximately $653,000 in fiscal
2007 compared with that reported for fiscal 2006.  Finally, the variance for the comparative
years also reflects the reversal of $131,000 of profit sharing expense recorded in the first quarter
of the earlier comparative period resulting from the discontinuation of that benefit. The remaining $190,000 increase in noninterest expense during fiscal 2007 included
increases in occupancy and equipment, advertising and other noninterest expense totaling
$368,000 which were largely attributable to the start up and ongoing operation of the Bank's
three newest branches opened during fiscal 2007.  The Company also recognized an increase in
data processing costs of $95,000 in 2007.  A portion of this increase was also attributable to the
start up and ongoing operation of the Bank's newest branches.  However, the increase in data
processing costs for fiscal 2007 also included approximately $64,000 of one-time expenses
attributable to upgrading the Bank's public website and online banking services and the
implementation of certain outsourced network infrastructure management services.  The latter
expense resulted from the Bank's decision to consolidate the provision of a variety of
information technology administration support services under a single outsourced service
provider.  Such services had previously been rendered by a combination of other outsourced
and in-house resources.  This decision also resulted in the elimination of one managerial
position within the Bank's MIS department during the fourth quarter ended September 30,
2007.




The reported decrease in legal fees was primarily attributable to comparatively lower
utilization of legal services during fiscal 2007.  The earlier comparative period included
expenses for legal services resulting from the completion of the Company's second step
conversion for which similar expenses were not incurred during the current year.  Legal
expenses during the earlier comparative period included those relating to the modification of
the Bank's employee benefit plans, including the Bank's 401k and ESOP, as well as the
development of the 2006 Equity Incentive Plan. Finally, comparative decreases in professional and consulting fees were primarily the
result of lower internal and external audit costs associated with the Sarbanes Oxley Act of 2002
during the current year.  The expense incurred for fiscal 2006 included a portion of the first year
costs associated with the development, implementation and audit of controls over financial
statement reporting in accordance with Section 404 of the Act.   The lower costs in fiscal 2007
reflect the reduced financial burden of maintaining and updating those controls as required to
ensure ongoing compliance with the Act. **Provision for Income Taxes**.  The provision for income taxes decreased $1.1 million for
fiscal 2007 compared with fiscal 2006.  For those same comparative years, the Company's
effective tax rate was 23.8% and 38.0%, respectively.  The lower effective tax rate in the current
period rate was largely the result of the level of "tax favored" income reported by the Company
for the comparative years in relation to the level of pretax net income reported by the Company
for those same periods.  "Tax favored" income arises from revenue sources on which the
Company pays income taxes at a comparatively lower effective tax rate than it generally pays
on other sources of income. Specifically, the Company's  effective tax rate is influenced by the level of interest
income on investment securities held by the Bank's investment subsidiary, American Savings
Investment Corporation ("ASIC").  ASIC is 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, the
Company also recognizes tax exempt income from the cash surrender value of bank owned life
insurance. The Company recognized income from these two "tax favored" sources during both fiscal 2007
and fiscal 2006.  However, the comparatively lower pretax net income reported for fiscal 2007
resulted in the items discussed above having a proportionally greater net beneficial impact on
the Company's reported effective tax rate in the current year.


**Comparison of Operating Results for the Years Ended September 30, 2006 and 2005**

**General.**  Net income for the year ended September 30, 2006 was $2.1 million, an
increase of $90,000, or 4.4% from the year ended September 30, 2005.  The increase in net
income resulted from an increase in net interest income offset by a decrease in noninterest
income coupled with increases in noninterest expense, the provision for loan losses and the
provision for income taxes.




**Interest Income.**  Total interest income increased 23.0% or $4.7 million to $25.3 million
for the year ended September 30, 2006 from $20.6 million for the year ended September 30,
2005.  For those same comparative years, the average yield on interest-earning assets increased
28 basis points to 5.12% from 4.84% while the average balance of interest-earning assets
increased $69.5 million or 16.3% to $495.4 million from $425.9 million. Interest income on loans increased $2.8 million or 16.2%, to $20.3 million for the year
ended September 30, 2006 from $17.5 million for the same period in 2005.  This increase was
due, in part, to a $42.0 million increase in the average balance of loans receivable to $369.9
million for the year ended September 30, 2006 from $327.9 million for the year ended September
30, 2005.  In addition, the average yield on loans increased 17 basis points to 5.49% from 5.32%
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 lending. The rise in interest income on loans was augmented by higher interest income on
securities, which increased $1.2 million  or 43.7% to $3.9 million for the year ended September
30, 2006 from $2.7 million for fiscal 2005.  The increase was due in part, to a 76 basis point
increase in the average yield on securities which grew to 3.99% from 3.23% for the same
comparative periods.  The impact on interest income attributable to this increase was further
augmented by a $13.8 million increase in the average balance of investment securities to $98.4
million for the year ended September 30, 2006 from $84.6 million for the same 2005 period.  The
increase in yield primarily resulted from purchases of investment securities with the proceeds
of the Company's second step conversion and higher yields on adjustable rate securities which
have repriced upward in accordance with the general movement of market interest rates. Further, interest and dividend income on federal funds sold, other interest-bearing
deposits and FHLB stock increased $717,000 to $1.1 million for the year ended September 30,
2006 from $408,000 for fiscal 2005.  This increase was due, in part, to an increase of $13.7 million
in the average balance of these assets to $27.1 million for the year ended September 30, 2006
from $13.3 million for the year ended September 30, 2005.  The impact on interest income
attributable to this growth was further augmented by a 110 basis point rise in the average yield
on these assets which increased to 4.16% from 3.06%. **Interest Expense.**  Total interest expense increased by $2.3 million or 23.6% to $11.8
million for the year ended September 30, 2006 from $9.5 million for fiscal 2005.  For those same
comparative periods, the average cost of interest-bearing liabilities increased 76 basis points
from 2.56% to 3.32%, while the average balance of interest-bearing liabilities decreased $16.7
million or 4.5% to $355.9 million for the year ended September 30, 2006 from $372.6 million for
fiscal 2005. Interest expense on deposits increased $2.5 million or 37.15% to $9.2 million for the year
ended September 30, 2006 from $6.7 million for fiscal 2005.  This increase was due, in part, to
the disintermediation of lower cost transaction account balances into higher yielding
certificates of deposit.  The average balance of interest-bearing deposits, including stock
subscriptions received, decreased $7.4 million to $303.1 million for the year ended September
30, 2006 from




$310.5 million for fiscal 2005.  The components of this net decrease for the
comparative periods include a decline in the average balance of savings and interest bearing
checking deposits of $26.3 million and $864,000 respectively.  These decreases were largely
offset by an increase in the average balance of higher costing certificates of deposit totaling
$19.8 million.

The impact on interest expense attributable to the disintermediation noted above was
exacerbated by an 87 basis point increase in the average cost of interest-bearing deposits to
3.03% for the year ended September 30, 2006 from 2.16% for fiscal 2005.  The components of this
increase include an 86 basis point increase in the average cost of certificates of deposit, an 84
basis point increase in the average cost of interest-bearing checking accounts and a 60 basis
point increase in the average cost of savings accounts. Interest expense on FHLB advances decreased $233,000 to $2.6 million for the year
ended September 30, 2006 from $2.8 million for the fiscal 2005.  This decrease was due, in part,
to a $9.3 million decrease in the average balance to $52.7 million for the year ended September
30, 2006 from $62.1 million for fiscal 2005.  The impact on expense attributable to this decrease
in average balance was partly offset by a 37 basis point increase in the average cost of advances
from 4.58% for the year ended September 30, 2005 to 4.95% for fiscal 2006.  The higher average
cost for the current period was partly due to the lower average balance of overnight repricing
line of credit borrowings compared with that held during the earlier comparative period.  The
cost of such overnight borrowings during that earlier period was significantly less than that of
the remaining portfolio of fixed-rate term advances.  Additionally, the maturity of lower
costing term advances in fiscal 2006 have resulted in comparatively higher costs for the
remaining portfolio of fixed-rate term advances. **Net Interest Income.**  Net interest income increased by $2.5 million or 22.5%, to $13.5
million for the year ended September 30, 2006 from $11.1 million for fiscal 2005.  The net
interest rate spread declined 48 basis points from 2.28% to 1.80% for the same comparative
periods, while the net interest margin increased 13 basis points from 2.60% to 2.73%. **Provision for Loan Losses.**Using the allowance methodology described under Critical
Accounting Policies found later in this discussion, the provision for loan losses totaled $465,000
for the year ended September 30, 2006 representing an increase of $384,000 over fiscal 2005.
The Company's net loan loss provision for the earlier comparative period reflected the reversal
of a previously recorded loss provision of $42,000.  After adjusting for the reversal in that
earlier period, the increase in loan loss provision is generally attributable to the comparatively
higher net growth in our commercial loan portfolio.  Specifically, each year's comparative
provision resulted from the incremental growth in the outstanding balance of the loans on
which historical and environmental loss factors are applied.  For the year ended September 30,
2006, outstanding loan balances, excluding the allowance for loan loss, increased 16.8% or $57.8
million to $400.7 million from $342.9 million at September 30, 2005.  The growth comprised a
net increase in the disbursed balances of construction loans of $15.1 million, net increases in
multi-family and nonresidential real estate loans totaling $15.4 million and a net increase in
business loans totaling $5.3 million.  Additional components of the net change in gross loan
balances included net increases in one- to four-family mortgages totaling $13.0 million coupled
with increases in home equity loans and lines of credit of $9.2 million.




By comparison, for the year ended September 30, 2005, outstanding loan balances, excluding
the allowance for loan loss, grew $32.4 million or 10.4% from $310.5 million at September 30,
2004 to $342.9 million at September 30, 2005.  The growth was primarily comprised of net
increases in multi-family and nonresidential real estate loans totaling $15.4 million coupled
with net increases in one- to four-family mortgages totaling $15.8 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 business and consumer loans totaling $304,000.  This growth
was offset by a decline in the disbursed balance of construction loans totaling $1.9 million. In total, the allowance for loan losses as a percentage of gross loans outstanding
increased 5 basis points to 0.53% at September 30, 2006 from 0.48% at September 30, 2005.
These ratios reflect allowance for loan loss balances of $2.1 million and $1.7 million,
respectively.  The increase in the ratio of allowance to gross loans reflects the changing
composition of the portfolio which reflects comparatively greater net growth in loans with
higher risk factors.  The level of the allowance is based on estimates and the ultimate losses
may vary from those estimates. **Noninterest Income.**  Noninterest income decreased $175,000 to $1.0 million for the
year ended September 30, 2006 compared to $1.2 million for fiscal 2005.  This reduction was
primarily attributable to a $271,000 loss on sale of an underperforming investment security
during the first quarter of fiscal 2006 compared with a similar loss on sale of $16,000 in fiscal
2005.  This net $255,000 variance was offset, in part, by increases to other noninterest income
categories.  Deposit service fees and charges increased $32,000 due primarily to increased
receipts of deposit account service charges offset by reduced levels of fee income from annuity
sales.  The Company also recorded comparatively higher income from cash surrender value of
life insurance of approximately $45,000 reflecting higher policy balances held by the Company
and increases in policy yields attributable to increases in market interest rates. **Noninterest Expense.**  Noninterest expense increased $1.7 million, or 19.4% to $10.7
million for the year ended September 30, 2006 from $8.9 million for the year ended September
30, 2005.  This increase was attributable to higher expenses for salaries and benefits, occupancy
and equipment, advertising, legal, professional and consulting fees, and other noninterest
expenses partially offset by decreases in data processing expenses. Salaries and employee benefits increased $1.0 million or 17.2% to $6.9 million for the
year ended September 30, 2006 as compared to $5.9 million for fiscal 2005.  Salaries and wages
including bonus and payroll taxes, increased $448,000 Such increases were primarily
attributable to growth in the Company's commercial lending staff and additions to retail
deposit personnel in anticipation of the Company's next branch opening coupled with overall
annual increases in employee compensation. Retirement and stock benefit plan costs increased $809,000 resulting primarily from
increased ESOP costs stemming from completion of Company's second step conversion and the
subsequent implementation of the Company's 2006 Equity Incentive Plan approved by
shareholders in May, 2006.  ESOP costs increased $310,000 from $270,000 for fiscal 2005 to
$580,000 for fiscal 2006 (See Note 5 Employee Stock Ownership Plan).  For those same
comparative periods, restricted stock plan costs increased $430,000 from $207,000 to $637,000.




The amount recorded in fiscal 2005 reflected only nine months of RSP expenses reflecting plan
approval by shareholders in January 2005.  By comparison, the amount recorded in fiscal 2006
included a full year of RSP benefits approved in 2005 plus a pro rata portion of the annual RSP
benefits relating to the Company's 2006 Equity Incentive Plan approved by shareholders in
May, 2006.  Finally, the Company began recognizing stock options expense upon the adoption
of FAS 123R on October 1, 2005.  For the year ended September 30, 2006, the Company recorded
$384,000 in stock options expense for which no comparative expense was recorded in the prior
fiscal year.  Together, these factors contributed $1.1 million to the comparative increase in
retirement and stock benefit plan costs.  These benefit cost increases were partly offset by a
comparative decrease in profit sharing expense of $306,000 resulting from $131,000 of accrued
plan expenses that were reversed in fiscal 2006 due to the Company's discontinuation of that
plan.  By comparison, profit sharing plan expenses in fiscal 2005 totaled $175,000.

Medical and other insurance benefit premiums, net of employee co-payments, increased
approximately $64,000 while other employee expenses increased approximately $71,000
resulting primarily from comparatively greater costs associated with employee training and
personnel procurement expenses. Finally, offsetting these net increases in salaries and employee benefits for the year
ended September 30, 2006 was a net decrease in director compensation expense of $382,000 due
largely to costs recognized in the earlier comparative period relating to changes in the
Company's director retirement plan for which no comparable costs were incurred in fiscal 2006. Occupancy and equipment expense increased $119,000 to $949,000 for the year ended
September 30, 2006 as compared to $830,000 for fiscal 2005 while data processing costs
decreased by approximately $17,000.  The increase in occupancy and equipment costs was
attributable, in large part, to the recognition of approximately $91,000 of deposit branch
acquisition costs in the more recent period relating to sites for which the Bank and/or Seller
were unable to fulfill the conditional terms of the sales contract.  Such expenses would have
been capitalized into the depreciable cost of the branch had they come to fruition.
Notwithstanding these challenges, the Company continues to pursue its deposit branch growth
strategy.  Toward that end, the Bank opened a full service branch located on Bloomfield
Avenue in Verona, New Jersey in November 2006.  The remaining increase in occupancy and
equipment costs is attributable primarily to additional property tax expense relating to that
branch.  Additionally, the Company recently received the requisite municipal approvals
needed to construct a full service branch on a site in Clifton, New Jersey. Increases in noninterest expense also included increases in advertising and marketing
expenses of approximately $62,000 attributable primarily to costs associated with enhanced
corporate and lending marketing programs.  Legal expenses for the year ended September 30,
2006 were $52,000 higher than those recorded for fiscal 2005.   This comparative increase in
legal expenses was attributable, in large part, to the Company's annual meeting held in May,
2006 and matters addressed by shareholders at that time.  Additionally, professional and
consulting fees increased $257,000 to $531,000 for the year ended September 30, 2006 from
$274,000 for fiscal 2005.  In large part, these increases were attributable to audit and consulting
costs incurred by the Company relating to compliance with the Sarbanes Oxley Act of 2002 and
the outsourcing of other internal audit and compliance-related services.




Finally, the Company recognized noteworthy increases in a variety of other noninterest
expenses in fiscal 2006 compared with fiscal 2005.  Other noninterest expenses increased
$247,000 from $752,000 for the year ended September 30, 2005 to $999,000 for the year ended
September 30, 2006.  A significant portion of this increase was directly attributable to the
Company's conversion into a fully public entity.  Such cost increases include those associated
with corporate insurance, transfer agent services, NASDAQ membership fees and regulatory
oversight costs.  Additional increases in other noninterest expense resulted from the
implementation of the Company's strategic growth and business diversification strategies.  For
example, the Company recognized a substantial portion of the general and administrative
"start up costs" of its new deposit branch in the fourth quarter of fiscal 2006.  The Verona
branch location opened in the first quarter of fiscal 2007. **Provision for Income Taxes**.  The provision for income taxes increased $195,000 for the
year ended September 30, 2006 compared with fiscal 2005.  For those same comparative
periods, the Company's effective tax rate was 38.0% and 37.1%, respectively.  The net increase
in the effective tax rate was attributable, in part, to the decline in the average balance of
investment securities held by the Bank's investment subsidiary, American Savings Investment
Corporation ("ASIC").  ASIC is 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. Throughout fiscal 2006, cash flows from ASIC were utilized by the Bank to fund loan
growth.  This resulted in comparatively lower net income recorded by the investment
subsidiary offset by greater net income recorded by the Bank resulting in the increase in the
Company's effective income tax rate. Additionally, the Company recorded comparatively higher non-deductible expenses
associated with incentive stock options due to the adoption of FAS 123R in the current fiscal
year.  Partially offsetting these factors were comparatively higher levels of tax exempt income
in fiscal 2006 from the cash surrender value of bank owned life insurance compared with that
recorded in fiscal 2005.




**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.

|                                                                         | At September 30,       |   | Years Ended September 30,
|------------------------------------------------------------------------ | ---------------------- | - | -------------------------
|                                                                         | 2007                   |   | 2007                     
|                                                                         | Balance                |   | Yield/Cost               
|                                                                         | (Dollars in thousands)
|**Interest-earning assets:**                                             |                        |   |                          
|Loans receivable, net(1)                                                 | $439,126               |   | 6.03                     
|Investment securities(2)                                                 | 65,250                 |   | 4.56                     
|Other interest-earning assets(3)                                         | 29,991                 |   | 5.13                     
|Total interest-earning assets                                            | 534,367                |   | 5.80                     
|Non-interest-earning assets                                              | 39,371                 |   |                          
|Total assets                                                             | $573,738               |   |                          
|**Interest-bearing liabilities:**                                        | ****                   |   |                          
|NOW & money market                                                       | $111,795               |   | 4.51                     
|Savings deposits(4)                                                      | 92,778                 |   | 2.54                     
|Certificates of deposit                                                  | 193,533                |   | 4.92                     
|Total interest-bearing deposits                                          | 398,106                |   | 4.25                     
|FHLB advances                                                            | 37,612                 |   | 5.21                     
|Total interest-bearing liabilities                                       | 435,718                |   | 4.33                     
|Non-interest-bearing deposits                                            | 30,494                 |   |                          
|Other non-interest-bearing     liabilities                               | 6,933                  |   |                          
|Total liabilities                                                        | 473,145                |   |                          
|Accumulated other     comprehensive income                               | (273                   | ) |                          
|Retained earnings & other equity                                         | 100,866                |   |                          
|Total liabilities and equity                                             | $573,738               |   |                          
|Net interest spread(5)                                                   |                        |   | 1.47                     
|Net interest margin(6)                                                   |                        |   | 2.27                     
|Ratio of interest-earning     assets to interest-bearing     liabilities | 122.64                 | % |                          

|_____________________________
|-----------------------------
|(1)                          
|(2)                          
|(3)                          
|(4)                          
|(5)                          
|(6)                          



**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.


|                                           | 2007-2006Increase (Decrease)
|------------------------------------------ | ----------------------------
|                                           | Volume                      
|                                           | (Dollars in thousands)      
|**Interest-earning assets:**               |                             
|Loans receivable                           | $2,691                      
|Securities                                 | (1,122)                     
|Other interest-earning assets              | (82                         
|Total interest-earning assets              | 1,487                       
|                                           |                             
|**Interest-bearing liabilities:**          |                             
|NOW and money market accounts              | 857                         
|Savings accounts                           | (230)                       
|Certificates of deposit                    | 823                         
|Total interest bearing deposits            | 1,450                       
|Federal Home Loan Bank advances            | (419                        
|Total interest-bearing liabilities         | 1,031                       
|                                           |                             
|Increase (decrease) in net interest income | $   456                     

|                                           | 2006-2005Increase (Decrease)
|------------------------------------------ | ----------------------------
|                                           | Volume                      
|                                           | (Dollars in thousands)      
|**Interest-earning assets:**               |                             
|Loans receivable                           | $2,234                      
|Securities                                 | 447                         
|Other interest-earning assets              | 419                         
|Total interest-earning assets              | 3,100                       
|                                           |                             
|**Interest-bearing liabilities:**          |                             
|NOW and money market accounts              | (12                         
|Savings accounts                           | (408                        
|Certificates of deposit                    | 596                         
|Total interest bearing deposits            | 176                         
|Federal Home Loan Bank advances            | (428                        
|Total interest-bearing liabilities         | (252                        
|                                           |                             
|Increase (decrease) in net interest income | $3,352                      



**Critical 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. **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 the
Company's historical loss experience as well as various "environmental factors" including 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, industry condition
information, and prevailing economic conditions.  Large groups of smaller balance
homogeneous loans, such as residential real estate and home equity and consumer loans, are
evaluated in the aggregate using historical loss factors adjusted for current economic
conditions.  Large balance and/or more complex loans, such as multi-family, nonresidential
real estate, construction and business 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 in the periods presented
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. 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.  Both historical and
environmental loss factors are reviewed and updated quarterly, where appropriate, as part of
management's assessment of the allowance for loan losses. During fiscal 2007, changes to environmental factors used in the Bank's allowance for
loan loss calculations generally reflected the Company's increased strategic focus on
commercial lending.  Such changes were made during the first fiscal quarter of 2007.
Environmental factors applied to the outstanding balance of commercial loans reflected the
changes to overall lending policies, procedures and practices associated with that strategic
emphasis, the increased volume




of commercial loans in relation to total loan originations,
changes in credit concentration reflecting larger loan balances to borrowers and concerns about
potential changes in regional real estate values.  However, the impact of these increases were
largely offset by reductions in environmental factors attributable to the experience, ability, and
depth of lending management and staff, all of which were enhanced through expanded staffing
during the prior fiscal year.  No significant changes to environmental factors used in the Bank's
loss provision calculations had been made during fiscal 2006.

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


**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. 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 the level of market 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 by providing funds
for its lending 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, 2007, the total approved loan
origination commitments outstanding amounted to $22.4 million.  At the same date, unused
lines of credit were $29.2 million and construction loans in process were $16.0 million.

Certificates of deposit scheduled to mature in one year or less at September 30, 2007,
totaled $155.6 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.  Additionally, at September 30, 2007 the Bank has $12.1 million of
borrowings from the Federal Home Loan Bank of New York ("FHLB") maturing in one year or
less which are currently expected to repaid without renewal at maturity.  Repayment of such
advances increases the Bank's unused borrowing capacity from the FHLB which, at September
30, 2007 totaled $102.6 million.  In calculating our borrowing capacity, the Bank utilizes the
FHLB's guideline, which generally limits advances secured by residential mortgage collateral to
25% of the Bank's total assets. The following tables disclose our contractual obligations and commercial commitments
as of September 30, 2007.  Scheduled principal payments on amortizing borrowings are
reported as maturities.


|                  | Total          | Less Than1 Year | After1-3 Years | 4-5 Years | 5 Years 
|----------------- | -------------- | --------------- | -------------- | --------- | --------
|                  | (In thousands)
|Time Deposits     | $	193,533      | $155,610        | $	23,516       | $	4,143   | $	10,264
|FHLB  advances(1) | 37,612         | 12,065          | 13,547         | 11,000    | 1,000   
|Total             | $	231,145      | $167,675        | $	37,063       | $	15,143  | $	11,264

|_________________________
|-------------------------
|(1)                      

|                                        | TotalAmountsCommitted | Less Than1 Year | 1-3 Years | 4-5 Years | Over5 Years
|--------------------------------------- | --------------------- | --------------- | --------- | --------- | -----------
|                                        | (In thousands)       
|Lines of credit(1)                      | $	29,210              | $	3,490         | $	358     | $	910     | $	24,452   
|Land lease - Bloomfield                 | 2,407                 | 116             | 277       | 277       | 1,737      
|Building lease - Nutley                 | 1,500                 | 84              | 184       | 185       | 1,047      
|Construction loans in   process(1)      | 15,969                | 13,010          | 2,959     | -         | -          
|Other commitments to   extend credit(1) | 22,400                | 22,400          | -         | -         | -          
|Total                                   | $	71,486              | $	39,100        | $	3,778   | $	1,372   | $	27,236   

|_________________________
|-------------------------
|(1)                      



As noted in the table above, the Bank has entered into a land lease agreement through
which it is committed to pay $2,407,079 over a 15 year term.  This commitment relates to the
relocation of the Bank's Bloomfield branch site which is expected to commence in January,
2008.  Such relocation will significantly upgrade and modernize the Bloomfield branch facility
supporting the Company's deposit growth and customer service enhancement objectives.  The
relocation will also support potential expansion of the administrative and lending office space
within the Company's existing headquarters facility where the branch is currently located
should such expansion be required to support the Company's business plan.  This commitment
is contingent upon the fulfillment of certain conditions outlined in the lease contract.
Additionally, the Bank will receive an abatement of rent for a total of $100,000 upon lease
payment inception conditioned upon the Bank's compliance with all its obligations under the
terms of the lease agreement. The Bank also has one outstanding standby letter of credit totaling $160,714.  The
standby letter of credit, which represents a contingent liability to the Bank, expires in May 2008.


**Regulatory Capital**

Consistent with its goals to operate a sound and profitable financial organization,
American Bank of New Jersey actively seeks to maintain its classification as a "well capitalized"
institution in accordance with regulatory standards.  The Bank's total equity was $76.8  million
at September  30, 2007, or 13.70% of total assets on that date.  As of September 30, 2007, the
Bank exceeded all capital requirements of the Office of Thrift Supervision.  The Bank's
regulatory capital ratios at September 30, 2007 were as follows: core capital 13.74%; Tier I risk-based
capital, 21.72%; and total risk-based capital, 22.45%.  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 Accounting Pronouncements**

A discussion of recent accounting pronouncements is presented in "Footnote 1 -
Summary of Significant Accounting Policies" contained within the Consolidated Financial
Statements included in this annual report.


**Quantitative and Qualitative Disclosures About Market Risk**

**Qualitative Analysis.**  Because the income on the majority of our assets and the cost of
the majority of our liabilities are sensitive to changes in interest rates, a significant form of
market risk for us is interest rate risk.  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:


- The interest income we earn on our interest-earning assets such as loans and
securities; and
- 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. The prepayment characteristics of our loans and mortgage-backed and related securities
are greatly influenced by movements in market interest rates.  For example, 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 prepayment proceeds at
rates that are comparable to the rates we previously earned on the prepaid loans or securities.
By contrast, increases in interest rates reduce the incentive for borrowers to refinance their debt.
In such cases, prepayments on loans and mortgage-backed and related securities may decrease
thereby extending the average lives of such assets and reducing the cash flows that are
available to be reinvested by the Company at higher interest rates. Tables presenting the composition and allocation of the Company's interest-earning
assets and interest-costing liabilities from an interest rate risk perspective are set forth in the
preceding section of this report titled "Comparison of Financial Condition at September 30, 2007
and September 30, 2006."  These tables present the Company's investment securities, loans,
deposits, and borrowings by categories that reflect the interest rate risk characteristics of the




underlying assets or liabilities.  Shown as a percentage of total assets, the comparative data
presents changes in the interest rate risk characteristics of the Company's balance sheet.

Our net interest margin may be adversely affected throughout several possible interest
rate environments.  For example, during fiscal 2007, the continued inversion of the yield curve,
by which shorter term market interest rates exceed those of longer term rates, triggered further
increases in the Bank's cost of interest-bearing liabilities that outpaced our increase in yield on
earning assets causing further net interest spread compression.  As noted in the Executive
Summary discussion earlier, such compression resulted in a 0.36% reduction in our net interest
spread to 1.44% from 1.80% for the fiscal year ended September 30, 2006.  During that time, the
continued growth in the Company's commercial lending activities contributed significantly to
improved yields on earning assets, which increased 52 basis points from 5.12% to 5.64%.
However, these improved yields were more than offset by increases in the cost of interest-bearing
liabilities which grew by 89 basis points from 3.32% to 4.21%.  Contributing to this
increase in the cost of interest-bearing liabilities was the impact of higher promotional interest
rates paid on new deposit accounts at the Bank's Verona, Nutley and Clifton branches.
However, a  portion of this increase was also attributable to continued upward pressure on
deposit interest rates which generally reflect movements in shorter term market interest rates. 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 adjustable rate mortgages, most of which are fixed rate for an initial period of
time.  At September 30, 2007, excluding allowance for loan losses and net deferred origination
costs and including loans held for sale, loans totaled $440.6 million comprising 76.8% of total
assets.  As presented in the loan-related tables in the preceding section of this report titled
"Comparison of Financial Condition at September 30, 2007 and September 30, 2006", loans
reported as fixed rate mortgages totaled $181.2 million or 31.6% of total assets while ARMs
totaled $199.4 million or 34.8% of total assets. In a rising 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 greater
repricing sensitivity than that of our loans and investment securities.  Having interest-bearing
liabilities that reprice more frequently than interest-earning assets is 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. Notwithstanding the risks presented by the flat to inverted yield curve that was
prevalent during fiscal 2007, or those resulting from further increases to short term interest
rates, a significant decrease in market interest rates could, by contrast, trigger a new wave of
loan refinancing that could result in the margin compression experienced in prior years when
rates fell to their historical lows. The Bank also faces the risk of continued disintermediation of our deposits into higher
cost accounts as well as the expectation for some amount of deposit outflows.  Specifically, we
were successful in growing non-maturity deposits during fiscal 2007 due, in part, to higher
promotional interest rates paid at the Bank's three newest branches.  Our ability to retain such




deposits as rates on such accounts are incrementally adjusted to "non-promotional" levels
continues to be rigorously tested.  We expect that a portion of recently acquired deposits may
be subject to disintermediation into higher yielding deposit accounts, such as certificates of
deposit, while the most "price sensitive" of those deposits may be withdrawn.  A portion of the
Bank's recent accumulation of short term liquid assets has been attributable to managing the
contingency of that latter risk.

**Quantitative Aspects of Market Risk.**  The following table presents American Bank of
New Jersey's net portfolio value as of September 30, 2007 - the latest date for which information
is available.  The net portfolio value was calculated by the Office of Thrift Supervision, based
on information provided by the Bank.


|Net Portfolio Value    | Net PortfolioValue as % ofPresent Value of Assets | BoardEstablished Limits
|---------------------- | ------------------------------------------------- | -----------------------
|Changes inRates        | $ Amount                                          | $ Change               
|(Dollars in thousands)
|+300 bp                | 68,496                                            | -20,370                
|+200 bp                | 75,408                                            | -13,458                
|+100 bp                | 82,544                                            | -6,322                 
|0 bp                   | 88,866                                            |                        
|-100 bp                | 92,869                                            | 4,003                  
|-200 bp                | 94,509                                            | 5,644                  

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




monitoring interest rate risk.  The committee comprises the Bank's Chief Executive Officer, the
Bank's President and Chief Operating Officer, the Bank's Senior Vice President and Chief
Financial Officer, the Bank's Senior Vice President and Chief Lending Officer, the Bank's Senior
Vice President Commercial Real Estate, the Bank's VP Branch Administration and the Bank's
Vice President and Controller.  Management 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 generally 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.

The qualitative and quantitative interest rate analysis presented above indicate that
various foreseeable movements in market interest rates may have an adverse effect on our net
interest margin and earnings.  The growth and diversification strategies outlined in the
Company's current business plan are designed not only to enhance earnings, but also to better
support the resiliency of those earnings throughout various movements in interest rates.
Toward that end, implementation of the Company's business plan over time is expected to
result in a better matching of the repricing characteristics of its interest-earning assets and
interest-bearing liabilities.  Specific business plan strategies to achieve this objective include:


| | (1) | Open up to three de novo branches over the next five years with an emphasis on
growth in non-maturity deposits;                                                                                                                                                                                                                                  
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                  
| | (2) | Attract and retain lower cost business transaction accounts by expanding and
enhancing business deposit services including online cash management and remote
deposit capture services;                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                  
| | (3) | Attract and retain lower cost personal checking and savings accounts through
expanded and enhanced cross selling efforts and modified ATM surcharge policies;                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                  
| | (4) | Originate and retain commercial loans with terms that increase overall loan portfolio
repricing frequency and cash flows while reducing call risk through prepayment
compensation provisions;                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                  
| | (5) | Originate and retain 1-4 family home equity loans and variable rate lines of credit to
increase loan portfolio repricing frequency and cash flows;                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                  
| | (6) | Originate both fixed and adjustable rate 1-4 family first mortgage loans eligible for
sale in the secondary market and, if warranted, sell such loans on either a servicing
retained or servicing released basis.  The strategy reduces the balance of longer
duration and/or non-prepayment protected loans while enhancing non interest
income.



With regard to this last strategy, for the years ended September 30, 2007 and 2006, we
sold a total of $9.3 million and $5.8 million, respectively, of longer term, fixed rate loans into the
secondary market which resulted in gains on sales of mortgage loans held for sale of $43,000
and $15,000, respectively.  At September 30, 2007, the Bank had six outstanding contracts to sell
a total of $1.6 million of long term, fixed rate mortgage loans into the secondary market. After fulfilling its loan sale commitments noted above, the Bank intends to
discontinue the sale of 1-4 family mortgage loan originations for a period of time to
augment the growth in commercial loans through which the Bank will reinvest a portion of the
balances of cash and cash equivalents accumulated during fiscal 2007.  As discussed in the
preceding section titled "Comparison of Financial Condition at September 30, 2007 and
September 30, 2006", such balances resulted from significant growth in deposits acquired
through the Bank's de novo branches opened during the current year.  The Bank will carefully
monitor the earnings, liquidity, and balance sheet allocation impact of this strategy and make
interim adjustments, as necessary, to support achievement of the Company's business plan
goals and objectives. In addition to the strategies noted above, we may utilize other strategies aimed at
improving the matching of interest-earning asset maturities to interest-bearing liability
maturities.  Such strategies may include:


| | (1) | 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;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                         
| | (2) | Lengthen the maturities of our liabilities through utilization of FHLB advances and
other wholesale funding alternatives.                                                               



**MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**

Management of American Bancorp of New Jersey, Inc. ("the Company") is responsible for
establishing and maintaining an effective system of internal control over financial reporting.
The Company's system of internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles.  There are inherent limitations in the effectiveness of any system of internal control
over financial reporting, including the possibility of human error and circumvention or
overriding of controls.  Accordingly, even an effective system of internal control over financial
reporting can provide only reasonable assurance with respect to financial statement
preparation. Projections of any evaluation of effectiveness to future periods are subject to the
risks that controls may become inadequate because of changes in conditions or that the degree
of compliance with the policies or procedures may deteriorate.

Management assessed the Company's systems of internal control over financial reporting as of
September 30, 2007.  This assessment was based on criteria for effective internal control over
financial reporting described in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission.  Based on this
assessment, management believes that, as of September 30, 2007, the Company maintained
effective internal control over financial reporting based on those criteria.

The Company's independent registered public accounting firm that audited the consolidated
financial statements that are included in this annual report on Form 10-K, has issued an
attestation report on management's assessment of the Company's internal control over
financial reporting.  The attestation report of Crowe Chizek and Company LLC appears on the
following page.



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
American Bancorp of New Jersey, Inc.
Bloomfield, New Jersey

We have audited the accompanying consolidated balance sheets of American Bancorp of New
Jersey Inc. as of September 30, 2007 and 2006, and the related statements of income, changes in
stockholders' equity, and cash flows for each of the years in the three-year period ended
September 30, 2007. We also have audited American Bancorp of New Jersey Inc.'s internal
control over financial reporting as of September 30, 2007, based on criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO).  American Bancorp of New Jersey Inc.'s management is
responsible for these financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management's Report on Internal Control Over
Financial Reporting. Our responsibility is to express an opinion on these consolidated financial
statements and an opinion on the company's internal control over financial reporting 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 audits
to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the consolidated financial statements
included examining, on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation.
Our audit of internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.

A company's internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide



reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company's assets that could have a material effect on the consolidated
financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of American Bancorp of New Jersey Inc. as of
September 30, 2007 and 2006, and the results of its operations and its cash flows for each of the
years in the three-year period ended September 30, 2007 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, American
Bancorp of New Jersey Inc. maintained, in all material respects, effective internal control over
financial reporting as of September 30, 2007, based on criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).

/s/ Crowe Chizek and Company LLC Crowe Chizek and Company LLC


Livingston, New Jersey
December 11, 2007



AMERICAN BANCORP OF NEW JERSEY, INC.CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, 2007 and 2006
(In thousands except share data)

---

|                                                                                                                                                                                                                            | 2007         |   | 2006         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | - | ------------ | -
|**ASSETS**                                                                                                                                                                                                                  |              |   |              |  
|Cash and cash equivalents                                                                                                                                                                                                   |              |   |              |  
|Cash and due from banks                                                                                                                                                                                                     | $  9,983     |   | $  6,671     |  
|Interest-bearing deposits                                                                                                                                                                                                   | 14,638       |   | 494          |  
|Federal funds sold                                                                                                                                                                                                          | 12,800       |   | -            |  
|Total cash and cash equivalents                                                                                                                                                                                             | 37,421       |   | 7,165        |  
|                                                                                                                                                                                                                           
|
|Securities available-for-sale                                                                                                                                                                                               | 58,093       |   | 74,523       |  
|Securities held-to-maturity (fair value: 2007-$6,671, 2006 - $10,423)                                                                                                                                                       | 6,730        |   | 10,547       |  
|Loans held for sale                                                                                                                                                                                                         | 1,243        |   | -            |  
|Loans receivable, net of allowance for loan losses (2007-$2,568, 2006-$2,123)                                                                                                                                               | 437,883      |   | 398,624      |  
|Premises and equipment                                                                                                                                                                                                      | 10,856       |   | 6,523        |  
|Federal Home Loan Bank stock, at cost                                                                                                                                                                                       | 2,553        |   | 3,356        |  
|Cash surrender value of life insurance                                                                                                                                                                                      | 13,214       |   | 8,747        |  
|Accrued interest receivable                                                                                                                                                                                                 | 2,212        |   | 1,979        |  
|Other assets                                                                                                                                                                                                                | 3,533        |   | 2,855        |  
|Total assets                                                                                                                                                                                                                | $   573,738  |   | $   514,319  |  
|                                                                                                                                                                                                                           
|
|**LIABILITIES AND EQUITY**                                                                                                                                                                                                  |              |   |              |  
|Deposits                                                                                                                                                                                                                    |              |   |              |  
|Non-interest-bearing                                                                                                                                                                                                        | $     30,494 |   | $     23,545 |  
|Interest-bearing                                                                                                                                                                                                            | 398,106      |   | 303,602      |  
|Total deposits                                                                                                                                                                                                              | 428,600      |   | 327,147      |  
|Advance payments by borrowers for taxes   and insurance                                                                                                                                                                     | 2,702        |   | 2,466        |  
|Federal Home Loan Bank advances                                                                                                                                                                                             | 37,612       |   | 56,075       |  
|Accrued expenses and other liabilities                                                                                                                                                                                      | 4,231        |   | 3,770        |  
|Total liabilities                                                                                                                                                                                                           | 473,145      |   | 389,458      |  
|                                                                                                                                                                                                                           
|
|Commitments and contingent liabilities                                                                                                                                                                                      |              |   |              |  
|                                                                                                                                                                                                                           
|
|Stockholders' Equity                                                                                                                                                                                                        |              |   |              |  
|Preferred stock, $.10 par value, 10,000,000    shares authorized at September 30, 2007 and 2006;                                                                                                                            | -            |   | -            |  
|                                                                                                                                                                                                                           
|
|Common stock, $.10 par value, 20,000,000 shares authorized,   14,527,953 shares issued at September 30, 2007 and September 30, 2006,   11,946,190 and 14,163,220 outstanding   at September 30, 2007 and September 30, 2006 | 1,453        |   | 1,453        |  
|                                                                                                                                                                                                                           
|
|Additional paid in capital                                                                                                                                                                                                  | 113,607      |   | 111,780      |  
|Unearned ESOP shares                                                                                                                                                                                                        | (8,099       | ) | (8,549       | )
|Retained earnings                                                                                                                                                                                                           | 24,258       |   | 25,438       |  
|Treasury Stock; 2007-2,581,763, 2006-364,733 shares                                                                                                                                                                         | (30,353      | ) | (4,380       | )
|Accumulated other comprehensive loss                                                                                                                                                                                        | (273         | ) | (881         | )
|Total stockholders' equity                                                                                                                                                                                                  | 100,593      |   | 124,861      |  
|                                                                                                                                                                                                                           
|
|Total liabilities and stockholders' equity                                                                                                                                                                                  | $   573,738  |   | $   514,319  |  

---

See accompanying notes to consolidated financial statements



AMERICAN BANCORP OF NEW JERSEY, INC.CONSOLIDATED STATEMENTS OF INCOME
Years Ended September 30, 2007, 2006, and 2005
(In thousands except share data)

|                                                        | 2007       |   | 2006       |   | 2005       |  
|------------------------------------------------------- | ---------- | - | ---------- | - | ---------- | -
|Interest and dividend income                            |            |   |            |   |            |  
|Loans, including fees                                   | $   24,656 |   | $   20,291 |   | $   17,459 |  
|Securities                                              | 2,953      |   | 3,928      |   | 2,734      |  
|Federal funds sold and other                            | 1,420      |   | 1,125      |   | 408        |  
|Total interest income                                   | 29,029     |   | 25,344     |   | 20,601     |  
|                                                       
|Interest Expense                                        |            |   |            |   |            |  
|Now and money market                                    | 3,358      |   | 785        |   | 490        |  
|Savings                                                 | 2,674      |   | 2,389      |   | 2,130      |  
|Certificates of deposit                                 | 8,425      |   | 6,017      |   | 4,082      |  
|Federal Home Loan Bank advances                         | 2,274      |   | 2,611      |   | 2,844      |  
|Total interest expense                                  | 16,731     |   | 11,802     |   | 9,546      |  
|                                                       
|**Net interest income**                                 | 12,298     |   | 13,542     |   | 11,055     |  
|                                                       
|Provision for loan losses                               | 445        |   | 465        |   | 81         |  
|                                                       
|**Net interest income after provision for loan losses** | 11,853     |   | 13,077     |   | 10,974     |  
|                                                       
|Noninterest income                                      |            |   |            |   |            |  
|Deposit service fees and charges                        | 721        |   | 722        |   | 690        |  
|Income from cash surrender value of life insurance      | 468        |   | 315        |   | 270        |  
|Gain on sale of loans                                   | 43         |   | 15         |   | 16         |  
|Loss on sales of securities available-for-sale          | (11        | ) | (271       | ) | (16        | )
|Other                                                   | 201        |   | 240        |   | 236        |  
|Total noninterest income                                | 1,422      |   | 1,021      |   | 1,196      |  
|                                                       
|Noninterest expense                                     |            |   |            |   |            |  
|Salaries and employee benefits                          | 8,607      |   | 6,910      |   | 5,896      |  
|Occupancy and equipment                                 | 1,098      |   | 949        |   | 830        |  
|Data processing                                         | 764        |   | 669        |   | 686        |  
|Advertising                                             | 409        |   | 314        |   | 252        |  
|Professional and consulting                             | 407        |   | 530        |   | 274        |  
|Legal                                                   | 136        |   | 286        |   | 234        |  
|Other                                                   | 1,123      |   | 999        |   | 752        |  
|Total noninterest expense                               | 12,544     |   | 10,657     |   | 8,924      |  
|                                                       
|Income before provision for income taxes                | 731        |   | 3,441      |   | 3,246      |  
|                                                       
|Provision for income taxes                              | 174        |   | 1,308      |   | 1,203      |  
|                                                       
|Net income                                              | $   557    |   | $  2,133   |   | $  2,043   |  
|                                                       
|Earnings per share:                                     |            |   |            |   |            |  
|Basic                                                   | $   0.05   |   | $   0.16   |   | $   0.15   |  
|Diluted                                                 | $   0.05   |   | $   0.16   |   | $   0.15   |  

---

See accompanying notes to consolidated financial statements



AMERICAN BANCORP OF NEW JERSEY, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended September 30, 2007, 2006 and 2005
(In thousands)

---

|                                                                                                                          | CommonStock | AdditionalPaid-inCapital | UnearnedESOPShares | UnearnedRSPShares | RetainedEarnings | AccumulatedOtherComprehensiveIncome (Loss) | AmountReclassifiedOn ESOPShares | TotalEquity | ComprehensiveIncome(Loss)
|------------------------------------------------------------------------------------------------------------------------- | ----------- | ------------------------ | ------------------ | ----------------- | ---------------- | ------------------------------------------ | ------------------------------- | ----------- | -------------------------
|Balance at  September 30, 2004                                                                                            | $  555      | $ 15,687                 | $  (1,200)         | $           -     | $ 24,806         | $  (482)                                   | $   (52)                        | $ 39,314    |                          
|RSP stock grants                                                                                                          | -           | 1,419                    | -                  | (1,419)           | -                | -                                          | -                               | -           |                          
|RSP shares earned                                                                                                         | -           |                          | -                  | 207               | -                | -                                          | -                               | 207         |                          
|ESOP shares earned                                                                                                        | -           | 136                      | 136                | -                 | -                | -                                          | -                               | 272         |                          
|Cash dividends paid -    $0.93 per share                                                                                  | -           | -                        | -                  | -                 | (1,432)          | -                                          | -                               | (1,432)     |                          
|Reclassification due to   change in fair value of   common stock in ESOP   subject  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    |                          

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.CONSOLIDATEDSTATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended September 30, 2007, 2006 and 2005
(In thousands)

|                                                                                             | CommonStock | AdditionalPaid-InCapital | UnearnedESOPShares | UnearnedRSPShares | RetainedEarnings | AccumulatedOtherComprehensiveLoss | TreasuryStock  | AmountReclassifiedOn ESOPShares | TotalEquity | Compre-hensiveIncome(Loss)
|-------------------------------------------------------------------------------------------- | ----------- | ------------------------ | ------------------ | ----------------- | ---------------- | --------------------------------- | -------------- | ------------------------------- | ----------- | --------------------------
|Balance at   September 30, 2005                                                              | $  555      | $17,242                  | $  (1,064)         | $  (1,212)        | $ 25,417         | $  (959)                          | $            - | $   (473)                       | $ 39,506    |                           
|Transfer of Unearned RSP to   APIC due to adoption of FAS   123R                             | -           | (1,212)                  | -                  | 1,212             | -                | -                                 | -              | -                               |             |                           
|Issuance and exchange of   common stock, net of   issuance costs (9,918,750 shares   issued) | 862         | 96,661                   | (7,935)            | -                 | -                | -                                 | -              | -                               | 89,588      |                           
|MHC capital infusion from   merger                                                           | -           | 99                       | -                  | -                 | -                | -                                 | -              | -                               | 99          |                           
|RSP stock grants (358,484 shares   issued)                                                   | 36          | (36)                     | -                  | -                 | -                | -                                 | -              |                                 |             |                           
|Share purchases (566,779   shares)                                                           | -           | (2,254)                  | -                  | -                 | -                | -                                 | (4,282)        | -                               | (6,536)     |                           
|RSP shares earned including tax   benefit of vested awards                                   | -           | 668                      | -                  |                   | -                | -                                 | -              | -                               | 668         |                           
|RSP shares transfer from APIC                                                                | -           | 98                       | -                  | -                 | -                | -                                 | (98)           | -                               | -           |                           
|Stock options earned                                                                         | -           | 384                      | -                  | -                 | -                | -                                 | -              | -                               | 384         |                           
|ESOP shares earned                                                                           | -           | 130                      | 450                | -                 | -                | -                                 | -              | -                               | 580         |                           
|Cash dividends paid -    $0.16 per share                                                     | -           | -                        | -                  | -                 | (2,112)          | -                                 | -              | -                               | (2,112)     |                           
|Reclassification due to    elimination of   repurchase obligation                            | -           | -                        | -                  | -                 | -                | -                                 | -              | 473                             | 473         |                           
|Comprehensive income                                                                         |             |                          |                    |                   |                  |                                   |                |                                 |             |                           
|Net income                                                                                   | -           | -                        | -                  | -                 | 2,133            | -                                 | -              | -                               | 2,133       | $  2,133                  
|Change in unrealized     gain (loss) on securities     available-for-sale,  net     of taxes | -           | -                        | -                  | -                 | -                | 78                                | -              | -                               | 78          | 78                        
|Total comprehensive      income                                                              |             |                          |                    |                   |                  |                                   |                |                                 |             | $ 2,211                   
|Balance at   September 30, 2006                                                              | $  1,453    | $111,780                 | $ (8,549)          | $    -            | $ 25,438         | $  (881)                          | $ (4,380)      | $    -                          | $124,861    |                           

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended September 30, 2007, 2006 and 2005
(In thousands)

|                                                                                      | CommonStock | AdditionalPaid-InCapital | UnearnedESOPShares | RetainedEarnings | AccumulatedOtherComprehensiveIncome | Treasury Stock    | TotalEquity | Compre-hensiveIncome(Loss)
|------------------------------------------------------------------------------------- | ----------- | ------------------------ | ------------------ | ---------------- | ----------------------------------- | ----------------- | ----------- | --------------------------
|Balance at   September 30, 2006                                                       | $	1,453     | $	111,780                | $	(8,549)          | $	25,438         | $                 	(881)            | $	(4,380)         | $	124,861   |                           
|Cumulative effect of   adoption of SAB 108                                            | -           | -                        | -                  | 130              | -                                   | -                 | 130         |                           
|Balance at   October 1, 2006                                                          | 1,453       | 111,780                  | (8,549)            | $	25,568         | (881)                               | (4,380)           | 124,991     |                           
|RSP stock grants (6,249   shares issued)                                              | -           | (76)                     | -                  | -                | -                                   | 76                | -           |                           
|RSP shares earned   including  tax  benefit   of vested awards                        | -           | 1,183                    | -                  | -                | -                                   | -                 | 1,183       |                           
|Share purchases   (2,223,279 shares)                                                  | -           | -                        | -                  | -                | -                                   | (26,049)          | (26,049)    |                           
|Stock options earned                                                                  |             | 563                      | -                  | -                | -                                   | -                 | 563         |                           
|ESOP shares earned                                                                    | -           | 157                      | 450                | -                | -                                   | -                 | 607         |                           
|Cash dividends paid -    $0.16 per share                                              | -           | -                        | -                  | (1,867)          | -                                   | -                 | (1,867)     |                           
|Comprehensive income                                                                  |             |                          |                    |                  |                                     |                   |             |                           
|Net income                                                                            | -           | -                        | -                  | 557              | -                                   | -                 | 557         | $   557                   
|Change in unrealized     loss on securities     available-for-sale,  net     of taxes | -           | -                        | -                  | -                | 608                                 | -                 | 608         | 608                       
|Total comprehensive          income                                                   |             |                          |                    |                  |                                     |                   |             | $  1,165                  
|Balance at   September 30, 2007                                                       | $	1,453     | $	113,607                | $	(8,099)          | $	24,258         | $	             (273)                | $        (30,353) | $	100,593   |                           

---

See accompanying notes to consolidated financial statements



AMERICAN BANCORP OF NEW JERSEY, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended September 30, 2007, 2006, and 2005
(In thousands)

---

|                                                                                      | 2007     | 2006      | 2005     
|------------------------------------------------------------------------------------- | -------- | --------- | ---------
|**Cash flows from operating activities**                                              |          |           |          
|Net Income                                                                            | $    557 | $  2,133  | $  2,043 
|Adjustments to reconcile net income to net cash      provided by operating activities |          |           |          
|Depreciation and amortization                                                         | 379      | 342       | 353      
|Net amortization of premiums and discounts                                            | (10)     | (89)      | 126      
|Losses on sales of securities available-for-sale                                      | 11       | 271       | 16       
|ESOP compensation expense                                                             | 607      | 580       | 272      
|RSP compensation expense                                                              | 1,111    | 637       | 207      
|SOP compensation expense                                                              | 563      | 384       | -        
|Provision for loan losses                                                             | 445      | 465       | 81       
|Increase in cash surrender value of life insurance                                    | (467)    | (315)     | (270)    
|Gain on sale of loans                                                                 | (43)     | (15)      | (16)     
|Proceeds from sales of loans                                                          | 9,337    | 5,775     | 2,431    
|Origination of loans held for sale                                                    | (10,543) | (5,525)   | (2,695)  
|Decrease (increase) in accrued interest receivable                                    | (233)    | (511)     | (109)    
|Decrease (increase) in other assets                                                   | (400)    | 61        | (732)    
|Change in deferred income taxes                                                       | (633)    | (520)     | (174)    
|Increase (decrease) in other liabilities                                              | 591      | 192       | 529      
|Net cash provided by operating activities                                             | 1,272    | 3,865     | 2,062    
|**Cash flows from investing activities**                                              | ****     |           |          
|Net increase in loans receivable                                                      | (39,704) | (58,083)  | (32,117) 
|Purchases of securities held-to-maturity                                              | -        | (4,935)   | (6,227)  
|Maturities of securities held-to-maturity                                             | 2,000    | -         | -        
|Principal paydowns on securities held-to-maturity                                     | 1,800    | 2,184     | 1,183    
|Purchases of securities available-for-sale                                            | (18,753) | (52,606)  | -        
|Sales of securities available-for-sale                                                | 3,227    | 9,750     | 1,984    
|Maturities of securities available-for-sale                                           | 16,000   | 11,000    | -        
|Calls of securities available-for-sale                                                | -        | -         | 2,000    
|Principal paydowns on securities available-for-sale                                   | 16,941   | 19,654    | 22,315   
|Purchase of Federal Home Loan Bank stock                                              | (1,999)  | (2,836)   | (2,734)  
|Redemption of Federal Home Loan Bank stock                                            | 2,802    | 2,599     | 2,505    
|Purchase of bank-owned life insurance                                                 | (4,000)  | (920)     | (1,000)  
|Purchase of premises and equipment                                                    | (4,712)  | (2,734)   | (574)    
|Net cash used in investing activities                                                 | (26,398) | (76,927)  | (12,665) 
|**Cash flows from financing activities**                                              |          |           |          
|Net increase in deposits                                                              | 101,453  | (13,778)  | 18,209   
|Stock subscriptions held for parent received (refunded or applied)                    | -        | (115,201) | 115,201  
|Net change in advance payments by borrowers for taxes and
insurance                   | 236      | 22        | 121      
|Repayment of Federal Home Loan Bank of New York advances                              | (8,063)  | (8,059)   | (16,057) 
|Federal Home Loan Bank of New York advances                                           | -        | -         | 15,000   
|Net change in Federal Home Loan Bank of New York overnight      lines of credit       | (10,400) | 10,400    | (2,700)  
|RSP tax benefit of vested awards                                                      | 72       | 31        | -        
|Cash dividends paid                                                                   | (1,867)  | (2,112)   | (1,432)  
|MHC Capital infusion                                                                  | -        | 99        | -        
|RSP and treasury share purchases                                                      | (26,049) | (6,536)   | -        
|Net proceeds from stock issuance                                                      | -        | 89,588    | -        
|Net cash provided by (used in) financing activities                                   | 55,382   | (45,546)  | 128,342  
|Net change in cash and cash equivalents                                               | 30,256   | (118,608) | 117,739  
|Cash and cash equivalents at beginning of year                                        | 7,165    | 125,773   | 8,034    
|Cash and cash equivalents at end of year                                              | $ 37,421 | $  7,165  | $ 125,773

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended September 30, 2007, 2006, and 2005
(In thousands)

---

|                                    | 2007    | 2006    | 2005  
|----------------------------------- | ------- | ------- | ------
|Supplemental cash flow information: |         |         |       
|Cash paid during the period for     |         |         |       
|Interest                            | $16,871 | $11,814 | $9,544
|Income taxes, net of refunds        | 909     | 1,797   | 1,675 

---

See accompanying notes to consolidated financial statements)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

Nature of Operations and Principles of Consolidation:  American Bancorp of New Jersey, Inc.
("ABNJ") is a New Jersey chartered corporation organized in May, 2005 that was formed for the
purpose of acquiring all of the capital stock of American Bank of New Jersey, which was
previously owned by ASB Holding Company ("ASBH") and American Savings, MHC, a
federally chartered mutual holding company.  American Bank of New Jersey originally
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, ASB Holding Company, the predecessor of American Bancorp of New
Jersey, Inc., 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.  ASBH contributed $9,616,000 or approximately 60% of the net proceeds to the
Bank in the form of a capital contribution.  ASBH loaned $1,333,080 to the Bank's employee
stock ownership plan and the ESOP used those funds to acquire 133,308 shares of common
stock at $10 per share.

After the sale of the stock, the MHC held 70%, or 3,888,150 shares, of the outstanding stock of
ASBH with the remaining 30% or, 1,666,350 shares, held by persons other than the MHC.
ASBH held 100% of the Bank's outstanding common stock.

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 of 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 14,169,469
outstanding shares.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The consolidated financial statements include American Bancorp of New Jersey, Inc. and its
wholly owned subsidiaries, American Bank of New Jersey ("the Bank") and ASB Investment
Corp ("the Investment Corp"), and the Bank's wholly owned subsidiary American Savings
Investment Corp ("ASIC"), 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.  ASIC was formed for the purpose of investing 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 tax rate lower than the statutory
state income tax rate.  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 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.

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.
Accordingly, as with most financial institutions in the market area, the ultimate collectibility of
a substantial portion of the Bank's loan portfolio is 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 with original
maturities of 90 days or less; 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.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (Continued)

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.

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 generally identifies the population of potentially impaired loans to be all nonaccrual
commercial loans.  However, additional criteria may be considered in identifying commercial
loans that may be potentially impaired.  Commercial loans are defined herein as multifamily,
commercial real estate, construction and business loans.  Potentially impaired loans are
individually assessed to determine if the loan's carrying value exceeds the fair value of the
collateral or the present value of the loan's expected future cash flows.  If full repayment of the
loan is not expected, the loan is identified as impaired.  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.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (Continued)

Loans Held-For-Sale:  Loans held-for-sale are carried at the lower of cost or market, using the
aggregate method.  Net unrealized losses, if any, are recorded as a valuation allowance and
charged to earnings.  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 account that reflects
our estimation of the losses in our loan portfolio to the extent they are both probable and
reasonable to estimate. The allowance is maintained through provisions for loan losses that are
charged to income in the period they are established.  We charge losses on loans against the
allowance for loan losses when we believe the collection of loan principal is unlikely.
Recoveries on loans previously charged-off are added back to the allowance.

Our methodology for calculating the allowance for lease and loan losses is based upon FAS 5
and FAS 114.  Under FAS 114, we identify and analyze certain loans for impairment.  If an
impairment is identified on a specific loan, a loss allocation is recorded in the amount of that
impairment.  Loan types subject to FAS 114 are, multi-family mortgage loans, non-residential
mortgage loans, construction loans and business loans.  We also conduct a separate review of
all loans on which the collectibility of principal may not be reasonably assured.  We evaluate all
classified loans individually and base our determination of a loss factor on the likelihood of
collectibility of principal including consideration of the value of the underlying collateral
securing the loan.

Under our implementation of FAS 5, we segregate loans by loan category and evaluate
homogeneous loans as a group.  The loss characteristics of aggregated homogeneous loans are
examined using two sets of factors: (1) annual historical loss experience factors that consider the
net charge-off history of the Bank and (2) environmental factors.  Although there may be other
factors that also warrant consideration, we consider the following environmental factors:

- levels and trends of delinquencies and impaired loans;
- levels and trends of charge-offs and recoveries;
- trends in volume and terms of loans;
- changes to lending policies, procedures and practices;
- experience, ability and depth of lending management and staff;
- national, regional and local economic trends and conditions;
- industry conditions; and
- changes in credit concentration.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

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 actual lives of the loans.

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.  Leasehold Improvements are depreciated using the straight-line
method with useful lives over the lesser of estimated life or lease term.

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 $81,186 and $99,484 at September 30, 2007 and 2006 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)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(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.

Stock-Based Compensation:  For the year ended September 30, 2005, employee compensation
expense under stock options was reported using the intrinsic value method.  No stock-based
compensation cost was reflected in net income,  as all options granted had an exercise price
equal to 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 for the year ended September 30, 2005.  Actual and pro forma
earnings per share reported for 2005 have been adjusted to reflect the exchange of shares
resulting from the Company's second step conversion.

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

|Net income as reported                               | $2,043 | 
|---------------------------------------------------- | ------ | 
|Deduct:  Stock-based compensation expense determined |       
|under fair value based method, net of taxes          | 223   
|                                                     |       
|Pro forma net income                                 | $1,820
|                                                     |       
|Basic earnings per share as reported                 | $0.15 
|Pro forma basic earnings per share                   | $0.13 
|Diluted earnings per share as reported               | $0.15 
|Pro forma diluted earnings per share                 | $0.13 

For the years ended September 30, 2006 and September 30, 2007, compensation expense
regarding stock options was recorded using the fair value recognition provisions of FASB
Statement No. 123R, Accounting for Stock-Based Compensation (see Note 11 Other Stock-Based
Compensation).

For accounting purposes, the Bank is recognizing compensation expense for shares of common
stock awarded under the 2005 Restricted Stock Plan and 2006 Equity Incentive 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.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (Continued)

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.  Weighted average shares for 2005 have been adjusted to
reflect the exchange of shares resulting from our second step conversion.

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, net of tax, which are also recognized as separate
components of equity.

Federal Home Loan Bank (FHLB) stock:  The Bank is a member of the FHLB system.  Members
are required to own a certain amount of stock based on the level of borrowings and other
factors, and may invest in additional amounts.  FHLB stock is carried at cost, classified as a
restricted security, and periodically evaluated for impairment based on ultimate recovery of par
value.  Both cash and stock dividends are reported as income.

Company Owned Life Insurance:  The Company has purchased life insurance policies on
certain key executives.  Company owned life insurance is recorded at the amount that can be
realized.

Long-term Assets:  Premises and equipment, core deposit and other intangible assets, and other
long term assets are reviewed for impairment when events indicate their carrying amount may
not be recoverable from future undiscounted cash flows.  If impaired, the assets are recorded at
fair value.

Loan Commitments and Related Financial Instruments:  Financial instruments include off
balance sheet credit instruments, such as commitments to make loans and commercial letters of
credit, issued to meet customer financing needs.  The face amount for these items represents the
exposure to loss, before considering customer collateral or ability to repay.  Such financial
instruments are recorded when they are funded.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (Continued)

Fair Value of Financial Instruments:  Fair values of financial instruments are estimated using
relevant market information and other assumptions, as more fully disclosed in a separate note.
Fair value estimates involve uncertainties and matters of significant judgment regarding
interest rates, credit risk, prepayments, and other factors, especially in the absence of broad
markets for particular items.  Changes in assumptions or in market conditions could
significantly affect the estimates.

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 Accounting Pronouncements and Developments**:**

In July 2006, the FASB released Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes."  This Interpretation revises the recognition tests for tax positions taken in tax returns
such that a tax benefit is recorded only when it is more likely than not that the tax position will
be allowed upon examination by taxing authorities.  The amount of such a tax benefit to record
is the largest amount that is more likely than not to be allowed.   Any reduction in deferred tax
assets or increase in tax liabilities upon adoption will correspondingly reduce retained
earnings.  The adoption of Interpretation No. 48 on October 1, 2007 is not expected to have a
material impact on the Company's consolidated financial statements.

In February 2006, the Financial Accounting Standards Board (FASB) issued Statement No. 155,
Accounting for Certain Hybrid Financial Instruments-an amendment to FASB Statements No.
133 and 140.  This Statement permits fair value re-measurement for any hybrid financial
instruments, clarifies which instruments are subject to the requirements of Statement No. 133,
and establishes a requirement to evaluate interests in securitized financial assets and other
items.  The new standard is effective for financial assets acquired or issued after the beginning
of the entity's first fiscal year that begins after September 15, 2006.  The adoption of this
statement did not have a material impact on its consolidated financial position or results of
operations.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (Continued)

In March 2006, the FASB issued Statement No. 156, Accounting for Servicing of Financial
Assets-an amendment of FASB Statement No. 140.  This Statement provides the following: 1)
revised guidance on when a servicing asset and servicing liability should be recognized; 2)
requires all separately recognized servicing assets and servicing liabilities to be initially
measured at fair value, if practicable; 3) permits an entity to elect to measure servicing assets
and servicing liabilities at fair value each reporting date and report changes in fair value in
earnings in the period in which the changes occur; 4) upon initial adoption, permits a onetime
reclassification of available-for-sale securities to trading securities for securities which are
identified as offsetting the entity's exposure to changes in the fair value of servicing assets or
liabilities that a servicer elects to subsequently measure at fair value; and 5) requires separate
presentation of servicing assets and servicing liabilities subsequently measured at fair value in
the statement of financial position and additional footnote disclosures.  This standard is
effective as of the beginning of an entity's first fiscal year that begins after September 15, 2006
with the effects of initial adoption being reported as a cumulative-effect adjustment to retained
earnings.  The adoption of this statement did not have a material impact on its consolidated
financial position or results of operations.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 "Fair
Value Measurements" ("SFAS No. 157"), which defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands disclosures
about fair value measurements.  SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007.  The adoption of SFAS No. 157 when it becomes
effective for the Company on October 1, 2008 is not expected to have a material impact on the
Company's consolidated financial statements.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159 "The
Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159"), SFAS No.
159 permits entities to choose to measure certain financial assets and financial liabilities at fair
value. The objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting provisions.  SFAS No.
159 is effective for financial statements issued for fiscal years beginning after November 15,
2007.  The Company has not yet determined the effect of adopting SFAS No. 159, which is
effective for it on October 1, 2008, but may be adopted as early as October 1, 2007.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (Continued)

At  its  September  2006  meeting,  the Emerging Issues Task Force ("EITF") reached  a  final
consensus  on  Issue  06-04,  "Accounting  for  Deferred Compensation and Postretirement
Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements." The consensus
stipulates that an agreement by an  employer  to share a portion of the proceeds of a life
insurance policy with  an  employee  during  the  postretirement  period is a postretirement
benefit  arrangement  required  to  be  accounted for under SFAS No. 106 or Accounting
Principles  Board  Opinion  ("APB")  No. 12, "Omnibus Opinion - 1967."  The  consensus
concludes  that the purchase of a split-dollar life insurance  policy  does not constitute a
settlement under SFAS No. 106 and, therefore, a liability for the postretirement obligation must
be recognized under  SFAS  No.  106  if  the benefit is offered under an arrangement that
constitutes  a  plan or under APB No. 12 if it is not part of a plan. Issue 06-04  is effective for
annual or interim reporting periods beginning after December  15, 2007. The provisions of Issue
06-04 should be applied through either  a  cumulative  effect  adjustment  to  retained  earnings
as of the beginning of the year of adoption or retrospective application. The Company is
currently assessing the financial statement impact of implementing EITF 06-04.

At  its  September  2006  meeting,  the Emerging Issues Task Force ("EITF") reached a final
consensus on Issue 06-05, "Accounting for Purchases of Life Insurance-Determining  the
Amount That Could Be Realized in Accordance with FASB  Technical  Bulletin No 85-4" ("EITF
06-05"). EITF 06-05 clarifies the accounting  for bank-owned life insurance and stipulates that
policyholders should consider any additional amounts included in the contractual terms of the
insurance  policies other than cash surrender value in determining the amount  that  could  be
realized under the insurance contract in accordance with  FASB  Technical  Bulletin  No. 85-4.
EITF 06-05 also establishes that policyholders  should determine the amount that could be
realized under the life  insurance  contracts  assuming the surrender of an individual-life by
individual-life  policy. EITF 06-05 is effective for fiscal years beginning after  December  31,
2006. The Company is currently assessing the financial statement impact of implementing EITF
06-05.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (Continued)

In September 2006, the Securities and Exchange Commission (SEC) released Staff Accounting
Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements (SAB 108), which is effective for fiscal
years ending on or after November 15, 2006.  SAB 108 provides guidance on how the effects of
prior-year uncorrected financial statement misstatements should be considered in quantifying a
current year misstatement.  SAB 108 requires public companies to quantify misstatements using
both an income statement (rollover) and balance sheet (iron curtain) approach and evaluate
whether either approach results in a misstatement that, when all relevant quantitative and
qualitative factors are considered, is material.  If prior year errors that had been previously
considered immaterial now are considered material based on either approach, no restatement is
required so long as management properly applied its previous approach and all relevant facts
and circumstances were considered.  Adjustments considered immaterial in prior years under
the method previously used, but now considered material under the dual approach required by
SAB 108, are to be recorded upon initial adoption of SAB 108.  The amount so recorded is
shown as a cumulative effect adjustment is recorded in opening retained earnings as of October
1, 2006.

Included in this cumulative effect adjustment is a debit to deferred taxes payable for $130,000.
This amount resulted from the deferred recognition of income tax benefit arising from the
Bank's utilization of net operating losses from its subsidiaries that were dissolved in the early
1990's.  At the time,
the Bank's eligibility to utilize those net operating losses was unclear due to complications
associated with the dissolution of those subsidiaries.  As such, the Bank elected to defer the
recognition of that income tax benefit for accounting purposes in the event that its utilization of
those net operating losses were to be successfully challenged by tax authorities.  Management
considered the above amount previously to be immaterial. The total of $130,000 appears on the
consolidated statement of changes in stockholders' equity as an adjustment to closing retained
earnings as of September 30, 2006 (opening balance of October 1, 2006).

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 2 - SECURITIES**

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

|                                    | FairValue  |  |  | GrossUnrealizedGains |  |  | GrossUnrealizedLosses |  
|----------------------------------- | ---------- |  |  | -------------------- |  |  | --------------------- | -
|2007                                |            |  |  |                      |  |  |                       |  
|U.S. Government and federal agency  | $    2,005 |  |  | $    5               |  |  | $         -           |  
|Mortgage-backed                     |            |  |  |                      |  |  |                       |  
|FHLMC                               | 9,040      |  |  | 39                   |  |  | (22                   | )
|FNMA                                | 11,696     |  |  | 25                   |  |  | (321                  | )
|GNMA                                | 81         |  |  | 1                    |  |  | -                     |  
|Collateralized mortgage obligations |            |  |  |                      |  |  |                       |  
|Agency                              | 35,271     |  |  | 93                   |  |  | (247                  | )
|                                    | $	58,093   |  |  | $	163                |  |  | $	(590                | )
|                                    |            |  |  |                      |  |  |                       |  
|2006                                |            |  |  |                      |  |  |                       |  
|U.S. Government and federal agency  | $	10,917   |  |  | $   -                |  |  | $    (72              | )
|Mortgage-backed                     |            |  |  |                      |  |  |                       |  
|FHLMC                               | 12,882     |  |  | 16                   |  |  | (64                   | )
|FNMA                                | 18,223     |  |  | 18                   |  |  | (583                  | )
|GNMA                                | 108        |  |  | -                    |  |  | -                     |  
|Collateralized mortgage obligations |            |  |  |                      |  |  |                       |  
|Agency                              | 32,393     |  |  | 1                    |  |  | (712                  | )
|                                    | $	74,523   |  |  | $	35                 |  |  | $	(1,431              | )

Proceeds from sales of available-for-sale securities amounted to $3,227,089, $9,750,233 and
$1,983,620 during the years ended September 30, 2007, 2006 and 2005 resulting in gross gains of
$0 for fiscal 2007, 2006 and 2005 and gross losses of $10,734, $271,084 and $16,380 for those same
periods.  Security sale gains and losses are recorded on the trade date using the specific
identification method.

The gross losses noted above represent capital losses for which the Bank recognized a deferred
income tax benefit.  At September 30, 2007, the remaining balance of the deferred tax asset
relating to these capital losses was approximately $119,000.  For income tax purposes, the
benefit of such capital losses may only be recognized to the extent that the Company records
future capital gains within the carry-forward timeframes established by tax authorities.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 2 - SECURITIES** (Continued)

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

|                                    | AmortizedCost |  |  | GrossUnrealizedGains |  |  | GrossUnrealizedLosses |   |  | FairValue    | 
|----------------------------------- | ------------- |  |  | -------------------- |  |  | --------------------- | - |  | ------------ | 
|2007                                |               |  |  |                      |  |  |                       |   |  |              | 
|U.S. Government and federal agency  | $          -  |  |  | $      -             |  |  | $      -              |   |  | $          - | 
|Mortgage-backed                     |               |  |  |                      |  |  |                       |   |  |              | 
|FHLMC                               | 138           |  |  | -                    |  |  | (1                    | ) |  | 137          | 
|FNMA                                | 4,545         |  |  | 1                    |  |  | (43                   | ) |  | 4,503        | 
|GNMA                                | 145           |  |  | 2                    |  |  | -                     |   |  | 147          | 
|Collateralized mortgage obligations |               |  |  |                      |  |  |                       |   |  |              | 
|Agency                              | 47            |  |  | -                    |  |  | -                     |   |  | 47           | 
|Non-agency                          | 1,855         |  |  | -                    |  |  | (18                   | ) |  | 1,837        | 
|                                    | $	6,730       |  |  | $    3               |  |  | $   (62               | ) |  | $	6,671      | 
|                                    |               |  |  |                      |  |  |                       |   |  |              | 
|2006                                |               |  |  |                      |  |  |                       |   |  |              | 
|U.S. Government and federal agency  | $	2,000       |  |  | $       -            |  |  | $   (24               | ) |  | $	1,976      | 
|Mortgage-backed                     |               |  |  |                      |  |  |                       |   |  |              | 
|FHLMC                               | 286           |  |  | 1                    |  |  | (1                    | ) |  | 286          | 
|FNMA                                | 5,866         |  |  | 2                    |  |  | (49                   | ) |  | 5,819        | 
|GNMA                                | 200           |  |  | 2                    |  |  | -                     |   |  | 202          | 
|Collateralized mortgage obligations |               |  |  |                      |  |  |                       |   |  |              | 
|Agency                              | 58            |  |  | 1                    |  |  | -                     |   |  | 59           | 
|Non-agency                          | 2,137         |  |  | -                    |  |  | (56                   | ) |  | 2,081        | 
|                                    | $	10,547      |  |  | $    6               |  |  | $	(130                | ) |  | $	10,423     | 

The fair value of debt securities and carrying amount, if different, at September 30, 2007 by
contractual maturity were as follows.  Securities not due at a single maturity date, primarily
mortgage-backed securities, are shown separately.

|                       | Held-to-Maturity |  | Availablefor Sale |             
|---------------------- | ---------------- |  | ----------------- | ------------
|                       | CarryingAmount   |  |                   | FairValue   
|                      
|Due less than one year | $          -     |  |                   | $          -
|Mortgage-backed        | 6,730            |  |                   | 6,661       
|Total                  | $	6,730          |  |                   | $	6,671     

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 2 - SECURITIES** (Continued)

Securities with carrying values of $6,180,398 and $12,513,151 at September 30, 2007 and 2006,
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, 2007 not recognized in
income are presented below by length of time the securities have been in an unrealized loss
position:

|                                      | Less than 12 Months | 12 Months or More | Total      
|------------------------------------- | ------------------- | ----------------- | -----------
|Description of Securities             | FairValue           | UnrealizedLoss    | FairValue  
|                                      |                     |                   |            
|U.S. Government and  federal agency   | $         -         | $      -          | $         -
|Mortgage backed                       | 3,557               | (6)               | 7,508      
|Collateralized mortgage  
obligations | 2,249               | (1)               | 13,573     
|Total temporarily     impaired        | $	5,806             | $	(7)             | $	21,081   

Available-for-sale securities with unrealized losses at September 30, 2006 not recognized in
income are presented below by length of time the securities have been in an unrealized loss
position:

|                                      | Less than 12 Months | 12 Months or More | Total    
|------------------------------------- | ------------------- | ----------------- | ---------
|Description of Securities             | FairValue           | UnrealizedLoss    | FairValue
|                                      |                     |                   |          
|U.S. Government and  federal agency   | $ 5,985             | $   (4)           | $ 4,932  
|Mortgage backed                       | 21,953              | (68)              | 9,260    
|Collateralized mortgage  
obligations | 15,593              | (111)             | 16,800   
|Total temporarily     impaired        | $43,531             | $	(183)           | $	30,992 

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 2 - SECURITIES** (Continued)

Held-to-maturity securities with unrealized losses at September 30, 2007 not recognized in
income are as follows:

|                                      | Less than 12 Months | 12 Months or More | Total    
|------------------------------------- | ------------------- | ----------------- | ---------
|Description of Securities             | FairValue           | UnrealizedLoss    | FairValue
|                                      |                     |                   |          
|U.S. Government and  federal agency   | $    -              | $      -          | $       -
|Mortgage backed                       | 3,325               | (12)              | 1,097    
|Collateralized mortgage  
obligations | -                   | -                 | 1,837    
|Total temporarily     impaired        | $3,325              | $	(12)            | $	2,934  

Held-to-maturity securities with unrealized losses at September 30, 2006 not recognized in
income are as follows:

|                                     | Less than 12 Months | 12 Months or More | Total    
|------------------------------------ | ------------------- | ----------------- | ---------
|Description of Securities            | FairValue           | UnrealizedLoss    | FairValue
|                                     |                     |                   |          
|U.S. Government and  federal agency  | $    -              | $    -            | $ 1,976  
|Mortgage backed                      | 4,670               | (7)               | 1,637    
|Collateralized mortgage  obligations | -                   | -                 | 2,081    
|Total temporarily     impaired       | $4,670              | $	(7)             | $	5,694  

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)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 2 - SECURITIES** (Continued)

At September 30, 2007, securities with unrealized losses had depreciated 1.9% 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.

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, 2007.

**NOTE 3 - LOANS**

Loans at period-end were as follows:

|                                | 2007      |   |  | 2006      |  
|------------------------------- | --------- | - |  | --------- | -
|                                |           |   |  |           |  
|Mortgage loans:                 |           |   |  |           |  
|One-to-four-family              | $	276,947 |   |  | $	283,469 |  
|Multi-family and nonresidential | 99,059    |   |  | 73,496    |  
|Construction                    | 48,561    |   |  | 33,155    |  
|Land                            | 3,341     |   |  | 534       |  
|Consumer                        | 655       |   |  | 720       |  
|Home equity                     | 19,756    |   |  | 19,122    |  
|Business                        | 7,024     |   |  | 6,068     |  
|Total loans                     | 455,343   |   |  | 416,564   |  
|Allowance for loan losses       | (2,568    | ) |  | (2,123    | )
|Net deferred loan costs         | 1,077     |   |  | 1,100     |  
|Loans in process                | (15,969   | ) |  | (16,917   | )
|                                |           |   |  |           |  
|Loans, net                      | $	437,883 |   |  | $	398,624 |  

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 3 - LOANS** (Continued)

At September 30, 2007 and 2006, the balance of one-to-four-family mortgage loans included
$22.6 million and $20.0 million, respectively, of thirty year adjustable rate loans with initial
fixed interest rate periods of three to five years during which time monthly loan payments
comprise interest only.  After the initial period, the monthly payments on such loans are
adjusted to reflect the collection of both interest and principal over the loan's remaining term to
maturity.

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:

|                                     | 2007    |   |  | 2006    |  
|------------------------------------ | ------- | - |  | ------- | -
|                                     |         |   |  |         |  
|Beginning balance                    | $	1,617 |   |  | $	922   |  
|New loans                            | 77      |   |  | 103     |  
|Effect of changes in related parties | (745    | ) |  | 726     |  
|Repayments                           | (332    | ) |  | (134    | )
|Ending balance                       | $	617   |   |  | $	1,617 |  

Mortgage loans serviced for others are not included in the accompanying financial statements.
At September 30, 2007 and 2006, the unpaid principal balances of these loans totaled
$19,073,838 and $20,481,818, respectively.

Activity in the allowance for loan losses was as follows:

|                             | 2007    |  |  | 2006    |  |  | 2005    | 
|---------------------------- | ------- |  |  | ------- |  |  | ------- | 
|                            
|Balance at beginning of year | $	2,123 |  |  | $	1,658 |  |  | $	1,578 | 
|Provision charged to income  | 445     |  |  | 465     |  |  | 81      | 
|Charge-offs                  | -       |  |  | -       |  |  | -       | 
|Recoveries                   | -       |  |  | -       |  |  | -       | 
|Balance at end of year       | $	2,568 |  |  | $	2,123 |  |  | $	1,658 | 

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 3 - LOANS** (Continued)

Impaired loans were as follows:

|                                                               | 2007   |  |  | 2006   |  |  | 2005   | 
|-------------------------------------------------------------- | ------ |  |  | ------ |  |  | ------ | 
|                                                               |        |  |  |        |  |  |        | 
|Period-end loans with no allocated allowance   for loan losses | $    - |  |  | $    - |  |  | $    - | 
|Period-end loans with allocated allowance   for loan losses    | -      |  |  | 172    |  |  | 174    | 
|Total                                                          | $    - |  |  | $  172 |  |  | $ 174  | 
|                                                               |        |  |  |        |  |  |        | 
|                                                               | 2007   |  |  | 2006   |  |  | 2005   | 
|                                                               |        |  |  |        |  |  |        | 
|Amount of the allowance for loan losses allocated              | $    - |  |  | $   86 |  |  | $   87 | 
|Average of impaired loans during the period                    | 43     |  |  | 173    |  |  | 225    | 
|Interest income recognized during impairment                   | -      |  |  | 10     |  |  | 10     | 
|Cash-basis interest income recognized                          | -      |  |  | 10     |  |  | 10     | 

Nonperforming loans were as follows:

|                                             | 2007      |  |  | 2006       |  |  | 2005   | 
|-------------------------------------------- | --------- |  |  | ---------- |  |  | ------ | 
|                                             |           |  |  |            |  |  |        | 
|Loans past due over 90 days still on accrual | $       - |  |  | $        - |  |  | $    - | 
|Nonaccrual loans                             | 1,249     |  |  | 2,089      |  |  | 1,163  | 

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

**NOTE 4 - ACCRUED INTEREST RECEIVABLE**

Accrued interest receivable is summarized as follows:

|                 | 2007    |  |  | 2006    | 
|---------------- | ------- |  |  | ------- | 
|                 |         |  |  |         | 
|Securities       | $  290  |  |  | $  406  | 
|Loans receivable | 1,922   |  |  | 1,573   | 
|Total            | $	2,212 |  |  | $	1,979 | 
|                 |         |  |  |         | 

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 5 - PREMISES AND EQUIPMENT**

Premises and equipment are summarized as follows:

|                                  | 2007     |  |  | 2006    | 
|--------------------------------- | -------- |  |  | ------- | 
|                                  |          |  |  |         | 
|Land                              | $	4,212  |  |  | $  840  | 
|Office buildings and improvements | 6,396    |  |  | 3,448   | 
|Furniture and equipment           | 4,477    |  |  | 3,743   | 
|Leasehold improvements            | 359      |  |  | -       | 
|Future branch site costs          | 331      |  |  | 3,032   | 
|                                  | 15,775   |  |  | 11,063  | 
|Less accumulated depreciation     | 4,919    |  |  | 4,540   | 
|                                  |          |  |  |         | 
|Total                             | $	10,856 |  |  | $	6,523 | 
|                                  |          |  |  |         | 

The table above includes the net book value of funds disbursed through September 30, 2007
relating to the relocation of our Bloomfield branch that is expected to open in January, 2008.
Additional capitalized costs estimated to total approximately $1.3 million are expected to be
paid in early fiscal 2008 relating to the completion of that branch.

The Company leases certain branch properties and equipment under operating leases.  Rent
expense was $49,477, $0 and $0 for fiscal years 2007, 2006, and 2005, respectively. Rent
commitments, before considering renewal options that generally are present, were as follows:

|2008       | $  100  | 
|---------- | ------- | 
|2009       | 230     | 
|2010       | 231     | 
|2011       | 231     | 
|2012       | 231     | 
|Thereafter | 2,784   | 
|Total      | $	3,807 | 

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 6 - DEPOSITS**

Deposit accounts are summarized as follows:

|                              | 2007      |  |  | 2006      | 
|----------------------------- | --------- |  |  | --------- | 
|                              |           |  |  |           | 
|Demand deposits               | $	30,494  |  |  | $	23,545  | 
|NOW and money market accounts | 111,795   |  |  | 31,429    | 
|Savings accounts              | 92,778    |  |  | 107,008   | 
|Certificates of deposit       | 193,533   |  |  | 165,165   | 
|Total deposits                | $	428,600 |  |  | $	327,147 | 

Certificates of deposit accounts with balances over $100,000 totaled $73,198,702 and $59,392,422
at September 30, 2007 and 2006, respectively.  All other deposit accounts with balances over
$100,000 totaled $115,307,591 and $86,490,684 at September 30, 2007 and 2006, respectively.
Generally, deposit balances over $100,000 are not federally insured.

Scheduled maturities of certificates of deposit were as follows:

|2008                | $155,610 | 
|------------------- | -------- | 
|2009                | 21,843   | 
|2010                | 1,673    | 
|2011                | 1,751    | 
|2012 and thereafter | 12,656   | 
|                    | $193,533 | 

**NOTE 7 - FEDERAL HOME LOAN BANK OF NEW YORK ADVANCES**

The Bank has $37.6 million of fixed rate advances with the Federal Home Loan Bank with
maturities through fiscal 2013 and fixed rates ranging from 3.79% to 6.18% at September 30,
2007.  None of the advances are callable prior to maturity.  One advance for $1.6 million with a
coupon of 4.57% has a five-year final maturity in June 2009, with a twenty-year amortization
schedule.  The remaining $36.0 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 $53.8 million of which $0 was drawn at September 30, 2007.  For the years ended
September 30, 2007 and 2006, the scheduled repayments and maturities of FHLB advances by
fiscal year are as follows:

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 7 - FEDERAL HOME LOAN BANK OF NEW YORK ADVANCES**(Continued)

|                         | September 30, 2007 | September 30, 2006
|------------------------ | ------------------ | ------------------
|                         | Balance            |                   
|Maturing in 2007         | $          -       |                   
|Maturing in 2008         | 12,065             |                   
|Maturing in 2009         | 7,547              |                   
|Maturing in 2010         | 6,000              |                   
|Maturing in 2011         | 6,000              |                   
|Maturing in 2012         | 5,000              |                   
|Maturing in 2013         | 1,000              |                   
|Overnight line of credit | -                  |                   
|                         | $37,612            |                   

At September 30, 2007, advances are secured primarily by mortgage loans totaling $81,422,361,
and all stock in the Federal Home Loan Bank totaling $2,553,400 under a blanket collateral
agreement for the amount of the notes outstanding.  Additionally, specific investment securities
with a carrying value totaling $4,165,293 also secure such advances.  At September 30, 2007, the
Bank's borrowing limit with the Federal Home Loan Bank was approximately $140.2 million.

**NOTE 8 - INCOME TAXES**

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

|                              | 2007  |   |  | 2006    |   |  | 2005    |  
|----------------------------- | ----- | - |  | ------- | - |  | ------- | -
|Current                       |       |   |  |         |   |  |         |  
|Federal                       | $	586 |   |  | $	1,507 |   |  | $	1,196 |  
|State and local               | 221   |   |  | 321     |   |  | 264     |  
|                              | 807   |   |  | 1,828   |   |  | 1,460   |  
|                              |       |   |  |         |   |  |         |  
|Deferred                      |       |   |  |         |   |  |         |  
|Federal                       | (362  | ) |  | (404    | ) |  | (193    | )
|State and local               | (271  | ) |  | (96     | ) |  | (84     | )
|                              | (633  | ) |  | (500    | ) |  | (277    | )
|                              |       |   |  |         |   |  |         |  
|Change in valuation allowance | -     |   |  | (20     | ) |  | 20      |  
|                              |       |   |  |         |   |  |         |  
|                              | $	174 |   |  | $	1,308 |   |  | $	1,203 |  

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 8 - INCOME TAXES**(Continued)

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

|                                             | 2007  |   |  | 2006    |   |  | 2005    |  
|-------------------------------------------- | ----- | - |  | ------- | - |  | ------- | -
|                                             |       |   |  |         |   |  |         |  
|Federal income tax expense at statutory rate | $	249 |   |  | $	1,170 |   |  | $	1,104 |  
|Increase in taxes resulting from             |       |   |  |         |   |  |         |  
|State income taxes, net of federal benefit   | (32   | ) |  | 135     |   |  | 132     |  
|Tax-exempt income from life insurance        | (159  | ) |  | (107    | ) |  | (92     | )
|Nondeductible ESOP expense                   | 53    |   |  | 44      |   |  | 46      |  
|Nondeductible stock options expense          | 53    |   |  | 49      |   |  | -       |  
|Other, net                                   | 10    |   |  | 17      |   |  | 13      |  
|Income tax expense                           | $	174 |   |  | $	1,308 |   |  | $	1,203 |  

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

|                                                 | 2007    |   |  | 2006    |  
|------------------------------------------------ | ------- | - |  | ------- | -
|Deferred tax assets                              |         |   |  |         |  
|Unrealized loss on securities available-for-sale | $  154  |   |  | $  515  |  
|Provision for loan losses                        | 1,032   |   |  | 848     |  
|Capital losses on security sales                 | 119     |   |  | 114     |  
|State of New Jersey Net Operating Loss (Bank)    | 90      |   |  | -       |  
|Accrued expenses and other liabilities           | 1,706   |   |  | 1,346   |  
|Total gross deferred tax assets                  | 3,101   |   |  | 2,823   |  
|                                                 |         |   |  |         |  
|Deferred tax liabilities                         |         |   |  |         |  
|Depreciation                                     | (168    | ) |  | (198    | )
|Deferred loan origination costs                  | (869    | ) |  | (815    | )
|Other                                            | (59     | ) |  | (207    | )
|Total gross deferred tax liabilities             | (1,096  | ) |  | (1,220  | )
|Valuation allowance                              | -       |   |  | -       |  
|                                                 |         |   |  |         |  
|Net deferred tax asset                           | $	2,005 |   |  | $	1,603 |  

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 8 - INCOME TAXES**(Continued)

Retained earnings includes allocations for federal income tax purposes representing tax bad
debt deductions of approximately $4,034,000 through September 30, 2007 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 $1,611,000.  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 9 - 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, 2007, 2006, and 2005 the Bank recorded expenses related to the
plan totaling $196,990, $64,165 and $476,860, respectively.  Expenses in 2005 included $444,000
related to an amendment to the plan by which retirement benefits would 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 the annual retainer paid
by the Bank only.   The balance of the accrued liability for the director's retirement plan at
September 30, 2007 was approximately $1,770,000.

The Bank has a 401(k) profit sharing plan covering substantially all employees.  Contributions
to the plan in fiscal 2007 and fiscal 2006 were limited to participant salary deferrals along with a
matching contribution provided by the Bank.   For the year ended September 30, 2007, 401(k)
matching contribution expense totaled $88,291.  Such costs in fiscal 2006 totaled $74,220.
Offsetting that cost in fiscal 2006 was the reversal of $131,250 of profit sharing expense that had
been accrued during fiscal 2005 for which no discretionary contribution to the plan was made
in 2006. Related expenses in fiscal 2005 totaled $247,906 which comprised $72,906 of 401(k)
matching contribution expense plus a total of $175,000 of discretionary plan contribution
expense.  Of the latter amount, $43,750 was actually contributed to the plan during fiscal 2005
and $131,250 that had been accrued was subsequently reversed during fiscal 2006 as noted.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 9 - BENEFIT PLANS**(Continued)

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, 2007, 2006 and 2005 Bank expenses related to the plan totaled $284,658, $226,371
and $235,611.  The Bank also purchased bank-owned life insurance on the individuals covered
by the supplemental executive retirement plan.  The cash surrender value of the Company's
bank-owned life insurance policies at September 30, 2007 was $13.2 million of which
approximately $9.9 million relate to policies originally purchased to provide income to offset
the costs of the Bank's supplemental executive retirement plans.  The remaining $3.3 million of
cash surrender value relate to policies that provide life insurance benefits primarily to the
Bank's senior officers.  The balance of the accrued liability for the supplemental executive
retirement plan at September 30, 2007 was approximately $1,271,000.

The Bank has entered into employment agreements with its Chief Executive Officer (CEO),
President & Chief Operating Officer (COO), and two Senior Vice Presidents (SVPs).  The CEO's
and President & COO's employment agreements have a term of three years while the two 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 two 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.

**NOTE 10 - EMPLOYEE STOCK OWNERSHIP PLAN**

As part of the minority stock offering, the Bank established an employee stock ownership plan
("ESOP") for the benefit of substantially all employees.  The ESOP borrowed $1,333,080 from
ASBH and used those funds to acquire 133,308 shares of ASBH stock at $10 per share.  As part
of the second step conversion, the ESOP borrowed $7,935,000 from the Company to acquire an
additional 793,500 shares of the Company's stock at $10 per share.  At the time of the closing of
the second step conversion, the unpaid balance of the first ESOP borrowing of approximately
$1,064,000 was combined with the balance of the second ESOP borrowing resulting in a total
ESOP borrowing obligation of approximately $8,999,000 to the Company.  Additionally, each of
the 133,308 ASBH shares held by the ESOP from the minority offering were exchanged for
2.55102 shares of the Company.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 10 - EMPLOYEE STOCK OWNERSHIP PLAN**(Continued)

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

ESOP activity for the years ended September 30, 2007, 2006 and 2005 and shares held by the
ESOP at the end of those periods are presented below.

|                                                                     | **2007**         | **2006**         | **2005**         
|-------------------------------------------------------------------- | ---------------- | ---------------- | -----------------
|Allocated to participants                                            | 131,509          | 80,408           | 43,146           
|Committed to be released                                             | 39,936           | 39,936           | 25,505           
|Unearned                                                             | 958,455          | 1,011,702        | 271,420          
|Total ESOP shares                                                    | 1,129,900        | 1,132,046        | 340,071          
|                                                                    
|Fair value of unearned shares                                        | $         10,418 | $         11,989 | $           2,975
|Fair value of allocated shares subject to      repurchase obligation | $           -    | $           -    | $     473        
|                                                                    
|ESOP compensation expense                                            | $      607       | $      580       | $     270        

The reported number of total shares and allocated shares held by the ESOP at September 30,
2007 each reflect the cumulative distribution of 3,671 allocated shares to participants in
accordance with the plan.  The original number of ESOP plan shares totaled 1,133,571 of which
a total of 135,180 have been allocated through September 30, 2007.

**NOTE 11 - OTHER STOCK-BASED COMPENSATION**

At the annual meeting held on January 20, 2005, stockholders of ASBH approved the ASB
Holding Company 2005 Stock Option Plan and the American Bank of New Jersey 2005
Restricted Stock Plan.  272,171 shares of common stock were made available under the 2005
Stock Option Plan.  On January 20, 2005, options to purchase 259,923 shares were awarded with
the remaining 12,248 shares awarded on May 6, 2005.  In addition, 81,651 shares of common
stock were made available under the 2005 Restricted Stock Plan.  On January 20, 2005, 76,752
shares of restricted stock were awarded with the remaining 4,899 shares awarded on May 6,
2005.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 11 - OTHER STOCK-BASED COMPENSATION**(Continued)

As of the closing of the Company's second step conversion on October 5, 2005, each of the
ASBH shares included in the 2005 Restricted Stock Plan and 2005 Stock Option Plan were
exchanged for 2.55102 shares of American Bancorp of New Jersey, Inc.  Consequently, awarded
shares under the 2005 Restricted Stock Plan and 2005 Stock Option Plan totaled 208,295 and
694,315, respectively, at that time.

At the annual meeting held on May 23, 2006, stockholders of ABNJ approved the American
Bancorp of New Jersey, Inc. 2006 Equity Incentive Plan.  Under this plan, 722,633 options on
shares of common stock and 358,484 restricted shares of common stock were made available.
All options and restricted shares relating to this plan were awarded on May 23, 2006.  As of that
date,  358,484 shares of ABNJ common stock were issued by the Company to fund the restricted
stock portion of the 2006 Equity Incentive Plan.  On June 6, 2006 the Company announced the
completion of its repurchase of the 208,295 shares relating to its 2005 Restricted Stock Plan and
its intent to repurchase up to 358,484 shares of its outstanding common stock relating to the
funding of the restricted stock portion of its 2006 Equity Incentive Plan.  Share repurchases to
fund the restricted stock portion of the 2006 Equity Incentive Plan were completed in the fourth
quarter of fiscal 2006.  The Company intends to reissue treasury shares to fund the exercise of
stock options in future periods.

Shares of common stock issuable pursuant to outstanding options under the 2005 Stock Option
Plan and 2006 Equity Incentive Plan are considered outstanding for purposes of calculating
earnings per share on a diluted basis.  The Company adopted FASB 123(R) on October 1, 2005.
Under that accounting requirement, the Company is now required to recognize compensation
expense related to stock options outstanding based upon the fair value of such awards at the
date of grant over the period that such awards are earned.  For the years ended September 30, 2007
and 2006, the Company recognized approximately $563,000 and $384,000, respectively, of compensation expense relating stock
options awarded through the 2005 Stock Option Plan and 2006 Equity Incentive Plan ("SOP"
options).  The Company recognized approximately $163,000 and $96,000, respectively, of
income tax benefit resulting from this expense for those periods.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 11 - OTHER STOCK-BASED COMPENSATION**(Continued)

For accounting purposes, the Company continues to recognize compensation expense for
restricted shares of common stock awarded under the 2005 Restricted Stock Plan and 2006
Equity Incentive Plan over the vesting period at the fair market value of the shares on the date
they are awarded.  For the year ended September 30, 2007, 2006 and 2005, the Company
recognized approximately $1,111,000, $637,000 and $207,000 respectively, of compensation
expense relating to restricted stock plan shares awarded through the 2005 Restricted Stock Plan
and 2006 Equity Incentive Plan ("RSP" shares).  The Company recognized approximately
$445,000, $254,000 and $83,000 of income tax benefit in fiscal 2007, 2006 and 2005 respectively,
resulting from this expense.

During the year ended September 30, 2007, the Company awarded the remaining 6,249 RSP
shares and 19,094 SOP options that were available under the Company's applicable benefit
plans.  Consequently, at September 30, 2007, all available shares and options relating to the 2005
Restricted Stock Plan, 2005 Stock Option Plan and the 2006 Equity Incentive Plan had been
awarded to participants.

As of September 30, 2007, there were approximately $1.7 million and $3.6 million, respectively
of total unrecognized compensation costs related to nonvested stock options and nonvested
restricted stock plan shares.   Those costs are expected to be recognized over a weighted-average
period of 3.2 and 3.4 years respectively.

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

|                                                           | **December 19,2006** |  | **May 23,2006** |  | **May 6,2005** |  | **January 20,2005** | 
|---------------------------------------------------------- | -------------------- |  | --------------- |  | -------------- |  | ------------------- | 
|**Options Awarded**                                        | ****                 |  |                 |  |                |  |                     | 
|                                                           |                      |  |                 |  |                |  |                     | 
|Risk free interest rate                                    | 4.56%                |  | 4.91%           |  | 3.95%          |  | 3.67%               | 
|                                                           |                      |  |                 |  |                |  |                     | 
|Expected option life                                       | 5.00                 |  | 5.00            |  | 5.00           |  | 5.00                | 
|                                                           |                      |  |                 |  |                |  |                     | 
|Expected stock price volatility                            | 12.17%               |  | 11.00%          |  | 22.00%         |  | 22.00%              | 
|                                                           |                      |  |                 |  |                |  |                     | 
|Dividend yield                                             | 1.35%                |  | 1.39%           |  | 0.00%          |  | 0.00%               | 
|                                                           |                      |  |                 |  |                |  |                     | 
|Weighted average fair value of
options granted during year | $	2.20               |  | $	2.11          |  | $	1.96         |  | $	1.86              | 

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 11 - OTHER STOCK-BASED COMPENSATION**(Continued)

A summary of the activity in the Company's stock option plans for the years ended September
30, 2007, 2006 and 2005 is as follows.

|                                               | For the years ended
|---------------------------------------------- | -------------------
|                                               | September 30, 2007 
|                                               | Shares             
|Outstanding at   
beginning of period          | 1,397,854          
|Granted                                        | 19,094             
|Exercised                                      | -                  
|Forfeited of expired                           | -                  
|Outstanding at end   
of period                | 1,416,948          
|                                               |                    
|Options exercisable   
at period end           | 417,094            
|Weighted average   
remaining
contractual life |                    

The aggregate intrinsic value of all outstanding stock options at
September 30, 2007 was approximately $2,742,000.  The aggregate intrinsic
value of all exercisable stock options outstanding at September 30, 2007 was approximately
$1,107,000.  There were no stock options outstanding and
exercisable at September 30, 2005.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 11 - OTHER STOCK-BASED COMPENSATION**(Continued)

A summary of the status of the Company's nonvested restricted stock plan shares as of
September 30, 2007, 2006 and 2005 and changes during the years ended September 30, 2007,
2006 and 2005 are as follows.

|                                      | For the years ended
|------------------------------------- | -------------------
|                                      | September 30, 2007 
|                                      | Shares             
|Outstanding at   
beginning of period | 520,126            
|Granted                               | 6,249              
|Vested                                | (112,094)          
|Forfeited or expired                  | -                  
|Outstanding at end   
of period       | 414,281            

The fair value at the vesting date of the restricted stock plan shares vested during the year
ended September 30, 2007 and 2006 was $1,276,276 and $413,700, respectively.  No restricted
stock plan shares vested in fiscal 2005.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 12 - 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:

|                              | 2007     | 2006    
|----------------------------- | -------- | --------
|                             
|Commitments to extend credit  | $	22,400 | $	19,045
|Unused lines of credit        | 29,210   | 23,541  
|Construction loans in process | 15,969   | 16,917  

Fixed rate loan commitments totaled $6,433,000 at September 30, 2007 and have interest rates
ranging from 5.875% to 7.375%.

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)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 13 - EARNINGS PER SHARE (EPS)**

Amounts reported as basic earnings per share of common stock reflect earnings available to
common stockholders for the period divided by the weighted average number of common
shares outstanding during the period less unearned ESOP shares.  Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue common stock (such
as stock awards and options) were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity.  Diluted EPS is
computed by dividing income by the weighted-average number of shares outstanding for the
period plus common-equivalent shares computed using the treasury stock method.  Weighted
average shares for 2005 have been adjusted to reflect the exchange of shares in the second step
conversion.

The factors used in the earnings per share computation follow.

|                                                                                     | **2007**          | **2006**          | **2005**         
|------------------------------------------------------------------------------------ | ----------------- | ----------------- | -----------------
|Basic                                                                                |                   |                   |                  
|Net income                                                                           | $          557    | $       2,133     | $          2,043 
|                                                                                     |                   |                   |                  
|Weighted average common shares      outstanding                                      | 11,526,179        | 13,021,667        | 13,892,396       
|                                                                                     |                   |                   |                  
|Basic earnings per common share                                                      | $            0.05 | $            0.16 | $            0.15
|                                                                                     |                   |                   |                  
|Diluted                                                                              |                   |                   |                  
|Net income                                                                           | $          557    | $       2,133     | $          2,043 
|                                                                                     |                   |                   |                  
|Weighted average common shares      outstanding for basic earnings per 	common
share | 11,526,179        | 13,021,667        | 13,892,396       
|                                                                                     |                   |                   |                  
|Add:  Dilutive effects of assumed      exercises of  stock options                   | 154,323           | 111,925           | 60,418           
|                                                                                     |                   |                   |                  
|Add:  Dilutive effects of full vesting of      stock  awards                         | 27,645            | 35,868            | 11,781           
|                                                                                     |                   |                   |                  
|Average shares and dilutive potential      common shares                             | 11,708,147        | 13,169,460        | 13,964,595       
|                                                                                     |                   |                   |                  
|Diluted earnings per common share                                                    | $            0.05 | $            0.16 | $            0.15

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 14 - REGULATORY CAPITAL REQUIREMENTS**

American Bancorp of New Jersey, Inc. 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.

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

|                                                     | Actual   |  | For CapitalAdequacyPurposes |       | To Be WellCapitalized UnderPrompt CorrectiveAction | 
|---------------------------------------------------- | -------- |  | --------------------------- | ----- | -------------------------------------------------- | 
|                                                     | Amount   |  |                             | Ratio |                                                    | 
|As of September 30, 2007                             |          |  |                             |       |                                                    | 
|Total capital (to risk-weighted      assets          | $	79,694 |  |                             | 22.45 | %                                                  | 
|Tier I capital (to risk-weighted     assets)         | 77,126   |  |                             | 21.72 |                                                    | 
|Tier I (core) capital (to adjusted     total assets) | 77,126   |  |                             | 13.74 |                                                    | 
|                                                     |          |  |                             |       |                                                    | 
|As of September 30, 2006                             |          |  |                             |       |                                                    | 
|Total capital (to risk-weighted     assets)          | $	84,658 |  |                             | 28.52 | %                                                  | 
|Tier I capital (to risk-weighted     assets)         | 82,621   |  |                             | 27.83 |                                                    | 
|Tier I (core) capital (to adjusted     total assets) | 82,621   |  |                             | 16.86 |                                                    | 

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 14 - REGULATORY CAPITAL REQUIREMENTS** (Continued)

As of September 30, 2007, 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.

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:

|                                             | 2007     | 2006    
|-------------------------------------------- | -------- | --------
|                                            
|GAAP equity                                  | $	76,839 | $	81,825
|Accumulated other comprehensive              | 287      | 796     
|Tier I capital                               | 77,126   | 82,621  
|General regulatory allowance for loan losses | 2,568    | 2,037   
|                                             |          |         
|Total capital                                | $	79,694 | $	84,658

Other than the funds held at the holding company level, the Company's principal source of
funds for dividend payments is dividends received from the Bank. Banking regulations limit
the amount of dividends that may be paid without prior approval of regulatory agencies.
Under these regulations, the amount of dividends that may be paid in any calendar year is
generally limited to the current year's net profits, combined with the retained net profits of the
preceding two years, subject to the capital requirements described above. Notwithstanding this
general limitation, during the fiscal year ended September 30, 2007, the Bank applied for, and
received, regulatory approval to pay two $4.0 million dividends to the holding company which
were distributed during the quarters ended June 30 and September 30, 2007.  The change in the
Bank's equity capital reported above reflects the $8.0 million in total dividends paid from the
Bank to the holding company during fiscal 2007.

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 15 - FAIR VALUE OF FINANCIAL INSTRUMENTS**

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

|                                                                | 2007           | 2006              
|--------------------------------------------------------------- | -------------- | ------------------
|                                                                | CarryingAmount | EstimatedFairValue
|Financial assets                                                |                |                   
|Cash and cash equivalents                                       | $	37,421       | $	37,421          
|Securities available-for-sale                                   | 58,093         | 58,093            
|Securities held-to-maturity                                     | 6,730          | 6,671             
|Loans receivable, net                                           | 437,883        | 436,811           
|Loans held for sale                                             | 1,243          | 1,260             
|Federal Home Loan Bank stock                                    | 2,553          | 2,553             
|Accrued interest receivable                                     | 2,212          | 2,212             
|                                                                |                |                   
|Financial liabilities                                           |                |                   
|Deposits                                                        | 428,600        | 428,737           
|Advance payments by      borrowers for taxes and      insurance | 2,702          | 2,702             
|Federal Home Loan Bank      advances                            | 37,612         | 37,872            
|Accrued interest payable                                        | 213            | 213               

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 15 - 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 16 - OTHER COMPREHENSIVE INCOME AND LOSS**

Other comprehensive income and loss components and related taxes were as follows.

|                                                                     | 2007  | 2006    | 2005   
|-------------------------------------------------------------------- | ----- | ------- | -------
|Unrealized holding gains (losses) on   available-for-sale securities | $	958 | $	(133) | $	(747)
|Reclassification adjustments for losses later   recognized in income | 11    | 271     | 16     
|Net unrealized gains and (losses)                                    | 969   | 138     | (731)  
|Tax effect                                                           | (361) | (60)    | 254    
|                                                                     |       |         |        
|Other comprehensive income (loss)                                    | $	608 | $	78    | $	(477)

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 17 - QUARTERLY FINANCIAL DATA (UNAUDITED)**

|               | Interest | Net Interest | Net    | Earnings per Share
|-------------- | -------- | ------------ | ------ | ------------------
|               | Income   | Income       | Income | Basic             
|2007           |          |              |        |                   
|First quarter  | $6,708   | $3,170       | $329   | $0.03             
|Second quarter | 7,159    | 3,057        | 150    | 0.01              
|Third quarter  | 7,508    | 3,064        | 150    | 0.01              
|Fourth quarter | 7,654    | 3,008        | (72)   | 0.00              
|               |          |              |        |                   
|2006           |          |              |        |                   
|First quarter  | $6,081   | $3,379       | $663   | $0.05             
|Second quarter | 6,239    | 3,466        | 688    | 0.05              
|Third quarter  | 6,432    | 3,399        | 464    | 0.04              
|Fourth quarter | 6,592    | 3,298        | 318    | 0.02              

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 18 - PARENT COMPANY FINANCIAL STATMENTS**

|**American Bancorp of New Jersey, Inc.
Condensed Statement of Financial Condition**
(In thousands, except share data)                                                                                                       | At September 30,
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------
|                                                                                                                                                                                                                            | 2007            
|**ASSETS**                                                                                                                                                                                                                  |                 
|Cash and cash equivalents                                                                                                                                                                                                   | $       3,263   
|Securities available-for-sale                                                                                                                                                                                               | 11,858          
|Investment in subsidiaries                                                                                                                                                                                                  | 76,837          
|ESOP note receivable from bank subsidiary                                                                                                                                                                                   | 8,541           
|Accrued interest receivable                                                                                                                                                                                                 | 46              
|Other assets                                                                                                                                                                                                                | 54              
|Total assets                                                                                                                                                                                                                | $   100,599     
|**LIABILITIES AND EQUITY**                                                                                                                                                                                                  |                 
|                                                                                                                                                                                                                            |                 
|Accrued expenses and other liabilities                                                                                                                                                                                      | $             6 
|Total liabilities                                                                                                                                                                                                           | 6               
|                                                                                                                                                                                                                            |                 
|Stockholders equity                                                                                                                                                                                                         |                 
|Preferred stock, $.10 par value, 10,000,000   shares authorized at September 30, 2007 and 2006;                                                                                                                             | -               
|                                                                                                                                                                                                                            |                 
|Common stock, $.10 par value, 20,000,000 shares authorized,   14,527,953 shares issued at September 30, 2007 and September 30, 2006,   11,946,190 and 14,163,220 outstanding   at September 30, 2007 and September 30, 2006 | 1,453           
|Additional paid in capital                                                                                                                                                                                                  | 113,607         
|Unearned ESOP shares                                                                                                                                                                                                        | (8,099)         
|Retained earnings                                                                                                                                                                                                           | 24,258          
|Treasury Stock; 2007 - 2,581,763, 2006 - 364,733 shares                                                                                                                                                                     | (30,353)        
|Accumulated other comprehensive loss                                                                                                                                                                                        | (273)           
|Total stockholders' equity                                                                                                                                                                                                  | 100,593         
|Total liabilities and stockholders' equity                                                                                                                                                                                  | $100,599        

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 18 - PARENT COMPANY FINANCIAL STATEMENTS**(Continued)

|**American Bancorp of New Jersey, Inc.Condensed Statement of Income**(In thousands, except share data) | For the years endedSeptember 30,
|------------------------------------------------------------------------------------------------------ | --------------------------------
|                                                                                                       | 2007                            
|                                                                                                       |                                 
|Interest income                                                                                        | $    1,480                      
|Dividends from subsidiaries                                                                            | 8,000                           
|Other income - (loss) on sales of securities available-for-sale                                        | (11)                            
|Interest expense                                                                                       | -                               
|Other expense                                                                                          | 296                             
|**Income before income tax and undistributed (overdistributed)   subsidiary income**                   | 9,173                           
|Provision (benefit) for income taxes                                                                   | 475                             
|Equity in undistributed (overdistributed) subsidiary income                                            | (8,141)                         
|Net income                                                                                             | $       557                     
|Earnings per share:                                                                                    |                                 
|Basic                                                                                                  | $       0.05                    
|Diluted                                                                                                | $       0.05                    

---

(Continued)



AMERICAN BANCORP OF NEW JERSEY, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2007, 2006, and 2005(Tables in Thousands)

---

**NOTE 18 - PARENT COMPANY FINANCIAL STATEMENTS**(Continued)

|**American Bancorp of New Jersey, Inc.Condensed Statement Cash Flows**(In thousands, except share data) | For the years endedSeptember 30,
|------------------------------------------------------------------------------------------------------- | --------------------------------
|                                                                                                        | 2007                            
|Cash flows from operating activities                                                                    |                                 
|Net Income                                                                                              | $        557                    
|Adjustments to reconcile net income to net cash   provided by operating activities                      |                                 
|Equity in overdistributed (undistributed)         earnings of subsidiary                                | 8,141                           
|Net amortization of premiums and discounts                                                              | (39)                            
|Losses on securities available-for-sale                                                                 | 11                              
|Decrease (increase) in accrued interest receivable                                                      | 94                              
|Decrease (increase) in other assets                                                                     | (210)                           
|Increase (decrease) in other liabilities                                                                | (13)                            
|Net cash provided by operating activities                                                               | 8,541                           
|                                                                                                        |                                 
|**Cash flows from investing activities**                                                                |                                 
|Decrease in loans receivable                                                                            | 237                             
|Purchases of securities available-for-sale                                                              | -                               
|Sales of securities available-for-sale                                                                  | 3,227                           
|Maturities of securities available-for-sale                                                             | 6,000                           
|Principal paydowns on securities available-for-sale                                                     | 4,230                           
|Net cash used in investing activities                                                                   | 13,694                          
|                                                                                                        |                                 
|**Cash flows from financing activities**                                                                |                                 
|Net proceeds from stock issuance                                                                        | -                               
|MHC Capital infusion                                                                                    | -                               
|RSP and treasury share purchases                                                                        | (26,049)                        
|Capital contribution to subsidiary                                                                      | -                               
|Cash dividends paid                                                                                     | (1,867)                         
|Net cash provided by (used in) financing activities                                                     | (27,916)                        
|Net change in cash and cash equivalents                                                                 | (5,681)                         
|Cash and cash equivalents at beginning of year                                                          | 8,944                           
|Cash and cash equivalents at end of year                                                                | $     3,263                     

---





**DIRECTORS AND OFFICERS**

|Directors of American Bancorp
of New Jersey and American
Bank of New Jersey
**Joseph Kliminski**
*Chief Executive Officer*
**Fred G. Kowal**
*President and Chief Operating
Officer*
**W. George Parker**
*Chairman of the Board
President and Retired Chief
Executive Officer of Adco
Chemical Company*
**James H. Ward III**
*Vice Chairman,
Retired Investor*
**Robert A. Gaccione**
*Partner of the law firm Gaccione,
Pomaco & Malanga P.C.*
**H. Joseph North**
*Retired Town Administrator of
Bloomfield, NJ*
**Vincent S. Rospond**
*Attorney and majority
stockholder of the law firm
Rospond, Rospond & Conte,  P.A.* | Officers of American
Bancorp of New Jersey
**Joseph Kliminski**
*Chief Executive Officer*
**Fred G. Kowal**
*President and Chief Operating
Officer*
**Eric B. Heyer**
*Sr. Vice President, Treasurer and
Chief Financial Officer*
**Richard M. Bzdek**
*Sr. Vice President, Corporate
Secretary* | Officers of American Bank
of New Jersey
**Joseph Kliminski**
*Chief Executive Officer*
**Fred G. Kowal**
*President and Chief Operating
Officer*
**Eric B. Heyer**
*Sr. Vice President, Treasurer and
Chief Financial Officer*
**Richard M. Bzdek**
*Sr. Vice President, Corporate
Secretary*
**Catherine M. Bringuier**
*Sr. Vice President, Chief
Lending Officer*
**Glenn Miller III**
*Sr. Vice President, Commercial
Real Estate Lending*
**Robert L. Cusick**
*Vice President, Construction Lending*
**Teresa W. Ko**
*Vice President, Commercial Loan
Underwriting*
**Josephine Castaldo**
*Vice President, Deposit
Operations/BSA Officer*
**Lois Anderson**
*Vice President, Branch
Administration*
**Robert A. Gaccione, Jr.**
*Vice President, Loan Origination*
**John Scognamiglio**
*Vice President, Controller*
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



**INVESTOR AND CORPORATE INFORMATION**

**Annual Meeting**

The Annual Meeting of Stock holders will be held at 8:30 a.m. local time, on February 26, 2008,
at The Wilshire Grand Hotel, 350 Pleasant Valley Way, West Orange, New Jersey.

**Stock Listing**

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

**Price Range of Common Stock**

Shares of American Bancorp of New Jersey, Inc. ("ABNJ") began trading on October 6, 2005
following the completion of the Company's second step conversion.  The high and low closing
prices for the common stock as reported on the NASDAQ Global Market, as well as the
dividends declare per share, are reflected in the table below.  Such information reflects inter-dealer prices, without retail markup, markdown or commission and may not represent actual
transactions.

|Fiscal Year 2007 | High   | Low      | Dividends
|---------------- | ------ | -------- | ---------
|First Quarter    | $12.24 | $  11.74 | $0.04    
|Second Quarter   | $12.02 | $ 11.50  | $0.04    
|Third Quarter    | $11.60 | $10.24   | $0.04    
|Fourth Quarter   | $11.10 | $10.24   | $0.04    

The combination of our regular quarterly dividends resulted in total cash dividends of $0.16
per share paid to public shareholders in fiscal 2007.

|Fiscal Year 2006 | High   | Low     | Dividends
|---------------- | ------ | ------- | ---------
|First Quarter    | $10.88 | $  9.75 | $0.04    
|Second Quarter   | $10.99 | $  9.90 | $0.04    
|Third Quarter    | $11.89 | $10.80  | $0.04    
|Fourth Quarter   | $12.09 | $11.57  | $0.04    

The combination of our regular quarterly dividends resulted in total cash dividends of $0.16
per share paid to public shareholders in fiscal 2006.

At December 7, 2007, there were 11,729,062 shares of American Bancorp of New Jersey, Inc
common stock issued and outstanding and approximately 845 stockholders of record.



**Stock Performance Graph**



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

**Annual Reports**

A copy of the Annual Report on Form 10-K without exhibits for the year ended September 30,
2007, 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.



**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

**Verona Branch**
     725 Bloomfield Avenue
     Verona, New Jersey 07044
     (973) 857-0856

**Nutley Branch**
     213 Harrison Street
     Nutley, New Jersey 07110
     (973) 798-6150

**Clifton Branch**
     500 Clifton Avenue
     Clifton, New Jersey 07011
     (973) 798-6250