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

                                    FORM 10-K
(Mark One)
[X]  Annual report pursuant to Section 13 or 15 (d) of the Securities Exchange
     Act of 1934

     For the fiscal year ended                 September 30, 2005
                               -------------------------------------------------
                                                    -OR-
[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
     For the transition period from             to              .
                                    -----------    -------------

                         Commission File Number: 0-51500
                                                 -------

                      AMERICAN BANCORP OF NEW JERSEY, INC.
                      ------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

          New Jersey                                           55-0897507
-------------------------------                             -------------------
(State or Other Jurisdiction of                             (I.R.S. Employer
 Incorporation or Organization)                             Identification No.)

365 Broad Street, Bloomfield, New Jersey                         07003
----------------------------------------                       ----------
(Address of Principal Executive Offices)                       (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Exchange Act:     None
                                                                      ----------

Securities registered pursuant to Section 12(g) of the Exchange Act:
                     Common Stock, par value $0.10 per share
                     ---------------------------------------
                                (Title of Class)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Exchange Act (Rule 12b-2). [ ] Yes [X] No

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Exchange Act Rule 12b-2). [ ] Yes [X] No

     The aggregate market value of the voting and non-voting  common equity held
by nonaffiliates of the registrant on March 31, 2005 was $0.

     As of December 20, 2005, the Registrant had outstanding  14,169,469  shares
of Common Stock.


                      DOCUMENTS INCORPORATED BY REFERENCE:
        1. Portions of the 2005 Annual Report to Stockholders. (Part II)



<PAGE>

                                     PART I

Forward-Looking Statements

     American Bancorp of New Jersey,  Inc. (the "Company" or  "Registrant")  may
from time to time make written or oral "forward looking  statements,"  including
statements  contained in the Company's  filings with the Securities and Exchange
Commission (including this Annual Report on Form 10-K and the exhibits thereto),
in its reports to stockholders and in other communications by the Company, which
are made in good faith by the Company  pursuant to the "safe harbor"  provisions
of the Private Securities Litigation Reform Act of 1995.

     These forward-looking  statements involve risks and uncertainties,  such as
statements  of the  Company's  plans,  objectives,  expectations,  estimates and
intentions that are subject to change based on various  important  factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and  the  strength  of  the  local  economies  in  which  the  Company  conducts
operations;  the effects of, and changes in,  monetary  and fiscal  policies and
laws,  including interest rate policies of the Board of Governors of the Federal
Reserve System, inflation, interest rates, market and monetary fluctuations; the
timely development of and acceptance of new products and services of the Company
and the  perceived  overall  value of these  products  and  services  by  users,
including the features, pricing and quality as compared to competitors' products
and services;  the impact of changes in financial  services laws and regulations
(including  laws   concerning   taxes,   banking,   securities  and  insurance);
technological  changes;  acquisitions;  changes in consumer  spending and saving
habits;  and the  success of the Company at managing  the risks  resulting  from
these factors.

     The Company cautions that the listed factors are not exclusive. The Company
does not undertake to update any forward-looking  statement,  whether written or
oral, that may be made from time to time by or on behalf of the Company.

Item 1.   Business.

General

     On  October  5, 2005,  American  Savings,  MHC (the  "MHC")  completed  its
reorganization  into stock form and the Company succeeded to the business of ASB
Holding  Company,  the MHC's  former  stock  holding  company  subsidiary.  Each
outstanding  share of common stock of the former  mid-tier stock holding company
(other than  shares  held by the MHC which were  canceled)  was  converted  into
2.55102 shares of common stock of the Company. As part of the second-step mutual
to stock conversion transaction, the Company sold a total of 9,918,750 shares to
eligible   depositors  of  American  Bank  of  New  Jersey  (the  "Bank")  in  a
subscription offering at $10.00 per share, including 793,500 shares purchased by
the Bank's employee stock ownership plan with funds borrowed from the Company.

     The Company is a New Jersey  corporation  that was incorporated in May 2005
for the purpose of being a holding  company for the Bank, a  federally-chartered
stock savings bank.  The Company is a unitary  savings and loan holding  company
and conducts no  significant  business or operations  of its own.  References in
this  Annual  Report  on  Form  10-K  to  the  Company  generally  refer  to the
consolidated  entity,

                                       2
<PAGE>

which includes the Bank, unless the context indicates  otherwise.  References to
"we,"  "us," or "our"  refer to the Bank or  Company,  or both,  as the  context
indicates.

     The Bank was originally founded in 1919 as the  American-Polish  Building &
Loan Association of Bloomfield,  New Jersey. It became a state-chartered savings
and loan association in 1948 and converted to a federally chartered savings bank
in 1995. The Bank's  deposits are federally  insured by the Savings  Association
Insurance Fund as administered by the Federal Deposit Insurance Corporation. The
Bank is regulated by the Office of Thrift  Supervision  and the Federal  Deposit
Insurance Corporation.

     Our core  business is using  retail  deposits in order to fund a variety of
mortgage and consumer loan products. We operate as a traditional community bank,
offering  retail  banking  services,  one- to four-family  residential  mortgage
loans, home equity loans and lines of credit,  multi-family and  non-residential
mortgage loans,  business and consumer loans. We also invest in  mortgage-backed
securities,  collateralized  mortgage-backed  obligations  and other  investment
securities.  The  principal  source  of  funds  for our  lending  and  investing
activities  is  retail  deposits,  supplemented  with  Federal  Home  Loan  Bank
borrowings.  Our results of  operations  depend  primarily  on our net  interest
income.  Net interest  income is the difference  between the interest  income we
earn on our interest-earning  assets and the interest we pay on interest-bearing
liabilities.  It is a function of the average  balances of loans and investments
versus deposits and borrowed funds  outstanding in any one period and the yields
earned  on those  loans  and  investments  and the cost of  those  deposits  and
borrowed funds.  Our  interest-earning  assets consist  primarily of residential
mortgage  loans,   multi-family  and  commercial  real  estate  mortgage  loans,
residential    mortgage-related   securities   and   U.S.   Agency   debentures.
Interest-bearing liabilities consist primarily of retail deposits and borrowings
from the Federal Home Loan Bank of New York.

Market Area

     Our main office is located in Bloomfield, New Jersey, and our branch office
is located in Cedar Grove,  New Jersey.  Our lending is concentrated in northern
New Jersey, and our predominant sources of deposits are the communities in which
our two offices are located as well as the neighboring communities. Our business
of attracting deposits and making loans is primarily conducted within our market
area. A downturn in the local economy could reduce the amount of funds available
for deposit and the ability of borrowers to repay their loans. As a result,  our
profitability could decrease.

Competition

     We face  substantial  competition in our attraction of deposits,  which are
our primary source of funds for lending,  and in our origination of loans.  Many
of our  competitors  are  significantly  larger  institutions  and have  greater
financial and managerial  resources.  Our ability to compete  successfully  is a
significant factor affecting our profitability.

     Our  competition  for deposits and loans  historically  has come from other
insured  financial  institutions  such as local and regional  commercial  banks,
savings  institutions,  and credit unions located in our primary market area. We
also  compete  with  mortgage  banking  companies  for real  estate  loans,  and
commercial  banks and  savings  institutions  for  consumer  loans;  and we face
competition for funds from investment products such as mutual funds,  short-term
money funds and corporate and government securities.

                                       3

<PAGE>

Lending Activities

     General.  We  have  traditionally  focused  on the  origination  of one- to
four-family  loans,  which  comprise a  significant  majority  of our total loan
portfolio.  We also  provide  financing  on  multi-family  dwellings,  mixed-use
properties  and  other  commercial  real  estate.   Commercial  business  loans,
construction loans, home equity loans and consumer loans make up the rest of the
total loan portfolio.

     Loan Portfolio Composition. The following table analyzes the composition of
our loan portfolio by loan category at the dates indicated.

<TABLE>
<CAPTION>
                                                                           At September 30
                                   -----------------------------------------------------------------------------------------------
                                          2005               2004               2003                2002               2001
                                   -----------------  ------------------  -----------------  ------------------  -----------------
                                   Amount    Percent   Amount    Percent   Amount   Percent   Amount    Percent   Amount   Percent
                                   ------    -------   ------    -------   ------   -------   ------    -------   ------   -------
                                                                        (Dollars in thousands)
<S>                              <C>         <C>     <C>         <C>    <C>         <C>     <C>         <C>    <C>        <C>
 Type of Loans:
 Mortgage loans
   One- to four-family
     real estate(1).............   $267,052    78.09%  $251,531    80.17% $215,984    81.59%  $167,564    79.06% $131,513   76.18%
   Multi-family and commercial
     real estate................     58,615    17.14     43,197    13.77    36,202    13.68     29,503    13.92    24,903   14.42
 Construction...................      1,450     0.42      7,175     2.29     1,233     0.47      4,875     2.30     9,402    5.45
 Consumer.......................        702     0.21        746     0.24       780     0.29        795     0.38       540    0.31
 Home equity....................     13,413     3.92     10,666     3.40     8,893     3.36      6,904     3.26     5,863    3.40
 Commercial.....................        746     0.22        398     0.13     1,610     0.61      2,298     1.08       417    0.24
                                   --------  -------  ---------  ------- ---------  -------  ---------  ------- ---------  ------


      Total loans receivable....    341,948   100.00%   313,713   100.00%  264,702   100.00%   211,939   100.00%  172,638  100.00%
                                              ======              ======             ======              ======            ======

 Less:
   Allowance for loan losses....     (1,658)             (1,578)            (1,371)             (1,117)            (1,009)
   Net deferred origination costs     1,036                 935                796                 673                532
   Loans in process.............       (350)             (4,100)              (783)             (3,121)            (5,839)
                                   --------            --------           --------            --------           --------

      Total loans receivable, net  $341,006            $308,970           $263,344            $208,374           $166,322
                                   ========            ========           ========            ========           ========
</TABLE>

--------------
(1)  Includes loans held for sale of $280,250 and $500,000 at September 30, 2005
     and September 30, 2003, respectively.


                                       4
<PAGE>

     Loan Maturity Schedule.  The following table sets forth the maturity of our
loan  portfolio at  September  30, 2005.  Demand  loans,  loans having no stated
maturity,  and overdrafts are shown as due in one year or less. This table shows
contractual  maturities  and  does  not  reflect  repricing  or  the  effect  of
prepayments. Actual maturities may differ.

<TABLE>
<CAPTION>
                                                                    At September 30, 2005
                            -----------------------------------------------------------------------------------------------------
                                            Multi-family
                            One- to Four-       and
                               Family        Commercial
                            Real Estate      Real Estate   Construction     Consumer      Home Equity     Commercial       Total
                            -----------     ------------   ------------     --------      -----------     ----------       -----
                                                                         (In thousands)
<S>                        <C>              <C>            <C>            <C>            <C>            <C>            <C>
Amounts Due:
Within 1 Year ..........     $     35         $    939       $  1,100       $    685       $     --       $    617       $  3,376
                             --------         --------       --------       --------       --------       --------       --------

After 1 year:
  1 to 5 years .........        2,191            1,391             --             17             71             70          3,740
  5 to 10 years ........       29,224            4,963             --             --          2,189             59         36,435
  10 to 15 years .......       59,212           17,367             --             --          6,398             --         82,977
  Over 15 years ........      176,390           33,955             --             --          4,755             --        215,100
                             --------         --------       --------       --------       --------       --------       --------

Total due after one year      267,017           57,676             --             17         13,413            129        338,252
                             --------         --------       --------       --------       --------       --------       --------
Total amount due .......     $267,052         $ 58,615       $  1,100       $    702       $ 13,413       $    746       $341,628
                             ========         ========       ========       ========       ========       ========       ========
</TABLE>



                                       5

<PAGE>

     The following  table sets forth the dollar amount of all loans at September
30, 2005 due after September 30, 2006, which have fixed interest rates and which
have floating or adjustable interest rates.

<TABLE>
<CAPTION>
                                                               Floating or
                                               Fixed Rates   Adjustable Rates     Total
                                               -----------   ----------------     -----
                                                              (In thousands)
<S>                                           <C>              <C>            <C>
One- to four-family real estate .........       $146,145         $120,872       $267,017
Multi-family and commercial real estate..         21,123           36,553         57,676
Construction ............................             --               --             --
Consumer ................................             17               --             17
Home equity .............................             --           13,413         13,413
Commercial ..............................             53               76            129
                                                --------         --------       --------
  Total .................................       $167,338         $170,914       $338,252
                                                ========         ========       ========
</TABLE>


     One-  to  Four-Family   Mortgage  Loans.   Our  primary  lending   activity
historically  has consisted of the  origination of one- to four-family  mortgage
loans,  most of which are  secured by property  located in northern  New Jersey.
While this type of loan will  continue to be the most  significant  component of
our total loan  portfolio,  we intend to emphasize the origination of commercial
real estate loans,  including  construction loans, and commercial and industrial
loans.

     We will  generally  originate  a one- to  four-family  mortgage  loan in an
amount up to 80% of the lesser of the appraised value or the purchase price of a
mortgaged  property.  For  loans  exceeding  this  guideline,  private  mortgage
insurance on the loan is typically required.

     Our  residential  loans are generally  originated  with fixed or adjustable
rates and have terms of ten to thirty years.  We also offer  mortgage loans with
bi-weekly  payments and recently began offering  mortgage loans with terms up to
forty years as well as fully  amortizing,  adjustable  rate loans with  interest
only payments for the first three to five years.  The majority of our adjustable
rate loan  products  provide for an interest  rate that is tied to the  one-year
Constant  Maturity U.S. Treasury index and have terms of up to thirty years with
initial fixed rate periods of one, three, five, seven, or ten years according to
the terms of the loan.  We also offer an  adjustable  rate loan with a rate that
adjusts every three years to the  three-year  Constant  Maturity  U.S.  Treasury
index.

     The  fixed  rate  mortgage  loans  that we  originate  generally  meet  the
secondary   mortgage  market   standards  of  the  Federal   National   Mortgage
Association.  For  the  purposes  of  interest  rate  risk  management,  we sell
qualifying one- to four-family  residential mortgages in the secondary market to
the Federal National  Mortgage  Association and other investors without recourse
and with  servicing  retained,  and we have  entered  into a master  selling and
servicing  agreement with the Federal National Mortgage  Association under which
the Bank sold $2.4 million in the year ended September 30, 2005, $4.8 million in
the year ended  September 30, 2004 and $9.4 million in the year ended  September
30, 2003.  Loan sales may increase or decrease in the future in connection  with
interest rate risk management.

     Substantially  all of our  residential  mortgages  include  "due  on  sale"
clauses,  which are provisions giving us the right to declare a loan immediately
payable if the borrower sells or otherwise transfers an interest in the property
to a third  party.  Property  appraisals  on real  estate  securing  our one- to
four-family   residential   loans  are  made  by  state  certified  or  licensed
independent  appraisers  approved  by the  Board of  Directors.  Appraisals  are
performed in accordance  with applicable  regulations  and policies.  We require
title  insurance  policies on all first  mortgage real estate loans  originated.
Homeowners,  liability, fire and, if required, flood insurance policies are also
required.


                                       6
<PAGE>

     Multi-family  and Commercial  Mortgage  Loans.  We also originate  loans on
multi-family and commercial real estate properties, including loans on apartment
buildings, retail/service properties, and other income-producing properties such
as mixed-use properties combining residential and commercial space. We generally
require no less than a 25% down payment or equity  position  for these  mortgage
loans.  Typically  these  loans  are  made  with  amortization  terms  of  up to
twenty-five  years. The majority of these loans are on properties located within
northern New Jersey and all are within the state.

     The multi-family and commercial mortgage loan portfolio has grown in recent
years,  however,  the  growth  of one- to  four-family  loans  has kept  pace so
multi-family  and  commercial  mortgage  loans as a percentage of the total loan
portfolio has remained fairly constant.  We are currently pursuing strategies to
grow this portfolio.

     Multi-family  and  commercial  mortgage  loans  generally are considered to
entail  significantly  greater  risk than that  which is  involved  with one- to
four-family  real estate  lending.  The  repayment  of these loans  typically is
dependent on the successful operations and income stream of the borrower and the
real estate  securing the loan as collateral.  These risks can be  significantly
affected by economic conditions. In addition,  commercial loans may carry larger
balances  to  single  borrowers  or  related  groups of  borrowers  than one- to
four-family  loans.  Furthermore,  this type of real  estate  lending  generally
requires  substantially  greater  evaluation and oversight  efforts  compared to
one-to-four family mortgage lending.

     Construction  Lending.  Essentially all of our  construction  lending is in
northern New Jersey. Our construction  lending includes loans to individuals for
construction of a primary  residence as well as loans to builders and developers
for single family, multi-unit and multi-house projects. We have no formal limits
as to  the  number  of  projects  a  builder  may  have  under  construction  or
development,  and make a case by case  determination  on loans to  builders  and
developers  who have multiple  projects  under  development.  In some cases,  we
convert a construction  loan to the permanent end mortgage loan upon  completion
of construction.

     Construction  lending is generally considered to involve a higher degree of
credit risk than long-term permanent financing of residential properties. If the
estimate of  construction  cost proves to be inaccurate,  we may be compelled to
advance additional funds to complete the construction with repayment  dependent,
in part,  on the success of the  ultimate  project  rather than the ability of a
borrower or  guarantor  to repay the loan.  If we are forced to  foreclose  on a
project  prior  to  completion,  there is no  assurance  that we will be able to
recover all of the unpaid  portion of the loan. In addition,  we may be required
to fund  additional  amounts  to  complete  a  project  and may have to hold the
property for an indeterminate period of time.

     Fluctuations in the outstanding  principal balance of our construction loan
portfolio  over the last  several  years  resulted  primarily  from our decision
during that time to reduce our origination of  construction  loans following the
retirement  of the loan  officer  who had  primarily  overseen  this  portfolio.
However, with the Bank's increasing strategic emphasis in commercial real estate
lending,  we expect that our construction  lending will grow,  particularly with
respect to  construction  loans to builders and  developers  for  multi-unit  or
multi-house projects.

     Consumer  Loans.  Consumer  loans  consist  of  savings  secured  loans and
unsecured  consumer  loans.  We will  generally  lend  up to 90% of the  account
balance on a savings  secured  loan.  At September  30, 2005,  we had $72,000 of
unsecured consumer loans.


                                       7
<PAGE>

     Consumer loans  generally have shorter terms and higher interest rates than
residential  loans.  The consumer  loan market can be helpful in  improving  the
spread between the average loan yield and the cost of funds and at the same time
improve the matching of rate sensitive assets and liabilities.

     Unsecured  consumer loans,  and consumer loans secured by collateral  other
than savings  accounts,  entail greater risks than  residential  mortgage loans.
Consumer  loan  repayment is dependent on the  borrower's  continuing  financial
stability  and is more likely to be  adversely  affected  by job loss,  divorce,
illness or personal  bankruptcy.  Finally,  the  application of various  federal
laws,  including federal and state bankruptcy and insolvency laws, may limit the
amount which can be recovered on consumer loans in the event of a default.

     Our  underwriting  standards for consumer loans include a determination  of
the applicant's  credit history and an assessment of the applicant's  ability to
meet existing  obligations  and payments on the proposed  loan. The stability of
the  applicant's  monthly  income may be  determined  by  verification  of gross
monthly income from primary  employment,  and  additionally  from any verifiable
secondary income.

     Home Equity  Loans.  Our home equity loan  portfolio  includes  home equity
lines of credit and second mortgage term loans.  Home equity lines of credit are
prime-based  loans that are adjusted  monthly.  Home equity loans are  primarily
originated in our market area and are generally  made in amounts of up to 80% of
value  on term  loans  and up to 80% of value on home  equity  lines of  credit.
During 2001, we began  offering  home equity loans on  investment  properties in
addition to loans on primary residences. Loans on investment properties are made
in  amounts  of up to 65% of value on term  loans and up to 60% of value of home
equity lines of credit.

     Generally,  our second  mortgage  loans have fixed rates for terms of up to
fifteen years.  Second  mortgages and home equity lines of credit do not require
title  insurance  but do require  homeowner,  liability,  fire and, if required,
flood insurance policies.

     Commercial  Loans.  We also originate  commercial  and industrial  business
loans to a variety of professionals,  sole proprietorships and small businesses,
primarily in our market area.  We have  recently  hired a commercial  lender and
intend to increase our commercial lending.

     These loans are generally  secured by real estate. We generally require the
personal  guarantee of the business owner.  Commercial  lending products include
term loans and lines of credit.  Our commercial  term loans generally have terms
from one to five years and are mostly fixed rate loans.  Our commercial lines of
credit have terms from one to three years and are mostly adjustable rate loans.

     Unlike  single-family  residential mortgage loans, which generally are made
on the  basis  of the  borrower's  ability  to make  repayment  from  his or her
employment  and other income and which are secured by real property  whose value
tends to be more easily  ascertainable,  commercial business loans typically are
made on the basis of the borrower's ability to make repayment from the cash flow
of the  borrower's  business.  As a result,  the  availability  of funds for the
repayment of commercial  business  loans may be  substantially  dependent on the
success of the business itself and the general economic environment.  Commercial
business loans,  therefore,  have greater credit risk than residential  mortgage
loans.  In  addition,  commercial  loans may  carry  larger  balances  to single
borrowers or related  groups of borrowers  than one- to  four-family  loans.  In
addition, commercial lending generally requires substantially greater evaluation
and oversight  efforts  compared to residential or  non-residential  real estate
lending.


                                       8
<PAGE>

     Loans to One  Borrower.  Under  federal  law,  savings  institutions  have,
subject to certain  exemptions,  lending  limits to one  borrower  or a group of
related  borrowers  in an amount  equal to the greater of $500,000 or 15% of the
institution's unimpaired capital and surplus.  Accordingly,  as of September 30,
2005, our loans to one borrower limit was approximately $5.7 million. Subsequent
to September 30, 2005, the limit increased to  approximately  $12.5 million as a
result of the additional capital from the second step conversion.

     At  September  30,  2005,  our largest  group of related  borrowers  had an
aggregate  balance  of  approximately  $4.8  million,  representing  4 loans  on
condominium   units,   9  loans  secured  by   multi-family   properties  and  2
single-family  residential  loans. At the same date, our second largest group of
related  borrowers  had an  aggregate  balance of  approximately  $3.0  million,
representing 4 loans secured by apartment buildings ranging from six units to 58
units.  Our  third  largest  group  of  related  borrowers  at that  date had an
aggregate balance of approximately $2.4 million, representing 2 loans secured by
apartment buildings,  1 loan on a mixed use commercial and residential property1
loan  on a  multi-family  property  and 1  single-family  residential  loan.  At
September 30, 2005, we had 4 additional  lending  relationships  exceeding  $2.0
million,  with  outstanding  balances at that date  ranging from $2.0 million to
$2.2 million. All of these lending  relationships were current and performing in
accordance with the terms of their loan agreements as of September 30, 2005.

     Loan  Originations,  Purchases,  Sales,  Solicitation  and Processing.  Our
customary sources of loan applications include repeat customers,  referrals from
realtors and other professionals, and "walk-in" customers.

     We  primarily  originate  our own loans and retain  them in our  portfolio.
Gross loan  originations  totaled $96.5 million for the year ended September 30,
2005.  Net of principal  repayments,  loan growth  totaled  approximately  $34.6
million for the year ended  September 30, 2005.  During the year ended September
30, 2004, we purchased $3.3 million of adjustable  rate mortgage  loans.  We did
not purchase any whole loans during the years ended  September 30, 2005 or 2003.
During the years ended September 30, 2005, 2004 and 2003, we sold loans totaling
$2.4 million, $4.8 million and $9.6 million,  respectively.  Loan sales are part
of our interest  rate risk  management  strategy and may increase or decrease in
the future.  We generally  sell loans on a  non-recourse  basis,  with servicing
retained.  At  September  30,  2005,  loans  serviced  for the benefit of others
totaled $15.9 million.

     We occasionally  purchase  participations in loans originated through other
lending institutions. At September 30, 2005, we had participations totaling $4.8
million from a New Jersey  thrift  institution  and $1.6 million from the Thrift
Institutions  Community  Investment  Corporation  of New Jersey  ("TICIC").  Our
participations   through  these  entities  are  secured  by  one-to-four  family
properties as well as multi-family or other non-one- to-four family  properties,
such as assisted living facilities.  We may also sell participation interests in
multi-family, commercial and other real estate loans or construction loans.

     Loan Commitments.  We give written commitments to prospective  borrowers on
all  residential  and  non-residential  mortgage  loans.  The  total  amount  of
commitments to extend credit for mortgage and consumer loans as of September 30,
2005, was approximately $21.3 million,  excluding commitments on unused lines of
credit of $16.0 million and undisbursed  portions of construction loans totaling
$350,000.

     Loan  Approval  Procedures  and  Authority.  Our lending  policies and loan
approval limits are  recommended by senior  management and approved by the Board
of Directors.  Our loan  origination  underwriter  has loan authority to approve
one-to  four-family  loans  up  to  $359,600,   the  Federal  National  Mortgage
Association  conforming  loan  limit.  Our  loan  origination  Manager  has loan
authority  to approve


                                       9
<PAGE>

one-to   four-family  loans  up  to  $500,000  with  Federal  National  Mortgage
Association  automated  underwriting  approvals.  Our Loan Committee consists of
Officers  Kliminski,  Kowal,  Bzdek and  Bringuier.  Each of these  officers has
authority to approve one-to four-family loans up to $750,000. One-to-four family
loans between $750,000 and $1,000,000 require two signatures from members of the
Loan Committee.  One-to  four-family  loans greater than $1,000,000  require the
approval of the Board of Directors.

     Loans  other than  one-to  four-family  loans up to  $750,000  require  two
signatures  from  members  of  Loan  Committee.  Approval  of  a  separate  loan
sub-committee  of the Board is required  for non one-to  four- family loans over
$750,000, or when aggregate exposure exceeds $1.5 million.

     Management  expects  that the Bank's  lending  policies  and loan  approval
limits will be modified in fiscal 2006 to reflect our growing strategic emphasis
in commercial and business lending.  As with existing  policies and limits,  any
such  changes  recommended  by  management  will be subject to Board of Director
approval.

Asset Quality

     Loan Delinquencies and Collection  Procedures.  The borrower is notified by
both mail and telephone when a loan is sixteen days past due. If the delinquency
continues,  subsequent  efforts are made to contact the delinquent  borrower and
additional  collection  notices and letters are sent. When a loan is ninety days
delinquent,  it is referred to an attorney for repossession or foreclosure.  All
reasonable  attempts are made to collect from borrowers  prior to referral to an
attorney for collection. In certain instances, we may modify the loan or grant a
limited  moratorium on loan  payments to enable the borrower to  reorganize  his
financial  affairs,  and we attempt to work with the  borrower  to  establish  a
repayment schedule to cure the delinquency.

     As to mortgage loans, if a foreclosure  action is taken and the loan is not
reinstated, paid in full or refinanced, the property is sold at judicial sale at
which we may be the buyer if there are no  adequate  offers to satisfy the debt.
Any  property  acquired  as the  result  of  foreclosure  or by  deed in lieu of
foreclosure  is  classified  as real estate  owned until it is sold or otherwise
disposed of. When real estate owned is acquired,  it is recorded at the lower of
the unpaid  principal  balance of the related loan or its fair market value less
estimated selling costs. The initial writedown of the property is charged to the
allowance for loan losses.  Adjustments  to the carrying value of the properties
that result from  subsequent  declines in value are charged to operations in the
period in which the  declines  occur.  At September  30,  2005,  we held no real
estate owned.

     Loans are reviewed on a regular basis and are placed on non-accrual  status
when  they are more  than  ninety  days  delinquent.  Loans  may be  placed on a
non-accrual status at any time if, in the opinion of management,  the collection
of additional  interest is doubtful.  Interest  accrued and unpaid at the time a
loan is placed  on  non-accrual  status  is  charged  against  interest  income.
Subsequent  payments are either applied to the outstanding  principal balance or
recorded  as  interest  income,  depending  on the  assessment  of the  ultimate
collectibility  of the loan. At September 30, 2005,  we had  approximately  $1.2
million of loans that were held on a non-accrual basis.


                                       10

<PAGE>

     Non-Performing  Assets. The following table provides information  regarding
our  non-performing  loans  and  other  non-performing  assets  as of the  dates
indicated.


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

<S>                                                     <C>        <C>        <C>        <C>        <C>
Loans accounted for on a non-accrual basis:
  One- to four-family .................................   $  952     $  445     $  147     $  147     $  309
  Multi-family, commercial and other ..................      101         74        369        423        287
  Construction ........................................       --         --         --         --         --
  Consumer ............................................       62         --          1         --         21
  Home equity .........................................       48         --         --         --         11
  Commercial ..........................................       --         --         --         --         --
                                                          ------     ------     ------     ------     ------
     Total ............................................   $1,163     $  519        517        570        628

Accruing loans contractually past due 90 days or more..       --         --         --         --         --
                                                          ------     ------     ------     ------     ------

Total non-performing loans ............................    1,163        519        517        570        628
Real estate owned .....................................       --         --         --         --         --
Other non-performing assets ...........................       --         --         --         --         --
                                                          ------     ------     ------     ------     ------

Total non-performing assets ...........................   $1,163     $  519     $  517     $  570     $  628
                                                          ======     ======     ======     ======     ======

Allowance for loan losses to non-performing loans.....    142.62%    304.05%    265.18%    195.96%    160.67%
Total non-performing loans to total loans ............      0.34%      0.17%      0.20%      0.27%      0.36%
Total non-performing loans to total assets ...........      0.21%      0.12%      0.12%      0.17%      0.24%
Total non-performing assets to total assets ..........      0.21%      0.12%      0.12%      0.17%      0.24%

</TABLE>

     During the year ended September 30, 2005,  gross interest income of $51,000
would have been recorded on loans accounted for on a non-accrual  basis if those
loans had been  current,  and $17,000 of interest on such loans was  included in
income for the year ended September 30, 2005.

     Classified  Assets.   Management,  in  compliance  with  Office  of  Thrift
Supervision ("OTS") guidelines,  has instituted an internal loan review program,
whereby non-performing loans are classified as substandard, doubtful or loss. It
is our  policy to review  the loan  portfolio,  in  accordance  with  regulatory
classification  procedures,  on at  least  a  quarterly  basis.  When a loan  is
classified  as  substandard  or  doubtful,  management  evaluates  the  loan for
impairment.  When  management  classifies a portion of a loan as loss, a reserve
equal to 100% of the loss amount is allocated against the loan.

     An asset is considered "substandard" if it is inadequately protected by the
paying capacity and net worth of the obligor or the collateral  pledged, if any.
Substandard assets include those characterized by the distinct  possibility that
the insured  institution  will  sustain  some loss if the  deficiencies  are not
corrected.  Assets classified as "doubtful" have all of the weaknesses  inherent
in  those  classified  substandard,  with  the  added  characteristic  that  the
weaknesses  present make  collection or liquidation in full highly  questionable
and  improbable,  on the basis of  currently  existing  facts,  conditions,  and
values.  Assets,  or  portions  thereof,  classified  as "loss"  are  considered
uncollectible  and of so little value that their  continuance  as assets without
the allocation of an impairment  reserve is not  warranted.  Assets which do not
currently  expose the  insured  institution  to a  sufficient  degree of risk to
warrant  classification in one of the


                                       11
<PAGE>

aforementioned  categories  but which  have  credit  deficiencies  or  potential
weaknesses are required to be designated "special mention" by management.

     Management's classification of assets is reviewed by the Board on a regular
basis and by the regulatory agencies as part of their examination  process.  The
following  table  discloses  our  classification  of assets and  designation  of
certain  loans as special  mention as of September  30, 2005.  At September  30,
2005, all of the classified  assets and special mention  designated  assets were
loans.

                                                        At
                                               September 30, 2005
                                               ------------------
                                                 (In thousands)

Special Mention.....................                 $ 1,295
Substandard.........................                   1,110
Doubtful............................                     174
Loss................................                       -
                                                     -------
  Total.............................                 $ 2,579
                                                     =======

     At September 30, 2005,  approximately  $1.1 million of loans  classified as
"substandard" were accounted for as non-performing loans. At September 30, 2005,
no loans  classified as "special  mention" or "doubtful"  were  accounted for as
non-performing loans.

     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 construction  loans,  multi-family  mortgage loans,  non-residential
mortgage loans and commercial  (non-mortgage)  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 both the
Bank and that of its regional peer group and (2) environmental factors. Although
there may be other  factors  that also  warrant  consideration,  we consider the
following environmental factors:

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


                                       12
<PAGE>

      o   industry conditions; and
      o   changes in credit concentration.

     In recent  years,  our  charge-offs  have been low and,  consequently,  our
estimation  of the  amount of losses in the loan  portfolio  both  probable  and
reasonable to estimate has been more reflective of other factors.

     Our allowance  estimation  methodology  utilizes historical loss experience
and environmental  factors such as the local and national  economy,  loan growth
rate, trends in delinquencies and  non-performing  loans,  experience of lending
personnel, and other similar factors. However, we have had significant growth in
recent years. As a result of the significant loan growth, a large portion of our
loan  portfolio  is  considered   "unseasoned,"  meaning  that  the  loans  were
originated less than three years ago. Generally,  unseasoned loans demonstrate a
greater risk of credit losses than their  seasoned  counterparts.  Moreover,  in
many cases,  these  unseasoned  loans are obligations of borrowers with whom the
Bank has had no prior payment experience.  In the absence of adequate historical
loss  experience  upon which the Bank can base its allowance  calculations,  the
Bank includes peer group  information in its  evaluation of the  allowance.  The
peer group information  utilized by the Bank is that of OTS regulated thrifts in
the northeast  region.  Management  believes that the majority of thrifts in the
northeast region have similar loan portfolio composition.

     This  estimation  is  inherently  subjective  as it requires  estimates and
assumptions  that are susceptible to significant  revisions as more  information
becomes available or as future events change.  Future additions to the allowance
for loan losses may be necessary if economic and other  conditions in the future
differ substantially from the current operating  environment.  In addition,  the
OTS as an integral part of its  examination  process,  periodically  reviews our
loan and foreclosed  real estate  portfolios and the related  allowance for loan
losses and valuation  allowance for foreclosed real estate.  The OTS may require
the  allowance for loan losses or the valuation  allowance for  foreclosed  real
estate to be increased based on its review of information  available at the time
of the examination, which would negatively affect our earnings.

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


                                       13

<PAGE>

     The following  table sets forth  information  with respect to our allowance
for loan losses for the periods indicated:


<TABLE>
<CAPTION>
                                                                    Year Ended September 30,
                                                    ----------------------------------------------------------
                                                      2005        2004        2003        2002         2001
                                                    ---------   ---------   ---------   ---------    ---------
                                                                     (Dollars in thousands)

<S>                                              <C>         <C>         <C>         <C>          <C>
Allowance balance at beginning of period........   $   1,578   $   1,371   $   1,117   $   1,009    $   1,003

Provision for loan losses ......................          81         207         254         105            2

Charge-offs:
  One- to four-family real estate ..............          --          --          --          --           --
  Consumer .....................................          --          --          --          (1)          --
                                                   ---------   ---------   ---------   ---------    ---------
     Total charge-offs .........................          --          --          --          (1)          --
                                                   ---------   ---------   ---------   ---------    ---------

Recoveries:
  Consumer .....................................          --          --          --           4            4
                                                   ---------   ---------   ---------   ---------    ---------
     Total recoveries ..........................          --          --          --           4            4
                                                   ---------   ---------   ---------   ---------    ---------
Net (charge-offs) recoveries ...................          --          --          --           3            4
                                                   ---------   ---------   ---------   ---------    ---------
Allowance balance at end of period .............   $   1,658   $   1,578   $   1,371   $   1,117    $   1,009
                                                   =========   =========   =========   =========    =========
Total loans outstanding at end of period........   $ 341,978   $ 313,713   $ 264,702   $ 211,939    $ 172,638
                                                   =========   =========   =========   =========    =========
Average loans outstanding during period........    $ 327,948   $ 278,632   $ 238,474   $ 186,974    $ 150,938
                                                   =========   =========   =========   =========    =========
Allowance as a % of total loans................         0.48%       0.50%       0.52%       0.53%        0.58%

Net loans charge-offs as a % of average loans..         0.00%       0.00%       0.00%       0.00%        0.00%
</TABLE>


                                       14
<PAGE>

     Allocation of Allowance for Loan Losses. The following table sets forth the
allocation  of our allowance for loan losses by loan category and the percent of
loans in each category to total loans  receivable,  net, at the dates indicated.
The portion of the loan loss allowance  allocated to each loan category does not
represent the total  available for future losses which may occur within the loan
category  since  the  total  loan  loss  allowance  is  a  valuation  allocation
applicable to the entire loan portfolio.

<TABLE>
<CAPTION>
                                                                           At September 30
                                 --------------------------------------------------------------------------------------------------
                                         2005                2004                2003               2002                  2001
                                 -------------------  ------------------  -----------------  ------------------   ------------------


                                            Percent             Percent            Percent             Percent              Percent
                                            of Loans            of Loans           of Loans            of Loans             of Loans
                                            to Total            to Total           to Total            to Total             to Total
                                  Amount     Loans    Amount     Loans    Amount    Loans    Amount     Loans     Amount     Loans
                                  ------    --------  ------    --------  ------   --------  ------    --------   ------    --------
                                                                        (Dollars in thousands)

<S>                            <C>       <C>       <C>       <C>       <C>       <C>      <C>         <C>      <C>         <C>
At end of period allocated to:
  One- to four-family real
     estate ..................   $  782     78.09%   $  777     80.17%   $  685     81.59%  $  531       79.06%  $  366       76.18%
  Multi-family and commercial
    real estate ..............      737     17.14       680     13.77       566     13.68      452       13.92      463       14.42
  Construction ...............       12      0.42        21      2.29         3      0.47       13        2.30       55        5.45
  Consumer ...................        4      0.21         4      0.24         3      0.29        3        0.38        2        0.31
  Home equity ................       63      3.92        43      3.40        37      3.36       29        3.26       36        3.40
  Commercial .................       16      0.22         9      0.13        34      0.61       46        1.08       11        0.24
  Unallocated ................       44        --        44        --        43        --       43          --       76          --
                                 ------    ------    ------    ------    ------    ------   ------      ------   ------      ------
     Total allowance .........   $1,658    100.00%   $1,578    100.00%   $1,371    100.00%  $1,117      100.00%  $1,009      100.00%
                                 ======    ======    ======    ======    ======    ======   ======      ======   ======      ======
</TABLE>





                                       15

<PAGE>

Securities Portfolio

     General.  Federally chartered savings banks have the authority to invest in
various types of liquid assets.  The investments  authorized by the Bank's board
approved  investment  policy  include  U.S.  government  and  government  agency
obligations,  mortgage-related securities of various U.S. government agencies or
government-sponsored   entities  and  private   corporate   issuers   (including
securities  collateralized  by mortgages),  certificates  of deposits of insured
banks and savings  institutions  and municipal  securities.  Our policy does not
permit corporate  non-residential  mortgage related  securities.  Our investment
securities  portfolio at September  30, 2005 did not contain  securities  of any
issuer with an  aggregate  book value in excess of 10% of our equity,  excluding
those issued by the United  States  Government  or its  agencies,  other than an
investment in an adjustable  rate mortgage  mutual fund with a carrying value of
approximately $9.7 million at September 30, 2005.

     Statement  of  Financial  Accounting  Standards  No. 115,  "Accounting  for
Certain Investments in Debt and Equity Securities,"  requires that securities be
categorized as "held-to-maturity," "trading securities" or "available-for-sale,"
based on  management's  intent as to the ultimate  disposition of each security.
Statement No. 115 allows debt securities to be classified as  "held-to-maturity"
and reported in financial  statements  at amortized  cost only if the  reporting
entity has the positive intent and ability to hold these securities to maturity.
Securities  that might be sold in response to changes in market  interest rates,
changes in the security's  prepayment risk,  increases in loan demand,  or other
similar factors cannot be classified as "held-to-maturity."

     We do not  currently  use or  maintain a trading  account.  Securities  not
classified as "held-to-maturity" are classified as  "available-for-sale."  These
securities are reported at fair value,  and  unrealized  gains and losses on the
securities are excluded from earnings and reported,  net of deferred taxes, as a
separate component of equity.

     All of our securities  carry market risk insofar as changes in market rates
of  interest  may  cause a  decrease  in  their  market  value.  Investments  in
securities are made based on certain considerations,  which include the interest
rate, tax considerations,  yield,  settlement date and maturity of the security,
our liquidity position,  and anticipated cash needs and sources. The effect that
the  proposed  security  would  have on our credit  and  interest  rate risk and
risk-based  capital  is also  considered.  We  purchase  securities  to  provide
necessary  liquidity  for  day-to-day  operations,  to aid in the  management of
interest rate risk and when investable funds exceed loan demand.

     Our  investment  policy,  which is approved by the Board of  Directors,  is
designed to foster  earnings and  liquidity  within  prudent  interest rate risk
guidelines,   while  complementing  our  lending  activities.   Generally,   our
investment  policy is to invest funds in various  categories of  securities  and
maturities based upon our liquidity needs,  asset/liability management policies,
investment   quality,    marketability   and   performance    objectives.    The
Asset/Liability Management Committee,  comprised of Joseph Kliminski, the Bank's
Chief Executive  Officer,  Fred Kowal,  the Bank's President and Chief Operating
Officer,  Richard  Bzdek,  the Bank's  Executive  Vice  President  and Corporate
Secretary,  Eric Heyer,  the Bank's Senior Vice  President  and Chief  Financial
Officer, Catherine Bringuier, the Bank's Senior Vice President and Chief Lending
Officer, Josephine Castaldo, the Bank's Vice President of Branch Administration,
and John Scognamiglio,  the Bank's Vice President and Controller, is responsible
for the  administration  of the securities  portfolio.  This committee  conducts
regular, informal meetings,  generally on a weekly basis, and meets quarterly to
formally review the Bank's securities portfolio.  The results of the committee's
quarterly  review are reported to the full Board,  which makes adjustment to the
investment policy and strategies as it considers necessary and appropriate.


                                       16
<PAGE>

     We do not currently  participate in hedging  programs,  interest rate caps,
floors or swaps,  or other  activities  involving the use of  off-balance  sheet
derivative financial instruments,  but we may do so in the future as part of our
interest rate risk management. Further, we do not invest in securities which are
not rated investment grade.

     Actual  maturities of the securities held by us may differ from contractual
maturities because issuers may have the right to call or prepay obligations with
and without prepayment penalties.

     Mortgage-related   Securities.   Mortgage-related  securities  represent  a
participation  interest  in a  pool  of  one-  to  four-family  or  multi-family
mortgages, although we focus primarily on mortgage-related securities secured by
one-  to  four-family  mortgages.  Our  mortgage-related   securities  portfolio
includes  mortgage-backed  securities and  collateralized  mortgage  obligations
issued by U.S. government  agencies or  government-sponsored  entities,  such as
Federal  Home  Loan  Mortgage  Corporation,  the  Government  National  Mortgage
Association,  and  the  Federal  National  Mortgage  Association,  as well as by
private  corporate  issuers.  The  portfolio  also  includes an investment in an
adjustable  rate mortgage  mutual fund,  with a carrying value of  approximately
$9.7 million at September 30, 2005.

     The mortgage originators use intermediaries  (generally government agencies
and  government-sponsored  enterprises,  but also a variety of private corporate
issuers)  to pool  and  repackage  the  participation  interests  in the form of
securities,  with  investors  such as us receiving  the  principal  and interest
payments on the  mortgages.  Securities  issued or sponsored by U.S.  government
agencies and  government-sponsored  entities are guaranteed as to the payment of
principal and interest to investors. Privately issued securities typically offer
rates above those paid on government agency issued or sponsored securities,  but
lack the guaranty of those agencies and are generally  less liquid  investments.
In the absence of an agency guarantee, our policy requires that we purchase only
privately-issued mortgage-related securities that have been assigned the highest
credit rating (AAA) by the applicable  securities rating agencies.  Limiting our
purchases of  privately-issued  mortgage-related  securities to those with a AAA
rating  reduces  our  added  credit  risk in  purchasing  non-agency  guaranteed
securities.  Moreover,  because there is a robust secondary market for AAA-rated
privately-issued   mortgage-related  securities,  much  of  the  liquidity  risk
otherwise associated with our investment in non-agency securities is mitigated.

     Mortgage-backed  securities are  pass-through  securities  typically issued
with  stated  principal  amounts,  and the  securities  are  backed  by pools of
mortgages  that have loans with interest  rates that are within a specific range
and  have  varying  maturities.  The  life of a  mortgage-backed  security  thus
approximates the life of the underlying  mortgages.  Mortgage-backed  securities
generally  yield less than the mortgage  loans  underlying the  securities.  The
characteristics  of the  underlying  pool  of  mortgages,  i.e.,  fixed-rate  or
adjustable-rate,  as well as prepayment  risk, are passed on to the  certificate
holder.  Mortgage-backed  securities  are  generally  referred  to  as  mortgage
participation certificates or pass-through certificates.


                                       17
<PAGE>

     Collateralized mortgage obligations are  mortgage-derivative  products that
aggregate pools of mortgages and mortgage-backed securities and create different
classes of securities with varying maturities and amortization schedules as well
as a residual  interest with each class having  different risk  characteristics.
The  cash  flows  from  the  underlying  collateral  are  usually  divided  into
"tranches" or classes whereby  tranches have descending  priorities with respect
to the  distribution  of  principal  and interest  repayment  of the  underlying
mortgages   and   mortgage-backed   securities   as  opposed  to  pass   through
mortgage-backed  securities  where  cash flows are  distributed  pro rata to all
security  holders.  Unlike  mortgage-backed  securities  from which cash flow is
received and prepayment risk is shared pro rata by all securities holders,  cash
flows   from   the   mortgages   and   mortgage-backed   securities   underlying
collateralized  mortgage obligations are paid in accordance with a predetermined
priority to investors holding various tranches of the securities or obligations.
A particular  tranche or class may carry  prepayment risk which may be different
from  that  of the  underlying  collateral  and  other  tranches.  Investing  in
collateralized  mortgage  obligations  allows us to better manage the prepayment
and extension risk associated  with  conventional  mortgage-related  securities.
Management believes  collateralized  mortgage  obligations  represent attractive
alternatives  relative to other investments due to the wide variety of maturity,
repayment  and  interest  rate  options   available.   At  September  30,  2005,
collateralized  mortgage  obligations  comprised $28.3 million of our securities
portfolio.

     Other Securities. In addition, at September 30, 2005 we held an approximate
investment  of $3.1  million in Federal  Home Loan Bank of New York common stock
(this  amount  is not  shown in the  securities  portfolio).  As a member of the
Federal  Home Loan Bank of New York,  ownership of Federal Home Loan Bank of New
York common shares is required.

     The  following  table  sets  forth  the  carrying  value of our  securities
portfolio at the dates indicated. Securities that are held-to-maturity are shown
at our amortized cost, and securities that are  available-for-sale  are shown at
the current market value.

<TABLE>
<CAPTION>
                                                                           At September 30,
                                                           --------------------------------------------------
                                                               2005            2004              2003
                                                               ----            ----              ----
                                                                            (In thousands)
<S>                                                        <C>            <C>                <C>
Securities Held-to-Maturity:
----------------------------

  U.S. government and federal agency obligation........      $   2,000      $      --          $       --
  Collateralized mortgage non-agency obligations.......          2,503             --                  --
  Collateralized mortgage agency obligations...........             76            107                 193
  Government National Mortgage Association.............            244            327                 476
  Federal Home Loan Mortgage Corporation...............            385            490                 657
  Federal National Mortgage Association................          2,616          1,870               1,513
                                                             ---------      ---------          ----------
    Total securities held-to-maturity..................          7,824          2,794               2,839
                                                             ---------      ---------          ----------

Securities Available-for-Sale:
------------------------------
  U.S. government and federal agency obligation........          9,805         13,840              13,484
  Collateralized mortgage non-agency obligations.......             --          1,234               4,962
  Collateralized mortgage agency obligations...........         25,763         42,870              61,685
  Government National Mortgage Association.............            148            202                 320
  Federal Home Loan Mortgage Corporation...............          4,090          5,219                 346
  Federal National Mortgage Association................         12,782         16,261              16,664
  Mutual fund..........................................          9,749          9,869               9,930
                                                             ---------      ---------          ----------
    Total securities available-for-sale................         62,337         89,495             107,391
                                                             ---------      ---------          ----------

    Total..............................................      $  70,161      $  92,289          $  110,230
                                                             =========      =========          ==========
</TABLE>


                                       18
<PAGE>

     The following table sets forth certain  information  regarding the carrying
values,   weighted   average   yields  and  maturities  of  our  investment  and
mortgage-backed  securities  portfolio at September  30, 2005.  This table shows
contractual  maturities  and  does  not  reflect  repricing  or  the  effect  of
prepayments. Actual maturities may differ.

<TABLE>
<CAPTION>
                                                                  At September 30, 2005
                               -----------------------------------------------------------------------------------------------------

                               One Year or Less  One to Five Years  Five to Ten Years  More than Ten Years      Total Securities
                               ----------------  -----------------  -----------------  -------------------      ----------------

                               Carrying Average  Carrying  Average  Carrying  Average  Carrying Average    Carrying  Average  Market
                                Value    Yield    Value     Yield     Value    Yield    Value    Yield      Value     Yield    Value
                               -------- -------  --------  -------  --------  -------  -------- -------    --------  -------  ------

                                                                                      (Dollars in thousands)

<S>                          <C>       <C>     <C>        <C>     <C>       <C>       <C>      <C>       <C>        <C>    <C>
U.S. Government and Federal
 Agency ....................   $ 4,947   2.08%   $ 6,858    2.61%   $    --     -- %    $    --    --%     $11,805    2.39%  $11,767

Mortgage-backed non-agency
 obligations ...............        --     --      2,503    3.85         --     --           --    --        2,503    3.85     2,434

Government National Mortgage
 Association ...............        --     --          4    6.90         --     --          738  2.73          742    2.75       744

Federal Home Loan Mortgage
 Association ...............        --     --      1,246    3.24      6,570   2.95       14,422  3.28       22,238    3.18    22,239

Federal National Mortgage
 Association ...............        --     --         --      --     12,339   3.40       10,785  3.67       23,124    3.52    23,099
                               -------           -------            -------             -------            -------           -------

  Total ....................   $ 4,947   2.08%   $10,611    2.98%   $18,909   3.24%     $25,945  3.40%     $60,412    3.18%  $60,283
                               =======           =======            =======             =======            =======           =======
</TABLE>


                                       19

<PAGE>
Sources of Funds

     General.  Deposits  are our major  source of funds  for  lending  and other
investment purposes.  In addition, we derive funds from loan and mortgage-backed
securities principal repayments,  and proceeds from the maturity,  call and sale
of  mortgage-backed  securities and investment  securities.  Loan and securities
payments are a relatively  stable  source of funds,  while  deposit  inflows are
significantly  influenced by general interest rates and money market conditions.
Borrowings  (principally  from the  Federal  Home  Loan  Bank)  are also used to
supplement the amount of funds for lending and investment.

     Deposits.  Our current deposit products include  checking,  savings,  money
market,  club accounts,  certificates of deposit  accounts ranging in terms from
thirty days to ten years, and individual  retirement  accounts.  Deposit account
terms vary,  primarily as to the required minimum balance amount,  the amount of
time that the funds must remain on deposit and the applicable interest rate.

     Deposits are obtained primarily from within New Jersey. Traditional methods
of advertising  are used to attract new customers and deposits,  including print
media,  cable  television,  direct  mail  and  inserts  included  with  customer
statements.  We have not in the past  utilized the services of deposit  brokers,
however,  our current  growth  strategy  includes a modest  brokered CD program.
Although we did offer special savings programs in connection with the opening of
our Cedar Grove branch office,  premiums or incentives for opening  accounts are
generally not offered. We periodically select particular  certificate of deposit
maturities for promotion.

     The  determination  of  interest  rates is based upon a number of  factors,
including:  (1) our need for funds based on loan demand,  current  maturities of
deposits and other cash flow needs; (2) a current survey of general market rates
and rates of a selected group of competitors'  rates for similar  products;  (3)
our current  cost of funds and yield on assets;  and (4) the  alternate  cost of
funds on a wholesale  basis, in particular the cost of advances from the Federal
Home Loan Bank.  Interest  rates are reviewed by senior  management  on a weekly
basis.

     At September  30,  2005,  $152.8  million or 44.8% of our deposits  were in
certificates of deposit.  Our liquidity could be reduced if a significant amount
of  certificates  of deposit,  maturing  within a short period of time, were not
renewed.  Historically,  a significant  portion of the  certificates  of deposit
remain  with us after  they  mature  and we  believe  that this  will  continue.
However,  the need to retain these time deposits  could result in an increase in
our cost of funds.

     At September  30, 2005,  we had  approximately  $24.2  million of municipal
deposits at the Bank. Of these deposits,  approximately  $14.0 million represent
funds held by municipalities  associated with capital improvement projects.  The
Bank  expects  a  significant  portion  of these  funds to be  withdrawn  during
calendar year 2006 as disbursements  are made by the  municipalities to fund the
completion of such projects.


                                       20

<PAGE>

     The following table sets forth the  distribution of deposits at the Bank at
the dates  indicated and the weighted  average  nominal  interest rates for each
period on each category of deposits presented.


<TABLE>
<CAPTION>
                                                                     At September 30
                            -----------------------------------------------------------------------------------------------------
                                         2005                             2004                                2003
                            ------------------------------   --------------------------------   ---------------------------------

                                                  Weighted                           Weighted                            Weighted
                                        Percent   Average                 Percent     Average                Percent      Average
                                       of Total   Nominal                 of Total    Nominal                of Total     Nominal
                              Amount   Deposits     Rate         Amount   Deposits     Rate        Amount    Deposits      Rate
                              ------   --------     ----         ------   --------     ----        ------    --------      ----

<S>                       <C>        <C>         <C>        <C>         <C>         <C>       <C>         <C>            <C>
Non-interest-bearing
   demand deposits........  $  25,583    7.50%       --%      $  22,599     7.00%       --%     $  21,676     7.40%          --%

Interest-bearing
   demand deposits........     39,264   11.52      1.87          38,696    11.99      1.06         21,721     7.42         0.98


Savings deposits..........    123,270   36.16      1.68         143,401    44.44      1.60        127,720    43.62         1.60

Time deposits.............    152,808   44.82      3.45         118,020    36.57      2.65        121,709    41.56         2.55
                            ---------  ------      ----       ---------   ------      ----      ---------   ------         ----

     Total deposits.......  $ 340,925  100.00%     2.37%      $ 322,716   100.00%     1.81%     $ 292,826   100.00%        1.79%
                            =========  ======      ====       =========   ======      ====      =========   ======         ====
</TABLE>


                                       21

<PAGE>

     The  following  table  shows the amount of our  certificates  of deposit of
$100,000 or more by time remaining until maturity as of September 30, 2005.

                                                  Certificates
      Remaining Time Until Maturity                of Deposits
      -----------------------------                -----------
                                                 (In thousands)

Within three months....................             $  7,845
Three through six months...............               11,968
Six through twelve months..............               11,813
                                                      21,030
Over twelve months.....................             --------
Total                                               $ 52,656
                                                    ========

     Borrowings.  To supplement our deposits as a source of funds for lending or
investment,  we borrow funds in the form of advances  from the Federal Home Loan
Bank.  We regularly  make use of Federal Home Loan Bank  advances as part of our
interest  rate risk  management,  primarily to extend the duration of funding to
match the longer term fixed rate loans held in the loan portfolio as part of our
growth  strategy.  During fiscal 2004 we recognized a $125,000 penalty to prepay
$3.0 million of fixed rate FHLB advances with a weighted  average cost of 6.28%.
In the future,  we may evaluate  the costs and benefits of further  prepayments,
which may result in additional  one time charges to earnings in the form of FHLB
prepayment  penalties  to further  improve  the Bank's net  interest  spread and
margin and enhance future earnings.

     Advances  from the  Federal  Home Loan Bank are  typically  secured  by the
Federal  Home Loan Bank stock we own and a portion of our  residential  mortgage
loans  and  may  be  secured  by  other  assets,  mainly  securities  which  are
obligations of or guaranteed by the U.S. government.  At September 30, 2005, our
borrowing limit with the Federal Home Loan Bank was approximately  $139 million.
Additional information regarding our Federal Home Loan Bank advances is included
under Note 8 of the Notes to the Financial Statements.

     The following table sets forth certain  information  regarding our borrowed
funds.

                                                      At or For the
                                                 Year Ended September 30,
                                              -----------------------------
                                               2005       2004       2003
                                              -------    -------    -------
Federal Home Loan Bank Advances:
Average balance outstanding .............     $62,056    $60,125    $54,923
Maximum amount outstanding
  at any month-end during the period....      $72,853    $65,500    $61,800
Balance outstanding at end of period....      $53,734    $57,491    $55,000
Weighted average interest rate during
   The period ...........................       4.58%      4.76%      5.16%
Weighted average interest rate at end
   Of period ............................       4.84%      4.72%      5.13%


                                       22
<PAGE>

Subsidiary Activity

     In  addition  to  American  Bank of New  Jersey,  the Company has one other
subsidiary, ASB Investment Corp., a New Jersey corporation,  which was organized
in June 2003 for the  purpose  of selling  insurance  and  investment  products,
including  annuities,  to customers of the Bank and the general public through a
third party networking arrangement.  There has been very little activity at this
subsidiary and sales are currently limited to the sale of fixed rate annuities.

     American Bank of New Jersey has one subsidiary, American Savings Investment
Corp.,  which was formed in August  2004  under New Jersey law as an  investment
company  subsidiary.  The  purpose  of this  subsidiary  is to invest in stocks,
bonds, notes and all types of equity, mortgages, debentures and other investment
securities.  Holding  investment  securities in this subsidiary  reduces our New
Jersey state income tax rate.

Personnel

     As of September  30, 2005,  we had 59 full-time  employees and 15 part-time
employees. The employees are not represented by a collective bargaining unit. We
believe our relationship with our employees is satisfactory.

Regulation

     Set forth below is a brief  description  of certain laws that relate to the
regulation of the Bank and the Company.  The description  does not purport to be
complete and is qualified  in its entirety by reference to  applicable  laws and
regulations.  The Bank and the Company operate in a highly  regulated  industry.
This  regulation  and  supervision  establishes  a  comprehensive  framework  of
activities in which a federal savings bank may engage and is intended  primarily
for the protection of the deposit insurance fund and depositors.

     Any change in applicable statutory and regulatory requirements,  whether by
the OTS, the Federal Deposit Insurance Corporation ("FDIC") or the United States
Congress,  could have a material adverse impact on the Company and the Bank, and
their  operations.  The adoption of  regulations  or the  enactment of laws that
restrict  the  operations  of the Bank and/or the  Company or impose  burdensome
requirements upon one or both of them could reduce their profitability and could
impair the value of the Bank's  franchise  which could hurt the trading price of
the Company's common stock.

Regulation of the Bank

     General. As a federally  chartered,  SAIF-insured savings bank, the Bank is
subject  to  extensive  regulation  by the  OTS and the  FDIC.  This  regulatory
structure gives the regulatory  authorities  extensive  discretion in connection
with their  supervisory  and enforcement  activities and  examination  policies,
including  policies  regarding the classification of assets and the level of the
allowance for loan losses.  The activities of federal  savings banks are subject
to extensive regulation  including  restrictions or requirements with respect to
loans to one borrower,  the percentage of  non-mortgage  loans or investments to
total  assets,  capital  distributions,   permissible  investments  and  lending
activities,  liquidity  management,  transactions  with affiliates and community
reinvestment.  Federal savings banks are also subject to reserve requirements of
the Federal  Reserve  System.  A federal  savings bank's  relationship  with its
depositors and borrowers is regulated by both state and federal law,  especially
in such matters as the ownership of savings accounts and the form and content of
the bank's mortgage documents.


                                       23


<PAGE>

     The Bank must file regular reports with the OTS and the FDIC concerning its
activities and financial  condition,  and must obtain regulatory approvals prior
to entering into certain  transactions  such as mergers with or  acquisitions of
other financial  institutions.  The OTS regularly examines the Bank and prepares
reports to the Bank's Board of Directors on  deficiencies,  if any, found in its
operations.

     Insurance of Deposit  Accounts.  The FDIC  administers two separate deposit
insurance funds. Generally, the Bank Insurance Fund ("BIF") insures the deposits
of commercial banks and the Savings Association  Insurance Fund ("SAIF") insures
the deposits of savings institutions. The FDIC is authorized to increase deposit
insurance  premiums if it determines  such increases are appropriate to maintain
the  reserves  of either  the BIF or SAIF or to fund the  administration  of the
FDIC. In addition,  the FDIC is authorized to levy emergency special assessments
on BIF and SAIF members.

     In addition, all FDIC-insured  institutions are required to pay assessments
to the  FDIC  to  fund  interest  payments  on  bonds  issued  by the  Financing
Corporation  ("FICO"),  an  agency  of the  Federal  government  established  to
recapitalize the predecessor to the SAIF. These  assessments will continue until
the FICO bonds mature in 2017.

     Regulatory Capital  Requirements.  OTS capital  regulations require savings
institutions to meet three capital standards: (1) tangible capital equal to 1.5%
of total  adjusted  assets,  (2) "Tier 1" or "core" capital equal to at least 4%
(3% if the  institution  has  received the highest  possible  rating on its most
recent  examination) of total adjusted assets,  and (3) risk-based capital equal
to 8% of total risk-weighted assets. At September 30, 2005 the Bank exceeded all
regulatory capital requirements and was classified as "well capitalized."

     In  addition,  the OTS may require  that a savings  institution  that has a
risk-based  capital  ratio  of less  than  8%,  a ratio  of  Tier 1  capital  to
risk-weighted  assets  of less  than 4% or a ratio  of Tier 1  capital  to total
adjusted  assets of less than 4% (3% if the institution has received the highest
rating on its most recent  examination)  take  certain  action to  increase  its
capital ratios. If the savings  institution's capital is significantly below the
minimum  required  levels of capital or if it is  unsuccessful in increasing its
capital ratios, the OTS may restrict its activities.

     For purposes of the OTS capital regulations, tangible capital is defined as
core capital less all intangible  assets except for certain  mortgage  servicing
rights.  Tier 1 or core  capital  is  defined  as common  stockholders'  equity,
non-cumulative perpetual preferred stock and related surplus, minority interests
in   the   equity   accounts   of   consolidated   subsidiaries,   and   certain
non-withdrawable accounts and pledged deposits of mutual savings banks. The Bank
does not have any non-withdrawable accounts or pledged deposits. Tier 1 and core
capital  are  reduced  by  an  institution's  intangible  assets,  with  limited
exceptions for certain mortgage and non-mortgage  servicing rights and purchased
credit card relationships. Both core and tangible capital are further reduced by
an amount  equal to the savings  institution's  debt and equity  investments  in
"non-includable"  subsidiaries engaged in activities not permissible to national
banks other than  subsidiaries  engaged in  activities  undertaken  as agent for
customers  or  in  mortgage   banking   activities  and  subsidiary   depository
institutions or their holding companies.

     The  risk-based  capital  standard  for savings  institutions  requires the
maintenance of total capital of 8% of risk-weighted assets. Total capital equals
the sum of core and  supplementary  capital.  The  components  of  supplementary
capital  include,  among other  items,  cumulative  perpetual  preferred  stock,
perpetual   subordinated   debt,   mandatory   convertible   subordinated  debt,
intermediate-term  preferred stock, the portion of the allowance for loan losses
not  designated  for specific loan losses and up to 45% of  unrealized  gains on
equity  securities.  The  portion  of the  allowance  for loan and lease  losses
includable  in  supplementary  capital  is  limited  to a  maximum  of  1.25% of
risk-weighted assets. Overall,  supplementary


                                       24
<PAGE>

capital is limited to 100% of core capital.  For purposes of  determining  total
capital,  a savings  institution's  assets are  reduced by the amount of capital
instruments  held  by  other  depository  institutions  pursuant  to  reciprocal
arrangements and by the amount of the institution's  equity  investments  (other
than those deducted from core and tangible  capital) and its high  loan-to-value
ratio land loans and non-residential construction loans.

     A savings institution's  risk-based capital requirement is measured against
risk-weighted assets, which equal the sum of each on-balance-sheet asset and the
credit-equivalent  amount of each  off-balance-sheet item after being multiplied
by an assigned  risk weight.  These risk weights  range from 0% for cash to 100%
for delinquent loans,  property acquired through foreclosure,  commercial loans,
and other assets.

     OTS rules require a deduction  from capital for savings  institutions  with
certain levels of interest rate risk.  The OTS calculates the  sensitivity of an
institution's  net portfolio value based on data submitted by the institution in
a schedule to its quarterly  Thrift Financial Report and using the interest rate
risk measurement  model adopted by the OTS. The amount of the interest rate risk
component,  if any, deducted from an institution's total capital is based on the
institution's  Thrift Financial Report filed two quarters  earlier.  The OTS has
indefinitely postponed  implementation of the interest rate risk component,  and
the Bank has not been  required  to  determine  whether it will be  required  to
deduct an interest rate risk component from capital.

     Prompt Corrective Regulatory Action. Under the OTS Prompt Corrective Action
regulations,   the  OTS  is  required  to  take   supervisory   actions  against
undercapitalized   institutions,   the  severity  of  which   depends  upon  the
institution's level of capital.  Generally, a savings institution that has total
risk-based  capital  of less than  8.0%,  or a  leverage  ratio or a Tier 1 core
capital ratio that is less than 4.0%, is  considered to be  undercapitalized.  A
savings  institution that has total risk-based  capital less than 6.0%, a Tier 1
core risk-based capital ratio of less than 3.0% or a leverage ratio that is less
than  3.0% is  considered  to be  "significantly  undercapitalized."  A  savings
institution  that has a tangible  capital to assets  ratio equal to or less than
2.0% is deemed  to be  "critically  undercapitalized."  Generally,  the  banking
regulator is required to appoint a receiver or  conservator  for an  institution
that is  "critically  undercapitalized."  The  regulation  also  provides that a
capital  restoration  plan must be filed with the OTS within  forty-five days of
the  date  an  institution  receives  notice  that  it  is   "undercapitalized,"
"significantly  undercapitalized" or "critically undercapitalized." In addition,
numerous  mandatory  supervisory  actions become  immediately  applicable to the
institution,  including, but not limited to, restrictions on growth,  investment
activities, capital distributions,  and affiliate transactions. The OTS may also
take  any  one  of  a  number  of  discretionary   supervisory  actions  against
undercapitalized institutions, including the issuance of a capital directive and
the replacement of senior executive officers and directors.

     Dividend  and  Other  Capital  Distribution  Limitations.  The OTS  imposes
various  restrictions or requirements on the ability of savings  institutions to
make capital distributions, including cash dividends.

     A savings  institution  that is a subsidiary  of a savings and loan holding
company,  such as the Bank, must file an application or a notice with the OTS at
least thirty days before making a capital  distribution.  A savings  institution
must file an application for prior approval of a capital distribution if: (i) it
is not eligible for expedited treatment under the applications  processing rules
of the OTS;  (ii) the total amount of all capital  distributions,  including the
proposed capital distribution,  for the applicable calendar year would exceed an
amount  equal to the  savings  bank's  net income for that year to date plus the
institution's  retained net income for the preceding  two years;  (iii) it would
not  adequately  be  capitalized  after the  capital  distribution;  or (iv) the
distribution would violate an agreement with the OTS or applicable regulations.


                                       25
<PAGE>

     The Bank is required to file a capital  distribution  notice or application
with the OTS  before  paying  any  dividend  to the  Company.  However,  capital
distributions  by the Company,  as a savings and loan holding  company,  are not
subject to the OTS capital distribution rules.

     The OTS may  disapprove  a  notice  or deny an  application  for a  capital
distribution if: (i) the savings institution would be undercapitalized following
the capital  distribution;  (ii) the proposed capital distribution raises safety
and  soundness  concerns;  or (iii) the  capital  distribution  would  violate a
prohibition  contained in any statute,  regulation or agreement.  In addition, a
federal  savings  institution  cannot  distribute  regulatory  capital  that  is
required for its liquidation account.

     Qualified  Thrift Lender Test.  Federal  savings  institutions  must meet a
qualified  thrift  lender  ("QTL")  test or they become  subject to the business
activity  restrictions  and branching  rules  applicable to national  banks.  To
qualify as a QTL, a savings  institution  must  either (i) be deemed a "domestic
building and loan association" under the Internal Revenue Code by maintaining at
least 60% of its total  assets in  specified  types of assets,  including  cash,
certain  government  securities,  loans  secured by and other assets  related to
residential real property,  educational loans and investments in premises of the
institution or (ii) satisfy the statutory QTL test set forth in the Home Owners'
Loan Act by  maintaining  at least  65% of its  "portfolio  assets"  in  certain
"Qualified Thrift  Investments"  (defined to include  residential  mortgages and
related equity investments,  certain mortgage-related securities, small business
loans,  student  loans and  credit  card  loans,  and 50% of  certain  community
development loans). For purposes of the statutory QTL test, portfolio assets are
defined  as  total  assets  minus  intangible  assets,   property  used  by  the
institution in conducting its business,  and liquid assets equal to 20% of total
assets.  A savings  institution  must  maintain its status as a QTL on a monthly
basis in at least nine out of every twelve months.  The Bank met the QTL test as
of  September  30,  2005 and in each of the last twelve  months and,  therefore,
qualifies as a QTL.

     Transactions with Affiliates.  Generally, federal banking law requires that
transactions   between  a  savings  institution  or  its  subsidiaries  and  its
affiliates  must  be on  terms  as  favorable  to  the  savings  institution  as
comparable transactions with non-affiliates. In addition, certain types of these
transactions   are  restricted  to  an  aggregate   percentage  of  the  savings
institution's capital.  Collateral in specified amounts must usually be provided
by  affiliates  in order to  receive  loans  from the  savings  institution.  In
addition,  a savings  institution may not extend credit to any affiliate engaged
in  activities  not  permissible  for a bank  holding  company  or  acquire  the
securities of any affiliate that is not a subsidiary. The OTS has the discretion
to treat  subsidiaries  of savings  institutions as affiliates on a case-by-case
basis.

     Community  Reinvestment Act. Under the Community  Reinvestment Act ("CRA"),
every insured depository  institution,  including the Bank, has a continuing and
affirmative obligation consistent with its safe and sound operation to help meet
the credit needs of its entire  community,  including  low- and  moderate-income
neighborhoods.  The CRA does not  establish  specific  lending  requirements  or
programs  for  financial   institutions  nor  does  it  limit  an  institution's
discretion  to develop the types of products and  services  that it believes are
best suited to its particular community.  The CRA requires the OTS to assess the
depository institution's record of meeting the credit needs of its community and
to take such record into account in its  evaluation of certain  applications  by
such  institution,  such as a merger or the  establishment of a branch office by
the Bank. An unsatisfactory  CRA examination rating may be used as the basis for
the  denial of an  application  by the OTS.  The  Office  of Thrift  Supervision
assigned  the Bank an overall  rating of  "Satisfactory"  in its most recent CRA
evaluation.

     Federal Home Loan Bank ("FHLB") System. The Bank is a member of the FHLB of
New York,  which is one of twelve regional FHLBs.  Each FHLB serves as a reserve
or  central  bank for its  members  within  its  assigned  region.  It is funded
primarily from funds deposited by financial  institutions  and


                                       26
<PAGE>

proceeds  derived from the sale of consolidated  obligations of the FHLB System.
It makes loans to members pursuant to policies and procedures established by the
board of directors of the FHLB.

     As a member,  the Bank is required to purchase  and  maintain  stock in the
FHLB of New York in an amount equal to the greater of 1% of our aggregate unpaid
residential  mortgage loans, home purchase  contracts or similar  obligations at
the beginning of each year or 5% of FHLB  advances.  We are in  compliance  with
this  requirement.  The FHLB imposes  various  limitations  on advances  such as
limiting the amount of certain types of real estate related collateral to 30% of
a member's capital and limiting total advances to a member.

     The FHLBs are  required  to provide  funds for the  resolution  of troubled
savings  institutions  and to contribute to affordable  housing programs through
direct loans or interest subsidies on advances targeted for community investment
and  low-  and  moderate-income  housing  projects.   These  contributions  have
adversely  affected the level of FHLB dividends paid and could continue to do so
in the future.

     Federal Reserve System.  The Federal Reserve System requires all depository
institutions  to  maintain  non-interest-bearing  reserves at  specified  levels
against their  checking  accounts and  non-personal  certificate  accounts.  The
balances  maintained  to meet the  reserve  requirements  imposed by the Federal
Reserve System may be used to satisfy the OTS liquidity requirements.

     Savings  institutions  have  authority  to borrow from the Federal  Reserve
System "discount  window," but Federal Reserve System policy generally  requires
savings  institutions  to exhaust all other sources  before  borrowing  from the
Federal Reserve System.

Regulation of the Company

     General.  The Company is a savings  and loan  holding  company,  subject to
regulation  and  supervision  by the OTS. In addition,  the OTS has  enforcement
authority over the Company and any non-savings  institution  subsidiaries.  This
permits the OTS to restrict or prohibit  activities  that it  determines to be a
serious risk to the  Company.  This  regulation  is intended  primarily  for the
protection  of the  depositors  and not for the benefit of  stockholders  of the
Company.

     Activities Restrictions. As a savings and loan holding company formed after
May 4, 1999, the Company is not a grandfathered unitary savings and loan holding
company  under the  Gramm-Leach-Bliley  Act (the "GLB  Act").  As a result,  the
Company and its non-savings  institution  subsidiaries  are subject to statutory
and regulatory restrictions on their business activities. Under the Home Owners'
Loan Act, as amended by the GLB Act, the  non-banking  activities of the Company
are restricted to certain activities specified by OTS regulation,  which include
performing  services  and  holding  properties  used  by a  savings  institution
subsidiary,  activities  authorized for savings and loan holding companies as of
March 5, 1987, and non-banking activities permissible for bank holding companies
pursuant to the Bank Holding  Company Act of 1956 (the "BHC Act") or  authorized
for financial holding companies pursuant to the GLB Act. Furthermore, no company
may acquire control of American Bank of New Jersey unless the acquiring  company
was a unitary  savings  and loan  holding  company  on May 4, 1999 (or  became a
unitary savings and loan holding company  pursuant to an application  pending as
of that date) or the company is only engaged in  activities  that are  permitted
for  multiple  savings  and loan  holding  companies  or for  financial  holding
companies under the BHC Act as amended by the GLB Act.

     Mergers and  Acquisitions.  The Company must obtain  approval  from the OTS
before acquiring more than 5% of the voting stock of another savings institution
or savings and loan holding  company or


                                       27
<PAGE>

acquiring  such a savings  institution  or savings and loan  holding  company by
merger,  consolidation  or purchase of its assets.  In evaluating an application
for the  Company to  acquire  control  of a savings  institution,  the OTS would
consider the financial  and  managerial  resources  and future  prospects of the
Company and the target institution, the effect of the acquisition on the risk to
the  insurance  funds,  the  convenience  and the  needs  of the  community  and
competitive factors.

     Sarbanes-Oxley  Act of 2002. On July 30, 2002,  President  Bush signed into
law the  Sarbanes-Oxley  Act of 2002 (the "Act").  The  Securities  and Exchange
Commission  ("SEC") has promulgated new regulations  pursuant to the Act and may
continue  to  propose  additional  implementing  or  clarifying  regulations  as
necessary in furtherance of the Act. The passage of the Act, and the regulations
implemented by the SEC subject publicly-traded  companies to additional and more
cumbersome reporting  regulations and disclosure  requirements.  Compliance with
the Act and corresponding regulations may increase the Company's expenses.

Item 2.  Properties.

     At September 30, 2005, our net investment in property and equipment totaled
$4.1  million.  We use an  outside  service  company  for data  processing.  The
following  table sets forth the location of our main office,  separate  drive-up
facility and branch  office,  the year opened for each and the net book value of
each.  Additionally,  at September 30, 2005, we had purchase  deposits and other
professional  fees  totaling  $584,000  in  connection  with de novo branch site
acquisitions.


                                     Year
                                    Facility     Leased or    Net Book Value at
Office Location                      Opened        Owned      September 30, 2005
---------------                      ------        -----      ------------------
                                                                (In thousands)
Main Office
365 Broad Street
Bloomfield, New Jersey  07003         1965        Owned           $  1,316


Main Office Drive Up Facility
16 Pitt Street
Bloomfield, New Jersey  07003         1998        Owned           $    339


Full Service Branch
310 Pompton Avenue
Cedar Grove, New Jersey  07009        2001        Owned           $  1,892

Item 3.  Legal Proceedings.

     From time to time the Company and its  subsidiaries  are parties to routine
litigation,  which arises in the normal  course of  business,  such as claims to
enforce  liens,  condemnation  proceedings on properties in which the Bank holds
security  interests,  claims involving the making and servicing of real property
loans,  and other issues incident to the business of the Bank. In the opinion of
management,  there  were no  lawsuits  pending  or known to be  contemplated  at
September 30, 2005 that would have a material effect on operations or income.

Item  4.  Submission of Matters to a Vote of Security Holders.

     None.


                                       28

<PAGE>

                                     PART II

Item 5.  Market for the Registrant's Common Equity, Related Stockholder Matters
         and Issuer Purchases of Equity Securities.

     (a) Market for Common Equity.  The common stock of American  Bancorp of New
Jersey,  Inc. is traded on the Nasdaq  National  Market under the symbol "ABNJ."
Trading  commenced  on  October  6,  2005 upon  completion  of the  second  step
conversion.  As of  December  10,  2005,  there were 935  registered  holders of
record,  including  brokerage firms, banks and registered clearing agents acting
as nominees for an beneficial "street name" holders.

     (b) Use of Proceeds. The Company commenced its stock offering in connection
with the second-step conversion of American Savings, MHC from the mutual holding
company form of organization to a full stock  corporation on August 22, 2005 and
completed  the offering and  conversion  on October 5, 2005.  Keefe,  Bruyette &
Woods, Inc. assisted the Company in its selling efforts on a best efforts basis.
The  Company  sold  9,918,750  shares of its common  stock,  par value $0.10 per
share,  at $10.00 per share,  representing  the  super-maximum  of the  offering
range. In addition,  each share of common stock held by the public  stockholders
of ASB Holding  Company,  the former  middle-tier  stock  holding  company,  was
converted  into 2.55102  shares of common stock of the Company,  resulting in an
aggregate of 4,250,719  exchange  shares.  Accordingly,  upon  completion of the
Conversion,  the Company had 14,169,469 total shares outstanding.  Shares of the
Company began trading on October 6, 2005 on the Nasdaq National Market under the
symbol "ABNJ."

     The Company paid an  underwriting  commission  to Keefe,  Bruyette & Woods,
Inc. of 1% of the aggregate  amount of common stock sold, not counting  exchange
shares  issued to holders of ASB  Holding  Company  common  stock and  excluding
(i)305,861 shares purchased in the offering by directors, officers and employees
of the Company and its  subsidiaries  and (ii) 793,500  shares  purchased in the
offering  by the  Bank's  employee  stock  ownership  plan.  Offering  expenses,
excluding  underwriting  commissions  of  $882,000,  totaled  $781,000  and  net
proceeds of the offering  were $97.5  million.  The Company used $7.9 million of
the net proceeds to make a loan to the Bank's  employee stock ownership plan for
the plan's purchase of 793,500 shares in the offering.

     (c) Issuer Purchases of Equity Securities.

<TABLE>
<CAPTION>
                                                                              (c) Total Number        (d) Maximum Number
                                                                             of Shares (or Units)   (or Approximate Dollar
                                                             (b)              Purchased as Part        Value) of Shares (or
                                   (a) Total Number        Average             of Publicly          Units) that May Yet Be
                                      of Shares (or      Paid per Share       Announced Plans           Purchased Under
Period                             Units) Purchased       (or Unit)             or Programs             Plans or Programs
------                             ----------------       ---------          --------------------   -----------------------
<S>                                     <C>                <C>                      <C>                  <C>
Quarter ended                             --                 N/A                      --                   208,293 (1)
September 30, 2005
</TABLE>

-------------------------
(1) As of September 30, 2005,  the Company had not  commenced its  repurchase of
shares to fund  stock  awards  previously  made under the  American  Bank of New
Jersey 2005 Restricted  Stock Plan.  Purchases to fund the restricted stock plan
will be made from time to time in the open market,  based on stock availability,
price and the Company's financial performance.


                                       29

<PAGE>

Item 6.  Selected Financial Data.

     The  information  contained in the table captioned  "Selected  Consolidated
Financial  and Other Data" in the portions of the Annual Report filed as Exhibit
13 to this Form 10-K is incorporated herein by reference.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

     The information contained in the section captioned "Management's Discussion
and Analysis of Financial  Condition  and Results of  Operations"  in the Annual
Report  filed  as  Exhibit  13 to this  Form  10-K  is  incorporated  herein  by
reference.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

     The information  contained in the section captioned "Management of Interest
Rate Risk and Market Risk" in the Annual Report filed as Exhibit 13 to this Form
10-K is incorporated herein by reference.

Item 8.  Financial Statements and Supplementary Data.

     The Company's  financial  statements listed under Item 15 of this Form 10-K
and  included  in  Exhibit  13 to this  Form  10-K are  incorporated  herein  by
reference.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

     Not applicable.

Item 9A.  Controls and Procedures.

     (a)  Evaluation  of  disclosure  controls  and  procedures.  Based on their
evaluation of the Company's  disclosure  controls and  procedures (as defined in
Rule 13a-15(e) under the Securities  Exchange Act of 1934 (the "Exchange Act")),
the Company's  principal  executive officer and principal financial officer have
concluded that as of the end of the period covered by this Annual Report on Form
10-K such disclosure controls and procedures are effective.

     (b) Changes in internal controls. During the last quarter of the year under
report,  there was no change in the Company's  internal  control over  financial
reporting that has materially  affected,  or is reasonably  likely to materially
affect, the Company's internal control over financial reporting.

Item 9B.  Other Information.

     Not applicable.



                                       30

<PAGE>

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.

Section 16(A) Beneficial Ownership Reporting Compliance

     The Common Stock of the Company is registered  pursuant to Section 12(g) of
the Securities and Exchange Act of 1934, as amended.  The officers and directors
of the Company and beneficial owners of greater than 10% of the Company's Common
Stock ("10%  beneficial  owners") are  required by Section  16(a) of such act to
file  reports of  ownership  and changes in  beneficial  ownership of the Common
Stock  with the SEC and NASDAQ  and to  provide  copies of those  reports to the
Company.  The Company is not aware of any  beneficial  owner,  as defined  under
Section 16(a), of more than 10% of its Common Stock. To the Company's knowledge,
all Section 16(a) filing  requirements  applicable to its officers and directors
were complied with during the 2005 fiscal year.

Directors and Executive Officers

     The  Company's  certificate  of  incorporation  requires  that the Board of
Directors be divided into four  classes,  as nearly equal in number as possible,
each class to serve for a four-year period, with approximately one-fourth of the
directors elected each year. The Board of Directors  currently consists of eight
members.  The following table sets forth the ages of the directors and executive
officers of the Company and the terms and length of service of the directors.

<TABLE>
<CAPTION>
                                Age at           Year First Elected or         Current
Name                     September 30, 2005           Appointed(1)           Term Expires
----                     -------------------          ------------           ------------

<S>                             <C>                     <C>                    <C>
Robert A. Gaccione                64                      2003                   2007
Joseph Kliminski                  62                      1986                   2009
Fred G. Kowal                     52                      2005                   2008
H. Joseph North                   73                      1991                   2006
Stanley Obal                      83                      1981                   2009
W. George Parker                  80                      1967                   2006
Vincent S. Rospond                73                      1981                   2008
James H. Ward, III                56                      1991                   2007
Richard M. Bzdek                  52                      N/A                    N/A
Eric B. Heyer                     43                      N/A                    N/A
Catherine M. Bringuier            42                      N/A                    N/A
</TABLE>


----------------------
(1)  Indicates the year the individual  first became a director of American Bank
     of New Jersey or ASB Holding  Company,  the former  mid-tier  stock holding
     company  that was  replaced by American  Bancorp of New Jersey,  Inc.  Each
     director of ASB Holding  Company  became a director of American  Bancorp of
     New Jersey, Inc. upon its formation in 2005.

     The business  experience of each of our directors and executive officers is
set forth below. Each has held his or her present position for at least the past
five years, except as otherwise indicated.


                                       31
<PAGE>

     Robert A. Gaccione has been a member of the Board since 2003. He has been a
senior  partner  of the  law  firm  of  Gaccione,  Pomaco  &  Malanga,  P.C.  in
Belleville,  New Jersey  for  thirty  years.  He is a former  Federal  Bureau of
Investigation  agent.  Mr.  Gaccione  also  serves as an Essex  County Tax Board
Commissioner.  He served as a director of Franklin  Community Bank, a commercial
bank located in Nutley, New Jersey for three years. Mr. Gaccione is a member and
the past president of the Belleville  Rotary Club, is the president of the Clara
Maass Foundation and is a member of the Belleville Foundation.

     Joseph Kliminski serves as Chief Executive Officer and has been a member of
the Board  since  1986.  He has been  employed by the Bank since 1967 and became
President and Chief Executive  Officer in 1987. In 2005, Mr. Fred Kowal replaced
Mr. Kliminski as President.  Mr. Kliminski is a member and past president of the
Bloomfield Lions Club, is president of the Advisory Board to the Bloomfield Town
Council, chairman of the Bloomfield Education Foundation, and former chairman of
the Deborah Hospital  Children of the World Golf Tournament.  Mr. Kliminski also
serves on the Executive  Committee of the Bloomfield  Center Alliance,  and is a
member and former  president of the Board of Trustees of the  Bloomfield  Public
Library.  He is also a former member of the Board of Governors of the New Jersey
League of  Community  Bankers and past  president  of the Essex  County  Savings
League.

     Fred G. Kowal serves as President and Chief Operating  Officer and has been
a member of the Board since 2005.  He joined the Bank in March 2005.  Mr.  Kowal
was  previously  Chairman  and Chief  Executive  Officer  of  Warwick  Community
Bancorp,  Inc. until its merger into Provident Bancorp, Inc. in October 2004. He
joined Warwick  Community  Bancorp,  Inc. in 1999 and also served as Chairman of
the Board of Directors of The Warwick Savings Bank and as Chairman of the Board,
President  and Chief  Executive  Officer  of The Towne  Center  Bank,  a de novo
commercial  bank formed by Warwick  Community  Bancorp,  Inc. in 1999.  Prior to
joining  Warwick,  he served as Senior Vice  President  of First Union  National
Bank, where he worked for 16 years, and as Senior Vice President of PNC Bank.

     H.  Joseph  North has been a member  of the Board  since  1991.  Mr.  North
retired in 1987 as Town  Administrator of Bloomfield,  New Jersey after 20 years
of service as the municipality's Chief  Administrative  Officer. Mr. North began
his  service to the Town of  Bloomfield  in 1958 as Town Clerk  where his duties
included  that  of  Corporation  Secretary  to the  Municipality  and  Executive
Secretary to the Planning Board and Zoning Board of  Adjustment.  Mr. North is a
past  president  and a lifetime  member of the New Jersey  Municipal  Management
Association  and  is a  former  member  of  the  International  City  Management
Association.  Mr. North is also a former president of the Bloomfield Lions Club,
Bloomfield  Fifth Quarter Club and  Bloomfield  Tennis  Federation  and a former
member of the Board of Trustees of Bloomfield College.

     Stanley Obal has been a member of the Board since 1981. Mr. Obal retired in
1982 and was the owner of Obal's Inn, a tavern and restaurant in Bloomfield, New
Jersey.

     W.  George  Parker has been a member of the Board  since 1967 and  Chairman
since 1990. Mr. Parker is the owner,  president and chief  executive  officer of
Adco Chemical Company, located in Newark, New Jersey.

     Vincent S.  Rospond  has been a member of the Board  since  1981.  He is an
attorney  and the  majority  stockholder  of the law firm of Rospond,  Rospond &
Conte,  P.A. in  Bloomfield,  New  Jersey.  Rospond,  Rospond & Conte  serves as
general  counsel  to the Bank.  Mr.  Rospond is the  president  and a trustee of
United Way of Bloomfield, is a member and the former legal counsel of Bloomfield
Chamber  of  Commerce,  and is a  member  and  the  treasurer  of  North  Jersey
Manufacturer's  &  Businessmen


                                       32


<PAGE>

Association.  He is also a member of the Cornell  Club of New Jersey,  the Essex
County Bar Association,  the Newark Art Museum,  the Bloomfield Music Federation
and the New Jersey Bar Association.

     James H.  Ward,  III has been a member  of the  Board  since  1991 and Vice
Chairman  since 2003.  From 1998 to 2000,  he was the majority  stockholder  and
Chief  Operating  Officer  of  Rylyn  Group,  which  operated  a  restaurant  in
Indianapolis,  Indiana. Prior to that, he was the majority stockholder and Chief
Operating Officer of Ward and Company,  an insurance agency in Springfield,  New
Jersey, where he was employed from 1968 to 1998. He is now a retired investor.

     Richard M. Bzdek serves as Executive  Vice  President and Secretary and has
been  employed by the Bank in various  capacities  since 1975.  Mr. Bzdek is the
former president and a current  director of the Bloomfield  Chamber of Commerce.
He is a member of the Financial  Managers Society and serves as Vice Chairman on
the Operations  and  Technology  Committee of the New Jersey League of Community
Bankers.  He is also the treasurer and a trustee of United Way of Bloomfield and
is a director and co-founder of the Bloomfield Center Alliance.

     Eric B.  Heyer  serves  as  Senior  Vice  President,  Treasurer  and  Chief
Financial Officer and has been employed by the Bank in various  capacities since
1993. He was previously the chief  financial  officer of Monarch Savings Bank in
Kearny,  New Jersey,  where he was  employed  from 1986 to 1993.  Mr. Heyer is a
member of the Financial Managers Society.  He has previously served as a trustee
of Kingston United Methodist Church and currently serves as vice chairman of the
stewardship and finance  committee of Princeton  United  Methodist  Church.  Mr.
Heyer also serves as a board  member of the Mental  Health  Clinic of Passaic in
Clifton, New Jersey.

     Catherine M.  Bringuier  serves as Senior Vice  President and Chief Lending
Officer and has been employed by the Bank in various  capacities since 1990. Ms.
Bringuier currently serves as a member of the Commercial Lending Committee, Loan
Servicing Committee,  and the Residential Lending & Affordable Housing Committee
of the New Jersey League of Community Bankers.  Ms. Bringuier was also appointed
to the Mortgage Steering  Committee of the New Jersey League. Ms. Bringuier is a
member of the Commercial Loan Committee and the Residential Lending Committee of
the Mortgage Bankers  Association of New Jersey.  She is a member and prior Vice
President of Sunny Acres Civic & Improvement Association in Cranford, New Jersey
and is an Assistant Den Leader for Cub Scout Pack 103, in Cranford, New Jersey.

Audit Committee

     The Audit Committee  consists of Directors Parker,  North and Ward, each of
whom is independent  under the rules of the Nasdaq Stock Market.  Each member of
the Audit  Committee is qualified  under the rules of the Nasdaq Stock Market to
serve as a member of the Audit  Committee,  however,  none qualifies as an audit
committee  financial  expert  within  the  meaning  of  the  regulations  of the
Securities and Exchange Commission. This committee meets quarterly and as needed
with the  internal  auditor and the external  auditors.  This  committee's  main
responsibilities  include  oversight  of the  internal  auditor and the external
auditors and  monitoring of  management  and staff  compliance  with the Board's
audit policies, and applicable laws and regulations.

Code of Ethics

     The  Company has  adopted a Code of Ethics  that  applies to its  principal
executive officer,  principal financial officer, principal accounting officer or
controller or persons performing similar functions. The


                                       33
<PAGE>

Company's  Code of Ethics will be provided  without  charge upon  request to the
Corporate  Secretary,  American  Bancorp of New Jersey,  Inc., 365 Broad Street,
Bloomfield, New Jersey 07003.

Item 11.  Executive Compensation.

Director Compensation

     Board Fees. Directors are currently paid a fee of $500 per meeting for each
regular and special meeting attended.  Directors also receive an annual retainer
of $2,500.  No fees are paid for committee  meetings other than audit  committee
meetings, for which directors receive a fee of $750 per meeting.

     Each director is also a director of American Bank of New Jersey and is paid
$1,000 per meeting for each  regular  and  special  meeting of the Bank's  Board
attended. Bank directors also receive an annual retainer of $8,000.

     Directors  who also  serve as  employees  do not  receive  compensation  as
directors.

     Directors  Consultation and Retirement Plan. The Directors Consultation and
Retirement Plan provides  retirement  benefits to directors on their  retirement
date.  "Retirement  date" means the date of termination of service as a director
following a participant's completion of not less than twelve years of service as
a director, or not less than six years of service following a change in control;
provided  however,  the retirement  date with regard to directors  serving as of
August  27,  1996 who have  completed  not less than five years of service as of
August  27,  1996  shall be the date of  termination  of  service  as a director
without  regard to whether  the twelve  years of  service  requirement  has been
fulfilled.  Upon  death  or  disability,  a  director  shall be  deemed  to have
terminated service as of that date.

     If a  director  agrees to become a  consulting  director  to our board upon
retirement,  he will receive a monthly payment for life but in no event for less
than 144 months,  equal to 0.0833 times the highest  aggregate  annual fees paid
(including  retainer  fees and  regular  board  meeting  fees)  during  the most
recently  completed  three  calendar  year  periods  ending  on  or  before  the
retirement  date.  In the event of a change in control,  all  directors  will be
presumed to have reached the  retirement  date and each  director will receive a
lump sum payment equal to the present value of future benefits payable.

     Restricted  Stock Awards.  During the year ended  September 30, 2005,  each
non-employee  director was awarded  12,498 shares of restricted  stock under the
American Bank of New Jersey 2005 Restricted Stock Plan.  Restricted stock awards
are earned at the rate of 20% one year after the date of grant and 20%  annually
thereafter  during  periods of  service as an  employee,  director  or  director
emeritus.  All awards become immediately 100% vested upon death or disability or
termination of service  following a change in control.  The number of restricted
shares awarded has been adjusted for the exchange  ratio in connection  with the
second-step conversion completed in October 2005.

     Stock  Option  Awards.  During  the year ended  September  30,  2005,  each
non-employee  director was awarded 39,923  options to purchase  shares of common
stock under the 2005 Stock Option Plan,  at an exercise  price equal to the fair
market value of the common stock on the date of grant.  These  options are first
exercisable  at a rate of 20% one year after the date of grant and 20%  annually
thereafter  during  continued  service  as an  employee,  director  or  director
emeritus.  Upon disability,  death, or a change in control,  these awards become
100%  exercisable.  The  number of  options  and the  exercise  price  have been
adjusted  in  accordance   with  the  exchange  ratio  in  connection  with  the
second-step conversion completed in October 2005.


                                       34

<PAGE>

Executive Compensation

     Summary Compensation Table. The following table sets forth the compensation
awarded to or earned by the chief executive  officer and certain other executive
officers for the three fiscal years ended  September 30, 2005. Mr. Kowal started
his employment in March 2005.

<TABLE>
<CAPTION>

                                                Annual Compensation(1)       Long Term Compensation Awards
                                                ----------------------       -----------------------------

                                                                             Restricted      Securities              All
                                   Fiscal                                       Stock        Underlying             Other
Name and Principal Position         Year        Salary         Bonus       Award(s)($)(2)  Options/SARs(#)      Compensation
---------------------------    ------------     ------         -----       ---------------  ---------------     ------------

<S>                              <C>           <C>            <C>              <C>              <C>           <C>
Joseph Kliminski                   2005          $256,730       $70,038          $338,031         164,899       $231,973(3)
Chief Executive Officer            2004           250,000             0                 0               0        188,101
                                   2003           242,255        73,228                 0               0        212,140

Fred G. Kowal (4)                  2005          $125,481       $     0          $      0               0       $      0
President and Chief
   Operating Officer

Richard M. Bzdek                   2005          $168,566       $38,080          $169,016          81,582         $63,194(5)
Executive Vice President           2004           164,147             0                 0               0         44,290
   and Secretary                   2003           162,244        30,492                 0               0         46,498

Eric B. Heyer                      2005          $148,904       $32,318          $154,940          74,639       $ 46,747(6)
Senior Vice President,             2004           145,000             0                 0               0         32,617
   Treasurer and Chief             2003           139,615        50,322                 0               0         31,019
   Financial Officer

Catherine M. Bringuier             2005          $138,840       $28,716          $154,940          74,639       $ 45,143(7)
Senior Vice President and          2004           133,800        25,000                 0               0         30,329
   Chief Lending Officer           2003           123,269        45,478                 0               0         20,910
</TABLE>

------------
(1)  All compensation  set forth in the table,  other than awards under the 2005
     Stock Option Plan, was paid by the Bank.
(2)  Under the 2005  Restricted  Stock  Plan,  shares of  restricted  stock were
     awarded  during 2005 as follows:  49,990  shares to Mr.  Kliminski,  24,995
     shares to Mr.  Bzdek,  22,912  shares to Mr. Heyer and 22,912 shares to Ms.
     Bringuier.  As of September 30, 2005, no shares had vested and the value of
     the restricted  shares held by each officer was as follows:  Mr.  Kliminski
     $548,100,  Mr.  Bzdek  $274,050,  Mr.  Heyer  $251,227  and  Ms.  Bringuier
     $251,227.
(3)  For 2005,  consists  of (i) an accrual of  $187,878  under Mr.  Kliminski's
     executive  salary  continuation   agreement,   (ii)  an  employer  matching
     contribution  to the 401(k)  Plan for Mr.  Kliminski  of  $6,259,  (iii) an
     employer  contribution  to the Profit  Sharing  Plan for Mr.  Kliminski  of
     $15,933,  and (iv) the award of shares  under  the ESOP  valued at  $21,903
     based on the closing price on the date of award.
(4)  Mr. Kowal's employment commenced in March 2005, thus information  presented
     for him does not reflect a full year.
(5)  For 2005, consists of (i) an accrual of $24,523 under Mr. Bzdek's executive
     salary continuation  agreement,  (ii) an employer matching  contribution to
     the 401(k) Plan for Mr. Bzdek of $5,140, (iii) an employer  contribution to
     the Profit  Sharing  Plan for Mr.  Bzdek of $15,993,  and (iv) the award of
     shares under the ESOP valued at $17,538  based on the closing  price on the
     date of award.
(6)  For 2005, consists of (i) an accrual of $12,273 under Mr. Heyer's executive
     salary continuation  agreement,  (ii) an employer matching  contribution to
     the 401(k) Plan for Mr. Heyer of $4,609, (iii) an employer  contribution to
     the Profit  Sharing  Plan for Mr.  Heyer of $14,373,  and (iv) the award of
     shares under the ESOP valued at $15,492  based on the closing  price on the
     date of award.
(7)  For 2005,  consists  of (i) an  accrual of  $10,937  under Ms.  Bringuier's
     executive  salary  continuation   agreement,   (ii)  an  employer  matching
     contribution  to the 401(k)  Plan for Ms.  Bringuier  of  $4,324,  (iii) an
     employer  contribution  to the Profit  Sharing  Plan for Ms.  Bringuier  of
     $15,437 and (iv) the award of shares under the ESOP valued at $14,445 based
     on the closing price on the date of award.

                                       35
<PAGE>

     The following table sets forth information concerning options granted under
the 2005 Stock Option Plan during the year ended September 30, 2005.

<TABLE>
<CAPTION>
                                         Option Grants in 2005 Fiscal Year

                                                Individual Grants
                             ---------------------------------------------------------
                                              Percent of
                                            Total Options
                              Number of       Granted to      Exercise
                               Options       Employees in       Price      Expiration           Grant Date
Name                           Granted       Fiscal Year      ($/Share)       Date           Present Value(1)
----                           -------       -----------      ---------       ----           ----------------
<S>                         <C>                <C>            <C>         <C>  <C>             <C>
Joseph Kliminski              164,899            36%            6.80        1/20/15              $307,045
Richard M. Bzdek               81,582            18%            6.80        1/20/15              $151,905
Eric B. Heyer                  74,639            16%            6.80        1/20/15              $138,976
Catherine M. Bringuier         74,639            16%            6.80        1/20/15              $138,976
</TABLE>

------------
(1)  The dollar values listed in this column are based on the Black-Scholes
     option pricing model, using the following assumptions as of the grant date:
     (i) dividend yield of 0.00%; (ii) expected life of 5 years; (iii) expected
     stock price volatility of 22%; and (iv) risk-free interest rate of 3.67%.

     The following table sets forth  information  concerning  options held as of
September 30, 2005.

<TABLE>
<CAPTION>
                 Aggregated Option Exercises in 2005 Fiscal Year and Fiscal Year End Option Values
                 ---------------------------------------------------------------------------------
                                                                                                Value of
                              Shares                         Number of Options            In-the-money Options
                            Acquired on      Value        at Fiscal Year-End (#)         at Fiscal Year-End ($)
Name                       Exercise (#)  Realized ($)    Exercisable/Unexercisable      Exercisable/Unexercisable
----                       ------------  ------------    -------------------------      -------------------------
<S>                            <C>                             <C>                           <C>
Joseph Kliminski                 0            N/A                0/164,899                     0/$686,487
Richard M. Bzdek                 0            N/A                0/81,582                      0/$339,628
Eric B. Heyer                    0            N/A                0/74,639                      0/$310,720
Catherine M. Bringuier           0            N/A                0/74,639                      0/$310,720
</TABLE>

     Employment Agreements. The Bank has entered into employment agreements with
Mr.  Kliminski,  Mr.  Kowal,  Mr.  Bzdek,  Mr.  Heyer  and  Ms.  Bringuier.  Mr.
Kliminski's,  Mr. Kowal's,  Mr. Bzdek's. Mr. Heyer's and Ms. Bringuier's current
base  salaries  are  $258,750,   $225,000,  $169,892,  $150,075,  and  $139,932,
respectively.  Mr. Kliminski's and Mr. Kowal's employment agreements have a term
of three years while Mr.  Bzdek's,  Mr. Heyer's and Ms.  Bringuier's  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 Mr.  Kliminski and Mr. Kowal,  and two years, in
the case of Mr. Bzdek, Mr. Heyer and Ms.  Bringuier.  If the Bank terminates Mr.
Kliminski or Mr. Kowal  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,  but in no event for a period of
less  than two  years.  If the  Bank  terminates  Mr.  Bzdek,  Mr.  Heyer or Ms.
Bringuier  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.  Mr.  Kliminski's  and  Mr.  Kowal's
employment  agreements  provide that if their  employment is terminated  without
just cause within twenty-four  months of a change in control,  they will be paid
an amount  equal to 2.999 times their  five-year  average  annual  taxable  cash
compensation in either a lump sum or, at their option, in periodic payments over
a three-year  period or the remaining term of the agreement,  whichever is less.
Mr. Bzdek's, Mr. Heyer's and Ms. Bringuier's  employment agreements provide that
if their  employment is


                                       36
<PAGE>

terminated without just cause within twelve months of a change in control,  they
will be paid an amount equal to 2.0 times their five-year average annual taxable
cash compensation in either a lump sum or, at their option, in periodic payments
over a two-year  period or the  remaining  term of the  agreement,  whichever is
less.  If change in control  payments had been made under the  agreements  as of
September  30, 2005,  the payments  would have equaled  approximately  $792,311,
$674,775,  $347,630,  $285,919 and $260,667 to Mr.  Kliminski,  Mr.  Kowal,  Mr.
Bzdek, Mr. Heyer and Ms. Bringuier, respectively.

     Executive  Salary  Continuation   Agreements.   The  Bank  has  implemented
executive salary continuation  agreements for the benefit of Officers Kliminski,
Bzdek, Heyer and Bringuier.  The executive salary  continuation  agreements will
provide benefits at age 65 that would be comparable to approximately  50% of Mr.
Kliminski's  average base salary based upon the average of the three highest out
of the last five years of  employment,  and 30% of average  salary for  Officers
Bzdek,  Heyer  and  Bringuier.  The  benefits  will  be paid  in  equal  monthly
installments  until the death of the  participant.  If a participant  terminates
employment prior to age 65, then the retirement  benefit equals the then accrued
balance of the participant's  liability reserve account, and the benefit is paid
in  equal  monthly  installments  until  the  death  of  the  participant.  Upon
disability,  the  participant  will  receive  the then  accrued  balance  of the
participant's  liability reserve account, and the benefit is payable either in a
lump sum or in 180 monthly  installments.  Upon a change in control of the Bank,
and the participant's  termination,  the participant will be deemed to reach age
65 and will receive full retirement  benefits.  As long as the agreement remains
in effect, upon the death of a participant,  the participant's  beneficiary will
be paid a death benefit under the terms of the  Endorsement  Method Split Dollar
Life Insurance Agreement between the participant and the Bank.

     For fiscal 2005, we accrued $187,878 under Mr. Kliminski's executive salary
continuation agreement,  $24,253 under Mr. Bzdek's executive salary continuation
agreement, $12,273 under Mr. Heyer's executive salary continuation agreement and
$10,937 under Ms. Bringuier's  executive salary  continuation  agreement.  These
accruals  reflect  the  scheduled  accruals  under  the  plan in  order  for the
retirement  benefit  provided  by the plan to be fully  accrued at the  expected
retirement date. The accrual for Mr. Kliminski is higher than that for the other
officers  due to the fewer  number of months left to accrue the full  retirement
benefit that will be payable to Mr.  Kliminski at his expected  retirement  date
and also  reflects a higher  average base salary for Mr.  Kliminski and a higher
percentage  of the base  provided  under the plan,  50% versus 30% for the other
officers. When the plans were established for each officer, there were 78 months
until the expected  retirement date for Mr.  Kliminski,  compared to 196 months,
300 months and 298 months for Officers Bzdek,  Heyer and Bringuier.  The amounts
required to accrue the present value of the retirement benefit provided for each
individual are based upon assumptions for discount rate, salary  projections and
life  expectancy.  These  assumptions are reviewed at least annually and provide
the basis upon which monthly benefit  accruals are recorded.  These accruals are
generally  recorded in equal  amounts  from month to month with  changes made to
these amounts as required by assumption changes.

Compensation Committee Report On Executive Compensation

     The  Compensation  Committee (the  "Committee") has furnished the following
report on executive compensation:

     The Compensation  Committee of the Company (the  "Compensation  Committee")
consists  only  of  independent  directors.  The  members  of  the  Compensation
Committee also serve on the Compensation Committee of the Bank. The Compensation
Committee,  at the  direction  of the  Board  of  Directors,  has  prepared  the
following report.


                                       37
<PAGE>

     The Compensation  Committee is responsible for conducting  periodic reviews
of  the  executive  compensation  of  senior  executives,  including  the  Chief
Executive Officer ("CEO").  The Compensation  Committee determines salary levels
for senior  executives  and other  officers  and  amounts of cash  bonuses to be
distributed  to  those  individuals,  if and as  appropriate.  The  Compensation
Committee  also  determines  awards under the Company's  stock option plan and a
restricted stock program.

     This report is  submitted  by the  Compensation  Committee  to the Board of
Directors of the Company to summarize the Compensation  Committee's  involvement
in the  compensation  decisions and policies adopted by the Bank and the Company
for executive officers  generally,  and for the Chief Executive Officer,  Joseph
Kliminski, in particular, during the fiscal year ended September 30, 2005.

     General Policy. The executive compensation practices of the Company and the
Bank are designed to reward and to provide an incentive for executives, based on
the  achievement  of corporate and  individual  goals.  Compensation  levels for
executives are established after considering  measures that include, but are not
limited to,  financial  performance of the Company and competitive  labor market
conditions.  Furthermore,  qualitative  factors such as overall job performance,
leadership,  teamwork,  and community involvement are considered in compensation
deliberations.   The  Compensation   Committee   utilizes   publicly   available
information  to  gather  information  related  to  compensation   practices  for
executive  officers of financial  services companies with assets of between $300
million and $800 million located in New Jersey and in the surrounding  states of
New York and  Pennsylvania  within  approximately  100 miles of Bloomfield,  New
Jersey. The Compensation  Committee has complete access to all necessary Company
personnel records, financial reports, and other data.

     Components of  Compensation.  In  evaluating  executive  compensation,  the
Compensation  Committee  concentrates on three fundamental  components:  salary,
incentive bonus compensation and retirement income opportunity.

     Salary levels for senior  executives and other officers are reviewed by the
Compensation Committee on an annual basis. Salary levels reflect an individual's
job   responsibilities,   experience  and  performance   and  the   Compensation
Committee's analysis of competitive marketplace conditions.

     In the past,  incentive bonuses based upon the Bank's Management  Incentive
Plan ("MIP") have been used to provide cash  distributions  to  executives.  MIP
compensation  considers a variety of factors  relating to Company and individual
performance in calculating  incentive  compensation.  The specific criteria upon
which each MIP  participant's  awards are based is determined by the  Committee.
For the fiscal  year ended  September  30,  2005,  the MIP  provided  bonuses to
selected  officers of the Bank based upon the Company's return on equity ("ROE")
and other performance targets including net loan growth and net deposit growth.

     Another component of the executive compensation strategy of the Company and
the Bank is the retirement income opportunity. Presently, such retirement income
opportunity  involves  the  Bank's  401K  plan  and the  Bank's  Employee  Stock
Ownership  Plan  (the  "ESOP").  In  addition,   senior  officers  of  the  Bank
participate in a Salary  Continuation Plan that provides  additional  retirement
income to senior  executives of the Bank who retire after  attainment of age 65.
Such benefit is comprised of a life annuity  calculated  as a percentage  of the
average base salary paid during the last three years of employment.

     In addition,  during 2005 the Company added stock-based  incentive programs
as a further  enhancement to our  retirement  income  opportunity  and long-term
compensation  strategy.  Through the use of such stock-based incentive programs,
executives may receive stock options and restricted stock awards that will offer
them  the  possibility  of  future  compensation  opportunity  depending  on the
executive's continued


                                       38


<PAGE>

employment with the Company and the Bank and the long-term price appreciation of
the Company's Common Stock.

     Committee Review of Executive  Compensation.  In making its recommendations
regarding  executive  compensation  during the quarter ending December 31, 2004,
the Compensation  Committee was influenced by several positive factors.  Primary
among these were the financial performance of the Company and steps taken by the
Company in executing its five year business plan and the significant role of the
Company's executive officers in bringing it about.  Additional  accomplishments,
less measurable in quantitative  form but of equal importance to the Company and
the Bank,  included  advances  in  strategic  direction,  strengthened  internal
controls, and regulatory compliance.

     Based upon these performance factors, the Company's executive officers were
awarded salary increases to be effective as of January 1, 2005.

     Compensation of the Chief Executive Officer. In assessing appropriate types
and amounts of compensation  for the CEO, the Board evaluates both corporate and
individual  performance.  Corporate  factors  included in such  evaluation  are:
return on average  assets,  the level of the  efficiency  ratio,  and the market
performance of the Common Stock. Individual factors include the CEO's initiative
and  implementation  of  successful  business  strategies;   maintenance  of  an
effective management team; and various personal qualities, including leadership,
commitment, and professional and community standing.

     After  reviewing the  Company's  2004  results,  as well as his  individual
contributions,  the  Compensation  Committee  concluded  that  the  CEO,  Joseph
Kliminski,  performed with exceptional  skill and diligence in 2004. The Company
generated  earnings and business growth in accordance with the Company's  budget
and operating plans,  and Mr.  Kliminski  deserves a large measure of the credit
for this  leadership  role in the Company's  accomplishments.  The  Compensation
Committee believes that Mr. Kliminski has made significant  contributions to the
ongoing  success of the Company and the Bank, and continues to set the stage for
their continued  success.  Accordingly,  Mr. Kliminski's salary was increased by
$8,750 or 3.5% from $250,000 to $258,750 effective January 1, 2005.

     For the fiscal year ended September 30, 2004, Mr.  Kliminski was awarded an
MIP  bonus  of  $70,038  paid  in the  quarter  ended  December  31,  2004.  The
performance  criteria for awards under the MIP for Joseph Kliminski included the
Company's  ROE, net loan growth and net deposit  growth.  The  percentage of Mr.
Kliminski's  fiscal 2004 MIP  attributable to each of these factors were 11% for
ROE, 26% for net loan growth and 63% for net deposit growth.

     For the fiscal year ended September 30, 2005, Mr.  Kliminski was awarded an
MIP  bonus  of  $30,284  paid in the  quarter  ending  December  31,  2005.  The
performance  criteria for awards under the MIP for Joseph Kliminski included the
Company's  ROE, net loan growth and net deposit  growth.  The  percentage of Mr.
Kliminski's  fiscal 2005 MIP  attributable to each of these factors were 25% for
ROE, 31% for net loan growth and 44% for net deposit growth.

     Report  delivered by the  Compensation  Committee:  Robert A. Gaccione,  H.
Joseph North,  Stanley Obal, W. George  Parker,  Vincent S. Rospond and James H.
Ward, III


                                       39

<PAGE>

Stock Performance Graph

         No performance graph is presented for the Company's common stock
because it did not commence trading until October 6, 2005 upon completion of the
second step conversion.

Compensation Committee Interlocks and Insider Participation

     The Compensation  Committee of the Bank during the year ended September 30,
2005 consisted of Directors  Gaccione,  North, Obal,  Parker,  Rospond and Ward.
During the year ended  September  30,  2005,  the Company had no  "interlocking"
relationships  in which (i) an  executive  officer  of the  Company  served as a
member of the compensation  committee of another entity,  one of whose executive
officers served on the compensation  committee of the Company; (ii) an executive
officer of the  Company  served as a director  of another  entity,  one of whose
executive  officers  served on the  compensation  committee of the Company;  and
(iii) an executive officer of the Company served as a member of the compensation
committee  of  another  entity,  one of whose  executive  officers  served  as a
director of the Company.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

     (a) and (b) Security Ownership of Certain Beneficial Owners and Management.
The  following  table sets forth,  as of November  30,  2005,  the  ownership of
American Bank of New Jersey's employee stock ownership plan and the ownership of
our executive officers and directors, individually and as a group. Other than as
set forth in the  table,  management  knows of no person or group that owns more
than 5% of the  outstanding  shares of common stock as of November 30, 2005. The
business address of each owner shown below is 365 Broad Street,  Bloomfield, New
Jersey 07003.

                                                                     Percent of
                                                                      Shares of
Name and Address                                     Number of      Common Stock
of Beneficial Owner                                  Shares(1)       Outstanding
-------------------                                  ---------       -----------

American Bank of New Jersey Bank Employee Stock
Ownership Plan Trust (the "ESOP")                   1,133,571            8.00%

Robert A. Gaccione                                     59,791            0.42%
Joseph Kliminski                                      198,923            1.40%
Fred G. Kowal                                            0               0.00%
H. Joseph North                                        15,128            0.11%
Stanley Obal                                           37,036            0.26%
W. George Parker                                      209,021            1.47%
Vincent S. Rospond                                    155,607            1.10%
James H. Ward, III                                    209,616            1.48%
Richard M. Bzdek                                      137,465            0.97%
Eric B. Heyer                                          58,171            0.41%
Catherine M. Bringuier                                 48,414            0.34%
All directors and executive officers
     as a group (11 persons) (2)                    1,129,172            7.90%

 --------------------------
*    Less than 1%.
(1)  Includes  shares of common  stock  held  directly  as well as by spouses or
     minor children, in trust and other indirect ownership.
(2)  Includes  an  aggregate  of 120,808  shares  underlying  options and 36,657
     shares of restricted stock that become exercisable or vested within 60 days
     of November 30, 2005. As of September 30, 2005, each non-employee  director
     had 6,943


                                       40


<PAGE>

     options  becoming  exercisable  on  January  20,  2006 and 2,083  shares of
     restricted  stock  vesting on January 20, 2006.  As of September  30, 2005,
     Officers Kliminski,  Bzdek, Heyer and Bringuier had 32,980,  16,316, 14,927
     and 14,927 options and 9,997,  4,998, 4,582, and 4,582 shares of restricted
     stock,  respectively,  becoming  exercisable or vested on January 20, 2006.
(3)  These  shares  are  held in a  suspense  account  and are  allocated  among
     participants  annually  on the  basis of  compensation  as the ESOP debt is
     repaid.  As of November 30, 2005, 43,147 shares have been allocated to ESOP
     participants.  The Board of Directors appointed all non-employee  directors
     to serve as ESOP  Trustees and as members of the ESOP Plan  Committee.  The
     ESOP Plan Committee  directs the vote of all unallocated  shares and shares
     allocated  to  participants  for which  timely  voting  directions  are not
     received.

     (c)  Changes  in  Control.   Management  of  the  Registrant  knows  of  no
arrangements,   including  any  pledge  by  any  person  of  securities  of  the
Registrant,  the operation of which may at a subsequent  date result in a change
in control of the Registrant.

     (d) Securities Authorized for Issuance under Equity Compensation Plans. Set
forth below is information as of September 30, 2005 with respect to compensation
plans under  which  equity  securities  of the  Registrant  are  authorized  for
issuance.

                                           EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
                                                   (a)                     (b)                      (c)
                                                                                             Number of securities
                                          Number of securities      Weighted-average        remaining available for
                                              to be issued         exercise price of      future issuance under equity
                                            upon exercise of          outstanding             compensation plans
                                          outstanding options,     options, warrants         (excluding securities
                                           warrants and rights         and rights           reflected in column (a))
                                          --------------------     -----------------      ----------------------------

<S>                                         <C>                     <C>                           <C>
    Equity compensation plans
      approved by security holders:
         2005 Stock Option Plan                  694,313                 $6.80                         0
         2005 Restricted Stock Plan              208,293                     0                         0
    Equity compensation plans
      not approved by security
      holders:
         None
                                                     N/A                   N/A                       N/A
                                                 -------                 -----                       ---

         TOTAL                                   902,606                 $5.23                         0
                                                 =======                 =====                         =
</TABLE>


Item 13. Certain Relationships and Related Transactions.

     Other than as disclosed  below,  no directors,  officers or their immediate
family members were engaged in transactions with American Bancorp of New Jersey,
Inc.,  ASB  Holding  Company,  American  Bank of New  Jersey  or any  subsidiary
involving  more than  $60,000  (other than  through a loan with the Bank) during
either of the two years ended September 30, 2005.

     Director Vincent S. Rospond is the majority  stockholder of the law firm of
Rospond, Rospond & Conte, P.A., which serves as general counsel to American Bank
of New Jersey and to which the Bank paid  approximately  $35,000  and $40,000 in
legal fees during the years ended September 30, 2005 and 2004. In addition,  the
Bank engages this law firm in connection  with  residential  loan closings,  and
fees  paid by


                                       41
<PAGE>

borrowers  in loan  closings  handled  by this law  firm  totaled
approximately $30,000 and $48,000 during fiscal 2005 and 2004.

     Director  Robert  A.  Gaccione  is a  senior  partner  of the  law  firm of
Gaccione,  Pomaco & Malanga,  P.C. to which the Bank paid approximately  $49,000
and $11,000 in legal fees during the years  ended  September  30, 2005 and 2004,
respectively.  In addition,  the Bank engages this law firm in  connection  with
commercial loan closings, and fees paid by borrowers in loan closings handled by
this law firm totaled  approximately  $20,000 and $38,000 during fiscal 2005 and
2004, respectively.

     Management believes that the transactions  described above were on terms at
least as favorable to the Bank as it would have received in transactions with an
unrelated party.

     The Bank  makes  loans to its  officers,  directors  and  employees  in the
ordinary  course of business.  The  application  fee is waived for  mortgages to
officers and employees on  single-family  owner-occupied  homes or second homes.
The Bank also reduces its  application  fee for mortgages on two-to-four  family
owner-occupied homes by the amount of the application fee for single family home
mortgages and reduces its modification fee for one-to-four family owner-occupied
home mortgages or second home mortgages by the amount of the application fee for
single  family  home  mortgages.  Other than these  application  fee waivers and
reductions to officers and employees,  these loans are on substantially the same
terms and conditions as those of comparable  transactions prevailing at the time
with other persons. These loans also do not include more than the normal risk of
collectibility or present other unfavorable features.

Item 14. Principal Accounting Fees and Services.

     Effective  July 30,  2002,  the  Securities  and  Exchange  Act of 1934 was
amended by the  Sarbanes-Oxley  Act of 2002 to require all auditing services and
non-audit services provided by an issuer's independent auditor to be approved by
the issuer's  audit  committee  prior to such services  being  rendered or to be
approved  pursuant to  pre-approval  policies and procedures  established by the
issuer's audit  committee.  The Company's  Audit  Committee has not  established
pre-approval  procedures and instead specifically approves each service prior to
the engagement of the auditor for all audit and non-audit services.

     All of the  services  listed  below for 2005 and 2004 were  approved by the
Audit Committee prior to the service being rendered. There were no services that
were not recognized to be non-audit services at the time of engagement that were
approved after the fact.

     Audit Fees.  The  aggregate  fees billed by Crowe  Chizek for  professional
services rendered for the audit of the Company's annual  consolidated  financial
statements and review of the quarterly consolidated financial statements for the
fiscal  years  ended  September  30,  2005 and 2004 were  $71,500  and  $64,000,
respectively.

     Audit Related Fees. The aggregate fees billed by Crowe Chizek for assurance
and related services related to the Company's Annual Report on Form 10-K for the
years ended September 30, 2005 and 2004 were $8,000 and $7,500, respectively.

     Tax Fees.  The  aggregate  fees  billed by Crowe  Chizek  for  professional
services rendered for tax preparation services for the years ended September 30,
2005 and 2004 were  $10,250 and  $9,000,  respectively.  Additional  tax-related
services  billed by Crowe Chizek for the years ended September 30, 2005 and 2004
were $2,175 and $0 respectively.  Such additional tax-related services consisted
of billings for tax


                                       42
<PAGE>

consultation  services  relating to the Company's change in tax year and related
communications to tax authorities.

     All Other Fees. The aggregate fees billed by Crowe Chizek for  professional
services  rendered  for  services or products  other than those listed under the
captions "Audit Fees," "Audit-Related Fees," and "Tax Fees" totaled $102,195 for
the year ended  September  30, 2005 and  consisted  of  expenses  related to the
second-step  conversion and stock offering completed in October 2005 and $13,625
for the year ended September 30, 2004, and consisted of expenses  related to the
minority stock offering completed in October 2003.

                                     PART IV

Item 15. Exhibits, Financial Statement Schedules.

     (a) Listed below are all financial statements and exhibits filed as part of
this Form 10-K.

     1.   The consolidated statements of financial condition as of September 30,
          2005 and 2004  and the  related  consolidated  statements  of  income,
          changes in  stockholders'  equity,  and cash flows for the three years
          ended  September  30, 2005,  together  with the related  notes and the
          report of independent certified public accountants.

     2.   The  following  exhibits  are either  included  with this Form 10-K or
          incorporated herein by reference: (a) List of Exhibits:

          3(i)  Certificate of Incorporation  of American Bancorp of New Jersey,
                Inc.(1)
          3(ii) Bylaws of American Bancorp of New Jersey, Inc. (1)
          4     Specimen Stock Certificate of ASB Holding Company(1)
          10.1  Employment Agreement  between  American  Bank of New  Jersey and
                Joseph Kliminski(2)+
          10.2  Employment Agreement  between  American  Savings  Bank of NJ and
                Richard M. Bzdek(2)+
          10.3  Employment Agreement between American Savings Bank of NJ and
                Eric B. Heyer(2)+
          10.4  Form of Executive Salary Continuation Agreement(2)+
          10.5  Employment Agreement  between  ASB  Holding  Company  and Joseph
                Kliminski(3) +
          10.6  Employment Agreement between American Bank of New Jersey and
                Fred G. Kowal(4) +
          10.7  Employment Agreement  between  American  Bank of New  Jersey and
                Catherine M. Bringuier(1) +
          10.8  2005 Stock Option Plan(5)+
          10.9  2005 Restricted Stock Plan(5)+
          13    Portions of the 2005 Annual Report to Stockholders
          21    Subsidiaries
          31    Certification  Pursuant to Section 302 of the Sarbanes-Oxley Act
                of 2002
          32    Certification Pursuant to Section 906 of the  Sarbanes-Oxley Act
                of 2002

         ---------------
          (1)  Incorporated by reference to the Company's Registration Statement
               on Form S-1 (File No.  333-125957) filed with the SEC on June 20,
               2005.


                                       43
<PAGE>

          (2)  Incorporated by reference to the  Registration  Statement on Form
               SB-2 (File No.  333-105472) of ASB Holding Company filed with the
               SEC on May 22, 2003.
          (3)  Incorporated by reference to the Form 10-KSB (File No. 000-31789)
               of ASB Holding Company filed with the SEC on December 24, 2003.
          (4)  Incorporated by reference to the Form 8-K (File No. 000-31789) of
               ASB Holding Company filed with the SEC on April 18, 2005.
          (5)  Incorporated by reference to the definitive proxy statement (File
               No.  000-31789)  of ASB  Holding  Company  filed  with the SEC on
               December 28, 2004.
          +    Management  or  compensatory  plan  required  to be  filed  as an
               exhibit.











                                       44

<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  the registrant has duly caused this report to
be signed on its behalf by the  undersigned,  thereunto  duly  authorized  as of
December 27, 2005.

                                     AMERICAN BANCORP OF NEW JERSEY, INC.


                                     By:  /s/ Fred G. Kowal
                                          --------------------------------------
                                          Fred G. Kowal
                                          President and Chief Operating Officer
                                          (Duly Authorized Representative)

     Pursuant to the  requirement  of the  Securities  Exchange Act of 1934,  as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated as of December 27, 2005.


/s/ W. George Parker                       /s/ Joseph Kliminski
------------------------------------       -------------------------------------
W. George Parker                           Joseph Kliminski
Chairman                                   Chief Executive Officer and Director
                                           (Principal Executive Officer)

/s/ Fred G. Kowal                          /s/ Eric B. Heyer
------------------------------------       -------------------------------------
Fred G. Kowal                              Eric B. Heyer
President, Chief Operating Officer         Senior Vice President, Treasurer and
and Director                               Chief Financial Officer
                                           (Principal Financial and Accounting
                                           Officer)

/s/ H. Joseph North                        /s/ James H. Ward, III
------------------------------------       -------------------------------------
H. Joseph North                            James H. Ward, III
Director                                   Vice Chairman


/s/ Stanley Obal                           /s/ Robert Gaccione
------------------------------------       -------------------------------------
Stanley Obal                               Robert Gaccione
Director                                   Director


/s/ Vincent S. Rospond
------------------------------------
Vincent S. Rospond
Director