**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





(Mark
                One)
            **FORM
                10-K**





ý  **ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**





For
                the fiscal year ended
            **December
                31, 2006**





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
            **0-14294**





**Greater
                Community Bancorp**(Exact
                name of registrant as specified in its
                charter)





**New
                Jersey**
            
            **22-2545165**State
                or other jurisdiction of
            
            (I.R.S.
                Employerincorporation
                or organization
            
            Identification
                No.)**55
                Union Boulevard, Totowa, New Jersey**
            
            **07512**(Address
                of principal executive offices)
            
            (Zip
                Code)





Registrant's
                telephone number, including area code
            **(973)
                942-1111**





Securities
      registered pursuant to Section 12(b) of the Act:





Title
                of each class
            
            Name
                of each exchange on which registered**Common
                Stock, par value $0.50 per share**
            
            **The
                NASDAQ Stock Market LLC**





Securities
      registered pursuant to Section 12(g) of the Act:


**None**(Title
                of class)





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Exchange Act.


 ̈YES
            ýNO


Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act.


 ̈YES
            ýNO


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. ý  YES  ̈ NO




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K (§229.405 of this chapter) 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.  ̈




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of
 “accelerated filer and large accelerated filer” in Rule 12b-2 of the
      Exchange Act. (Check one):




Large
                accelerated filer ̈
            Accelerated
                filerý
            Non-accelerated
                filer ̈


*Table
          of Contents*


Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act).  ̈ YES
      [ ý  NO








The
      aggregate market value of the voting common stock held by non-affiliates of
      the
      registrant at June 30, 2006 (the last business day of the registrant’s most
      recently completed second fiscal quarter) was approximately $112,419,253. This
      calculation does not reflect a determination that persons are affiliates for
      any
      other purpose.





The
      number of shares outstanding of the registrant's common stock as of February
      28, **** 2007
      was
      8,422,044.








DOCUMENTS
      INCORPORATED BY REFERENCE





Certain
      information in the Company's definitive Proxy Statement for its 2007 Annual
      Meeting of Stockholders to be held on April 24, 2007 is incorporated by
      reference into Part III, Items 10 through 14, inclusive.






















**TABLE
      OF CONTENTS**


**PAGE**PART
                  I
              
              
              2Item
                  1.
              Business
              2Item
                  1A.
              Risk
                  Factors
              7Item
                  1B.
              Unresolved
                  Staff Comments
              9Item
                  2.
              Properties
              9Item
                  3.
              Legal
                  Proceedings
              9Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              9PART
                  II
              
              
              10Item
                  5.
              Market
                  for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                  Purchases of Equity Securities
              10Item
                  6.
              Selected
                  Financial Data
              12Item
                  7.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              12Item
                  7A.
              Quantitative
                  and Qualitative Disclosures about Market Risk
              25Item
                  8.
              Financial
                  Statements and Supplementary Data
              26Item
                  9.
              Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure
              54Item
                  9A.
              Controls
                  and Procedures
              54Item
                  9B.
              Other
                  Information
              54PART
                  III
              
              
              57Item
                  10.
              Directors,
                  Executive Officers and Corporate Governance
              57Item
                  11.
              Executive
                  Compensation
              57Item
                  12.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              57Item
                  13.
              Certain
                  Relationships and Related Transactions, and Director
                  Independence
              57Item
                  14.
              Principal
                  Accounting Fees and Services
              57PART
                  IV
              
              
              57Item
                  15.
              Exhibits,
                  Financial Statement Schedules
              57SIGNATURES
              
              58Exhibit
                  Index
              
              E-1


*Table
          of Contents*


**PART
      I**




**Item
      1. B** **usiness.**




**THE
      HOLDING COMPANY**


Greater
      Community Bancorp (the “Company”) is a business corporation incorporated in New
      Jersey in 1984 and headquartered in Totowa, New Jersey. It is registered as
      a
      bank holding company with the Board of Governors of the Federal Reserve System
      (“Federal Reserve”) under the Bank Holding Company Act of 1956, as amended
      (“Holding Company Act”), and is designated by the Federal Reserve as a financial
      holding company pursuant to the Gramm-Leach-Bliley Act of 1999 (the “1999 Act”).
      The Company’s primary business activity is the ownership and operation of a New
      Jersey commercial bank subsidiary, Greater Community Bank (“GCB”). GCB’s
      operation includes equipment leasing activity through its wholly-owned nonbank
      subsidiary, Highland Capital Corp.




**BANK
      SUBSIDIARY**


GCB
      received its charter from the New Jersey Department of Banking and Insurance
      (“Department”). GCB commenced operations as a commercial bank in 1986. Its main
      office is located at 55 Union Boulevard, Totowa, New Jersey. At December 31,
      2006, GCB operated fifteen additional full-service branches located in Passaic,
      Bergen and Morris Counties, New Jersey. GCB offers a broad variety of lending
      services, including commercial and residential real estate loans, short and
      medium term loans, revolving credit arrangements, lines of credit and consumer
      loans. GCB also offers a variety of deposit accounts, including consumer and
      commercial checking accounts, interest-bearing checking accounts, savings and
      time deposits and other customary banking services. GCB operates a securities
      brokerage business in its Greater Community Financial division (“GCF”). Raymond
      James Financial Services, Inc. acts as GCF’s registered broker-dealer. Highland
      Capital Corp. (“HCC”), a wholly-owned nonbank subsidiary of GCB, engages in high
      quality vendor-driven lease programs focusing primarily on small to medium
      ticket medical equipment leasing.




GCB
      has a
      wholly-owned investment company nonbank subsidiary, a New Jersey corporation,
      formed to manage its investment portfolio. The New Jersey investment company
      had
      in turn a wholly-owned Delaware subsidiary to hold and manage its investment
      securities, which, after the close of business on December 31, 2006, merged
      with
      and into a wholly-owned investment company nonbank subsidiary, a New York
      corporation, operating for the same purpose.




GCB
      formed a wholly-owned nonbank subsidiary, Greater Community Redevelopment LLC
      (“GCR”), in 2006. GCR invests in community real estate redevelopment projects
      and currently has one such investment through a joint venture with a
      nonaffiliated limited liability company.




**NONBANK
      SUBSIDIARIES**


The
      Company operates seven nonbank subsidiaries in addition to those that are
      wholly-owned by GCB.




GCB
      Realty, LLC (“Realty”) was formed to acquire and manage real estate properties.
      Realty owns a property in Bergen County, New Jersey. GCB and several other
      tenants lease space in the building.




GCB
      Capital Trust II (“Trust”) was formed under the Business Trust Act of Delaware
      and is an unconsolidated subsidiary of the Company. The Trust’s sole purposes
      were to issue and sell Trust Preferred Securities (“Preferred Securities”) and
      Common Securities and use the sales proceeds to acquire junior subordinated
      debentures (the “Debentures”) issued by the Company. The Company owns all of the
      Trust’s Common Securities. The Debentures are the Trust’s sole assets and the
      Company’s interest payments on the Debentures are the Trust’s sole revenue. In
      2002 the Company issued, through the Trust, 2,400,000 Preferred Securities,
      $10
      face value per security, for total proceeds of $24 million. The Preferred
      Securities have an annual distribution rate of 8.45% payable quarterly. The
      Preferred Securities mature on June 30, 2032 and are callable at the Company’s
      option on or after June 30, 2007.




REO
      Fairfield, LLC (“REO”), wholly-owned by the Company, manages other real estate
      owned by the Company. It currently holds one property located in Passaic County,
      New Jersey.




Greater
      Community Title LLC, wholly-owned by the Company, provides title insurance
      and
      settlement services and, through Greater Community 1031Exchange Services LLC,
      its subsidiary limited liability company, provides 1031 account exchange
      services.




Greater
      Community Tax Services LLC, wholly-owned by the Company, provides personal
      income tax preparation services.




Greater
      Community Insurance Services, LLC (“Insurance”) is 50% owned by the Company.
      Insurance provides traditional insurance products and is a joint venture with
      a
      nonaffiliated limited liability company.




2
 *Table
          of Contents*


**BUSINESS
      SEGMENTS**


The
      Company follows the provisions of Statement on Financial Accounting Standards
      (SFAS) No.131, *Disclosures
      about Segments of an Enterprise and Related Information* ,
      for
      reporting information about operating segments in its consolidated financial
      statements. The Company operates GCB and all nonbank subsidiaries as two
      reportable business segments. “Community Banking” consists of GCB and all
      nonbank subsidiaries with the exception of GCB’s nonbank subsidiary HCC. All of
      Community Banking’s activities are interrelated, and each activity is dependent
      and assessed based on how each of the Community Banking’s activities supports
      the other activities. Accordingly, significant operating decisions are based
      upon analysis of Community Banking as an operating segment. The Company operates
      HCC as a reportable business segment, “Leasing”, in that the unit specializes in
      vendor-driven lease programs focusing primarily on small to medium ticket
      medical equipment leasing and derives its business largely outside the rest
      of
      the Company’s traditional geographic market. See Note 1. of the Notes to
      Consolidated Financial Statements contained in Part II, Item 8. for further
      information on the Company’s business segments.




**RECENT
      LEGISLATION**


The
      Sarbanes-Oxley Act of 2002 (“SOA”) has had, and in the future will likely
      continue to have, a great impact on the corporate governance and financial
      statement preparation and reporting obligations of publicly held business
      entities such as the Company. This legislation contains far-reaching
      requirements relating to, among other things: certifications by an issuer’s
      principal officers relating to the accuracy of financial disclosures and
      disclosure controls and procedures; the independence of auditors; the
      composition, specific duties and independence of audit committees of boards
      of
      directors; the manner in which audit committees obtain and process financial
      and
      related information; an increase in the events required to be reported
      currently; and an acceleration of the time within which an issuer’s “insiders”
must report changes in beneficial ownership of the issuer’s securities. The
      Company has put in place a sound program to comply with the SOA requirements
      and
      has allocated resources for continuous monitoring of the processes.




**COMPETITION**


The
      Company, through GCB, competes with other New Jersey commercial banks, savings
      banks, savings and loan associations, finance companies, insurance companies
      and
      credit unions. A substantial number of offices of competing financial
      institutions are located within GCB’s respective market areas. The past trend
      towards consolidation of the banking industry has continued in New Jersey in
      recent years. This trend may make it more difficult for smaller banks such
      as
      GCB to compete with larger national and regional banking institutions. Several
      of GCB’s competitors are affiliated with major banking and financial
      institutions that are substantially larger and have far greater financial
      resources than GCB.




Competitive
      factors between financial institutions can be classified into two categories:
      competitive rates and competitive service. Rate competition can be intense
      in
      the origination of loans and the generation of deposits. GCB competes with
      larger institutions with respect to the interest rates they offer. From a
      service standpoint, GCB’s competitors, by virtue of their superior financial
      resources, have substantially greater lending limits than GCB. Such competitors
      also perform certain functions for their customers, such as trust and
      international services, which GCB has chosen not to provide. The Company
      regularly reviews its products, pricing, locations and alternative delivery
      channels in order to remain competitive.




**SUPERVISION
      AND REGULATION**


The
      banking industry is highly regulated. Statutory and regulatory controls increase
      a bank holding company’s cost of doing business, limit its options to deploy
      assets and maximize income and may significantly limit the activities of
      institutions that do not meet regulatory capital or other requirements. Areas
      subject to regulation and supervision by the bank regulatory agencies include,
      among others: minimum capital levels; dividends; affiliate transactions;
      expansion of locations; acquisitions and mergers; reserves against deposits;
      deposit insurance premiums; credit underwriting standards; management and
      internal controls; investments; and general safety and soundness of banks and
      bank holding companies. Supervision, regulation and examination of the Company
      and GCB by the bank regulatory agencies are intended primarily for the
      protection of depositors, the communities served by the institutions or other
      governmental interests, rather than for holders of shares of the Company’s
      common stock.




Following
      is a brief summary of certain statutes, rules and regulations affecting the
      Company and GCB. The Company is unable to predict the nature or the extent
      of
      the effects on its business and earnings that fiscal or monetary policies,
      economic control, new regulation or new federal or state legislation may have
      in
      the future. The following summary does not purport to be complete and is
      qualified in its entirety by reference to such statutes and
      regulations.




**1.
      Bank Holding Company Regulation**


As
      a bank
      holding company and financial holding company, the Company is subject to regular
      examination, supervision and regulation by the Federal Reserve. The Company
      is
      required to file reports with the Federal Reserve and to furnish such additional
      information as the Federal Reserve may require pursuant to the Holding Company
      Act. The Company also is subject to regulation by the Department.




3
 *Table
          of Contents*


Federal
      Reserve policy requires the Company to act as a source of financial and
      managerial strength to GCB and to commit resources to support it. In addition,
      any loans by the Company to GCB would be subordinate in right of payment to
      deposits and certain other indebtedness of GCB. At December 31, 2006, the
      Company had approximately $6.2 million in financial resources in addition to
      its
      investment in GCB and nonbank subsidiaries. The Federal Reserve has adopted
      guidelines regarding the capital adequacy of bank holding companies requiring
      them to maintain specified minimum ratios of capital to total assets and capital
      to risk-weighted assets.




**2.
      Holding Company Activities**


With
      certain exceptions, the Holding Company Act prohibits a bank holding company
      from acquiring direct or indirect ownership or control of more than 5% of the
      voting shares of a company that is not a bank or a bank holding company or
      from
      engaging directly or indirectly in activities other than those of banking,
      managing or controlling banks, or providing services for its subsidiaries.
      The
      principal exceptions to these prohibitions involve certain nonbank activities
      that, by statute or by Federal Reserve regulation or order, have been identified
      as activities closely related to the business of banking. The Company’s
      activities are subject to these legal and regulatory limitations under the
      Holding Company Act and related Federal Reserve regulations. Satisfactory
      capital ratios and Community Reinvestment Act (“CRA”) ratings are generally
      prerequisites to obtaining regulatory approval to make
      acquisitions.




The
      Federal Interstate Banking and Branching Act of 1994 permits a bank holding
      company to acquire banks in states other than its home state, regardless of
      applicable state law. The 1994 law also permits banks to create interstate
      branches, either by merging across state lines or by creating new branches,
      subject to a state’s ability to opt out of these enabling provisions. As have
      most states, New Jersey has enacted legislation to authorize interstate banking
      either by merger or by branching into New Jersey if the foreign bank already
      has
      branches in New Jersey; however, that legislation did not authorize de novo
      branching into New Jersey.




**3.
      Holding Company Dividends and Stock Repurchases**


The
      Federal Reserve has the power to prohibit bank holding companies from paying
      dividends if their actions are deemed to constitute unsafe or unsound practices.
      It is the Federal Reserve’s policy that a bank holding company should pay cash
      dividends only to the extent that its net income for the past year is sufficient
      to cover both the cash dividends and a rate of earnings retention that is
      consistent with its capital needs, asset quality and overall financial
      condition.




As
      a bank
      holding company, the Company is required to give the Federal Reserve prior
      written notice of any purchase or redemption of its outstanding equity
      securities if the gross consideration for the purchase or redemption, when
      combined with the net consideration paid for all such purchases or redemptions
      during the preceding 12 months, is equal to 10% or more of the Company’s
      consolidated net worth. The Federal Reserve may disapprove such a purchase
      or
      redemption if it determines that the proposal would violate any law, regulation,
      Federal Reserve order, directive or any condition imposed by or written
      agreement with the Federal Reserve.




**4.
      Financial Holding Company Regulation**


As
      a
      financial holding company, the Company may engage in any activity that the
      Federal Reserve determines to be financial in nature or incidental to such
      financial activity, or is complementary to a financial activity and does not
      pose a substantial risk to the safety or soundness of depository institutions
      or
      the financial system generally. The following activities will be considered
      financial in nature: (a) lending, exchanging, transferring, investing for others
      or safeguarding money or securities; (b) insuring, guaranteeing or indemnifying
      against loss, harm, damage, illness, disability or death, or providing and
      issuing annuities, and acting as principal, agent or broker for purposes of
      the
      foregoing, in any State; (c) providing financial, investment or economic
      advisory services, including advising an investment company; (d) issuing or
      selling instruments representing interests in pools of assets permissible for
      a
      bank to hold directly; (e) underwriting, dealing in or making a market in
      securities; (f) engaging in any activity that the Federal Reserve has determined
      to be so closely related to banking or managing or controlling banks as to
      be a
      proper incident thereto; (g) engaging in the United States in any activity
      that
      a bank holding company may engage in outside of the United States that the
      Federal Reserve has determined to be usual in connection with the transaction
      of
      banking or other financial operations abroad; (h) engaging through nonbank
      subsidiaries in various underwriting or merchant or investment banking
      activities; and (i) acquiring investment assets through insurance company
      affiliates in the ordinary course of an insurance company business.




**5.
      Bank Regulation**


As
      a
      state-chartered bank that is not a member of the Federal Reserve System, GCB
      is
      subject to the primary federal supervision of the FDIC under the Federal Deposit
      Insurance Act (the “FDIA”). Prior FDIC approval is required to establish or
      relocate a branch office or engage in any merger, consolidation or significant
      purchase or sale of assets. GCB is also subject to regulation and supervision
      by
      the Department. In addition, GCB is subject to numerous federal and state laws
      and regulations which set forth specific restrictions and procedural
      requirements with respect to the establishment of branches, investments,
      interest rates on loans, credit practices, the disclosure of credit terms and
      discrimination in credit transactions.




4
 *Table
          of Contents*


The
      FDIC
      and the Department regularly examine the operations of GCB and its condition,
      including capital adequacy, reserves, loans, investments and management
      practices. These examinations are for the protection of GCB’s depositors and the
      FDIC’s Deposit Insurance Fund and not the Company. GCB is also required to
      furnish quarterly and annual reports to the FDIC. The FDIC’s enforcement
      authority includes the power to remove officers and directors and the authority
      to issue orders to prevent a bank from engaging in unsafe or unsound practices
      or violating laws or regulations governing its business.




The
      FDIC
      has adopted regulations regarding the capital adequacy of banks subject to
      its
      primary supervision. Such regulations require those banks to maintain specified
      minimum ratios of capital to total assets and capital to risk-weighted assets.
      See “13. Regulatory Capital Requirements” below.




Statewide
      branching is permitted in New Jersey. Branch approvals are subject to statutory
      standards relating to safety and soundness, competition, public convenience
      and
      performance under the CRA.




**6.
      Community Reinvestment Act**


Under
      the
      CRA, GCB has a continuing and affirmative obligation, consistent with its safe
      and sound operation, to help meet the credit needs of its entire communities,
      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, consistent with
      the CRA. The CRA also requires all institutions to make public disclosure of
      their CRA examination ratings. GCB received a “satisfactory” CRA rating in its
      most recent examination.




**7.
      Bank Dividends**


New
      Jersey law permits GCB to declare dividends only if, after payment of the
      dividends, its capital would be unimpaired and its remaining surplus would
      equal
      at least 50% of its capital. Under the FDIA, GCB is prohibited from paying
      dividends or making any other capital distribution if, after that distribution,
      it would fail to meet its regulatory capital requirements. At December 31,
      2006,
      GCB met its regulatory capital requirements. The FDIC also has authority to
      prohibit the payment of dividends by a bank when it determines such payment
      to
      be an unsafe and unsound banking practice. The FDIC may prohibit parent
      companies of banks that are deemed to be “significantly undercapitalized” under
      the FDIA or which fail to properly submit and implement capital restoration
      plans required by the FDIA from paying dividends or making other capital
      distributions without the FDIC’s permission. See “3. Holding Company Dividends
      and Stock Repurchases” above.




**8.
      Restrictions on Intercompany Transactions**


GCB
      is
      subject to restrictions imposed by federal law on extensions of credit to,
      and
      certain other transactions with, the Company and other affiliates. Such
      restrictions prevent the Company and its affiliates from borrowing from GCB
      unless the loans are secured by specified collateral, and require such
      transactions to have terms comparable to terms of arms-length transactions
      with
      third persons. Such transactions by GCB are generally limited in amount as
      to
      the Company and as to any other affiliate to 10% of GCB’s capital and surplus.
      As to the Company and all other affiliates, such transactions are limited to
      an
      aggregate of 20% of GCB’s capital and surplus. These regulations and
      restrictions may limit the Company’s ability to obtain funds from GCB for its
      cash needs, including funds for acquisitions and for payment of dividends,
      interest and operating expenses.




**9.
      Real Estate Lending Guidelines**


Under
      FDIC regulations, state banks must adopt and maintain written policies
      establishing appropriate limits and standards for real estate lending
      activities. These policies must establish loan portfolio diversification
      standards, prudent underwriting standards (including loan-to-value limits that
      are clear and measurable), loan administration procedures and documentation,
      and
      approval and reporting requirements. A bank’s real estate lending policy must
      reflect consideration of the Interagency Guidelines for Real Estate Lending
      Policies adopted by federal bank regulators. Additional guidance issued by
      the
      federal regulators focuses on concentrations in those types of commercial real
      estate (“CRE”) loans that are particularly vulnerable to cyclical CRE markets,
      provides criteria for determining a CRE concentration and in such case addresses
      sound risk management practices.




**10.
      Deposit Insurance**


GCB
      is a
      member of the FDIC. As such, its deposits are insured to a maximum of $100,000
      per depositor (up to $250,000 for "self-directed" retirement accounts) through
      the FDIC. GCB is required to pay deposit insurance premiums to the
      FDIC.




The
      Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”)
      included provisions to reform the federal deposit insurance system, including
      the implementation of risk-based deposit insurance premiums. The FDIC merged
      its
      previous federal deposit insurance funds and formed the Deposit Insurance Fund
      (DIF) on March 31, 2006 in accordance with the Federal Deposit Insurance Reform
      Act of 2005. FDIC maintains the DIF by assessing depository institutions an
      insurance premium based upon statutory factors that include the balance of
      insured deposits as well as the degree of risk the institution poses to the
      insurance fund. The deposit insurance premium rates assessed for GCB were
      0.0031% in 2006 and 0.0033% in 2005.




5
 *Table
          of Contents*


11.
      Standards for Safety and Soundness


Under
      FDICIA, each federal banking agency is required to prescribe noncapital safety
      and soundness standards for institutions under its authority. The federal
      banking agencies have adopted interagency guidelines covering internal controls,
      information systems and internal audit systems, loan documentation, credit
      underwriting, interest rate exposure, asset growth, compensation, fees,
      benefits, and standards for asset quality and earnings sufficiency. An
      institution that fails to meet any of these standards may be required to develop
      a plan acceptable to the agency, specifying the steps that the institution
      will
      take to meet the standards. Failure to submit or implement such a plan may
      subject the institution to regulatory sanctions. The Company believes GCB meets
      all adopted standards.




**12.
      Enforcement Powers**


The
      bank
      regulatory agencies have broad discretion to issue cease and desist orders
      if
      they determine that the Company or GCB is engaging in “unsafe or unsound banking
      practices.” In addition, the federal bank regulatory authorities may impose
      substantial civil money penalties for violations of certain federal banking
      statutes and regulations, violation of a fiduciary duty, or violation of a
      final
      or temporary cease and desist order, among other things. Financial institutions
      and a broad range of persons associated with them are subject to the imposition
      of fines, penalties and other enforcement actions based upon the conduct of
      their relationships with the institutions.




The
      FDIC
      may be appointed as a conservator or receiver for a depository institution
      based
      upon a number of events and circumstances. In such a capacity the FDIC also
      has
      express authority to repudiate most contracts with such an institution that
      the
      FDIC determines to be burdensome or to promote the orderly administration of
      the
      institution’s affairs. The FDIC also has authority to enforce contracts made by
      a depository institution notwithstanding any contractual provision providing
      for
      termination, default, acceleration, or exercise of rights upon, or solely by
      reason of, insolvency or the appointment of a conservator or receiver. Insured
      depository institutions also are prohibited from entering into contracts for
      goods, products or services that would adversely affect their safety and
      soundness.




**13.
      Regulatory Capital Requirements**


The
      Federal Reserve and the FDIC have established guidelines with respect to the
      maintenance of appropriate levels of capital by bank holding companies and
      state-chartered banks that are not members of the Federal Reserve System (“state
      nonmember banks”). The regulations impose two sets of capital adequacy
      requirements: minimum leverage rules, which require maintenance of a specified
      minimum ratio of capital to total assets, and risk-based capital rules, which
      require the maintenance of specified minimum ratios of capital to
“risk-weighted” assets.




These
      regulations require bank holding companies and state nonmember banks to maintain
      a minimum leverage ratio of “Tier I capital” to total assets of 3%. Only the
      strongest bank holding companies and banks, with composite examination ratings
      of 1 under the rating system used by the federal bank regulators, are permitted
      to operate at or near such minimum level of capital. All other bank holding
      companies and banks are expected to maintain a leverage ratio of at least 1%
      to
      2% above the minimum ratio, depending on the assessment of an individual
      organization’s capital adequacy by its primary regulator. Any bank or bank
      holding company experiencing or anticipating significant growth would be
      expected to maintain capital well above the minimum levels. In addition, the
      Federal Reserve has indicated that whenever appropriate, and in particular
      when
      a bank holding company is undertaking expansion, seeking to engage in new
      activities or otherwise facing unusual or abnormal risks, it will consider,
      on a
      case-by-case basis, the level of an organization’s ratio of tangible Tier I
      capital (after deducting all intangibles) to total assets in making an overall
      assessment of capital.




The
      risk-based capital rules require bank holding companies and state nonmember
      banks to maintain minimum regulatory capital levels based upon a weighting
      of
      their assets and off-balance sheet obligations according to risk. The risk-based
      capital rules have two basic components: a Tier I or core capital requirement
      and a Tier II or supplementary capital requirement. Tier I capital consists
      primarily of common stockholders’ equity, certain perpetual preferred stock and
      minority interests in the equity accounts of consolidated subsidiaries, less
      most intangible assets, primarily goodwill. Tier II capital elements include,
      subject to certain limitations, the allowance for loan and lease losses;
      perpetual preferred stock that does not qualify for Tier I and long-term
      preferred stock with an original maturity of at least 20 years from issuance;
      hybrid capital instruments, including perpetual debt and mandatory convertible
      securities; and subordinated debt and intermediate-term preferred
      stock.




The
      risk-based capital regulations assign balance sheet assets and credit equivalent
      amounts of off-balance sheet obligations to one of four broad risk categories
      based principally on the degree of credit risk associated with the obligor.
      The
      assets and off-balance sheet items in the four risk categories are weighted
      at
      0%, 20%, 50% and 100%. These computations result in the total risk-weighted
      assets.




The
      risk-based capital regulations require banks and bank holding companies to
      maintain a minimum ratio of total capital to total risk-weighted assets of
      8%,
      with at least 4% as core capital. For the purpose of calculating these ratios,
      supplementary capital is limited to no more than 100% of core capital, and
      the
      aggregate amount of certain types of supplementary capital is limited.
      These




6
 *Table
          of Contents*


regulations
      also limit the allowance for loan and lease losses which may be included as
      capital to 1.25% of total risk-weighted assets.




At
      December 31, 2006, the Company’s total risk-based capital and leverage capital
      ratios were 11.84% and 8.38%, respectively. The minimum levels established
      by
      the regulators for these measures are 8% and 4%, respectively.




FDICIA
      requires federal banking regulators to classify insured depository institutions
      by capital levels and to take various prompt corrective actions to resolve
      the
      problems of an institution that does not satisfy the capital standards. Under
      FDICIA and its prompt corrective action regulations, all institutions,
      regardless of their capital levels, are restricted from making any capital
      distribution or paying any management fees that would cause the institution
      to
      fail to meet the minimum capital requirements.




Under
      the
      FDIC’s prompt corrective action regulations, a “well-capitalized” bank is one
      that is not subject to a regulatory order or directive to meet any specific
      capital level and that has or exceeds the following capital levels: a total
      risk-based capital ratio of 10%, a Tier I risk-based capital ratio of 6% and
      a
      leverage ratio of 5%. An “adequately-capitalized” bank is one that does not
      qualify as “well-capitalized” but meets or exceeds the following capital
      requirements: a total risk-based capital ratio of 8%, a Tier I risk-based
      capital ratio of 4% and a leverage ratio of either 4% or 3% if the bank has
      the
      highest composite examination rating. A bank not meeting these criteria will
      be
      treated as “undercapitalized,” “significantly undercapitalized,” or “critically
      undercapitalized” depending on the extent to which its capital levels are below
      these standards. A bank falling within any of the three “undercapitalized”
categories will be subject to increased monitoring by the appropriate federal
      banking regulator and other restrictions.




**EFFECT
      OF GOVERNMENT MONETARY POLICIES; POSSIBLE FURTHER
      LEGISLATION**


The
      Company’s earnings are and will be affected by domestic and international
      economic conditions and the monetary and fiscal policies of the United States
      and foreign governments and their agencies.




The
      Federal Reserve’s monetary policies have had, and will probably continue to
      have, an important impact on the operating results of commercial banks through
      its power to implement national monetary policy in order, among other things,
      to
      curb inflation or combat a recession. The Federal Reserve’s policies have a
      major effect on the levels of bank loans, investments and deposits through
      its
      open market operations in United States Government securities and through its
      regulation of, among other things, the discount rate on borrowings of banks
      and
      the imposition of nonearning reserve requirements against bank deposits. It
      is
      not possible to predict the nature and impact of future changes in monetary
      and
      fiscal policies.




From
      time
      to time, proposals are made by legislators and various bank regulatory
      authorities that would alter the powers of, and place restrictions on, different
      types of banking organizations. It is impossible to predict whether any of
      these
      proposals will be adopted and any impact of such adoption on the business of
      the
      Company and/or GCB. GCB is also subject to various Federal and State laws such
      as usury laws and consumer protection laws.




**EMPLOYEES**


As
      of
      December 31, 2006, the Company employed a total of 191 employees, including
      177
      full-time employees. Management considers relations with employees to be
      satisfactory.




**AVAILABLE
      INFORMATION**


The
      Company maintains an internet website at www.greatercommunity.com .
      The
      Company makes available through that website, free of charge, copies of its
      Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
      on
      Form 8-K, and amendments to those reports, as soon as reasonably practical
      after
      the Company electronically files those materials with, or furnishes them to,
      the
      Securities and Exchange Commission. Those reports may be accessed by following
      the links under "Financial Information" at the Company's website.




**Item
      1A.Risk Factors.**




An
      investment in the common stock of the Company (“the common stock”) involves
      risks. In addition to other information contained in this Form 10-K, as well
      as
      in the documents incorporated by reference into it, the following factors should
      be considered carefully before deciding to make an investment decision regarding
      the common stock.




**Common
      Stock**


The
      common stock is subject to fluctuations in value due to, among other things:
      variations in the Company’s anticipated or actual results of operations or the
      results of its competitors; changes in investors’ or analysts’ perceptions of
      the risks and condition of the Company’s business; the size of the public float
      of the common stock; regulatory developments; announcements of acquisitions,
      new
      businesses or locations by the Company or its competitors; market conditions
      and
      general economic conditions.




7
 *Table
          of Contents*


Although
      the Company owns a bank subsidiary, the Company is not itself a bank. The common
      stock is not a bank deposit and is not guaranteed by the Federal Deposit
      Insurance Corporation (“FDIC”) or any other agency.




**Absence
      of Active Trading Market for Common Stock**


Historically,
      the common stock has not been actively traded. The reasons for the lack of
      active trading include the facts that the common stock is not widely held and
      the directors and executive officers of the Company and its subsidiaries own
      a
      large percentage of the outstanding shares. Accordingly, no assurances can
      be
      given that a holder will be able to sell the common stock when desired or that
      he will not incur a significant markdown in connection with such a
      sale.




**Future
      Sales of Common Stock**


In
      the
      future, the Company may issue additional securities to raise additional capital.
      Any such issuance would dilute the percentage of ownership interest of existing
      shareholders and may dilute the per share book value of the common stock. In
      addition, stock option holders may exercise their options at a time when the
      Company could otherwise be able to obtain additional equity capital on more
      favorable terms. The sale or availability for sale of a substantial number
      of
      shares of common stock in the public market could adversely affect the price
      of
      the common stock and could impair the Company’s ability to raise additional
      capital through the sale of equity securities.




**Intense
      Competition in the Company’s Market Area**


The
      Company’s bank and nonbank subsidiaries operate primarily in Passaic, Bergen and
      Morris Counties, New Jersey. Intense competition exists in all aspects of the
      financial services industry in this market area, including competition from
      a
      number of major banking and financial institutions and securities brokers which
      have substantially greater resources, name recognition and market presence
      than
      the Company or its subsidiaries. These institutions may have other competitive
      advantages in particular markets or may be willing to accept lower profit
      margins on certain products. Differences in resources, regulation, competitive
      advantages, and business strategy may decrease the Company’s net interest
      margin, increase operating costs, and make it more difficult to compete
      profitably.




**Changes
      in Local Economic Conditions**


The
      Company’s commercial and commercial real estate lending operations are
      concentrated in counties of northern New Jersey and success of these operations
      depends in part upon economic conditions in these markets. Adverse changes
      in
      economic conditions in these markets could impact growth in loans, impair the
      ability to collect on loans, increase problem loans and charge-offs, and
      otherwise negatively affect the Company’s performance and financial
      condition.




**Changes
      in Interest Rates and Related Factors**


The
      Company’s net income depends to a great extent upon the level of its net
      interest income. Net interest income is the difference between the interest
      income earned on loans and leases, investments, and other interest-earning
      assets, and the interest expense paid on interest-bearing deposits and
      borrowings. Changes in interest rates can increase or decrease net interest
      income. Net interest income is affected because different types of assets and
      liabilities may react differently, and at different times, to market interest
      rate changes based on the repricing terms and maturity characteristics of the
      assets and liabilities.




Changes
      in market interest rates are affected by many factors beyond the Company’s
      control, including inflation, unemployment, money supply, international events,
      and events in the world financial markets. The Company attempts to manage
      interest rate risk by adjusting the rates, repricing, maturity, and balances
      and
      mix of interest-earning assets and interest-bearing liabilities, but interest
      rate risk management techniques are not exact. As a result, a rapid or sustained
      increase or decrease in interest rates could have an adverse effect on the
      Company’s net interest income and results of operations. Results of the
      Company’s interest rate sensitivity simulation model, used to assist in the
      management of interest rate risk, depend upon a number of assumptions which
      may
      not prove to be accurate. There can be no assurance that the Company will be
      able to successfully manage its interest rate risk.




**Maintenance
      of an Adequate Allowance for Loan and Lease Losses**


The
      Company maintains an allowance for loan and lease losses in an amount it
      believes is adequate to provide for probable losses in the loan and lease
      portfolio. The Company strives to carefully monitor credit quality and to
      identify loans and leases that may become nonperforming and result in losses.
      The Company cannot be sure that it will be able to identify deteriorating
      credits before they become nonperforming, or that it will be able to limit
      losses on those loans and leases that are identified. As a result, future
      additions to the allowance may be necessary, through provisions of expense
      charged to the consolidated income statement. Future additions may also be
      required based on changes in the loans and leases comprising the portfolio
      and
      changes in the financial condition of borrowers, such as may result from changes
      in economic conditions or as a result of incorrect assumptions by management
      in
      determining the allowance. Additionally, banking regulators periodically review
      the allowance and may require the Company to increase the allowance or to
      recognize further loan or lease charge-offs based upon their judgments, which
      may be different from the Company’s. An increase in the allowance for loan and
      lease losses could have a negative effect on the Company’s results of operations
      and financial condition.




8
 *Table
          of Contents*


**Income
      Taxes**


The
      Company is subject to federal income taxes and state income taxes in many state
      tax jurisdictions. There is significant judgment required by the Company in
      evaluating its tax positions and determining its provision for income taxes.
      During the ordinary course of business, there are tax planning strategies,
      transactions and calculations for which the ultimate tax determination may
      be
      uncertain. The Company may establish reserves for tax-related uncertainties
      based on estimates of whether, and the extent to which, additional taxes will
      be
      due. The Company adjusts these reserves in light of changing facts and
      circumstances, such as the refinement of an estimate or the closing of a tax
      audit. No assurance can be given that the final tax outcome of such matters
      will
      not be different from that which is reflected in the Company’s income tax
      provisions and accruals. To the extent that the final tax outcome of these
      matters is different than the amounts recorded, such differences will impact
      the
      provision for income taxes in the period in which such determination is made.
      The provision for income taxes includes the impact of reserve provisions and
      changes to reserves that are considered appropriate.




**Regulatory
      Burden**


The
      banking industry is heavily regulated. Banking regulations are primarily
      intended to protect depositors, not shareholders. GCB is subject to regulation
      and supervision of the FDIC and the State of New Jersey Department of Banking
      and Insurance (“Department”). The Company is subject to regulation and
      supervision by the Board of Governors of the Federal Reserve System and the
      Department. The burden imposed by federal and state regulators puts banks at
      a
      competitive disadvantage compared to less regulated competitors such as finance
      companies, mortgage banking companies, and leasing companies. Changes in the
      laws, regulations, and regulatory guidelines and practices affecting the banking
      industry may increase the Company’s cost of doing business and create
      competitive advantages for others. Regulations affecting banks and financial
      service companies undergo continuous change. The Company cannot predict the
      ultimate effect of these changes, which could have an adverse effect on
      profitability or financial condition.




**Ability
      to Pay Dividends**


The
      Company’s ability to pay dividends to shareholders largely depends on its
      receipt of dividends from GCB. The Company also relies on the dividends from
      GCB
      to make required payments on its subordinated debentures. The amount of
      dividends that GCB may pay to the Company is limited by laws and regulations.
      The Company also may decide to limit the payment of dividends even when it
      has
      the legal ability to pay them in order to retain earnings for use in its
      business.




**Item
      1B. Unresolved Staff Comments.**




None.




**Item2.** **P** **roperties.**




The
      Company does not directly own or lease any land, buildings or equipment. One
      of
      the Company’s nonbank subsidiaries, Realty, owns a property in Bergen County,
      New Jersey. GCB leases space from Realty for its branch and certain office
      space
      in Paramus, New Jersey. GCB owns five properties in Passaic County and three
      properties in Bergen County, New Jersey, including land in Englewood and Wayne,
      New Jersey, and for its various branch locations. GCB leases its corporate
      headquarters, main office banking facility and other office space in Totowa,
      New
      Jersey from a related party. GCB also leases space from unaffiliated parties
      for
      its various other branch locations in Passaic, Bergen and Morris Counties,
      New
      Jersey, and leases office space in Somers Point, New Jersey and Tarrytown,
      New
      York. HCC leases office space for its satellite location in Chicago, Illinois.
      In the opinion of management, all leased properties are adequately insured
      and
      leased at fair rentals.




**Item
      3.** **L** **egal
      Proceedings.**




The
      Company and its subsidiaries are from time to time parties to various legal
      actions arising in the normal course of business. Management believes there
      is
      no proceeding threatened or pending against the Company, which, if determined
      adversely, would have a material effect on the Company’s business, consolidated
      financial position or consolidated results of operations.




**Item
      4.**  **** **Submission
      of Mattersto a** **Vote
      of Security Holders.**




No
      matter
      was submitted during the fourth quarter of 2006 to a vote of security holders
      through the solicitation of proxies or otherwise.




9
 *Table
          of Contents*


PART
      II




**Item
      5.** **Market
      for Registrant’s Common Equity, RelatedStockholder Matters and
      Issuer Purchases of Equity Securities.**




**Market
      Information**


The
      Company’s common stock is traded on the Nasdaq Global Market under the symbol
“GFLS”. The following table sets forth the high and low closing sale prices per
      share for the common stock as reported by Nasdaq for the periods presented,
      and
      the cash dividends declared per share on the common stock in each case for
      the
      periods indicated. The market quotations and cash dividends have been adjusted
      to take into account the effect of stock dividends.




CashMarket
                Quotations
            
            DividendsHigh
            
            Low
            
            DeclaredYear
                Ended December 31, 2006First
                Quarter
            
            $
            17.91
            
            $
            15.06
            
            $
            0.127Second
                Quarter
            
            
            16.75
            
            
            15.02
            
            
            0.137Third
                Quarter
            
            
            15.70
            
            
            14.71
            
            
            0.140Fourth
                Quarter
            
            
            15.75
            
            
            14.26
            
            
            0.140Year
                Ended December 31, 2005First
                Quarter
            
            $
            16.17
            
            $
            13.70
            
            $
            0.114Second
                Quarter
            
            
            16.18
            
            
            13.96
            
            
            0.124Third
                Quarter
            
            
            16.46
            
            
            15.05
            
            
            0.127Fourth
                Quarter
            
            
            14.88
            
            
            14.85
            
            
            0.127







**Holders**


As
      of
      December 31, 2006, there were approximately 842 holders of record of the
      Company’s common stock.




**Dividends**


The
      Company anticipates that it will continue to pay quarterly cash dividends on
      its
      common stock, although there can be no assurance that payment of such dividends
      will continue or that they will not be reduced. The payment of dividends in
      the
      future is discretionary with the Board of Directors and will depend on the
      Company’s operating results and financial condition, tax considerations and
      other factors. The Company's ability to pay dividends on its common stock in
      the
      future is also subject to regulatory restrictions that are potentially
      applicable. See Part I, Item 1. Business--Holding Company Dividends and Stock
      Repurchases, for further discussion.




**Recent
      Sales of Unregistered Securities**


None.




**Purchases
      of Equity Securities by the Issuer and Affiliated
      Purchasers**


The
      following table presents information with respect to purchases of common stock
      of the Company for the year ended December 31, 2006, by the Company or on behalf
      of the Company or any “affiliated purchaser” of the Company, as defined in Rule
      10b-18(a)(3) under the Exchange Act.




Period
            Total
              Number
                of
              Shares
              Purchased
            
            Average
              Price
                Paid
              Per
                Share01/01/06
                - 01/31/06
            
            
            37,447
            
            $
            15.0302/01/06
                - 02/28/06
            
            
            908
            
            $
            14.9703/01/06
                - 03/31/06
            
            
            1,091
            
            $
            14.9304/01/06
                - 04/30/06
            
            
            1,756
            
            $
            15.22






10
 *Table
          of Contents*


All
      of
      the shares were purchased by the Company from its employees and directors in
      connection with stock swap exercises of stock options and similar transactions
      pursuant to shareholder-approved compensation plans described in Note 11 within
      the Notes to the Consolidated Statements.




**Securities
      Authorized for Issuance Under Equity Compensation Plans**


The
      following table provides aggregate information regarding grants under all equity
      compensation plans of the Company as of December 31, 2006.




Number
                of securitiesNumber
                of securities to be
            
            Weighted
                average
            
            remaining
                availableissued
                upon exercise of
            
            exercise
                price of
            
            for
                future issuanceoutstanding
                options,
            
            outstanding
                options,
            
            (excluding
                securitiesPlan
                category
            
            warrants
                and rights
            
            warrants
                and rights
            
            reflected
                in 1stcolumn)Equity
                compensation plansapproved
                by security holders
            
            172,497
            
            $14.30
            
            390,100Equity
                compensation plans notapproved
                by security holders
            
            -
            
            -
            
            -Total
            
            172,497
            
            $14.30
            
            390,100


**Performance
      Graph**


The
      following graph compares the Company’s cumulative total stockholder return since
      December 31, 2001 with the Nasdaq Composite Index and the SNL Bank Nasdaq Index.
      The graph assumes that the value of the investment in the Company’s common stock
      and each index was $100.00 on December 31, 2001 and assumes reinvestment of
      dividends thereafter.









**Years
                Ended****Index**
            
            **12/31/01**
            
            **12/31/02**
            
            **12/31/03**
            
            **12/31/04**
            
            **12/30/05**
            
            **12/31/06**Greater
                Community Bancorp
            
            $
            100.00
            
            $
            146.78
            
            $
            162.99
            
            $
            167.51
            
            $
            160.87
            
            $
            205.23NASDAQ
                Composite
            
            
            100.00
            
            
            68.76
            
            
            103.67
            
            
            113.16
            
            
            115.57
            
            
            127.58SNL
                Bank NASDAQ
            
            
            100.00
            
            
            102.85
            
            
            132.76
            
            
            152.16
            
            
            147.52
            
            
            165.62


11
 *Table
          of Contents*


**Item
      6.** **Selected
      Financial Data.**




The
      following selected financial data should be read in conjunction with the
      Consolidated Financial Statements, related Notes and Management’s Discussion and
      Analysis of Financial Condition and Results of Operations, appearing elsewhere
      herein.




(dollars
                in thousands, except per share data)
            
            Years
                Ended December 31,2006
            
            2005
            
            2004
            
            2003
            
            2002**Summary
                of Operations:**Interest
                income
            
            $
            54,890
            
            $
            48,662
            
            $
            40,250
            
            $
            37,906
            
            $
            40,905Interest
                expense
            
            
            23,070
            
            
            16,571
            
            
            12,599
            
            
            12,244
            
            
            14,686Net
                interest income
            
            
            31,820
            
            
            32,091
            
            
            27,651
            
            
            25,662
            
            
            26,219Provision
                for loan and lease losses
            
            
            717
            
            
            1,071
            
            
            1,169
            
            
            2,065
            
            
            996Non-interest
                income
            
            
            6,288
            
            
            6,221
            
            
            6,489
            
            
            7,948
            
            
            7,319Non-interest
                expense
            
            
            24,725
            
            
            23,991
            
            
            21,251
            
            
            22,025
            
            
            21,676Income
                before provision for income taxes
            
            
            12,666
            
            
            13,250
            
            
            11,720
            
            
            9,520
            
            
            10,866Provision
                for income taxes
            
            
            7,113
            
            
            4,396
            
            
            3,934
            
            
            2,786
            
            
            3,353Net
                Income
            
            $
            5,553
            
            $
            8,854
            
            $
            7,786
            
            $
            6,734
            
            $
            7,513**Common
                Share Data****1****:**Earnings
                per share—basic
            
            $
            0.67
            
            $
            1.10
            
            $
            1.01
            
            $
            0.88
            
            $
            0.97Earnings
                per share—diluted
            
            $
            0.67
            
            $
            1.08
            
            $
            0.98
            
            $
            0.83
            
            $
            0.91Cash
                dividends declared per share
            
            $
            0.54
            
            $
            0.49
            
            $
            0.45
            
            $
            0.40
            
            $
            0.35Stock
                dividend
            
            
            2.50%
            
            
            2.50%
            
            
            2.50%
            
            
            2.50%
            
            
            5.00%Dividend
                payout ratio
            
            
            81.59%
            
            
            44.77%
            
            
            44.17%
            
            
            45.27%
            
            
            35.65%Book
                value
            
            $
            8.04
            
            $
            7.89
            
            $
            7.39
            
            $
            6.69
            
            $
            6.62**Selected
                Operating Ratios:**Return
                on average assets
            
            
            0.62%
            
            
            1.02%
            
            
            0.98%
            
            
            0.91%
            
            
            1.09%Return
                on average equity
            
            
            8.22%
            
            
            14.43%
            
            
            14.28%
            
            
            13.15%
            
            
            15.29%Net
                interest margin2
            
            
            3.85%
            
            
            4.02%
            
            
            3.82%
            
            
            3.81%
            
            
            4.15%**Financial
                Condition Data:**Total
                assets
            
            $
            950,969
            
            $
            925,201
            
            $
            825,363
            
            $
            753,125
            
            $
            719,867Cash
                and cash equivalents
            
            
            53,869
            
            
            64,980
            
            
            32,322
            
            
            29,233
            
            
            37,133Investment
                securities
            
            
            101,333
            
            
            134,197
            
            
            132,045
            
            
            155,239
            
            
            192,195Total
                loans and leases, net of unearned income
            
            
            721,430
            
            
            670,391
            
            
            602,274
            
            
            515,657
            
            
            436,044Allowance
                for loan and lease losses
            
            
            10,022
            
            
            9,478
            
            
            8,918
            
            
            8,142
            
            
            7,298Total
                deposits
            
            
            727,312
            
            
            736,080
            
            
            603,951
            
            
            560,713
            
            
            544,043Total
                borrowings
            
            
            138,989
            
            
            113,869
            
            
            155,514
            
            
            134,747
            
            
            115,728Shareholders'
                equity
            
            
            67,575
            
            
            64,541
            
            
            58,615
            
            
            50,570
            
            
            51,498**Capital
                Ratios:**Total
                risk-based capital
            
            
            11.84%
            
            
            12.19%
            
            
            11.73%
            
            
            11.96%
            
            
            13.77%Tier
                I risk-based capital
            
            
            10.06%
            
            
            10.31%
            
            
            9.52%
            
            
            9.03%
            
            
            10.58%Tier
                I leverage capital
            
            
            8.38%
            
            
            8.35%
            
            
            7.99%
            
            
            7.09%
            
            
            7.38%Equity
                to assets
            
            
            7.11%
            
            
            6.98%
            
            
            7.10%
            
            
            6.71%
            
            
            7.15%1Adjusted for stock dividends2Tax equivalent basis







**Item
      7.**  **Management’s Discussion and Analysisof Financial Condition and
      Results of Operations.**




The
      purpose of this analysis section (the “MD&A”) is to provide the reader with
      information relevant to understanding and assessing the Company's financial
      condition and results of operations for each of the past three years and its
      financial condition at the end of each of the past two years. In order to
      appreciate this analysis fully, the reader is encouraged to review the
      consolidated financial statements, notes and statistical data presented in
      this
      annual report. Data is presented for the Company and its subsidiaries in the
      aggregate unless otherwise indicated.




12
 *Table
          of Contents*


**CAUTIONARY
      STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS**


This
      Form
      10-K, both in this MD&A and elsewhere (including documents incorporated by
      reference herein), contains both historical information and “forward-looking
      statements” within the meaning of the Private Securities Litigation Reform Act
      of 1995. Forward-looking statements are not historical facts and include
      expressions about management's confidence and strategies and its expectations
      about new and existing programs and products, relationships, opportunities,
      technology and market conditions. These statements may be identified by such
      forward-looking terminology as “projected,” “expect,” “look,” “believe,”
“anticipate,” “may,” “will,” or similar statements or variations of such terms.
      Such forward-looking statements involve certain risks and uncertainties. These
      include, but are not limited to, the ability of the Company's bank subsidiary
      to
      generate deposits and loans and leases, attract qualified employees, the
      direction of interest rates, continued levels of loan and lease quality and
      origination volume, continued relationships with major customers including
      sources for loans and leases, the effects of economic conditions and legal
      and
      regulatory barriers and structure, as well as the risks described in Part I,
      Item 1A. of this report. Actual results may differ materially from such
      forward-looking statements. The Company assumes no obligation to update any
      such
      forward-looking statement at any time.




**SIGNIFICANT
      ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES**


The
      accounting and reporting policies of the Company conform, in all material
      respects, with accounting principles generally accepted in the United States
      of
      America (“US GAAP”) and general practices within the financial services
      industry. The preparation of financial statements in conformity with US GAAP
      requires management to make estimates and assumptions that affect the amounts
      reported in the financial statements and the accompanying notes. Actual results
      could differ from those estimates.




The
      Company considers that the determination of the allowance for loan and lease
      losses involves a higher degree of judgment and complexity than its other
      significant accounting policies. The allowance for loan and lease losses is
      calculated with the objective of maintaining an allowance level believed by
      management to be sufficient to absorb estimated probable credit losses in the
      loan and lease portfolios. Management’s determination of the adequacy of the
      allowance is based on periodic evaluations of the loan and lease portfolios
      and
      other relevant factors. However, this evaluation is inherently subjective as
      it
      requires material estimates, including, among others, expected default
      probabilities, loss given default, expected commitment usage, the amounts and
      timing of expected future cash flows on impaired loans, and general amounts
      based on historical loss experience. The process also considers economic
      conditions, uncertainties in estimating losses and inherent risks in the loan
      portfolio. All of these factors may be susceptible to significant change. To
      the
      extent actual outcomes differ from management estimates, additional provisions
      for loan and lease losses may be required that would adversely impact earnings
      in future periods.




The
      Company recognizes deferred tax assets and liabilities for the future tax
      effects of temporary differences, net operating loss carryforwards and tax
      credits. Deferred tax assets are subject to management’s judgment based upon
      available evidence that future realization is more likely than not. If
      management determines that the Company may be unable to realize all or part
      of
      net deferred tax assets in the future, a direct charge to income tax expense
      may
      be required to reduce the recorded value of the net deferred tax asset to the
      expected realizable amount.




The
      Company adopted SFAS No. 142, *Goodwill
      and Intangible Assets,* on
      January 1, 2002. This SFAS modified the accounting for all purchased goodwill
      and intangible assets. SFAS No. 142 includes requirements to test goodwill
      and
      indefinite-lived intangible assets for impairment rather than amortize them.
      On
      January 1, 2002, the Company stopped amortizing goodwill, which approximated
      $800,000 annually. The Company did not identify any impairment of goodwill
      during its transitional testing of its outstanding goodwill.




**Results
      of Operations**


For
      the
      year ended December 31, 2006, the Company recorded earnings of $5.6 million,
      or
      $0.67 per diluted share, a decrease of $3.3 million or 37.3% from 2005. In
      2005,
      the Company earned $8.9 million, or $1.08 per diluted share, an increase of
      13.7% from the $7.8 million or $0.98 per diluted share earned in 2004. Earnings
      for 2006 were impacted, among other things, by the recognition of an incremental
      state tax liability of approximately $3.3 million net of federal income tax
      benefit, and interest on taxes of approximately $880,000.




**Net
      Interest Income**


Net
      interest income is the most significant component of the Company's income from
      operations. Net interest income is the difference between interest earned on
      interest-earning assets, primarily loans and leases and investment securities,
      and interest paid on interest-bearing liabilities, primarily deposits and
      borrowings. Changes in net interest income result from the interaction between
      the volume and composition of interest-earning assets and interest-bearing
      liabilities, related yields and associated funding costs. The Company’s net
      interest income is affected by regulatory, economic and competitive factors
      that
      influence interest rates, loan demand, deposit flows and general levels of
      nonperforming assets.




13
 *Table
          of Contents*


The
      following table presents the Company's consolidated average balances of assets,
      liabilities and shareholders' equity including amounts of interest income and
      expense and average yields and rates on the related items, for the years ended
      December 31, 2006, 2005 and 2004. Yields are reflected on a fully taxable
      equivalent basis.




(dollars
                    in thousands)
                
                Years
                    Ended December 31,2006
                
                2005
                
                2004Average
                  Balance
                
                Interest
                    Income /
                  Expense
                
                Average
                    Yield /
                  Rate
                
                Average
                  Balance
                
                Interest
                    Income /
                  Expense
                
                Average
                    Yield /
                  Rate
                
                Average
                  Balance
                
                Interest
                    Income /
                  Expense
                
                Average
                    Yield /
                  Rate**ASSETS**Interest-earning
                    assets:Investment
                    securities (tax equivalent basis)
                
                $
                119,121
                
                $
                5,668
                
                
                4.76%
                
                $
                135,973
                
                $
                5,838
                
                
                4.29%
                
                $
                145,726
                
                $
                5,844
                
                
                4.01%Due
                    from banks - interest-bearing
                
                
                10,478
                
                
                499
                
                
                4.76%
                
                
                8,036
                
                
                264
                
                
                3.29%
                
                
                7,060
                
                
                205
                
                
                2.90%Federal
                    funds sold
                
                
                16,993
                
                
                841
                
                
                4.95%
                
                
                18,166
                
                
                584
                
                
                3.21%
                
                
                22,753
                
                
                238
                
                
                1.05%Loans
                    and leases, net unearned income(1)
                
                
                686,007
                
                
                48,157
                
                
                7.02%
                
                
                641,709
                
                
                42,238
                
                
                6.58%
                
                
                556,111
                
                
                34,233
                
                
                6.16%Total
                    interest-earning assets
                
                
                832,599
                
                
                55,165
                
                
                6.63%
                
                
                803,884
                
                
                48,924
                
                
                6.09%
                
                
                731,650
                
                
                40,520
                
                
                5.54%Less:
                    Allowance for loan and lease losses
                
                
                (9,719
                )
                
                
                
                
                
                
                
                (9,327
                )
                
                
                
                
                
                
                
                (8,604
                )All
                    other assets
                
                
                75,606
                
                
                
                
                
                
                
                
                76,445
                
                
                
                
                
                
                
                
                70,507Total
                    assets
                
                $
                898,486
                
                
                
                
                
                
                
                $
                871,002
                
                
                
                
                
                
                
                $
                793,553**LIABILITIES
                    AND SHAREHOLDERS' EQUITY**Interest-bearing
                    liabilities:Int.
                    bearing checking, money market and savings
                $
                338,844
                
                $
                9,113
                
                
                2.69%
                
                $
                297,708
                
                $
                4,230
                
                
                1.42%
                
                $
                269,382
                
                $
                2,059
                
                
                0.76%Time
                    deposits
                
                
                197,314
                
                
                7,618
                
                
                3.86%
                
                
                203,718
                
                
                5,714
                
                
                2.80%
                
                
                177,795
                
                
                3,883
                
                
                2.18%Federal
                    funds and other borrowings (2)
                
                
                87,621
                
                
                4,311
                
                
                4.92%
                
                
                95,873
                
                
                4,599
                
                
                4.80%
                
                
                98,841
                
                
                4,629
                
                
                4.68%Subordinated
                    debentures
                
                
                24,743
                
                
                2,028
                
                
                8.20%
                
                
                24,743
                
                
                2,028
                
                
                8.20%
                
                
                24,000
                
                
                2,028
                
                
                8.45%Total
                    interest-bearing liabilities
                
                
                648,522
                
                
                23,070
                
                
                3.56%
                
                
                622,042
                
                
                16,571
                
                
                2.66%
                
                
                570,018
                
                
                12,599
                
                
                2.21%Non
                    interest-bearing deposits
                
                
                172,224
                
                
                
                
                
                
                
                
                177,526
                
                
                
                
                
                
                
                
                161,400Other
                    liabilities
                
                
                10,178
                
                
                
                
                
                
                
                
                10,063
                
                
                
                
                
                
                
                
                7,614Shareholders'
                    equity
                
                
                67,562
                
                
                
                
                
                
                
                
                61,371
                
                
                
                
                
                
                
                
                54,521Total
                    liabilities and shareholders' equity
                
                $
                898,486
                
                
                
                
                
                
                
                $
                871,002
                
                
                
                
                
                
                
                $
                793,553Net
                    interest income and rate spread (tax equivalent basis)
                
                32,095
                
                
                3.07%
                
                
                
                
                
                32,353
                
                
                3.42%
                
                
                
                
                
                27,921
                
                
                3.33%Less:
                    Tax equivalent basis adjustment
                
                
                
                
                
                (275
                )
                
                
                
                
                
                
                
                (262
                )
                
                
                
                
                
                
                
                (270
                )Net
                    interest income
                
                
                
                
                $
                31,820
                
                
                
                
                
                
                
                $
                32,091
                
                
                
                
                
                
                
                $
                27,651Net
                    interest margin (3)
                
                
                
                
                
                
                
                
                3.85%
                
                
                
                
                
                
                
                
                4.02%
                
                
                
                
                
                
                
                
                3.82%(1)Includes nonaccrual loans, the effect of which is to reduce
                    the
                    yield earned on loans, and deferred loan fees and costs.(2)Includes federal funds purchased, securities sold under
                    agreements
                    to purchase and FHLB advances.(3)Net interest income (tax equivalent basis) divided by total
                    earning
                    assets.
 
 The
          table
          below quantifies the impact on net interest income resulting from changes
          in
          interest income and interest expense as they relate to changes in average
          volume
          and average rates over the past three years. Changes that are not due solely
          to
          changes in volume or rate are allocated between such categories in proportion
          to
          the relationship of the absolute dollar amount of the change in each category.




(in
                    thousands)
                
                2006
                    Compared to 2005
                
                2005
                    Compared to 2004Due
                    to Change in
                
                Net
                
                Due
                    to Change in
                
                NetVolume
                
                Rate
                
                Change
                
                Volume
                
                Rate
                
                ChangeIncrease
                  (decrease) in interest income1:Investment
                    securities
                
                $
                (1,342
                )
                $
                1,172
                
                $
                (170
                )
                $
                113
                
                $
                (119
                )
                $
                (6
                )Loans
                    and leases
                
                
                3,015
                
                
                2,904
                
                
                5,919
                
                
                5,521
                
                
                2,484
                
                
                8,005Other
                    interest-earning assets
                
                
                60
                
                
                432
                
                
                492
                
                
                (7
                )
                
                412
                
                
                405Total
                    interest income
                
                $
                1,732
                
                $
                4,509
                
                
                6,241
                
                $
                5,627
                
                $
                2,777
                
                
                8,404Increase
                    (decrease) in interest expense:Int.
                    bearing checking, money market and savings
                
                $
                654
                
                $
                4,229
                
                
                4,883
                
                $
                237
                
                $
                1,934
                
                
                2,171Time
                    deposits
                
                
                (173
                )
                
                2,077
                
                
                1,904
                
                
                621
                
                
                1,210
                
                
                1,831Borrowings2
                
                
                (410
                )
                
                122
                
                
                (288
                )
                
                (157
                )
                
                127
                
                
                (30
                )Total
                    interest expense
                
                $
                71
                
                $
                6,428
                
                
                6,499
                
                $
                701
                
                $
                3,271
                
                
                3,972Increase
                    (decrease) in net interest income
                
                
                
                
                
                
                
                $
                (258
                )
                
                
                
                
                
                
                $
                4,4321Tax equivalent basis.2Includes federal funds purchased, securities sold under
                    agreements
                    to purchase, FHLB advances and subordinated
                    debentures.







From
      June
      2004 to December 31, 2006, the Federal Reserve Board increased overnight
      interest rates by 400 basis points to 5.25%. In contrast, long-term interest
      rates have not increased by the same amount. This resulted in a general
      flattening of the interest rate yield curve during 2005 which changed to an
      inverted yield curve during the second half of 2006. The interest rate
      environment experienced by the Company in 2006, which created intense
      competition for both deposits and loans, contributed in large part to net
      interest income in 2006 being relatively the same as in 2005. The Company’s
      average cost of interest-bearing liabilities increased 90




14
 *Table
          of Contents*


basis
      points and exceeded an increase of 54 basis points in the average yield on
      interest-earning assets. The net interest rate spread (average yield on
      interest-earning assets less the average rate on interest-bearing liabilities)
      on a tax equivalent basis declined 35 basis points to 3.07%.




For
      the
      year ended December 31, 2006, net interest income was $31.8 million, a $271,000
      or 0.8% decrease compared to 2005. Interest and fees on loans and leases
      increased by $5.9 million from 2005 as a result of a 6.9% increase in the
      average portfolio. Primarily due to interest rate increases during 2006, the
      average yield on loans and leases increased 44 basis points to 7.02%, compared
      to 6.58% in 2005. Loans and leases represented 82.4% and 79.8% of average
      earning assets for 2006 and 2005, respectively, reflecting a change in mix
      due
      to average loans and leases growth of $44.3 million and a decline in average
      investment securities of $16.9 million. Interest income on investment securities
      for 2006, on a tax equivalent basis, was $5.7 million which approximated the
      amount in 2005. The average tax equivalent yield on investment securities
      increased 47 basis points in 2006 compared to 2005, to 4.76%, reflecting higher
      market rates. Investments represented 14.3% of average interest-earning assets
      in 2006, declining from 16.9% the prior year, as a portion of the portfolio
      was
      used to support loan growth. Interest income on federal funds sold and deposits
      with banks during 2006 reflected an increase of $492,000 compared to 2005,
      primarily as a result of interest rate increases. Interest expense for 2006
      increased by $6.5 million, or 39.2%, over 2005. Interest expense on deposits
      reflected the entire year-to-year increase due to a change in deposit mix and
      the repricing of deposits at higher interest rates. During 2006 the average
      interest rate paid on interest-bearing liabilities increased 90 basis points
      compared to 2005.




For
      2005,
      net interest income was $32.1 million, a $4.4 million or 16.1% increase compared
      with 2004. Interest and fee income on loans and leases during 2005 increased
      $8.0 million supporting a 15.4% increase in average loans and leases during
      the
      period. The average yield on loans and leases increased to 6.58% in 2005
      compared to 6.16% in 2004 primarily due to interest rate increases. Interest
      income on investment securities for 2005, on a tax equivalent basis, was $5.8
      million which approximated the amount in 2004. Average investment securities
      decreased $9.8 million in 2005 over 2004 to fund loan growth. The average tax
      equivalent yield on investment securities was 4.29% for 2005 compared to 4.01%
      for the prior year. Investments represented 16.9% of average earning assets
      in
      2005 compared to 19.9% in 2004. Interest expense for 2005 increased by $4.0
      million, or 31.5%, over 2004. Interest expense on deposits reflected the entire
      year-to-year increase and supported $54.2 million growth in average
      interest-bearing deposits during a period of rising interest rates. During
      2005
      the average interest rate paid on interest-bearing liabilities increased 45
      basis points compared to 2004.




Average
      interest-bearing deposits comprised 82.7% in 2006, 80.6% in 2005, and 78.4%
      in
      2004 of the Company’s total interest-bearing funding sources, with the balance
      consisting of short- and long-term borrowings.




The
      Company’s tax equivalent net interest margin, the rate which measures tax
      equivalent net interest income as a percentage of average interest-earning
      assets, was 3.85%, 4.02% and 3.82% for the years ended December 31, 2006, 2005
      and 2004, respectively.




**Provision
      for Loan and Lease Losses**


GCB’s
      management regularly performs an analysis to identify the inherent risk of
      loss
      in its loan portfolio, and HCC’s management regularly conducts a similar review
      to identify risks in its lease portfolio. These analyses include evaluations
      of
      concentrations of credit, past loss experience, current economic conditions,
      amount and composition of the portfolios (including loans and leases being
      specifically monitored by management), impaired loans, estimated fair value
      of
      underlying collateral, loan commitments outstanding, delinquencies and other
      factors.




The
      Company recorded a provision for loan and lease losses of $717,000 in 2006
      compared with $1.1 million in 2005. The decrease of $354,000 was a result of
      management’s regular evaluation of the adequacy of the allowance for loan and
      lease losses. A provision of $1.1 million was recorded in 2005, compared to
      $1.2
      million in 2004.




GCB
      and
      HCC monitor their allowances for loan and lease losses and may make future
      adjustments to the allowances through the provision for loan and lease losses
      as
      economic conditions dictate. Although the respective subsidiaries maintain
      their
      loan and lease loss allowances at levels they consider adequate to provide
      for
      the inherent risk of loss in their loan and lease portfolios, there can be
      no
      assurance that future losses will not exceed estimated amounts or that
      additional provisions for loan and lease losses will not be required in future
      periods. In addition, management’s determinations as to the amount of their
      allowances for possible loan and lease losses are subject to review by the
      FDIC
      and the Department as part of their respective examination processes. Such
      reviews may result in the establishment of an additional allowance based upon
      those regulators’ judgments after a review of the information available at the
      times of their examinations.




**Non-interest
      Income**


Non-interest
      income for 2006 was $6.3 million compared with $6.2 million for 2005. The net
      increase of $67,000 was due to several offsetting increases and decreases from
      2005, including a decline of $134,000 in service charges on deposit accounts,
      primarily in overdraft fees, an increase in loan fee income of $132,000, a
      decrease in gains on sales of investment securities of $104,000 and an increase
      in all other income of $286,000. The increase in all other income included
      $189,000 in title insurance fee income. For 2006, non-interest income
      represented 16.5% of total revenue (net interest income plus non-interest
      income).




15
 *Table
          of Contents*


Non-interest
      income for 2005 was $6.2 million compared with $6.5 million for 2004, reflecting
      a decrease of $268,000, or 4.1%. The decrease was primarily due to a $511,000,
      or 45.6%, decline in gains on sales of investment securities coupled with a
      $155,000, or 37.4%, increase in loan fee income stemming largely from lease
      terminations in the period. In addition, service charges on deposit accounts,
      bank-owned life insurance income and other commissions and fees increased
      nominally. Non-interest income represented 16.2% of total revenue in
      2005.




**Non-interest
      Expense**


Non-interest
      expense in 2006 was $24.7 million compared with $24.0 million the prior year.
      The increase of $734,000, or 3.1%, was primarily attributable to a charge to
      operations of $880,000 for interest on taxes. The charge represented an estimate
      of interest due on taxes relating to a tax liability recorded in the Company’s
      provision for income taxes in 2006. See the below section, Income Taxes, for
      further discussion. Salaries and benefits expense increased $649,000, or 4.9%,
      and included severance costs of $490,000 recognized in connection with the
      resignation of an executive officer in 2006. Regulatory, professional and other
      fees, primarily in consulting costs, increased $100,000, while several other
      expense categories experienced a decrease when compared to the prior year.
      The
      decreases included $105,000 in occupancy and equipment costs, and $225,000
      in
      other operating expenses, primarily in contributions expense. Other year-to-year
      expense decreases totaling $565,000 were primarily attributable to expenses
      recognized in 2005 that did not recur in 2006.




For
      2005,
      non-interest expense increased $2.7 million, or 12.9%, to $24.0 million compared
      with 2004. Of the increase, salaries and benefits expense accounted for $1.3
      million or 11.2%. Compensation costs increased from certain salary adjustments
      in response to competitive market conditions, staffing additions in key
      positions and annual salary increases. An increase in occupancy and equipment
      expense accounted for $194,000 and computer expenses increased by $348,000.
      A
      one-time merger and conversion charge of $297,000 was recognized pursuant to
      the
      mergers of two former bank subsidiaries with and into GCB at year-end 2005,
      the
      majority of which was related to conversion of the respective banks’ core and
      ancillary processing systems. A valuation loss of $300,000 was recognized on
      other real estate owned, and a loss of $161,000 was realized on prepayment
      of
      certain FHLB advances to in order to reposition the balance sheet and improve
      upon the related interest cost.




**Income
      Taxes**


The
      provision for income taxes was $7.1 million, $4.4 million and $3.9 million
      for
      the years ended December 31, 2006, 2005 and 2004, respectively. The Company’s
      effective tax rates were 56.2%, 33.2% and 33.6% for the respective years. The
      increase in the effective tax rate from 2005 to 2006 was the result of an
      incremental state tax provision, net of federal tax benefit, of $3.3 million. The
      one-time charge was in connection with the Company’s review of its tax positions
      and its consideration of the final adjudication in the fourth quarter of 2006
      of
      a State of New Jersey Superior Court tax case decision. As a result of the
      review, the Company determined there is a more likely than not probability
      that
      it will be assessed a tax liability and therefore recorded the liability in
      accordance with SFAS No. 5, *Accounting
      for Contingencies* and No.
      109, *Accounting
      for Income Taxes* . The
      Company anticipates it will apply for voluntary disclosure to the appropriate
      state tax authority in an effort to timely extinguish and potentially mitigate
      the liability.




**Financial
      Condition**


At
      December 31, 2006, total assets were $951.0 million, an increase of $25.8
      million or 2.8% over December 31, 2005. The Company’s performance for 2006 was
      highlighted by continued loan growth, particularly in the commercial mortgage
      and lease receivables portfolios, during a period of intensified competition.
      Loans and leases totaled $721.4 million at year-end, increasing $51.0 million,
      or 7.6%, while investment securities and federal funds sold declined by $32.9
      million and $10.4 million, respectively. The increase in loans and leases was
      funded primarily from these sources. Interest-bearing due from banks increased
      $14.8 million and was primarily funded by an increase in FHLB advances of $16
      million. Total deposits declined $8.8 million year to year.




At
      December 31, 2005, total assets were $925.2 million, an increase of $99.8
      million or 12.1% over the prior year-end. Loans and leases increased by $68.1
      million, or 11.3%, while investment securities and federal funds sold increased
      by $2.2 million and $32.6 million, respectively. Interest-bearing due from
      banks
      increased $3.8 million. The increase in loans and leases was funded by proceeds
      from maturities of investment securities and increases in total deposits and
      short-term borrowings. Total deposits increased $132.1 million, or
      21.9%.




**Investment
      Securities**


At
      December 31, 2006, the investment securities portfolio totaled $101.3 million,
      a
      decrease of $32.9 million or 24.5% from December 31, 2005. Maturities and
      principal paydowns from investment securities were principally used to fund
      loan
      and lease growth during the year, which was a period of intense deposit
      competition. Investment securities at December 31, 2005 increased by $2.2
      million or 1.6% compared to December 31, 2004.




The
      following table presents the composition of the investment securities portfolio
      including the amortized cost and fair values of the components at December
      31,
      2006, 2005 and 2004.




16
 *Table
          of Contents*


(in
                          thousands)
                      
                      December
                          31,2006
                      
                      2005
                      
                      2004Amortized
                        Cost
                      
                      Fair
                        Value
                      
                      Amortized
                        Cost
                      
                      Fair
                        Value
                      
                      Amortized
                        Cost
                      
                      Fair
                        ValueAvailable-for-salesecurities:U.S.
                          Treasury and U.S. Government agencies
                      
                      $
                      5,902
                      
                      $
                      5,877
                      
                      $
                      17,607
                      
                      $
                      17,446
                      
                      $
                      23,698
                      
                      $
                      23,567State
                          and political subdivisions
                      
                      
                      11,007
                      
                      
                      10,972
                      
                      
                      12,170
                      
                      
                      12,088
                      
                      
                      12,744
                      
                      
                      12,754Mortgage-backed
                      
                      
                      27,762
                      
                      
                      26,925
                      
                      
                      34,567
                      
                      
                      33,456
                      
                      
                      20,779
                      
                      
                      24,546Other
                          debt and equity
                      
                      
                      18,966
                      
                      
                      21,168
                      
                      
                      18,716
                      
                      
                      20,987
                      
                      
                      51,352
                      
                      
                      50,973Total
                          available-for-sale
                      
                      
                      63,637
                      
                      
                      64,942
                      
                      
                      83,060
                      
                      
                      83,977
                      
                      
                      108,573
                      
                      
                      111,840Held-to-maturity
                          securities:U.S.
                          Treasury and U.S. Governmentagencies
                      
                      
                      29,411
                      
                      
                      29,268
                      
                      
                      48,226
                      
                      
                      47,690
                      
                      
                      17,395
                      
                      
                      17,293State
                          and political subdivisions
                      
                      
                      3,955
                      
                      
                      3,949
                      
                      
                      1,975
                      
                      
                      1,975
                      
                      
                      2,786
                      
                      
                      2,786Mortgage-backed
                      
                      
                      19
                      
                      
                      19
                      
                      
                      19
                      
                      
                      20
                      
                      
                      24
                      
                      
                      25Other
                          debt
                      
                      
                      3,006
                      
                      
                      2,989
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -Total
                          held-to-maturity
                      
                      
                      36,391
                      
                      
                      36,225
                      
                      
                      50,220
                      
                      
                      49,685
                      
                      
                      20,205
                      
                      
                      20,104Total
                          investment securities
                      
                      $
                      100,028
                      
                      $
                      101,167
                      
                      $
                      133,280
                      
                      $
                      133,662
                      
                      $
                      128,778
                      
                      $
                      131,944


During
      2006, the Company realized net gains of $506,000 from the sale of $763,000
      in
      investment securities. In 2005, the Company realized net gains of $610,000
      from
      the sale of $3.7 million in investment securities. Included in shareholders’
equity at December 31, 2006 is accumulated other comprehensive income in the
      amount of $778,000, an increase of $354,000 from the end of 2005. The Company
      had no investment securities held for trading purposes at December 31, 2006
      or
      2005.




The
      following table reflects the average yields, amortized costs and fair values
      of
      the Company’s investment securities by maturity category:




(dollars
                in thousands)
            
            December
                31, 2006Average
              Yield1
            
            Amortized
              Cost
            
            Fair
              ValueAvailable-for-sale
                securities:Due
                in one year or less
            
            
            4.16%
            
            $
            3,236
            
            $
            3,220Due
                after one year through five years
            
            
            4.45%
            
            
            5,651
            
            
            5,526Due
                after five years through ten years
            
            
            5.64%
            
            
            3,206
            
            
            3,189Due
                after ten years
            
            
            6.35%
            
            
            4,816
            
            
            4,914Mortgage-backed
            
            
            4.69%
            
            
            27,762
            
            
            26,925Other
                debt securities
            
            
            6.84%
            
            
            12,309
            
            
            12,551Equity
                securities
            
            
            n/a
            
            
            6,657
            
            
            8,617Total
                available-for-sale
            
            
            
            
            
            63,637
            
            
            64,942Held-to-maturity
                securities:Due
                in one year or less
            
            
            4.09%
            
            
            29,879
            
            
            29,743Due
                after five years through ten years
            
            
            5.16%
            
            
            3,487
            
            
            3,474Mortgage-backed
            
            
            6.04%
            
            
            19
            
            
            19Other
                debt securities
            
            
            6.12%
            
            
            3,006
            
            
            2,989Total
                held-to-maturity
            
            
            
            
            
            36,391
            
            
            36,225Total
                investment securities
            
            
            
            
            $
            100,028
            
            $
            101,1671Tax
                equivalent basis.





**Loans
      and Leases**


Loan
      growth during 2006 occurred primarily in loans secured by nonresidential
      properties and lease financing receivables. The growth reflected the Company's
      aggressive business development efforts against a backdrop of steepening
      competition during a period with a flat and inverted interest rate yield curve.
      The loan and lease portfolio at December 31, 2006, net of unearned income,
      totaled $721.4 million, increasing $51.0 million or 7.6% over the December
      31,
      2005 reported amount. Average loans and leases for 2006 increased $44.3 million,
      while the average portfolio yield increased 44 basis points from 2005 as a
      result of increased market interest rates.




Loans
      and
      leases outstanding of $670.4 million at December 31, 2005 increased $68.1
      million from year-end 2004 primarily due to increased loan demand in the
      Company's primary market areas.




The
      following table summarizes the components of the loan and lease portfolio at
      the
      dates indicated. Certain loans were reclassified in 2005 to reflect appropriate
      categorization of security held as collateral.




17
 *Table
          of Contents*




(in
                thousands)
            
            December
                31,2006
            
            2005
            
            2004
            
            2003
            
            2002Loans
                secured by 1 to 4 family residential properties
            
            $
            145,000
            
            $
            153,824
            
            $
            147,557
            
            $
            148,121
            
            $
            142,677Loans
                secured by multifamily residential properties
            
            
            41,749
            
            
            35,563
            
            
            10,349
            
            
            11,619
            
            
            12,861Loans
                secured by nonresidential properties
            
            
            381,849
            
            
            323,031
            
            
            311,568
            
            
            260,318
            
            
            203,501Loans
                to individuals
            
            
            2,785
            
            
            3,722
            
            
            5,872
            
            
            5,686
            
            
            8,843Commercial
                loans
            
            
            36,012
            
            
            37,872
            
            
            52,973
            
            
            37,532
            
            
            33,859Construction
                loans
            
            
            43,350
            
            
            63,647
            
            
            44,687
            
            
            37,640
            
            
            24,339Lease
                financing receivables, net
            
            
            71,214
            
            
            53,302
            
            
            37,826
            
            
            23,181
            
            
            17,058Other
                loans
            
            
            651
            
            
            510
            
            
            754
            
            
            449
            
            
            957Total
                loans and leases
            
            
            722,610
            
            
            671,471
            
            
            611,586
            
            
            524,546
            
            
            444,095Less:
                Unearned income
            
            
            (1,180
            )
            
            (1,080
            )
            
            (394
            )
            
            (747
            )
            
            (753
            )Loans
                and leases, net of unearned income
            
            $
            721,430
            
            $
            670,391
            
            $
            611,192
            
            $
            523,799
            
            $
            443,342




The
      Company’s lending activity is focused in northern New Jersey, except equipment
      leasing which is largely out-of-state. At December 31, 2006, there was no
      concentration of loans and leases exceeding 10% of the total loan and lease
      portfolio other than loans that are secured by real estate. Borrower
      concentrations are considered to exist when there are amounts loaned or leased
      to borrowers engaged in similar activities which could similarly impact them
      should there be a change in economic condition. Efforts are made to maintain
      a
      diversified portfolio as to type of borrower to guard against a significant
      downturn of the economy. The Company does not engage in foreign loans and
      leases.




The
      following table reflects the contractual maturity and interest rate sensitivity
      of certain components of the loan and lease portfolio at December 31, 2006.
      Demand loans, having no stated schedule of repayment and no stated maturity,
      and
      overdrafts are reported as due within one year.




(in
                thousands)
            
            December
                31, 2006Within
            
            1
                -
                5
            
            Over1
                Year
            
            Years
            
            5
                Years
            
            TotalLoans
                and leases with predetermined interest rates:Loans
                secured by nonresidential properties
            
            $
            10,485
            
            $
            28,661
            
            $
            101,806
            
            $
            140,952Commercial
                loans
            
            
            3,770
            
            
            13,208
            
            
            355
            
            
            17,333Lease
                financing receivables
            
            
            22,747
            
            
            47,656
            
            
            811
            
            
            71,214Construction
                loans
            
            
            1,153
            
            
            1,100
            
            
            -
            
            
            2,253Total
                loans and leases with predetermined interest rates
            
            
            38,155
            
            
            90,625
            
            
            102,972
            
            
            231,752Loans
                with floating interest rates:Loans
                secured by nonresidential properties
            
            
            22,325
            
            
            9,179
            
            
            209,393
            
            
            240,897Commercial
                loans
            
            
            13,162
            
            
            2,747
            
            
            2,770
            
            
            18,679Construction
                loans
            
            
            24,050
            
            
            16,442
            
            
            605
            
            
            41,097Total
                loans with floating interest rates
            
            
            59,537
            
            
            28,368
            
            
            212,768
            
            
            300,673Total
                loans and leases
            
            $
            97,692
            
            $
            118,993
            
            $
            315,740
            
            $
            532,425




**Asset
      Quality**


Various
      degrees of risk are associated with substantially all investing activities.
      Management of GCB and HCC are charged with monitoring asset quality,
      establishing credit policies and procedures and seeking consistent application
      of these policies and procedures. The degree of risk inherent in all lending
      activities is influenced heavily by general economic conditions in the immediate
      market area. Among the factors that tend to affect portfolio risks are changes
      in local or regional real estate values, income levels and energy prices. These
      factors, coupled with unemployment levels and tax rates, as well as governmental
      actions and weakened market conditions that reduce credit demand among qualified
      borrowers, are also important determinants of the risk inherent in lending.




Management’s
      monitoring of the loan and lease portfolio’s asset quality is assisted by the
      classification of nonperforming assets which include past due and nonaccruing
      loans and leases, renegotiated loans and other real estate.




18
 *Table
          of Contents*


**Nonperforming
      Assets**


Management
      reviews monthly all loans and leases that are past due as to principal or
      interest. The accrual of interest income on loans and leases is discontinued
      when it is determined that such loans or leases are either doubtful of
      collection or are involved in a protracted collection process. Uncollected
      interest is reversed on loans or leases placed on nonaccrual
      status.




The
      following table summarizes the composition of the Company's nonperforming assets
      and related asset quality ratios as of the dates indicated:




(dollars
                in thousands)
            
            December
                31,2006
            
            2005
            
            2004
            
            2003
            
            2002Nonaccruing
                loans and leases
            
            $
            987
            
            $
            1,359
            
            $
            2,511
            
            $
            2,010
            
            $
            2,767Renegotiated
                loans
            
            
            98
            
            
            154
            
            
            205
            
            
            252
            
            
            295Total
                nonperforming loans and leases
            
            
            1,085
            
            
            1,513
            
            
            2,716
            
            
            2,262
            
            
            3,062Loans
                and leases past due 90 days and accruing
            
            
            -
            
            
            -
            
            
            -
            
            
            313
            
            
            587Other
                real estate owned, net
            
            
            349
            
            
            549
            
            
            849
            
            
            824
            
            
            -Total
                nonperforming assets
            
            $
            1,434
            
            $
            2,062
            
            $
            3,565
            
            $
            3,399
            
            $
            3,649Nonperforming
                assets to total assets
            
            
            0.15%
            
            
            0.22%
            
            
            0.43%
            
            
            0.45%
            
            
            0.51%Nonperforming
                loans and leases to total loans and leases
            
            
            0.15%
            
            
            0.23%
            
            
            0.44%
            
            
            0.43%
            
            
            0.69%Nonperforming
                assets to total loans and leases andother
                real estate owned
            
            
            0.20%
            
            
            0.31%
            
            
            0.58%
            
            
            0.65%
            
            
            0.82%







Nonperforming
      loans and leases decreased $0.4 million at December 31, 2006 compared to
      December 31, 2005, primarily in nonaccruing loans. At year-end 2006, other
      real
      estate owned decreased $200,000 compared to year-end 2005, and decreased
      $300,000 at year-end 2005 compared to year-end 2004, due to valuation losses
      recognized in those periods. Overall, nonperforming assets to total assets
      improved from 0.22% at December 31, 2005 to 0.15% at 2006 year-end. Total
      nonperforming loans and leases decreased $1.2 million at December 31, 2005
      compared to December 31, 2004. If the nonaccruing loans in 2006, 2005 and 2004
      had continued to pay interest, interest income during those years would have
      increased by $111,000, $74,000 and $156,000, respectively.




**Allowance
      for Loan and Lease Losses**


The
      allowance for loan and lease losses was $10.0 million at December 31, 2006
      compared to $9.5 million at the prior year-end and $8.9 million at December
      31,
      2004. The allowance for loan and lease losses is increased periodically through
      charges to earnings in the form of a provision for loan and lease losses. Loans
      and leases that are deemed uncollectible are charged against the allowance
      and
      any recoveries of such assets are credited to it. Management believes that
      adequate reserves have been provided for losses inherent in the portfolio as
      of
      the reporting date.




The
      Company maintains an allowance for loan and lease losses at an amount that
      management considers adequate to provide for potential credit losses based
      upon
      periodic evaluation of the risk characteristics of the loan portfolio.
      Management reviews the adequacy of the allowance on a monthly basis. In doing
      so, management takes into consideration factors such as actual versus estimated
      losses, regional and national economic conditions, portfolio concentration
      and
      the impact of government regulations. The Company makes specific reserve
      allocations for impaired loans, and an allocation to general reserves based
      on
      historical trends and qualitative factors. The Company consistently applies
      the
      following comprehensive methodology.




The
      first
      category of reserves consists of a specific allocation of the allowance for
      impaired loans. This allocation is established for specific commercial loans,
      commercial real estate and construction loans which have been identified by
      management as being impaired, including renegotiated loans. These loans are
      assigned based on nonperformance according to their payment terms and there
      is
      reason to believe that repayment of principal in whole or part is unlikely.
      The
      specific allocation of the allowance is the total amount of potential
      unconfirmed losses for these impaired loans. To assist in determining the fair
      value of loan collateral for impaired and other loans, the Company often
      utilizes independent third party qualified appraisal firms which in turn employ
      their own criteria and assumptions that may include occupancy rates, rental
      rates, and property expenses, among others.




The
      second category of reserves consists of the general allocation portion of the
      allowance. This is determined by taking the loan and lease portfolios
      outstanding and creating individual loan pools for commercial loans, commercial
      real estate loans, construction loans, lease receivables and various types
      of
      loans to individuals that have similar characteristics and applying historical
      loss experiences to each pool. This estimate represents the potential
      unconfirmed losses within each pool. The historical estimation for each loan
      pool is then adjusted to account for current conditions, current loan and lease
      portfolio performance, credit policy or management changes and other qualitative
      factors which may indicate future losses to deviate from historical
      levels.




Management
      must make estimates using assumptions and information which is often subjective
      and changing rapidly. Management believes the allowance for loan and lease
      losses was at an acceptable level at December 31, 2006.





19
 *Table
            of Contents*





The
      following table reflects transactions affecting the allowance for loan and
      lease
      losses for the periods indicated.




Years
                Ended December 31,(dollars
                in thousands)
            
            2006
            
            2005
            
            2004
            
            2003
            
            2002Balance
                at beginning of year
            
            $
            9,478
            
            $
            8,918
            
            $
            8,142
            
            $
            7,298
            
            $
            6,320Charge-offs:Commercial
            
            
            (25
            )
            
            (29
            )
            
            (43
            )
            
            (14
            )
            
            (160
            )Lease
                financing receivables
            
            
            (320
            )
            
            (394
            )
            
            (1,142
            )
            
            (1,331
            )
            
            (52
            )Real
                estate - mortgages
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (47
            )Installment
                loans to individuals
            
            
            -
            
            
            (1
            )
            
            (8
            )
            
            (16
            )
            
            (3
            )Credit
                cards and related plans
            
            
            (5
            )
            
            (6
            )
            
            (8
            )
            
            (1
            )
            
            (36
            )(350
            )
            
            (430
            )
            
            (1,201
            )
            
            (1,362
            )
            
            (298
            )Recoveries:Commercial
            
            
            1
            
            
            64
            
            
            120
            
            
            42
            
            
            66Lease
                financing receivables
            
            
            175
            
            
            23
            
            
            654
            
            
            24
            
            
            7Real
                estate - mortgages
            
            
            -
            
            
            -
            
            
            -
            
            
            58
            
            
            165Installment
                loans to individuals
            
            
            -
            
            
            5
            
            
            21
            
            
            4
            
            
            26Credit
                cards and related plans
            
            
            1
            
            
            -
            
            
            13
            
            
            13
            
            
            16177
            
            
            92
            
            
            808
            
            
            141
            
            
            280Net
                charge-offs
            
            
            (173
            )
            
            (338
            )
            
            (393
            )
            
            (1,221
            )
            
            (18
            )Provision
                charged to operations
            
            
            717
            
            
            1,071
            
            
            1,169
            
            
            2,065
            
            
            996Reclassification
            
            
            -
            
            
            (173
            )
            
            -
            
            
            -
            
            
            -Balance
                at end of year
            
            $
            10,022
            
            $
            9,478
            
            $
            8,918
            
            $
            8,142
            
            $
            7,298Net
                charge-offs for the period toperiod
                average loans and leases
            
            
            (0.03%
            )
            
            (0.05%
            )
            
            (0.07%
            )
            
            (0.26%
            )
            
            0.00%


A
      reclassification was recorded in 2005 which had the effect of reducing the
      allowance for loan and lease losses by $173,000. The reclassification was for
      a
      previously established reserve for lease residual losses recorded in a
      subaccount of the allowance for loan and lease losses.




**Allocation
      of the Allowance for Loan and Lease Losses**


The
      following table sets forth the allocation of the amount of allowance for loan
      and lease losses by loan category, the percentage of the total allowance
      allocated by category, and the percentage of each loan category to total loans
      and leases, at each of the dates indicated.




(dollars
                  in thousands)
              Years
                  Ended December 31,2006
              
              2005
              
              2004
              
              2003
              
              2002Balance
                  allocable to:
              Amount
              
              %
                  of
                Total
              
              %
                  of
                Loans
                to
                  Total
                Loans
              
              Amount
              
              %
                  of
                  Total
              
              % of
                Loans
                To
                Total
                Loans
              
              Amount
              
              %
                  of
                  Total
              
              %
                  of
                Loans
                To
                Total
                Loans
              
              Amount
              
              %
                  of
                  Total
              
              %
                  of
                Loans
                to
                Total
                Loans
              
              Amount
              
              %
                  of
                  Total
              
              %
                  of
                Loans
                To
                Total
                LoansCommercial
                  and
                non-residential
                properties
              $
              6,624
              
              
              66%
              
              
              58%
              
              $
              5,455
              
              
              58%
              
              
              54%
              
              $
              4,335
              
              
              49%
              
              
              60%
              
              $
              3,712
              
              
              45%
              
              
              57%
              
              $
              3,576
              
              
              49%
              
              
              55%Lease
                  financing
                receivables
              
              1,443
              
              
              14
              
              
              10
              
              
              1,369
              
              
              14
              
              
              8
              
              
              1,677
              
              
              19
              
              
              6
              
              
              1,755
              
              
              22
              
              
              4
              
              
              1,416
              
              
              19
              
              
              4Construction
              
              862
              
              
              9
              
              
              6
              
              
              1,238
              
              
              13
              
              
              9
              
              
              814
              
              
              9
              
              
              7
              
              
              403
              
              
              5
              
              
              7
              
              
              278
              
              
              4
              
              
              5Loans
                  secured by
                1-4
                  and multi-family
                properties
              
              746
              
              
              8
              
              
              26
              
              
              802
              
              
              9
              
              
              28
              
              
              891
              
              
              10
              
              
              26
              
              
              893
              
              
              11
              
              
              31
              
              
              1,521
              
              
              21
              
              
              35Loans
                  to individuals
              
              36
              
              
              -
              
              
              -
              
              
              46
              
              
              -
              
              
              1
              
              
              102
              
              
              1
              
              
              1
              
              
              174
              
              
              2
              
              
              1
              
              
              47
              
              
              1
              
              
              1Other
                  categories
              
              311
              
              
              3
              
              
              -
              
              
              568
              
              
              6
              
              
              -
              
              
              1,099
              
              
              12
              
              
              -
              
              
              1,205
              
              
              15
              
              
              -
              
              
              460
              
              
              6
              
              
              -Total
                  allowance for
                loan
                  and lease losses
              $
              10,022
              
              
              100%
              
              
              100%
              
              $
              9,478
              
              
              100%
              
              
              100%
              
              $
              8,918
              
              
              100%
              
              
              100%
              
              $
              8,142
              
              
              100%
              
              
              100%
              
              $
              7,298
              
              
              100%
              
              
              100%





**Deposits**


At
      December 31, 2006, total deposits were $727.3 million, decreasing $8.8 million
      or 1.2% over 2005. Higher market interest rates created intense competition
      for
      deposit generation during 2006. The Company’s deposit growth in 2006 was coupled
      with a shift in deposit composition from time deposits less than $100,000,
      which
      declined $31.1 million, to money market accounts, which increased $26.4 million.




At
      December 31, 2005, total deposits were $736.1 million, increasing $132.1 million
      or 21.9% over 2004. Interest-bearing checking deposits and total time deposits
      accounted for $89.4 million and $41.2 million of the increase, respectively.
      The
      growth was




20
 *Table
          of Contents*


primarily
      a result of successful periodic marketing promotions that generally coincided
      with anticipated loan fundings and other liquidity considerations.




Average
      total deposits increased $29.4 million or 4.3% in 2006, compared to an increase
      of $70.4 million or 11.6% in 2005. The following table summarizes the components
      of average deposits and the respective average rates paid for the years
      indicated.






(dollars
                in thousands)
            
            Years
                Ended December 31,2006
            
            Average
              Rate
            
            2005
            
            Average
              Rate
            
            2004
            
            Average
              RateNon
                interest-bearing deposits
            
            $
            172,224
            
            
            -
            
            $
            177,526
            
            
            -
            
            $
            161,400
            
            
            -Int.
                bearing checking, money market and savings
            
            
            338,844
            
            
            2.69%
            
            
            297,708
            
            
            1.42%
            
            
            269,382
            
            
            0.76%Time
                deposits
            
            
            197,314
            
            
            3.86%
            
            
            203,718
            
            
            2.80%
            
            
            177,795
            
            
            2.18%Average
                total deposits
            
            $
            708,382
            
            
            2.36%
            
            $
            678,952
            
            
            1.46%
            
            $
            608,577
            
            
            0.97%





The
      following is a summary of time deposits over $100,000 categorized by time
      remaining to maturity.




(in
                thousands)
            
            December
                31, 2006Three
                months or less
            
            $
            23,606Over
                three months through six months
            
            
            17,800Over
                six months through twelve months
            
            
            24,913Over
                twelve months
            
            
            8,086Total
                time deposits over $100
            
            $
            74,405




**Short-Term
      Borrowings**


Short-term
      borrowings generally have maturities of less than thirty days. As of December
      31, 2006, federal funds purchased were $10.0 million and securities sold under
      agreements to repurchase totaled $8.2 million. Details of total short-term
      borrowings for the last three years are presented below:




(dollars
                in thousands)
            
            December
                31,2006
            
            2005
            
            2004Federal
                funds purchased and securities sold under repurchase
                agreements:Balance
                at year end
            
            $
            18,246
            
            $
            9,126
            
            $
            45,771Average
                during the year
            
            
            13,705
            
            
            12,258
            
            
            14,620Maximum
                month-end balance
            
            
            75,629
            
            
            22,162
            
            
            45,771Weighted
                average rate during the year
            
            
            3.34%
            
            
            2.47%
            
            
            1.62%Rate
                at year end
            
            
            3.07%
            
            
            2.35%
            
            
            1.88%




**Federal
      Home Loan Bank Advances**


The
      Company uses Federal Home Loan Bank Advances as an added source of funding
      and
      periodically executes transactions to meet its funding needs. Advances are
      collateralized borrowings which have varying terms and interest rates. At
      December 31, 2006, FHLB advances totaled $96.0 million, compared with $80.0
      million at year-end 2005.




**Subordinated
      Debentures**


During
      2002 the Company issued $24.0 million of 8.45% junior subordinated debentures
      (the “2002 Debentures”) due June 30, 2032 to GCB Capital Trust II (the “Trust”),
      a Delaware business trust and an unconsolidated subsidiary of the Company whose
      equity securities are wholly-owned by the Company. The 2002 Debentures are
      the
      Trust's sole asset. The Trust issued 2,400,000 shares of trust preferred
      securities, $10 face value. The Company’s obligations under the 2002 Debentures
      and related documents, taken together, constitute a full, irrevocable and
      unconditional guarantee on a subordinated basis by the Company of the Trust’s
      obligations under the preferred securities. The preferred securities are
      redeemable by the Company on or after June 30, 2007 or earlier if the deduction
      of related interest for federal income taxes is prohibited, treatment as Tier
      I
      capital is no longer permitted, or certain other contingencies arise. The
      preferred securities must be redeemed upon maturity of the 2002 Debentures
      in
      2032. The ability of the Company to pay interest on the 2002 Debentures is
      dependent to a great extent on the ability of GCB to pay dividends to the
      Company.




**Interest
        Rate Sensitivity**
 Banks
        are
        concerned with the extent to which they are able to match maturities and
        repricing of interest-earning assets and interest-bearing liabilities. Such
        matching is facilitated by examining the extent to which these assets and
        liabilities are interest rate sensitive and by monitoring the institution’s
        interest rate sensitivity gap. An interest-earning asset or interest-bearing
        liability is considered to




21
 *Table
          of Contents*


be
      interest rate sensitive if it will mature or reprice within a specific time
      period. The interest rate sensitivity gap is defined as the excess of
      interest-earning assets maturing or repricing within a specific time period
      over
      interest-bearing liabilities maturing or repricing within that time period.
      GCB
      monitors its gap on a quarterly basis, primarily its six-month and one-year
      maturities, and works to maintain its gap within a range of +10% to -25%. The
      Company had a negative one-year cumulative gap position within this range with
      respect to its exposure to interest rate risk at December 31, 2006.




GCB’s
      Investment Committee meets quarterly and GCB’s Asset/Liability Management
      Committee meets quarterly or more frequently to review interest rate risk and
      balance sheet strategy in an attempt to mitigate interest rate risk. The Company
      uses simulation models to measure, among other things, the impact of potential
      changes in interest rates on net interest income, and the economic value and
      the
      modified duration of equity. As described below, sudden changes in interest
      rates should not have a material impact on the Company’s results of operations.
      Should GCB experience a positive or negative mismatch in excess of the approved
      range, it has a number of remedial options. It has the ability to reposition
      its
      investment portfolio to include securities with more advantageous repricing
      and/or maturity characteristics. It can attract variable or fixed-rate loan
      products as appropriate. It can also price deposit products to attract deposits
      with maturity characteristics that can lower its exposures to interest rate
      risk.




The
      following table summarizes as of December 31, 2006 the maturities and repricing
      of interest-earning assets and interest-bearing liabilities in accordance with
      their contractual terms in given time periods.







(dollars
                in thousands)
            
            December
                31, 2006Due
                within
              Three
              Months
            
            Four
                to
              Twelve
              Months
            
            One
                to
              Two
              Years
            
            Three
                to
              Five
              Years
            
            Over
              Five
              Years
            
            Total
            
            Fair
              ValueRate-sensitive
                assets:Investment
                securities and interest-bearing
                due from banks
            
            $
            33,612
            
            $
            36,242
            
            $
            17,457
            
            $
            13,548
            
            $
            25,529
            
            $
            126,388
            
            $
            127,692Rate
            
            
            5.03%
            
            
            4.40%
            
            
            4.82%
            
            
            4.45%
            
            
            6.49%
            
            
            5.05%Federal
                funds sold
            
            
            31,600
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            31,600
            
            
            31,600Rate
            
            
            5.13%
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            5.13%Loans
                and leases, net of unearned income
            
            
            154,375
            
            
            77,108
            
            
            97,009
            
            
            288,625
            
            
            104,013
            
            
            721,430
            
            
            718,079Rate
            
            
            8.33%
            
            
            6.98%
            
            
            6.60%
            
            
            6.52%
            
            
            6.00%
            
            
            6.89%Total
                rate-sensitive assets
            
            $
            219,587
            
            $
            122,404
            
            $
            114,466
            
            $
            302,173
            
            $
            129,842
            
            $
            879,418
            
            $
            877,371Rate-sensitive
                liabilities:Interest-bearing
                checking and money market
            
            $
            205,775
            
            $
            -
            
            $
            16,442
            
            $
            52,777
            
            $
            20,771
            
            $
            295,765
            
            $
            295,640Rate
            
            
            4.03%
            
            
            -
            
            
            2.50%
            
            
            2.71%
            
            
            2.75%
            
            
            3.62%Savings
                deposits
            
            
            26,563
            
            
            184
            
            
            7,297
            
            
            21,017
            
            
            13,719
            
            
            68,659
            
            
            68,659Rate
            
            
            1.22%
            
            
            2.00%
            
            
            1.23%
            
            
            1.22%
            
            
            1.22%
            
            
            1.22%Time
                deposits
            
            
            57,610
            
            
            106,091
            
            
            19,478
            
            
            10,696
            
            
            -
            
            
            193,875
            
            
            192,702Rate
            
            
            3.92%
            
            
            4.62%
            
            
            4.24%
            
            
            4.21%
            
            
            -
            
            
            4.35%Total
                borrowings1
            
            
            13,989
            
            
            39,000
            
            
            21,500
            
            
            57,500
            
            
            7,000
            
            
            138,989
            
            
            139,879Rate
            
            
            4.74%
            
            
            6.49%
            
            
            5.23%
            
            
            5.27%
            
            
            4.46%
            
            
            5.51%Total
                rate-sensitive liabilities
            
            $
            303,937
            
            $
            145,154
            
            $
            110,180
            
            $
            141,990
            
            $
            41,490
            
            $
            697,288
            
            $
            696,880Interest
                rate sensitivity gap
            
            $
            (84,350
            )
            $
            (31,804
            )
            $
            49,749
            
            $
            160,183
            
            $
            88,352
            
            $
            182,130Interest
                rate sensitivity gap as apercentage
                of total rate-sensitive assets
            
            
            (9.59%
            )
            
            (3.62%
            )
            
            5.66%
            
            
            18.21%
            
            
            10.05%Cumulative
                interest rate sensitivity gap
            
            $
            (84,350
            )
            $
            (116,154
            )
            $
            (66,405
            )
            $
            93,778
            
            $
            182,130Cumulative
                interest rate sensitivity gapas
                a percentage of total rate-sensitive assets
            
            
            (9.59%
            )
            
            (13.21%
            )
            
            (7.55%
            )
            
            10.66%
            
            
            20.71%11Includes federal funds purchased, securities sold under agreements
                to
                repurchase, FHLB advances and subordinated
                debentures.





**Liquidity**


Sources
      of liquidity at December 31, 2006 totaled $145.2 million or 15.3% of total
      assets, consisting of available-for-sale investment securities of $64.9 million
      and $80.2 million in cash and cash equivalents and interest-bearing due from
      banks. By comparison, liquidity at December 31, 2005 totaled $160.6 million
      or
      17.4% of total assets, consisting of available-for-sale investment securities
      of
      $84.0 million and $76.6 million in cash and cash equivalents and
      interest-bearing due from banks.




The
      following table presents the Company’s contractual obligations and other
      commitments requiring potential cash outflows as of December 31,
      2006.





22
 *Table
            of Contents*






(in
                thousands)
            
            December
                31, 2006Less
                than
              One
                Year
            
            One
                to Two
              Years
            
            Three
                to
              Five
                Years
            
            After
                Five
              Years
            
            TotalRemaining
                contractual maturities of time deposits
            
            $
            163,701
            
            $
            19,478
            
            $
            10,696
            
            $
            -
            
            $
            193,875Total
                borrowings
            
            
            52,989
            
            
            21,500
            
            
            57,500
            
            
            7,000
            
            
            138,989Minimum
                annual rental payments
            
            
            876
            
            
            793
            
            
            1,615
            
            
            190
            
            
            3,474Loan
                commitments
            
            
            103,222
            
            
            44,341
            
            
            -
            
            
            -
            
            
            147,563Standby
                letters of credit
            
            
            3,524
            
            
            -
            
            
            -
            
            
            -
            
            
            3,524Total
            
            $
            324,312
            
            $
            86,112
            
            $
            69,811
            
            $
            7,190
            
            $
            487,425





**Capital**


The
      Company’s primary regulator, the Federal Reserve Board (the “Federal Reserve”),
      has issued guidelines classifying and defining bank holding company capital
      into
      the following components: 1) Tier I capital, which includes tangible
      shareholders’ equity for common stock and certain qualifying perpetual preferred
      stock, and 2) Tier II capital, which includes a portion of the allowance for
      loan and lease losses, certain qualifying long-term debt and preferred stock
      that does not qualify as Tier I capital. The risk-based capital guidelines
      require financial institutions to maintain specific defined credit risk factors
      (risk-adjusted assets). As of December 31, 2006, the minimum Tier I and combined
      Tier I and Tier II capital ratios required by the Federal Reserve for capital
      adequacy purposes were 4% and 8%, respectively.




In
      addition to the risk-based capital guidelines, the Federal Reserve requires
      that
      a bank holding company which meets that regulator’s highest performance and
      operating standards maintain a minimum leverage ratio (Tier I capital as a
      percentage of tangible assets) of 4%. Those bank holding companies anticipating
      significant growth are expected to maintain a leverage ratio above the minimum
      ratio. The Federal Reserve evaluates minimum leverage ratios for each entity
      through the ongoing regulatory examination process. GCB’s primary federal
      regulator, the FDIC, has also issued regulations establishing similar risk-based
      and leverage capital ratios.




Management
      regularly reviews the Company’s and GCB’s capital resources relative to capital
      adequacy, expansion strategy and capital alternatives.




The
      following table presents the risk-based and leverage capital ratios for the
      Company and GCB as of December 31, 2006 and 2005.




( dollars
                in thousands)
            
            
            
            
            
            
            
            
            
            
            
            To
                Be Well-CapitalizedFor
                Capital
            
            Under
                Prompt CorrectiveActual
            
            Adequacy
                Purposes
            
            Action
                ProvisionsAmount
            
            Ratio
            
            Amount
            
            Ratio
            
            Amount
            
            RatioAs
                of December 31, 2006Total
                risk-based capitalGreater
                Community Bancorp
            
            $
            90,065
            
            
            11.84
            %
            
            $
            60,855
            
            
            8.00
            %
            
            
            n/a
            
            
            n/aGreater
                Community Bank
            
            
            83,991
            
            
            11.09
            %
            
            
            60,589
            
            
            8.00
            %
            
            $
            75,736
            
            
            10.00
            %Tier
                I risk-based capitalGreater
                Community Bancorp
            
            
            76,521
            
            
            10.06
            %
            
            
            30,426
            
            
            4.00
            %
            
            
            n/a
            
            
            n/aGreater
                Community Bank
            
            
            74,562
            
            
            9.85
            %
            
            
            30,279
            
            
            4.00
            %
            
            
            45,418
            
            
            6.00
            %Tier
                I leverage capitalGreater
                Community Bancorp
            
            
            76,521
            
            
            8.38
            %
            
            
            36,526
            
            
            4.00
            %
            
            
            n/a
            
            
            n/aGreater
                Community Bank
            
            
            74,562
            
            
            8.20
            %
            
            
            36,372
            
            
            4.00
            %
            
            
            45,465
            
            
            5.00
            %As
                of December 31, 2005Total
                risk-based capitalGreater
                Community Bancorp
            
            $
            87,127
            
            
            12.19
            %
            
            $
            57,179
            
            
            8.00
            %
            
            
            n/a
            
            
            n/aGreater
                Community Bank
            
            
            80,704
            
            
            11.32
            %
            
            
            57,035
            
            
            8.00
            %
            
            
            71,293
            
            
            10.00
            %Tier
                I risk-based capitalGreater
                Community Bancorp
            
            
            73,668
            
            
            10.31
            %
            
            
            28,581
            
            
            4.00
            %
            
            
            n/a
            
            
            n/aGreater
                Community Bank
            
            
            71,803
            
            
            10.07
            %
            
            
            28,522
            
            
            4.00
            %
            
            
            42,782
            
            
            6.00
            %Tier
                I leverage capitalGreater
                Community Bancorp
            
            
            73,668
            
            
            8.35
            %
            
            
            35,290
            
            
            4.00
            %
            
            
            n/a
            
            
            n/aGreater
                Community Bank
            
            
            71,803
            
            
            7.97
            %
            
            
            36,037
            
            
            4.00
            %
            
            
            45,046
            
            
            5.00
            %






23
 *Table
          of Contents*







**Recent
      Accounting Pronouncements**




**Accounting
      Changes and Error Corrections**


In
      May
      2005, the Financial Accounting Standards Board (“FASB”) issued Statement
      No. 154, (“SFAS No. 154”), *Accounting
      Changes and Error Corrections-A Replacement of APB Opinion No. 20 and FASB
      Statement No. 3* .
      Among
      other things, SFAS No. 154 requires that a voluntary change in accounting
      principle be applied retroactively with all prior period financial statements
      presented on the new accounting principle, unless it is impractical to do so.
      SFAS No. 154 also provides that (i) a change in method of depreciating
      or amortizing a long-lived nonfinancial asset be accounted for as a change
      in
      estimate (prospectively) that was effected by a change in accounting principle,
      and (ii) correction of errors in previously issued financial statements
      should be termed a “restatement”. The requirements became effective for the
      Company for accounting changes beginning January 1, 2006. The Company has
      adopted SFAS No. 154.




**Accounting
      for Uncertainty in Income Taxes**


In
      June
      2006, the FASB issued Interpretation ("FIN") No. 48, *Accounting
      for Uncertainty in Income Taxes-an interpretation of FASB Statement No.
      109* .
      FIN No.
      48 prescribes a recognition threshold and measurement attribute for the
      financial statement recognition and measurement of a tax position taken or
      expected to be taken in a tax return, and provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure, and transition. FIN No. 48 is effective for fiscal years beginning
      after December 15, 2006. The Company does not expect that the adoption of this
      interpretation will have a material impact on its financial position, results
      of
      operations and cash flows.




**Fair
      Value Measurements**


In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* (“SFAS
      No. 157”). This Statement defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles, and expands
      disclosures about fair value measurements. SFAS No. 157 does not require any
      new
      fair value measurements, but provides enhanced guidance to other pronouncements
      that require or permit assets or liabilities to be measured at fair value.
      This
      Statement is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and interim periods within those years.
      The
      Company is currently evaluating the impact of SFAS No. 157 on its financial
      statements.




**SEC
      Staff Accounting Bulletin No. 108**


In
      September 2006, the Securities and Exchange Commission ("SEC") issued Staff
      Accounting Bulletin ("SAB") No. 108 to require quantification of financial
      statement misstatements under both the "rollover approach" and the "iron curtain
      approach". The "rollover approach" quantifies a misstatement based on the amount
      of the error originating in the current year income statement, but ignores
      the
      effects of correcting the portion of the current year balance sheet misstatement
      that originated in prior years. The "iron curtain approach" quantifies a
      misstatement based on the effects of correcting the misstatement existing in
      the
      balance sheet at the end of the current year, irrespective of the misstatement's
      year(s) of origination. The provisions of SAB No. 108 must be applied to
      financial statements for fiscal years ending after November 15, 2006. The
      Company has adopted SAB No. 108.




**Accounting
      for Defined Benefit Pension and Other Postretirement
      Plans**


In
      September 2006, the FASB issued SFAS No. 158, *Employers’ Accounting for Defined Benefit Pension and Other Postretirement
      Plans—an amendment of FASB Statements No. 87, 88, 106 and
      132(R)* (“SFAS
      No. 158”). This Statement requires an employer to recognize the overfunded or
      underfunded status of a defined postretirement plan as an asset or liability
      in
      its statement of financial position and to recognize changes in that funded
      status in the year in which the changes occur through comprehensive income.
      SFAS
      No. 158 also requires measurement of the funded status of a plan as of the
      date
      of the fiscal year-end statement of financial position. Requirements for the
      recognition of the funded status of a defined postretirement plan and to provide
      the required disclosures were effective for the Company as of December 31,
      2006.
      The requirement to measure plan assets and benefit obligations as of the date
      of
      the fiscal year-end financial statements is effective for fiscal years ending
      after December 15, 2008. The Company’s adoption of the recognition and
      disclosure requirements as of December 31, 2006 did not have a material impact
      on its financial position, results of operations and cash flows.




**Fair
      Value Option for Financial Assets and Liabilities**


In
      February 2007, the FASB issued SFAS No. 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities—Including an
      amendment of FASB Statement No. 115* (“SFAS
      No. 159” or “Standard”). SFAS No. 159 provides all entities with an option to
      report selected financial assets and liabilities at fair value. The objective
      of
      SFAS No. 159 is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in earnings caused by measuring related
      assets and liabilities differently without having to apply the complex
      provisions of hedge accounting. The Standard also establishes presentation
      and
      disclosure requirements designed to facilitate comparisons between companies
      that choose different measurement attributes for similar types of assets and
      liabilities. SFAS No. 159 does not eliminate disclosure requirements included
      in
      other accounting standards. The Standard is effective for the Company on January
      1, 2008. Early adoption is permitted under certain conditions. The Company
      is
      currently evaluating the impact of SFAS No. 159 on its financial
      statements.


24
 *Table
          of Contents*




**Impact
      of Inflation and Changing Prices**


The
      Company’s consolidated financial statements and notes thereto presented
      elsewhere in this Form 10-K have been prepared in accordance with US GAAP.
      US
      GAAP requires the measurement of financial position and operating results in
      terms of historical dollars without considering the changes in the relative
      purchasing power of money over time due to inflation. The impact of inflation
      is
      reflected in the increased cost of the Company’s operations. Unlike most
      industrial companies, nearly all of the Company’s assets and liabilities are
      monetary in nature. As a result, interest rates have a greater impact on the
      Company’s performance than do the effects of general levels of inflation.
      Interest rates do not necessarily move in the same direction or to the same
      extent as the prices of goods and services.




**Contractual
      Obligations, Commitments, Contingent Liabilities and Off-Balance Sheet
      Arrangements**


See
      Note
      13. and Note 14. of the Notes to Consolidated Financial Statements contained
      in
      Part II, Item 8. of this report for a discussion of the Company’s contractual
      obligations, commitments, contingent liabilities and off-balance sheet
      arrangements.




**Item
      7A. Quantitative and Qualitative Disclosuresabout Market
      Risk.**




See
      Item
      7, Management’s Discussion and Analysis of Financial Condition and Results of
      Operations.







25
 *Table
          of Contents*


**Item
      8.**  **Financial Statements and Supplementary Data.**




**GREATER
      COMMUNITY BANCORP AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


(in
      thousands, except share data)





December
                31,2006
            
            2005**ASSETS**CASH
                AND DUE FROM BANKS - Non interest-bearing
            
            $
            22,269
            
            $
            22,980FEDERAL
                FUNDS SOLD
            
            
            31,600
            
            
            42,000Total
                cash and cash equivalents
            
            
            53,869
            
            
            64,980DUE
                FROM BANKS - Interest-bearing
            
            
            26,359
            
            
            11,600INVESTMENT
                SECURITIES - Available-for-sale
            
            
            64,942
            
            
            83,977INVESTMENT
                SECURITIES - Held-to-maturity (aggregate fair value of$36,225
                and $49,685 at December 31, 2006 and 2005, respectively)
            
            
            36,391
            
            
            50,220Total
                investment securities
            
            
            101,333
            
            
            134,197LOANS
                AND LEASES, net of unearned income
            
            
            721,430
            
            
            670,391Less:
                Allowance for loan and lease losses
            
            
            (10,022
            )
            
            (9,478
            )Net
                loans and leases
            
            
            711,408
            
            
            660,913PREMISES
                AND EQUIPMENT, net
            
            
            10,599
            
            
            10,341ACCRUED
                INTEREST RECEIVABLE
            
            
            4,091
            
            
            3,894OTHER
                REAL ESTATE OWNED, net
            
            
            349
            
            
            549BANK-OWNED
                LIFE INSURANCE
            
            
            15,477
            
            
            15,005GOODWILL
            
            
            11,574
            
            
            11,574OTHER
                ASSETS
            
            
            15,910
            
            
            12,148TOTAL
                ASSETS
            
            $
            950,969
            
            $
            925,201**LIABILITIES
                AND SHAREHOLDERS’ EQUITY**DEPOSITS:Non
                interest-bearing
            
            $
            169,013
            
            $
            177,907Interest-bearing
                checking
            
            
            103,853
            
            
            94,255Money
                market
            
            
            191,912
            
            
            165,469Savings
            
            
            68,659
            
            
            85,275Time
                deposits less than $100
            
            
            119,470
            
            
            150,578Time
                deposits $100 and over
            
            
            74,405
            
            
            62,596Total
                deposits
            
            
            727,312
            
            
            736,080FEDERAL
                FUNDS PURCHASED
            
            
            10,000
            
            
            -SECURITIES
                SOLD UNDER AGREEMENTS TO REPURCHASE
            
            
            8,246
            
            
            9,126FHLB
                ADVANCES
            
            
            96,000
            
            
            80,000SUBORDINATED
                DEBENTURES
            
            
            24,743
            
            
            24,743ACCRUED
                INTEREST PAYABLE
            
            
            3,191
            
            
            2,420OTHER
                LIABILITIES
            
            
            13,902
            
            
            8,291Total
                liabilities
            
            
            883,394
            
            
            860,660SHAREHOLDERS’
                EQUITY:Common
                stock, par value $0.50 per share, 20,000,000 shares authorized, 8,402,842and
                7,988,182 shares outstanding at December 31, 2006 and 2005,
                respectively
            
            
            4,201
            
            
            3,994Additional
                paid-in capital
            
            
            58,633
            
            
            53,907Retained
                earnings
            
            
            3,963
            
            
            6,216Accumulated
                other comprehensive income
            
            
            778
            
            
            424Total
                shareholders’ equity
            
            
            67,575
            
            
            64,541TOTAL
                LIABILITIES AND SHAREHOLDERS’ EQUITY
            
            $
            950,969
            
            $
            925,201See
                accompanying notes to consolidated financial statements.





26
 *Table
          of Contents*


**GREATER
      COMMUNITY BANCORP AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF INCOME**


(in
      thousands, except per share data)




Years
                Ended December 31,2006
            
            2005
            
            2004INTEREST
                INCOME:Loans
                and leases, including fees
            
            $
            48,157
            
            $
            42,238
            
            $
            34,233Investment
                securities
            
            
            5,393
            
            
            5,576
            
            
            5,574Federal
                funds sold and deposits with banks
            
            
            1,340
            
            
            848
            
            
            443Total
                interest income
            
            
            54,890
            
            
            48,662
            
            
            40,250INTEREST
                EXPENSE:Deposits
            
            
            16,731
            
            
            9,944
            
            
            5,942Short-term
                borrowings
            
            
            4,311
            
            
            4,599
            
            
            4,629Long-term
                borrowings
            
            
            2,028
            
            
            2,028
            
            
            2,028Total
                interest expense
            
            
            23,070
            
            
            16,571
            
            
            12,599NET
                INTEREST INCOME
            
            
            31,820
            
            
            32,091
            
            
            27,651PROVISION
                FOR LOAN AND LEASE LOSSES
            
            
            717
            
            
            1,071
            
            
            1,169Net
                interest income after provision for loan and lease losses
            
            
            31,103
            
            
            31,020
            
            
            26,482NON-INTEREST
                INCOME:Service
                charges on deposit accounts
            
            
            2,755
            
            
            2,889
            
            
            2,862Commissions
                and fees
            
            
            1,195
            
            
            1,278
            
            
            1,206Loan
                fee income
            
            
            701
            
            
            569
            
            
            414Gains
                on sale of investment securities, net
            
            
            506
            
            
            610
            
            
            1,121Gains
                on sale of leases
            
            
            -
            
            
            -
            
            
            51Bank-owned
                life insurance
            
            
            472
            
            
            502
            
            
            477Other
                income
            
            
            659
            
            
            373
            
            
            358Total
                non-interest income
            
            
            6,288
            
            
            6,221
            
            
            6,489NON-INTEREST
                EXPENSE:Salaries
                and employee benefits
            
            
            13,761
            
            
            13,112
            
            
            11,788Occupancy
                and equipment
            
            
            3,656
            
            
            3,761
            
            
            3,567Regulatory,
                professional and other fees
            
            
            2,232
            
            
            2,132
            
            
            2,129Computer
                services
            
            
            923
            
            
            925
            
            
            577Office
                expenses
            
            
            1,066
            
            
            1,079
            
            
            1,082Merger
                and conversion charges
            
            
            8
            
            
            297
            
            
            -Loss
                on debt prepayment
            
            
            -
            
            
            161
            
            
            -Loss
                on other real estate owned
            
            
            200
            
            
            300
            
            
            -Interest
                on income taxes
            
            
            880
            
            
            -
            
            
            -Other
                operating expenses
            
            
            1,999
            
            
            2,224
            
            
            2,108Total
                non-interest expense
            
            
            24,725
            
            
            23,991
            
            
            21,251INCOME
                BEFORE PROVISION FOR INCOME TAXES
            
            
            12,666
            
            
            13,250
            
            
            11,720PROVISION
                FOR INCOME TAXES
            
            
            7,113
            
            
            4,396
            
            
            3,934NET
                INCOME
            
            $
            5,553
            
            $
            8,854
            
            $
            7,786Earnings
                per share — basic
            
            $
            0.67
            
            $
            1.10
            
            $
            1.01Earnings
                per share — diluted
            
            $
            0.67
            
            $
            1.08
            
            $
            0.98See
                accompanying notes to consolidated financial
                statements.





27
 *Table
          of Contents*


**GREATER
      COMMUNITY BANCORP AND SUBSIDIARIES**





**CONSOLIDATED
      STATEMENTS OF COMPREHENSIVE INCOME**


(in
      thousands)





Years
                Ended December 31,2006
            
            2005
            
            2004NET
                INCOME
            
            $
            5,553
            
            $
            8,854
            
            $
            7,786OTHER
                COMPREHENSIVE INCOME NET OF TAX:Unrealized
                securities gains (losses) arising during period
            
            
            658
            
            
            (1,027
            )
            
            (55
            )Less:
                reclassification for gains included in net income
            
            
            304
            
            
            366
            
            
            673Other
                comprehensive income (loss)
            
            
            354
            
            
            (1,393
            )
            
            (728
            )TOTAL
                COMPREHENSIVE INCOME
            
            $
            5,907
            
            $
            7,461
            
            $
            7,058








**CONSOLIDATED
      STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY**


(in
      thousands)


Common
                    Stock
                
                Additional
                
                
                
                Accumulated
                  Other
                
                TotalNumber
                  of
                    Shares
                
                Par
                    Value
                
                Paid-in
                  Capital
                
                Retained
                  Earnings
                
                Comprehensive
                  Income
                
                Shareholders’
                  EquityBALANCE:
                    January 1, 2004
                
                
                7,004
                
                $
                3,502
                
                $
                41,788
                
                $
                2,735
                
                $
                2,545
                
                $
                50,570Net
                    income - 2004
                
                
                -
                
                
                -
                
                
                -
                
                
                7,786
                
                
                -
                
                
                7,7862.5%
                    stock dividend
                
                
                180
                
                
                90
                
                
                2,484
                
                
                (2,574
                )
                
                -
                
                
                -Exercise
                    of stock options
                
                
                342
                
                
                171
                
                
                2,557
                
                
                -
                
                
                -
                
                
                2,728Tax
                    benefit from exercise of stock options
                
                
                -
                
                
                -
                
                
                1,102
                
                
                -
                
                
                -
                
                
                1,102Issuance
                    of common stock
                
                
                44
                
                
                22
                
                
                607
                
                
                -
                
                
                -
                
                
                629Cash
                    dividends declared, $0.47 per share
                
                
                -
                
                
                -
                
                
                -
                
                
                (3,472
                )
                
                -
                
                
                (3,472
                )Other
                    comprehensive (loss), net of tax
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (728
                )
                
                (728
                )BALANCE:
                    December 31, 2004
                
                
                7,570
                
                $
                3,785
                
                $
                48,538
                
                $
                4,475
                
                $
                1,817
                
                $
                58,615Net
                    income - 2005
                
                
                -
                
                
                -
                
                
                -
                
                
                8,854
                
                
                -
                
                
                8,8542.5%
                    stock dividend
                
                
                192
                
                
                96
                
                
                3,009
                
                
                (3,105
                )
                
                -
                
                
                -Exercise
                    of stock options
                
                
                170
                
                
                85
                
                
                938
                
                
                -
                
                
                -
                
                
                1,023Tax
                    benefit from exercise of stock options
                
                
                -
                
                
                -
                
                
                547
                
                
                -
                
                
                -
                
                
                547Acceleration
                    of stock option vesting
                
                
                -
                
                
                -
                
                
                11
                
                
                -
                
                
                -
                
                
                11Issuance
                    of common stock
                
                
                56
                
                
                28
                
                
                864
                
                
                -
                
                
                -
                
                
                892Cash
                    dividends declared, $0.51 per share
                
                
                -
                
                
                -
                
                
                -
                
                
                (4,008
                )
                
                -
                
                
                (4,008
                )Other
                    comprehensive (loss), net of tax
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,393
                )
                
                (1,393
                )BALANCE:
                    December 31, 2005
                
                
                7,988
                
                $
                3,994
                
                $
                53,907
                
                $
                6,216
                
                $
                424
                
                $
                64,541Net
                    income - 2006
                
                
                -
                
                
                -
                
                
                -
                
                
                5,553
                
                
                -
                
                
                5,5532.5%
                    stock dividend
                
                
                202
                
                
                101
                
                
                3,118
                
                
                (3,219
                )
                
                -
                
                
                -Exercise
                    of stock options
                
                
                176
                
                
                88
                
                
                458
                
                
                -
                
                
                -
                
                
                546Tax
                    benefit from exercise of stock options
                
                
                -
                
                
                -
                
                
                601
                
                
                -
                
                
                -
                
                
                601Issuance
                    of common stock
                
                
                36
                
                
                18
                
                
                542
                
                
                -
                
                
                -
                
                
                560Stock-based
                    compensation
                
                
                -
                
                
                -
                
                
                7
                
                
                -
                
                
                -
                
                
                7Cash
                    dividends declared, $0.55 per share
                
                
                -
                
                
                -
                
                
                -
                
                
                (4,587
                )
                
                -
                
                
                (4,587
                )Other
                    comprehensive income, net of tax
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                354
                
                
                354BALANCE:
                    December 31, 2006
                
                
                8,402
                
                $
                4,201
                
                $
                58,633
                
                $
                3,963
                
                $
                778
                
                $
                67,575See
                    accompanying notes to consolidated financial
                    statements.


28
 *Table
            of Contents*


**GREATER
      COMMUNITY BANCORP AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


(in
      thousands)




Years
                Ended December 31,2006
            
            2005
            
            2004CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                Income
            
            $
            5,553
            
            $
            8,854
            
            $
            7,786Adjustments
                to reconcile net income to net cash provided by operating
                activities:Depreciation
                and amortization
            
            
            1,074
            
            
            1,204
            
            
            1,243Amortization
                of premium (accretion of discount) on securities, net
            
            
            (44
            )
            
            138
            
            
            624Provision
                for loan and lease losses
            
            
            717
            
            
            1,071
            
            
            1,169(Gain)
                on sale of assets
            
            
            -
            
            
            -
            
            
            (51
            )(Gain)
                on sale of securities
            
            
            (506
            )
            
            (610
            )
            
            (1,121
            )Recognized
                loss on impaired securities
            
            
            23
            
            
            -
            
            
            -Stock-based
                compensation
            
            
            7
            
            
            11
            
            
            -Tax
                benefit from exercise of stock options
            
            
            601
            
            
            -
            
            
            -Loss
                on debt prepayment
            
            
            -
            
            
            161
            
            
            -Deferred
                income tax provision (benefit)
            
            
            (2,898
            )
            
            (122
            )
            
            316(Increase)
                in accrued interest receivable
            
            
            (196
            )
            
            (1,059
            )
            
            (200
            )(Increase)
                in bank-owned life insurance and other assets
            
            
            (1,167
            )
            
            (141
            )
            
            (2,089
            )Increase
                in accrued interest payable and other liabilities
            
            
            6,382
            
            
            3,428
            
            
            188Net
                cash provided by operating activities
            
            
            9,547
            
            
            13,532
            
            
            7,865CASH
                FLOWS FROM INVESTING ACTIVITIES:Available-for-sale
                investment securitiesPurchases
            
            
            (4,026
            )
            
            (2,491
            )
            
            (45,166
            )Sales
            
            
            763
            
            
            3,658
            
            
            2,493Maturities
                and principal paydowns
            
            
            23,087
            
            
            24,733
            
            
            82,914Held-to-maturity
                investment securitiesPurchases
            
            
            (11,924
            )
            
            (33,867
            )
            
            (21,216
            )Maturities
                and principal paydowns
            
            
            25,875
            
            
            3,939
            
            
            3,749Net
                (increase) in interest-bearing deposits with banks
            
            
            (14,759
            )
            
            (3,794
            )
            
            (267
            )Net
                (increase) in loans
            
            
            (51,212
            )
            
            (59,710
            )
            
            (87,786
            )Capital
                expenditures
            
            
            (1,333
            )
            
            (1,522
            )
            
            (3,721
            )(Increase)
                in other real estate owned
            
            
            -
            
            
            -
            
            
            (25
            )Net
                cash (used in) investing activities
            
            
            (33,529
            )
            
            (69,054
            )
            
            (69,025
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Net
                increase (decrease) in deposit accounts
            
            
            (8,768
            )
            
            132,129
            
            
            43,238Increase
                (decrease) in federal funds purchased
            
            
            10,000
            
            
            (40,000
            )
            
            24,300Increase
                (decrease) insecurities sold under agreement to repurchase
            
            
            (880
            )
            
            3,355
            
            
            (4,276
            )Increase
                (decrease) in FHLB advances
            
            
            16,000
            
            
            (5,161
            )
            
            -Dividends
                paid
            
            
            (4,587
            )
            
            (4,008
            )
            
            (3,472
            )Proceeds
                from exercise of stock options
            
            
            546
            
            
            1,570
            
            
            3,830Proceeds
                from issuance of common stock
            
            
            560
            
            
            892
            
            
            629Net
                cash provided by financing activities
            
            
            12,871
            
            
            88,777
            
            
            64,249NET
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
            
            $
            (11,111
            )
            $
            33,255
            
            $
            3,089CASH
                AND CASH EQUIVALENTS, beginning of year
            
            
            64,980
            
            
            32,322
            
            
            29,233CASH
                AND CASH EQUIVALENTS, end of year
            
            $
            53,869
            
            $
            64,980
            
            $
            32,322Supplemental
                disclosure of cash flow information:Cash
                paid during the year for interest on deposits and
                borrowings
            
            $
            22,299
            
            $
            15,783
            
            $
            12,442Cash
                paid during the year for federal and state income taxes
            
            
            3,803
            
            
            3,762
            
            
            3,697See
                accompanying notes to consolidated financial
                statements.





29
 *Table
          of Contents*


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





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




**BUSINESS**


Greater
      Community Bancorp (“the Company”), primarily through its subsidiary Greater
      Community Bank (“GCB”), offers a broad range of lending, leasing, depository and
      related financial services to individual consumers, businesses and governmental
      units primarily through fifteen full-service offices located in Passaic, Bergen
      and Morris Counties, New Jersey. GCB competes with other banking and financial
      institutions in its primary market communities, including financial institutions
      with resources substantially greater than its own. Commercial banks, savings
      banks, savings and loan associations, credit unions, and money market funds
      actively compete for deposits and loans. Such institutions, as well as consumer
      finance and insurance companies, may be considered competitors with respect
      to
      one or more services they render.




Highland
      Capital Corp. (“HCC”), a wholly-owned nonbank subsidiary of GCB, engages in
      commercial equipment leasing focusing on small to medium ticket and lower or
      middle market leases. GCB also operates a securities brokerage business in
      its
      Greater Community Financial division (“GCF”). An unaffiliated company is the
      registered broker-dealer for GCF. The Company provides various other financial
      services through its affiliated subsidiary companies.




**BASIS
      OF FINANCIAL STATEMENT PRESENTATION**


The
      accounting and reporting policies of the Company and its subsidiaries conform
      with accounting principles generally accepted in the United States of America
      and predominant practices within the banking industry. The consolidated
      financial statements include the accounts of the Company, GCB, GCB’s direct
      subsidiaries HCC and Greater Community Investment Company, Inc., GCB’s indirect
      subsidiary Union Boulevard Corp., GCB Realty, LLC, Greater Community Services,
      Inc., REO Fairfield, LLC, Greater Community Tax Services LLC, Greater Community
      Title LLC (“Title”), Title’s direct subsidiary Greater Community 1031 Exchange
      Services, LLC, and the 50%-owned subsidiary Greater Community Insurance
      Services, LLC. All intercompany balances and transactions have been
      eliminated.




The
      preparation of financial statements requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the financial
      statements. These estimates and assumptions also affect reported amounts of
      revenues and expenses during the reporting period. Actual results could differ
      from those estimates.




The
      principal estimates that are particularly susceptible to significant change
      in
      the near term relate to the allowance for loan and lease losses and goodwill
      and
      intangible assets. The evaluation of the adequacy of the allowance for loan
      and
      lease losses includes an analysis of the individual loans and overall risk
      characteristics and size of the different loan portfolios, and takes into
      consideration current economic and market conditions, the capability of specific
      borrowers to pay specific loan obligations, and current loan collateral values.
      However, actual losses on specific loans, which also are encompassed in the
      analysis, may vary from estimated losses.




The
      Company accounts for goodwill and other intangible assets in accordance with
      SFAS No, 142, *Goodwill
      and Intangible Assets.* SFAS No.
      142 includes requirements to test goodwill and indefinite lived intangible
      assets for impairment rather than amortize them. Substantially all outstanding
      goodwill resulted from the acquisition of First Savings Bancorp of Little Falls,
      Inc. in 1999. In accordance with the provisions of SFAS No. 142 the Company
      has
      determined that no goodwill impairment existed as of December 31,
      2006.




**BUSINESS
      SEGMENTS**


Statement
      on Financial Accounting Standards (SFAS) No.131, *Disclosures
      about Segments of an Enterprise and Related Information* ,
      establishes standards for the way public business enterprises report information
      about operating segments in annual financial statements and requires that those
      enterprises report selected information about operating segments in interim
      financial reports issued to stockholders. It also establishes standards for
      related disclosure about products and services, geographic area, and major
      customers. The statement requires that a public business enterprise report
      financial and descriptive information about its reportable operating
      segments.




The
      Company applies the aggregation criteria set forth under SFAS No.131 for GCB
      and
      all of the Company’s nonbank subsidiaries, with the exception of GCB’s nonbank
      subsidiary HCC, to create a reportable segment, “Community Banking.” All of
      Community Banking’s activities are interrelated, and each activity is dependent
      and assessed based on how each of the Community Banking’s activities supports
      the other activities. For example, Community Banking’s commercial lending is
      dependent upon its ability to fund itself with retail deposits and other
      borrowings and to manage interest rate and credit risk. This situation is also
      similar for consumer and residential mortgage lending. Accordingly, significant
      operating decisions are based upon analysis of Community Banking as an operating
      segment. The Company regards HCC as a reportable segment, “Leasing”, in that the
      unit




30
 *Table
          of Contents*


specializes
      in vendor-driven lease programs focusing primarily on small to medium ticket
      medical equipment leasing and derives its business largely outside the rest
      of
      the Company’s traditional geographic market. Leasing
      is funded by a credit facility with GCB.




The
      following tables present revenue, expense and net income for the years indicated
      and total assets at the respective year-ends for both business segments. All
      significant intersegment accounts and transactions have been
      eliminated.




(in
                thousands)
            
            At
                and For the Year Ended December 31, 2006Total
              Company
            
            Community
              Banking
            
            Leasing
            
            Corporate
              and
                Other2Net
                interest income
            
            $
            31,820
            
            $
            29,088
            
            $
            2,732
            
            $
            -Non-interest
                income1
            
            
            5,782
            
            
            5,446
            
            
            401
            
            
            (65
            )Total
                revenue
            
            
            37,602
            
            
            34,534
            
            
            3,133
            
            
            (65
            )Provision
                for loan and lease losses
            
            
            717
            
            
            449
            
            
            268
            
            
            -Gain
                on sale of investment securities
            
            
            506
            
            
            506
            
            
            -
            
            
            -Non-interest
                expense
            
            
            24,725
            
            
            22,903
            
            
            1,887
            
            
            (65
            )Income
                before provision for income taxes
            
            
            12,666
            
            
            11,688
            
            
            978
            
            
            -Provision
                for income taxes
            
            
            7,113
            
            
            6,746
            
            
            367
            
            
            -Net
                income
            
            $
            5,553
            
            $
            4,942
            
            $
            611
            
            $
            -Period-end
                total assets
            
            $
            950,969
            
            $
            943,840
            
            $
            71,456
            
            $
            (64,327
            )




At
                and For the Year Ended December 31, 2005Total
              Company
            
            Community
              Banking
            
            Leasing
            
            Corporate
              and
                Other2Net
                interest income
            
            $
            32,091
            
            $
            29,752
            
            $
            2,339
            
            $
            -Non-interest
                income1
            
            
            5,611
            
            
            5,284
            
            
            387
            
            
            (60
            )Total
                revenue
            
            
            37,702
            
            
            35,036
            
            
            2,726
            
            
            (60
            )Provision
                for loan and lease losses
            
            
            1,071
            
            
            835
            
            
            236
            
            
            -Gain
                on sale of investment securities
            
            
            610
            
            
            610
            
            
            -
            
            
            -Non-interest
                expense
            
            
            23,991
            
            
            22,320
            
            
            1,731
            
            
            (60
            )Income
                before provision for income taxes
            
            
            13,250
            
            
            12,491
            
            
            759
            
            
            -Provision
                for income taxes
            
            
            4,396
            
            
            4,137
            
            
            259
            
            
            -Net
                income
            
            $
            8,854
            
            $
            8,354
            
            $
            500
            
            $
            -Period-end
                total assets
            
            $
            925,201
            
            $
            920,910
            
            $
            51,689
            
            $
            (47,398
            )




At
                and For the Year Ended December 31, 2004Total
              Company
            
            Community
              Banking
            
            Leasing
            
            Corporate
              and
                Other2Net
                interest income
            
            $
            27,651
            
            $
            25,812
            
            $
            1,839
            
            $
            -Non-interest
                income1
            
            
            5,317
            
            
            5,118
            
            
            262
            
            
            (63
            )Total
                revenue
            
            
            32,968
            
            
            30,930
            
            
            2,101
            
            
            (63
            )Provision
                for loan and lease losses
            
            
            1,169
            
            
            (874
            )
            
            2,043
            
            
            -Gain
                on sale of investment securities
            
            
            1,121
            
            
            1,121
            
            
            -
            
            
            -Gain
                on sale of leases
            
            
            51
            
            
            -
            
            
            51
            
            
            -Non-interest
                expense
            
            
            21,251
            
            
            19,616
            
            
            1,698
            
            
            (63
            )Income
                (loss) before provision for income taxes
            
            
            11,720
            
            
            13,309
            
            
            (1,589
            )
            
            -Provision
                for income taxes (recovery)
            
            
            3,934
            
            
            4,435
            
            
            (501
            )
            
            -Net
                income (loss)
            
            $
            7,786
            
            $
            8,874
            
            $
            (1,088
            )
            $
            -Period-end
                total assets
            
            $
            825,363
            
            $
            821,746
            
            $
            36,371
            
            $
            (32,754
            )





1 Excludes
      non-recurring gains which are reported separately.


2 Includes
      intersegment eliminations.




31
 *Table
          of Contents*


**INVESTMENT
      SECURITIES**


The
      Company accounts for its investment securities in accordance with SFAS No.115, *Accounting
      for Certain Investments in Debt and Equity Securities* .
      Investment securities that the Company has the ability and intent to hold to
      maturity are classified as held-to-maturity and are stated at cost, adjusted
      for
      premium amortization and discount accretion. Securities which are held for
      indefinite periods of time which management intends to use as part of its
      asset/liability management strategy, or that may be sold in response to changes
      in interest rates, changes in prepayment risk, increased capital requirements
      or
      other similar factors, are classified as available-for-sale and are carried
      at
      fair value. Net unrealized gains and losses for such securities, net of income
      tax effect, are charged/credited directly to shareholders’ equity. Securities
      transactions are accounted for on a trade date basis. Gains or losses on
      disposition of investment securities are based on the net proceeds and the
      adjusted carrying amount of the securities sold using the specific
      identification method.




As
      of
      December 31, 2006 and 2005, the Company did not have any foreign investment
      securities or securities designated as trading account investments.




SFAS
      No.133, *Accounting
      for Derivative Instruments and Hedging Activity* ,
      established accounting and reporting standards for derivative instruments,
      including certain derivative instruments imbedded in other contracts, and for
      hedging activities. It requires that an entity recognize all derivatives as
      either assets or liabilities in the statement of financial position and measure
      those instruments at fair value. SFAS No.133 was amended by SFAS No.138, *Accounting
      for Certain Derivative Instruments and Certain Hedging
      Activities* .
      The
      Company’s adoption of SFAS No.133, as amended, did not have a material impact on
      its financial condition or results of operations. The Company did not have
      any
      derivatives at December 31, 2006 and 2005.




The
      Company adopted EITF 03-1, *The
      Meaning of Other than Temporary Impairment and Its Application to Certain
      Investments* ,
      as of
      December 31, 2003.  EITF 03-1 includes certain required quantitative and
      qualitative disclosures for investment securities accounted for under SFAS
      No.
      115, *Accounting
      for Certain Investments in Debt and Equity Securities* ,
      that
      are impaired at the balance sheet date, but an other-than-temporary impairment
      has not been recognized.  In November 2005, the FASB issued Staff Position
      FSP FAS 115-1 and FAS 124-1, *The
      Meaning of Other-Than-Temporary Impairment and Its Application to Certain
      Investments* .
      This
      FSP provides guidance on determining when an investment is considered impaired,
      whether that impairment is other than temporary, and the measurement of an
      impairment loss. The FSP also provides accounting considerations subsequent
      to
      the recognition of an other-than-temporary impairment and requires certain
      disclosures about unrealized losses that have not been recognized as
      other-than-temporary impairments. The Company adopted FSP FAS 115-1 and FAS
      124-1 as of December 31, 2005. The disclosures required under EITF 03-1 and
      FSP
      FAS 115-1 and FAS 124-1 are included in these financial statements .




At
      December 31, 2006 and 2005, the Company identified investment securities that
      would be held for indefinite periods of time but not necessarily to maturity,
      including securities that would be used as part of the Company’s asset/liability
      management strategy and possibly sold in response to changes in interest rates,
      changes in prepayment risk and similar factors. These securities are classified
      as available-for-sale. These securities are carried at fair value, with any
      temporary unrealized gains or losses reported as a separate component of other
      comprehensive income (loss), net of the related income tax effect. Declines
      in
      the fair value of individual available-for-sale securities below their cost
      that
      are other than temporary result in write-downs of the individual securities
      to
      their fair value, and are included in non-interest income in the consolidated
      statements of income. Factors affecting the determination of whether an
      other-than-temporary impairment has occurred include a downgrading of the
      security by a rating agency, a significant deterioration in the financial
      condition of the issuer, or that management would not have the intent and
      ability to hold a security for a period of time sufficient to allow for any
      anticipated recovery in fair value.




**LOANS
      AND ALLOWANCE FOR LOAN AND LEASE LOSSES**


Loans
      and
      leases that management has the intent or the ability to hold for the foreseeable
      future or until maturity or payoff are stated at the amount of unpaid principal
      net of unearned discount, unamortized loan fees and loan and lease origination
      costs and an allowance for loan and lease losses. The allowance for loan and
      lease losses is established through a provision for loan and lease losses
      charged to expense. Loans and leases are charged against the allowance for
      loan
      and lease losses when management believes that the collectibility of principal
      is unlikely. The allowance for loan and lease losses is maintained at a level
      that management considers adequate to provide for credit losses inherent in
      the
      loan and lease portfolios at the reporting date. The level of the allowance
      is
      based on management’s evaluation of losses in the loan and lease portfolios
      after consideration of prevailing and anticipated economic conditions, including
      estimates and appraisals, among other items, known or anticipated at each
      reporting date. On a periodic basis during the year management makes credit
      reviews of the loan and lease portfolios designed to identify potential charges
      to the allowance.




Interest
      income on loans and leases is credited to operations based upon the principal
      amount outstanding. The net amounts of origination fees, origination costs
      and
      commitment fees are deferred and recognized over the lives of the related loans
      and leases as adjustments of yield. When management believes there is sufficient
      doubt as to the ultimate collectibility of interest on any loan and lease,
      the
      accrual of applicable interest is discontinued. A loan or lease is generally
      classified as nonaccrual when principal and interest have consistently been
      in
      default for a period of 90 days or more or because of deterioration in the
      financial condition of the borrower, and payment in full of principal or
      interest is not expected. Loans and leases past due 90 days or more and still
      accruing interest are loans and leases that are generally well-secured and
      expected to be restored to a current status in the near future.




32
 *Table
          of Contents*


The
      Company accounts for impaired loans in accordance with SFAS No.114, *Accounting
      by Creditors for Impairment of a Loan* ,
      as
      amended by SFAS No.118, *Accounting
      by Creditors for Impairment of a Loan - Income Recognition and
      Disclosures* .
      Impairment is measured based on the present value of expected future cash flows
      discounted at the loan’s effective interest rates, except that as a practical
      expedient, the Company may measure impairment based on a loan’s observable
      market price, or the fair value of the collateral if the loan is collateral
      dependent. Regardless of the measurement method, a creditor must measure
      impairment based on the fair value of the collateral when the creditor
      determines that foreclosure is probable.




The
      Company also follows SEC Staff Accounting Bulletin (SAB) No.102, *Selected
      Loan Loss Allowance Methodology and Documentation Issue* .
      This
      SAB provides guidance on the development, documentation, and application of
      a
      systematic methodology for determining the allowance for loans and leases in
      accordance with US GAAP.




The
      Company accounts for its transfers and servicing assets in accordance with
      SFAS
      No.140, *Accounting
      for Transfers of Servicing of Financial Assets and Extinguishments of
      Liabilities* .
      SFAS
      No.140 revised the accounting for the securitization of other transfers of
      financial assets and collateral.




The
      Company adopted FASB Interpretation 45 (FIN 45), *Guarantor’s
      Accounting and Disclosure Requirements for Guarantees, including Indirect
      Guarantees of Indebtedness of Others* ,
      on
      January 1, 2003. FIN 45 requires a guarantor entity, at the inception of a
      guarantee covered by the measurement provisions of the interpretation, to record
      a liability for the fair value of the obligation undertaken in issuing the
      guarantee. The Company issues financial and performance letters of credit.
      Financial letters of credit require the Company to make payment if the
      customer’s financial condition deteriorates, as defined in the agreements.
      Performance letters of credit require the Company to make payments if the
      customer fails to perform certain non-financial contractual obligations. The
      Company previously did not record a liability when guaranteeing obligations
      unless it became probable that the Company would have to perform under the
      guarantee. FIN 45 applies prospectively to guarantees the Company issues or
      modifies after 2002.




The
      Company adopted SFAS No.149, *Amendment
      of Statement 133 on Derivative Instruments and Hedging
      Activities* ,
      on July
      1, 2003. SFAS No.149 clarifies and amends SFAS No.133 for implementation issues
      raised by constituents or includes the conclusions reached by the FASB on
      certain FASB Staff Implementation Issues. SFAS 149 also amends SFAS No.133
      to
      require a lender to account for loan commitments related to mortgage loans
      that
      will be held for sale as derivatives. SFAS No.149 is effective for contracts
      entered into or modified after June 30, 2003. The Company periodically enters
      into commitments with its customers which it intends to sell in the future.
      The
      adoption of SFAS No.149 did not have a material impact on the Company’s
      financial position or results of operations. The Company also follows the
      provisions of SAB No.105, *Application
      of Accounting Principles to Loan Commitments,* which
      was issued in March, 2004.




**PREMISES
      AND EQUIPMENT**


Premises
      and equipment, including leasehold improvements, are stated at cost less
      accumulated depreciation and amortization. Depreciation expense is computed
      primarily on the straight-line method over the estimated useful lives of the
      assets. Leasehold improvements are depreciated over the term of the lease or
      estimated useful life, whichever is shorter.




The
      Company follows SFAS No.144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets* .
      SFAS
      No.144 retained the existing requirements to recognize and measure the
      impairment of long-lived assets to be held and used or to be disposed of by
      sale. SFAS No.144 also changed the requirements relating to reporting the
      effects of a disposal or discontinuation of a segment of a business.




**BANK-OWNED
      LIFE INSURANCE**


The
      Company invests in bank-owned life insurance (BOLI). BOLI involves the Company’s
      purchase of insurance on the lives of certain employees and nonemployee
      directors. GCB is owner and beneficiary of the policies. Investment returns
      on
      the policies, which increase or decrease the policies’ cash surrender values
      (i.e., carrying amounts) are dependent on market rates.




**GOODWILL**


Goodwill
      represents the excess of the cost over the fair value of net assets of acquired
      businesses. Substantially all of the Company’s outstanding goodwill resulted
      from the acquisition of First Savings Bancorp in 1999. Under SFAS No. 142 it
      is
      no longer amortized but is tested for impairment annually or more frequently
      if
      events or changes in circumstances indicate that the asset might be impaired.
      Impairment is the condition that exists when the carrying amount of goodwill
      exceeds its implied fair value. The Company evaluates goodwill in accordance
      with provisions of SFAS No. 142 and has determined that no impairment loss
      existed as of December 31, 2006 or 2005. Goodwill at December 31, 2006 and
      2005
      was approximately $11.6 million, net of accumulated amortization of $1.1
      million.




33
 *Table
          of Contents*


**DEFERRED
      FINANCING COSTS**


Deferred
      financing costs related to the issuance of subordinated debentures are being
      amortized over the life of the instruments and are included in other assets.
      The
      unamortized balances at December 31, 2006 and 2005 were approximately $785,000
      and $857,000, respectively.




**INCOME
      TAXES**


The
      Company accounts for income taxes under the liability method of accounting
      for
      income taxes. Deferred tax assets and liabilities are determined based on the
      difference between the financial statement and tax bases of assets and
      liabilities as measured by the enacted tax rates that will be in effect when
      these differences reverse. Deferred tax expense and income is the result of
      changes in deferred tax assets and liabilities. The principal types of accounts
      resulting in differences between assets and liabilities for financial statement
      and tax return purposes are the allowance for loan and lease losses, interest
      income on nonaccrual loans, depreciation and amortization, deferred loan fees,
      the difference between book and tax bases of assets acquired and net operating
      loss carryforwards. The Company and its subsidiaries file a consolidated federal
      income tax return.




**STATEMENTS
      OF CASH FLOWS**


Cash
      and
      cash equivalents are defined as cash on hand, cash items in process of
      collection, non interest-bearing amounts due from banks and federal funds sold.
      Generally, federal funds are sold for a one-day period. Cash on hand generally
      satisfies required reserve balances to be maintained with the Federal Reserve
      Bank of New York.




**COMPREHENSIVE
      INCOME**


The
      Company follows the disclosure provisions of SFAS No.130, *Reporting
      Comprehensive Income* .
      SFAS
      No. 130 requires the reporting of comprehensive income in addition to net income
      from operations. Comprehensive income is a more inclusive financial reporting
      methodology that includes disclosure of certain financial information that
      historically has not been recognized in the calculation of net income.




The
      following table presents the components of other comprehensive income for the
      periods indicated.




(in
                  thousands)
              
              December
                  31, 2006
              
              December
                  31, 2005
              
              December
                  31, 2004Before
                Tax
                Amount
              
              Tax
                (Expense)
                Benefit
              
              Net
                  of
                Tax
                Amount
              
              Before
                Tax
                Amount
              
              Tax
                (Expense)
                Benefit
              
              Net
                  of
                Tax
                Amount
              
              Before
                Tax
                Amount
              
              Tax
                (Expense)
                Benefit
              
              Net
                  of
                Tax
                AmountUnrealized
                  gains on
                investment
                  securities:Unrealized
                  holding
                gains
                  (losses) arising
                during
                  period
              
              $
              894
              
              $
              (236
              )
              $
              658
              
              $
              (1,740
              )
              $
              713
              
              $
              (1,027
              )
              $
              200
              
              $
              (255
              )
              $
              (55
              )Less:
                  reclassification
                adjustment
                  for gains
                included
                  in net income
              
              
              506
              
              
              (202
              )
              
              304
              
              
              610
              
              
              (244
              )
              
              366
              
              
              1,121
              
              
              (448
              )
              
              673Other
                  comprehensive
                income
                  (loss), net
              
              $
              388
              
              $
              (34
              )
              $
              354
              
              $
              (2,350
              )
              $
              957
              
              $
              (1,393
              )
              $
              (921
              )
              $
              193
              
              $
              (728
              )
  **OTHER
        REAL ESTATE OWNED**


Other
      real estate owned, representing property acquired through foreclosure, is
      recorded at the lower of cost or market value less estimated costs of disposal.
      When property is acquired, the excess, if any, of the loan balance over fair
      market value is charged to the allowance for loan and lease losses. Periodically
      thereafter, the asset is reviewed for subsequent declines in the estimated
      fair
      market value. Subsequent declines, if any, holding costs, valuation losses,
      and
      gains and losses on subsequent sale are included in the consolidated statements
      of income. At December 31, 2006, the Company held one property in other real
      estate owned in the amount of $349,000, net of valuation reserve.




**ADVERTISING
      COSTS**


The
      Company expenses advertising costs as incurred. Advertising expenses for the
      years ended December 31, 2006, 2005 and 2004 were approximately $309,000,
      $239,000 and $245,000, respectively.




**EARNINGS
      PER SHARE**


Basic
      earnings per share is computed by dividing income available to common
      shareholders by the weighted average number of shares of common stock
      outstanding during the period. Diluted earnings per share takes into account
      the
      potential dilution that could occur if stock options or other contracts to
      issue
      common stock were exercised and converted into common stock. All weighted
      average actual shares and per share information in the financial statements
      have
      been adjusted retroactively for the effect of stock dividends.




34
 *Table
          of Contents*


**STOCK-BASED
      COMPENSATION**


At
      December 31, 2006, the Company had three stock-based compensation plans, which
      are more fully described in Note 11 within the Notes to Consolidated Financial
      Statements.




Effective
      January 1, 2006, the Company adopted the fair value recognition provisions
      of SFAS
      No.
      123 (Revised), *Share-Based
      Payment* (“SFAS
      No. 123(R))” for all
      share-based payments, using the modified prospective transition method. Under
      this transition method, compensation cost recognized includes compensation
      cost
      for all share-based awards granted on or subsequent to January 1, 2006, based
      on
      the grant date fair value estimated in accordance with the provisions of SFAS
      No. 123(R). In accordance with the modified prospective transition method,
      the
      Company’s consolidated financial statements for prior periods have not been
      restated to reflect, and do not include, the impact of SFAS No. 123(R).




Prior
      to
      January 1, 2006 the Company accounted for its plans under the recognition and
      measurement principles of APB Opinion No. 25 and related interpretations.
      Stock-based employee and director compensation costs are not reflected in net
      income, except in 2005 as described below, as all options granted under these
      plans had an exercise price equal to the market value of the underlying common
      stock on the date of grant. The following table illustrates the effect on net
      income and earnings per share if the Company had applied the fair value
      recognition provisions of SFAS No.123 to stock-based compensation.




(in
                thousands, except per share amounts)
            
            
            
            Years
                Ended December 31,2006
            
            2005
            
            2004Net
                income as reported
            $
            5,553
            
            $
            8,854
            
            $
            7,786Plus:  
                stock-based compensation expense, net of income taxes,included
                in reported net income
            
            4
            
            
            7
            
            
            -Less:  
                total stock-based compensation costs, net of income taxes,determined
                under fair value-based method for all awards
            
            -
            
            
            (1,220
            )
            
            (247
            )Pro
                forma net income
            $
            5,557
            
            $
            7,641
            
            $
            7,539Earnings
                per share - basic
            
            
            As
                reported
            
            $
            0.67
            
            $
            1.10
            
            $
            1.01Pro
                forma
            
            
            0.67
            
            
            0.95
            
            
            0.97Earnings
                per share - diluted
            
            
            As
                reported
            
            $
            0.67
            
            $
            1.08
            
            $
            0.98Pro
                forma
            
            
            0.67
            
            
            0.93
            
            
            0.94





The
      Company granted 15,400 stock options in 2006, 20,500 stock options in 2005
      and
      108,650 stock options in 2004. The fair value of each grant was estimated on
      the
      date of grant using the Black-Scholes options-pricing model. The Company also
      granted 4,500 shares of restricted stock in 2006. The fair market value of
      each
      grant is equal to the price of the Company’s stock on the day following the
      approval of the grant.




On
      December 20, 2005, the Company accelerated the vesting of all unvested shares
      of
      stock options in all stock option plans in existence at the time, so that all
      such options became fully vested and exercisable at such date. In accordance
      with FIN 44, *Accounting
      for Certain Transactions Involving Stock Compensation,* a FASB
      interpretation of APB Opinion No. 25, compensation expense must be recorded
      for
      certain modifications of share-based payments. In the case of stock options,
      the
      acceleration of vesting is considered a modification that results in the
      recording of expense when, as a result of the modification, a grantee is able
      to
      vest in an award that, under the original terms, would not have vested. The
      Company recognized $7,000 in stock-compensation expense, net of income taxes,
      in
      2005 in accordance with FIN 44. The total 2005 stock-based compensation costs
      of
      $1.2 million, net of income taxes, determined under the fair value-based method
      included $315,000 of pro forma costs for 2005 and $905,000 of future period
      pro
      forma costs attributed to the acceleration of vesting and exercisability of
      all
      unvested stock options. The acceleration of vesting and exercisability of all
      unvested stock options will provide the Company with a benefit to its future
      results of operations by an avoidance of expense that would have been required
      to be recorded on outstanding stock options starting January 1, 2006, in
      accordance with the Company’s adoption of SFAS No. 123(R), *Share-Based
      Compensation* .




**VARIABLE
      INTEREST ENTITIES**


The
      Company has determined that GCB Capital Trust II (“the Trust”) qualifies as a
      variable interest entity under FASB’s FIN 46. The Trust issued mandatorily
      redeemable preferred stock to investors and loaned the proceeds to the Company.
      The Trust holds, as its sole asset, subordinated debentures issued by the
      Company. The Company adopted the provisions of FIN 46(R) in 2004, which required
      the Company to deconsolidate GCB Capital Trust II. FIN 46(R) precludes
      consideration of the call option embedded in the preferred stock when
      determining if the Company has the right to a majority of the Trust’s expected
      residual returns.




On
      March
      1, 2005 the Federal Reserve adopted a final rule that allows the continued
      inclusion of trust preferred securities in the Tier I capital of bank holding
      companies after applying FIN 46(R). In addition, the rule revised the
      quantitative limits applied to the aggregate amount of trust preferred
      securities and certain other core capital elements included in Tier I capital.
      The revised limits become effective after a five-year transition
      period.




35
 *Table
          of Contents*


**RECENT
      ACCOUNTING PRONOUNCEMENTS**




**Accounting
      Changes and Error Corrections**


In
      May
      2005, the Financial Accounting Standards Board (“FASB”) issued Statement
      No. 154, (“SFAS No. 154”), *Accounting
      Changes and Error Corrections-A Replacement of APB Opinion No. 20 and FASB
      Statement No. 3* .
      Among
      other things, SFAS No. 154 requires that a voluntary change in accounting
      principle be applied retroactively with all prior period financial statements
      presented on the new accounting principle, unless it is impractical to do so.
      SFAS No. 154 also provides that (i) a change in method of depreciating
      or amortizing a long-lived nonfinancial asset be accounted for as a change
      in
      estimate (prospectively) that was effected by a change in accounting principle,
      and (ii) correction of errors in previously issued financial statements
      should be termed a “restatement”. The requirements became effective for the
      Company for accounting changes beginning January 1, 2006. The Company has
      adopted SFAS No. 154.




**Accounting
      for Uncertainty in Income Taxes**


In
      June
      2006, the FASB issued Interpretation ("FIN") No. 48, *Accounting
      for Uncertainty in Income Taxes-an interpretation of FASB Statement No.
      109* .
      FIN No.
      48 prescribes a recognition threshold and measurement attribute for the
      financial statement recognition and measurement of a tax position taken or
      expected to be taken in a tax return, and provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure, and transition. FIN No. 48 is effective for fiscal years beginning
      after December 15, 2006. The Company does not expect that the adoption of this
      interpretation will have a material impact on its financial position, results
      of
      operations and cash flows.




**Fair
      Value Measurements**


In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* (“SFAS
      No. 157”). This Statement defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles, and expands
      disclosures about fair value measurements. SFAS No. 157 does not require any
      new
      fair value measurements, but provides enhanced guidance to other pronouncements
      that require or permit assets or liabilities to be measured at fair value.
      This
      Statement is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and interim periods within those years.
      The
      Company is currently evaluating the impact of SFAS No. 157 on its financial
      statements.




**SEC
      Staff Accounting Bulletin No. 108**


In
      September 2006, the Securities and Exchange Commission ("SEC") issued Staff
      Accounting Bulletin ("SAB") No. 108 to require quantification of financial
      statement misstatements under both the "rollover approach" and the "iron curtain
      approach". The "rollover approach" quantifies a misstatement based on the amount
      of the error originating in the current year income statement, but ignores
      the
      effects of correcting the portion of the current year balance sheet misstatement
      that originated in prior years. The "iron curtain approach" quantifies a
      misstatement based on the effects of correcting the misstatement existing in
      the
      balance sheet at the end of the current year, irrespective of the misstatement's
      year(s) of origination. The provisions of SAB No. 108 must be applied to
      financial statements for fiscal years ending after November 15, 2006. The
      Company has adopted SAB No. 108.




**Accounting
      for Defined Benefit Pension and Other Postretirement
      Plans**


In
      September 2006, the FASB issued SFAS No. 158, *Employers’ Accounting for Defined Benefit Pension and Other Postretirement
      Plans—an amendment of FASB Statements No. 87, 88, 106 and
      132(R)* (“SFAS
      No. 158”). This Statement requires an employer to recognize the overfunded or
      underfunded status of a defined postretirement plan as an asset or liability
      in
      its statement of financial position and to recognize changes in that funded
      status in the year in which the changes occur through comprehensive income.
      SFAS
      No. 158 also requires measurement of the funded status of a plan as of the
      date
      of the fiscal year-end statement of financial position. Requirements for the
      recognition of the funded status of a defined postretirement plan and to provide
      the required disclosures were effective for the Company as of December 31,
      2006.
      The requirement to measure plan assets and benefit obligations as of the date
      of
      the fiscal year-end financial statements is effective for fiscal years ending
      after December 15, 2008. The Company’s adoption of the recognition and
      disclosure requirements as of December 31, 2006 did not have a material impact
      on its financial position, results of operations and cash flows.




**Fair
      Value Option for Financial Assets and Liabilities**


In
      February 2007, the FASB issued SFAS No. 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities—Including an
      amendment of FASB Statement No. 115* (“SFAS
      No. 159” or “Standard”). SFAS No. 159 provides all entities with an option to
      report selected financial assets and liabilities at fair value. The objective
      of
      SFAS No. 159 is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in earnings caused by measuring related
      assets and liabilities differently without having to apply the complex
      provisions of hedge accounting. The Standard also establishes presentation
      and
      disclosure requirements designed to facilitate comparisons between companies
      that choose different measurement attributes for similar types of assets and
      liabilities. SFAS No. 159 does not eliminate disclosure requirements included
      in
      other accounting standards. The Standard is effective for the Company on January
      1, 2008. Early adoption is permitted under certain conditions. The Company
      is
      currently evaluating the impact of SFAS No. 159 on its financial
      statements.


36
 *Table
          of Contents*


**RECLASSIFICATIONS**


Certain
      reclassifications have been made to the prior period financial statements to
      conform to the 2006 presentation.







**NOTE
      2 - INVESTMENT SECURITIES**





The
      amortized cost, unrealized gains and losses, and fair value of the Company’s
      available-for-sale and held-to-maturity investment securities are as
      follows:





(in
                  thousands)
              
              December
                  31,2006
              
              2005Amortized
                Cost
              
              Gross
                Unrealized
                Gains
              
              Gross
                Unrealized
                Losses
              
              Fair
                  Value
              
              Amortized
                Cost
              
              Gross
                Unrealized
                Gains
              
              Gross
                Unrealized
                Losses
              
              Fair
                  ValueAvailable-for-sale:U.S.
                  Treasury and U.S. government
                agencies
              $
              5,902
              
              $
              3
              
              $
              (28
              )
              $
              5,877
              
              $
              17,607
              
              $
              1
              
              $
              (162
              )
              $
              17,446State
                  and political subdivisions
              
              
              11,007
              
              
              144
              
              
              (179
              )
              
              10,972
              
              
              12,170
              
              
              114
              
              
              (196
              )
              
              12,088Mortgage-backed
                  securities:FHLMC
              
              
              7,104
              
              
              28
              
              
              (229
              )
              
              6,903
              
              
              9,218
              
              
              39
              
              
              (301
              )
              
              8,956FNMA
              
              
              19,435
              
              
              27
              
              
              (669
              )
              
              18,793
              
              
              23,673
              
              
              45
              
              
              (911
              )
              
              22,807Other
              
              
              1,223
              
              
              9
              
              
              (3
              )
              
              1,229
              
              
              1,676
              
              
              22
              
              
              (5
              )
              
              1,693Total
                  mortgage-backed securities
              
              27,762
              
              
              64
              
              
              (901
              )
              
              26,925
              
              
              34,567
              
              
              106
              
              
              (1,217
              )
              
              33,456Other
                  debt and equity securities
              
              
              18,966
              
              
              2,287
              
              
              (85
              )
              
              21,168
              
              
              18,716
              
              
              2,383
              
              
              (112
              )
              
              20,987Total
                  available-for-sale
              
              
              63,637
              
              
              2,498
              
              
              (1,193
              )
              
              64,942
              
              
              83,060
              
              
              2,604
              
              
              (1,687
              )
              
              83,977Held-to-maturity:U.S.
                  Treasury and U.S. governmentagencies
              
              29,411
              
              
              18
              
              
              (161
              )
              
              29,268
              
              
              48,226
              
              
              -
              
              
              (536
              )
              
              47,690State
                  and political subdivisions
              
              
              3,955
              
              
              -
              
              
              (6
              )
              
              3,949
              
              
              1,975
              
              
              -
              
              
              -
              
              
              1,975Mortgage-backed
                  securities:FHLMC
              
              
              19
              
              
              -
              
              
              -
              
              
              19
              
              
              19
              
              
              1
              
              
              -
              
              
              20Other
                  debt securities
              
              
              3,006
              
              
              -
              
              
              (17
              )
              
              2,989
              
              
              -
              
              
              -
              
              
              -
              
              
              -Total
                  held-to-maturity
              
              
              36,391
              
              
              18
              
              
              (184
              )
              
              36,225
              
              
              50,220
              
              
              1
              
              
              (536
              )
              
              49,685Total
                  investment securities
              
              $
              100,028
              
              $
              2,516
              
              $
              (1,377
              )
              $
              101,167
              
              $
              133,280
              
              $
              2,605
              
              $
              (2,223
              )
              $
              133,662




The
      amortized cost and fair value of investment securities at December 31, 2006
      by
      contractual maturity are shown in the following table. Expected maturities
      will
      differ from contractual maturities because issuers and borrowers may have the
      right to call or prepay obligations.




(in
                thousands)
            
            December
                31, 2006Description
                of securities
            
            Amortized
              Cost
            
            Fair
              ValueAvailable-for-sale:Due
                in one year or less
            
            $
            3,236
            
            $
            3,220Due
                after one year through 5 years
            
            
            5,651
            
            
            5,526Due
                after five years through 10 years
            
            
            3,206
            
            
            3,189Due
                after ten years
            
            
            4,816
            
            
            4,914Mortgage-backed
                securities
            
            
            27,762
            
            
            26,925Other
                debt and equity securities
            
            
            18,966
            
            
            21,168Total
                available-for-sale
            
            
            63,637
            
            
            64,942Held-to-maturity:Due
                in one year or less
            
            
            29,879
            
            
            29,743Due
                after five years through ten years
            
            
            3,487
            
            
            3,474Mortgage-backed
                securities
            
            
            19
            
            
            19Other
                debt securities
            
            
            3,006
            
            
            2,989Total
                held-to-maturity
            
            
            36,391
            
            
            36,225Total
                investment securities
            
            $
            100,028
            
            $
            101,167


Proceeds
      from sales of available-for-sale securities for the years ended December 31,
      2006, 2005 and 2004 were $0.8 million, $3.7 million and $2.5 million,
      respectively. Net securities gains of $506,000, $610,000, and $1.1 million
      were
      realized on these sales for the respective years. Gross losses were not
      significant for such years.




37
 *Table
          of Contents*


Securities
      totaling $25.8 million and $74.9 million at December 31, 2006 and 2005,
      respectively, were pledged to secure public deposits, FHLB advances, securities
      sold under repurchase agreements and for other purposes required by
      law.




The
      table
      below indicates the length of time individual securities have been in a
      continuous unrealized loss position at December 31, 2006 and 2005.




(in
                    thousands)
                
                December
                    31, 2006Less
                    than 12 months
                
                12
                    months or longer
                
                TotalDescription
                    of securities
                
                Fair
                  Value
                
                Unrealized
                  Losses
                
                Fair
                  Value
                
                Unrealized
                  Losses
                
                Fair
                  Value
                
                Unrealized
                  LossesAvailable-for-sale:U.S.
                    Treasury obligations
                
                $
                -
                
                $
                -
                
                $
                998
                
                $
                (1
                )
                $
                998
                
                $
                (1
                )U.S.
                    government agencies
                
                
                2,003
                
                
                (2
                )
                
                2,139
                
                
                (25
                )
                
                4,142
                
                
                (27
                )State
                    and political subdivisions
                
                
                -
                
                
                -
                
                
                3,564
                
                
                (179
                )
                
                3,564
                
                
                (179
                )Mortgage-backed
                    securities
                
                
                428
                
                
                (2
                )
                
                20,701
                
                
                (899
                )
                
                21,129
                
                
                (901
                )Other
                    debt securities
                
                
                1,021
                
                
                (3
                )
                
                3,121
                
                
                (32
                )
                
                4,142
                
                
                (35
                )Total
                    debt securities
                
                
                3,452
                
                
                (7
                )
                
                30,523
                
                
                (1,136
                )
                
                33,975
                
                
                (1,143
                )Equity
                    securities
                
                
                2,252
                
                
                (50
                )
                
                -
                
                
                -
                
                
                2,252
                
                
                (50
                )Total
                    available-for-sale
                
                
                5,704
                
                
                (57
                )
                
                30,523
                
                
                (1,136
                )
                
                36,227
                
                
                (1,193
                )Held-to-maturity:U.S.
                    government agency
                
                
                -
                
                
                -
                
                
                24,273
                
                
                (161
                )
                
                24,273
                
                
                (161
                )State
                    and political subdivisions
                
                
                3,949
                
                
                (6
                )
                
                -
                
                
                -
                
                
                3,949
                
                
                (6
                )Other
                    debt securities
                
                
                1,468
                
                
                (17
                )
                
                -
                
                
                -
                
                
                1,468
                
                
                (17
                )Total
                    held-to-maturity
                
                
                5,417
                
                
                (23
                )
                
                24,273
                
                
                (161
                )
                
                29,690
                
                
                (184
                )Total
                    securities temporarily impaired
                
                $
                11,121
                
                $
                (80
                )
                $
                54,796
                
                $
                (1,297
                )
                $
                65,917
                
                $
                (1,377
                )




(in
                thousands)
            
            December
                31, 2005Less
                than 12 months
            
            12
                months or longer
            
            TotalDescription
                of securities
            
            Fair
              Value
            
            Unrealized
              Losses
            
            Fair
              Value
            
            Unrealized
              Losses
            
            Fair
              Value
            
            Unrealized
              LossesAvailable-for-sale:U.S.
                Treasury obligations
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -U.S.
                government agencies
            
            
            2,424
            
            
            (33
            )
            
            46,234
            
            
            (129
            )
            
            48,658
            
            
            (162
            )State
                and political subdivisions
            
            
            684
            
            
            (4
            )
            
            3,332
            
            
            (192
            )
            
            4,016
            
            
            (196
            )Mortgage-backed
                securities
            
            
            7,556
            
            
            (107
            )
            
            18,912
            
            
            (1,110
            )
            
            26,468
            
            
            (1,217
            )Other
                debt securities
            
            
            2,346
            
            
            (40
            )
            
            2,286
            
            
            (16
            )
            
            4,632
            
            
            (56
            )Total
                debt securities
            
            
            13,010
            
            
            (184
            )
            
            70,764
            
            
            (1,447
            )
            
            83,774
            
            
            (1,631
            )Equity
                securities
            
            
            499
            
            
            (6
            )
            
            2,750
            
            
            (50
            )
            
            3,249
            
            
            (56
            )Total
                available-for-sale
            
            
            13,509
            
            
            (190
            )
            
            73,514
            
            
            (1,497
            )
            
            87,023
            
            
            (1,687
            )Held-to-maturity:Federal
                agency securities
            
            
            31,545
            
            
            (258
            )
            
            16,145
            
            
            (278
            )
            
            47,690
            
            
            (536
            )Total
                held-to-maturity
            
            
            31,545
            
            
            (258
            )
            
            16,145
            
            
            (278
            )
            
            47,690
            
            
            (536
            )Total
                securities temporarily impaired
            
            $
            45,054
            
            $
            (448
            )
            $
            89,659
            
            $
            (1,775
            )
            $
            134,713
            
            $
            (2,223
            )







The
      Company does not believe that any individual unrealized loss as of December
      31,
      2006 and 2005 represents an other-than-temporary impairment. As of these dates,
      a total of 140 and 191 securities, respectively, were in a continuous unrealized
      loss position, of which 112 and 149, respectively, were in the
      available-for-sale category. For 2006 and 2005, a majority of the unrealized
      losses were 12 months or longer in duration and consisted primarily of
      mortgage-backed securities issued by the FHLMC, FNMA and other similar
      institutions. The unrealized losses in both periods were primarily due to
      changes in interest rates.




**NOTE
      3 - LOANS** **AND LEASES**




Major
      classifications of loans and leases are presented in the following
      table.




38
 *Table
          of Contents*







(in
                thousands)
            
            December
                31,2006
            
            2005Loans
                secured by 1 to 4 family residential properties
            
            $
            145,000
            
            $
            153,824Loans
                secured by multifamily residential properties
            
            
            41,749
            
            
            35,563Loans
                secured by nonresidential properties
            
            
            381,849
            
            
            323,031Loans
                to individuals
            
            
            2,785
            
            
            3,722Commercial
                loans
            
            
            36,012
            
            
            37,872Construction
                loans
            
            
            43,350
            
            
            63,647Lease
                financing receivables, net
            
            
            71,214
            
            
            53,302Other
                loans
            
            
            651
            
            
            510Total
                loans and leases
            
            
            722,610
            
            
            671,471Less:
                Unearned income
            
            
            (1,180
            )
            
            (1,080
            )Loans
                and leases, net of unearned income
            
            $
            721,430
            
            $
            670,391




The
      following table presents information related to loans and leases which are
      on a
      nonaccrual basis, loans which have been renegotiated to provide a reduction
      or
      deferral of interest or principal for reasons related to the debtor's financial
      difficulties and loans and leases contractually past due ninety days or more
      as
      to interest or principal payments and still accruing.




(in
                thousands)
            
            December
                31,2006
            
            2005Nonaccruing
                loans and leases
            
            $
            987
            
            $
            1,359Renegotiated
                loans
            
            
            98
            
            
            154Total
                nonperforming loans and leases
            
            $
            1,085
            
            $
            1,513Loans
                and leases past due 90 days and accruing
            
            $
            -
            
            $
            -Gross
                interest income which would have been recorded under original
                terms
            
            $
            111
            
            $
            74





The
      Company identifies a loan as impaired when it is probable that interest and
      principal will not be collected according to the contractual terms of the loan
      agreement. Impaired loans consist primarily of nonaccruing loans. Payments
      received on impaired loans are recorded as interest income unless collection
      of
      the remaining recorded investment is doubtful, in which event payments received
      are recorded as reductions of principal.




As
      of the
      dates and for the years indicated, the Company’s recorded investment in impaired
      loans, the related valuation allowance and interest income recognized were
      as
      follows:


(in
                  thousands)
              
              December
                  31,2006
              
              2005Recorded
                  investment
              
              $
              687
              
              $
              1,175


Years
                  Ended December 31,2006
              
              2005
              
              2004Average
                  recorded investment
              
              $
              699
              
              $
              1,387
              
              $
              1,769Interest
                  income recognized
              
              
              55
              
              
              233
              
              
              30




The
      valuation allowance for impaired loans, if any, is included in the allowance
      for
      loan and lease losses on the Company’s consolidated balance sheets.




GCB
      extends credit to various directors, executive officers and their associates.
      These extensions are made in the ordinary course of business and on
      substantially the same terms, including interest rates and collateral, as those
      prevailing at the time for comparable transactions with others .
      At
      December 31, 2006, loans outstanding to these related parties amounted to $25.7
      million. During 2006, new loans to related parties were $9.2 million, lines
      advanced totaled $1.1 million and loan and line repayments totaled $3.8 million.
      All related party loans were current as to principal and interest payments
      at
      December 31, 2006.




39
 *Table
          of Contents*


**NOTE
      4 - ALLOWANCE FOR LOAN AND LEASE LOSSES**




An
      analysis of the activity in the allowance for loan and lease losses is as
      follows:




(in
                thousands)
            
            Years
                Ended December 31,2006
            
            2005
            
            2004Balance,
                beginning of year
            
            $
            9,478
            
            $
            8,918
            
            $
            8,142Charge-offs
            
            
            (350
            )
            
            (430
            )
            
            (1,201
            )Recoveries
            
            
            177
            
            
            92
            
            
            808Provision
                charged to operations
            
            
            717
            
            
            1,071
            
            
            1,169Reclassification
            
            
            -
            
            
            (173
            )
            
            -Balance,
                end of year
            
            $
            10,022
            
            $
            9,478
            
            $
            8,918





A
      reclassification was recorded in 2005 which had the effect of reducing the
      allowance for loan and lease losses by $173,000. The reclassification was for
      a
      previously established reserve for lease residual losses recorded in a
      subaccount of the allowance for loan and lease losses.




**NOTE
      5 - PREMISES AND EQUIPMENT**




Premises
      and equipment consisted of the following:




(in
                thousands)
            
            
            
            December
                31,Estimated
              Useful
                Lives
            
            2006
            
            2005Land
            
            Indefinite
            
            $
            3,777
            
            $
            3,777Buildings
                and improvements
            
            5
                to 20 years
            
            
            6,164
            
            
            6,117Furniture,
                fixtures and equipment
            
            3
                to 10 years
            
            
            9,332
            
            
            8,501Leasehold
                improvements
            
            3
                to 40 years
            
            
            2,815
            
            
            2,604Capital
                assets in progress
            
            -
            
            
            389
            
            
            14622,477
            
            
            21,145Less:
                accumulated depreciation and amortization
            
            
            
            
            
            (11,878
            )
            
            (10,804
            )Total
                premises and equipment, net
            
            
            
            
            $
            10,599
            
            $
            10,341




Depreciation
      and amortization expense were $1.1 million, $1.2 million and $1.2 million for
      the years ended December 31, 2006, 2005 and 2004, respectively.




**NOTE
      6 - DEPOSITS**




At
      December 31, 2006, the schedule of maturities of certificates of deposit was
      as
      follows:




(in
                thousands)2007
            
            $
            163,7012008
            
            
            19,4782009
            
            
            10,6962010
            
            
            -2011
            
            
            -Total
                certificates of deposit
            
            $
            193,875


**NOTE
      7 - DEBT**




**Short-Term
      Borrowings**


Short-term
      borrowings consist primarily of federal funds purchased and securities sold
      under agreements to repurchase that generally mature within 30 days from the
      date of the transaction. GCB has an overnight line of credit with the Federal
      Home Loan Bank which is available upon maintaining an appropriate level of
      pledged collateral. GCB also has unsecured lines of credit with certain
      correspondent banks. Borrowings under such arrangements are for short-term
      liquidity purposes and have interest rates that fluctuate based on market
      conditions.







40
 *Table
          of Contents*




Details
      of short-term borrowings are presented in the following table.




(dollars
                in thousands)
            
            December
                31,2006
            
            2005
            
            2004Federal
                funds purchased and securities sold under repurchase
                agreements:Balance
                at year end
            
            $
            18,246
            
            $
            9,126
            
            $
            45,771Average
                during the year
            
            
            13,705
            
            
            12,258
            
            
            14,620Maximum
                month-end balance
            
            
            75,629
            
            
            22,162
            
            
            45,771Weighted
                average rate during the year
            
            
            3.34%
            
            
            2.47%
            
            
            1.62%Rate
                at year end
            
            
            3.07%
            
            
            2.35%
            
            
            1.88%







**Federal
      Home Loan Bank Advances**


At
      December 31, 2006 GCB had $96.0 million of Federal Home Loan Bank Advances
      considered to be long-term borrowings. The advances are collateralized by
      certain first mortgage loans and investment securities. The weighted average
      interest rate on advances during 2006 was 5.21%. Of the total outstanding at
      December 31, 2006, $55.0 million of advances are callable on a quarterly basis
      at the option of the FHLB contingent on changes in interest rates. The FHLB
      advances mature as follows:




(in
                thousands)2007
            
            $
            5,0002008
            
            
            13,0002009
            
            
            22,0002010
            
            
            15,0002011
            
            
            10,000Thereafter
            
            
            31,000Total
                FHLB advances
            
            $
            96,000


**Subordinated
      Debentures**


During
      2002 the Company issued $24.0 million of 8.45% junior subordinated debentures
      (the “Debentures”) due June 30, 2032 to GCB Capital Trust II (“the Trust”), a
      Delaware business trust and an unconsolidated subsidiary of the Company whose
      equity securities are wholly-owned by the Company. The Debentures are the
      Trust's sole asset. The Trust issued 2,400,000 shares of trust preferred
      securities, $10 face value. The Company’s obligations under the Debentures and
      related documents, taken together, constitute a full, irrevocable and
      unconditional guarantee on a subordinated basis by the Company of the Trust’s
      obligations under the preferred securities. The preferred securities are
      redeemable by the Company on or after June 30, 2007 or earlier if the deduction
      of related interest for federal income taxes is prohibited, treatment as Tier
      I
      capital is no longer permitted, or certain other contingencies arise. The
      preferred securities must be redeemed upon maturity of the Debentures in
      2032.




The
      Company adopted the provisions of FASB’s Financial Interpretation No. 46(R) in
      2004, which required the Company to deconsolidate GCB Capital Trust II.




**NOTE
      8 - INCOME TAXES**




The
      components of the provision for income taxes are as follows:




(in
                thousands)
            
            Years
                Ended December 31,2006
            
            2005
            
            2004FederalCurrent
            
            $
            4,455
            
            $
            4,184
            
            $
            3,401Deferred
            
            
            (2,652
            )
            
            (108
            )
            
            269StateCurrent
            
            
            5,556
            
            
            334
            
            
            217Deferred
            
            
            (246
            )
            
            (14
            )
            
            47Total
                provision for income taxes
            
            $
            7,113
            
            $
            4,396
            
            $
            3,934







The
      provision for income taxes reconciled to the income taxes that would have been
      computed at the statutory federal rate is as follows:







41
 *Table
          of Contents*







(in
                thousands)
            
            Years
                Ended December 31,2006
            
            2005
            
            2004Federal
                income tax, at statutory rate
            
            $
            4,333
            
            $
            4,571
            
            $
            3,985Increase
                (reduction) in taxes resulting from:Tax-exempt
                income
            
            
            (225
            )
            
            (428
            )
            
            (423
            )State
                income tax, net of federal benefits
            
            
            3,452
            
            
            210
            
            
            175Bank-owned
                life insurance
            
            
            (165
            )
            
            -
            
            
            -Other,
                net
            
            
            (282
            )
            
            43
            
            
            197Total
                provision for income taxes
            
            $
            7,113
            
            $
            4,396
            
            $
            3,934







The
      net
      deferred tax asset consisted of the following:




(in
                thousands)
            
            December
                31,2006
            
            2005Allowance
                for loan and lease losses and valuation reserve on other real
                estate
            
            $
            3,816
            
            $
            3,365Interest
                income on nonaccrual loans
            
            
            25
            
            
            49Depreciation
                and amortization
            
            
            924
            
            
            551Net
                operating loss carryforwards
            
            
            378
            
            
            176Deferred
                directors fees
            
            
            560
            
            
            508State
                tax and interest not currently deductible
            
            
            2,231
            
            
            -Unrealized
                holding (gains) on securities available-for-sale
            
            
            (526
            )
            
            (493
            )Other,
                net
            
            
            70
            
            
            460Net
                deferred tax asset, included in other assets
            
            $
            7,482
            
            $
            4,616


The
      state
      tax information at and for the year ended December 31, 2006 in the preceding
      tables includes the effects of a one-time charge in connection with the
      Company’s review of its tax positions and its consideration of the final
      adjudication in the fourth quarter of 2006 of a State of New Jersey Superior
      Court tax case decision. As a result of the review, the Company determined
      there
      is a more likely than not probability that it will be assessed a tax liability
      and therefore recorded the liability in accordance with SFAS No. 5, *Accounting
      for Contingencies* and No.
      109, *Accounting
      for Income Taxes* .




**NOTE
      9 - SHAREHOLDERS’ EQUITY** ****




On
      July
      31, 2006, the Company paid a 2.5% stock dividend on its common stock to
      shareholders of record on July 14, 2006. On July 29, 2005, the Company paid
      a
      2.5% stock dividend on its common stock to shareholders of record on July 15,
      2005. On July 30, 2004, the Company paid a 2.5% stock dividend on its common
      stock to shareholders of record on July 15, 2004.




**NOTE
      10 - EARNINGS PER SHARE**




The
      Company’s calculation of earnings per share in accordance with SFAS No.128, *Earnings
      Per Share* ,
      is as
      follows (per share amounts have been adjusted for the effect of stock
      dividends) :





(in
                thousands, except per share data)
            
            Year
                Ended December 31, 2006WeightedIncome
            
            Average
                Shares
            
            Per
                Share(numerator)
            
            (denominator)
            
            Amount**Basic
                EPS**Net
                income available to common stockholders
            
            $
            5,553
            
            
            8,341
            
            $
            0.67**Effect
                of Dilutive Securities**Stock
                options and restricted stock
            
            
            -
            
            
            4
            
            
            -**Diluted
                EPS**Net
                income available to common stockholders plus assumed
                conversions
            
            $
            5,553
            
            
            8,345
            
            $
            0.67





Year
                Ended December 31, 2005WeightedIncome
            
            Average
                Shares
            
            Per
                Share(numerator)
            
            (denominator)
            
            Amount**Basic
                EPS**Net
                income available to common stockholders
            
            $
            8,854
            
            
            8,063
            
            $
            1.10**Effect
                of Dilutive Securities**Stock
                options
            
            
            -
            
            
            153
            
            
            (0.02
            )**Diluted
                EPS**Net
                income available to common stockholders plus assumed
                conversions
            
            $
            8,854
            
            
            8,216
            
            $
            1.08





42
 *Table
          of Contents*




Year
                  Ended December 31, 2004Income
              
              Weighted
                Average
                  Shares
              
              Per
                  Share(numerator)
              
              (denominator)
              
              Amount**Basic
                  EPS**Net
                  income available to common stockholders
              
              $
              7,786
              
              
              7,734
              
              $
              1.01**Effect
                  of Dilutive Securities**Stock
                  options
              
              
              -
              
              
              247
              
              
              (0.03
              )**Diluted
                  EPS**Net
                  income available to common stockholders plus assumed
                  conversions
              
              $
              7,786
              
              
              7,981
              
              $
              0.98




**NOTE
      11 - STOCK-BASED COMPENSATION**




The
      Company has three stock-based compensation plans (“Plans”), including the 2006
      Plan (as defined below) which was approved by shareholders on April 18,
      2006:




§
            2001
                Stock Option Plan for Nonemployee Directors (the “2001 Directors
                Plan”)




§
            2001
                Employee Stock Option Plan (the “2001 Employee
                Plan”)




§
            2006
                Long-Term Stock Compensation Plan (the “2006
                Plan”)




The
      following table presents the amounts of cumulatively granted awards, net of
      cancellations, through December 31, 2006. Awards are adjusted for changes from
      recapitalization, such as stock dividends, in accordance with the terms of
      the
      respective Plans.





Stock
                Options
            
            Authorized
              Awards
            
            Cumulative
              Granted,
              Net
                of
              Cancellations
            
            Awards
              Available
              for
                Grant2001
                Directors Plan
            
            
            68,149
            
            
            61,288
            
            
            -2001
                Employee Plan
            
            
            365,086
            
            
            238,057
            
            
            -2006
                Plan(1)
            
            
            307,500
            
            
            15,400
            
            
            292,100Restricted
                Stock2006
                Plan(1)
            
            
            102,500
            
            
            4,500
            
            
            98,000(1)The
                2006 Plan provides for a total of 410,000 authorized awards, of which
                a
                maximum of 102,500 awards may be in restricted stock.




For
      the
      2001 Plans, the option exercise price equals the market price on the date of
      the
      grant. For the 2006 Plan, the option exercise price equals the market price
      on
      the day following the approval of the grant. Except for the 2006 Plan, the
      option is generally vested over a 5 year period and has a 10 year contractual
      term. The 2006 Plan allows the Board of Directors to grant awards under varying
      vesting schedules and contractual terms.




In
      December 2005, the Company accelerated the vesting of all unvested stock options
      in all stock option plans in existence at the time, so that all such options
      became fully vested and exercisable at such date. In April 2006, the Company’s
      shareholders approved the 2006 Plan for officers and key employees of the
      Company. The 2006 Plan provides for awards of non-qualified stock options and
      restricted stock.




Prior
      to
      January 1, 2006, the Company accounted for its stock-based plans under the
      recognition and measurement provisions of Accounting Principles Board Opinion
      No. 25, *Accounting
      for Stock Issued to Employees* ,
      and
      related interpretations, as permitted by Statement of Financial Accounting
      Standard No. 123, *Accounting
      for Stock-Based Compensation* (“SFAS
      No. 123”). No compensation cost was recognized for stock options in the
      consolidated statements of income for the periods ended on or prior to December
      31, 2005, as options granted under those plans had an exercise price equal
      to
      the market value of the underlying common stock on the date of the grant.
      However, there was compensation expense of approximately $11,000 before tax
      recorded in the year ended December 31, 2005 related to the accelerated vesting
      of all unvested stock options (discussed above) in accordance with Financial
      Standards Accounting Board (“FASB”) Interpretation No. 44, *Accounting
      for Certain Transactions Involving Stock Compensation* .




Effective
      January 1, 2006, the Company adopted the fair value recognition provisions
      of SFAS
      No.
      123 (Revised), *Share-Based
      Payment* (“SFAS
      No. 123(R))” for all
      share-based payments, using the modified prospective transition method. Under
      this transition method, compensation cost recognized includes compensation
      cost
      for all share-based awards granted on or subsequent to January 1, 2006, based
      on
      the grant date fair value estimated in accordance with the provisions of SFAS
      No. 123(R). In accordance with the modified prospective transition method,
      the
      Company’s consolidated financial statements for prior periods have not been
      restated to reflect, and do not include, the impact of SFAS No.
      123(R).




43
 *Table
          of Contents*


Upon
      adoption of SFAS No. 123(R), the Company elected to retain its method of
      valuation for share-based awards granted using the Black-Scholes options-pricing
      model which was also previously used for the Company’s pro forma information
      required under SFAS No. 123. The Company is recognizing compensation expense
      for
      its awards on a straight-line basis over the requisite service period for the
      entire award (straight-line attribution method). The
      Company elected the alternative transition method under FSP FAS 123(R)-3 to
      account for the tax effects of share-based payment awards.




The
      Company granted 15,400 stock options under the 2006 Plan for the year ended
      December 31, 2006, at a weighted average exercise price of $15.52. The grants
      vest over 4 years and have an 8-year contractual term. The fair value of each
      grant was estimated on the date of grant using the Black-Scholes options-pricing
      model with the following weighted-average assumptions: expected dividend yield
      3.79%; expected volatility 44%; risk-free interest rate 4.70%; and expected
      life
      5.3 years. The fair value of each grant was estimated to be $5.14. The range
      of
      expected volatilities for all grants was 43% to 45%. The following is a
      description of the weighted-average assumptions used to estimate fair
      value:




§
            Expected
                dividend yield is an annualized rate calculated using the most recent
                declared dividend at time of grant and the Company’s average trailing
                twelve-month adjusted daily stock price at date of
                grant.




§
            Expected
                volatility is based on the standard deviation of the historical volatility
                of the daily adjusted closing price of the Company’s shares for a period
                equivalent to the expected life of the
                option.




§
            The
                risk-free interest rate is based on the U.S. Treasury yield curve
                in
                effect at the time of grant for a period equivalent to the expected
                life
                of the option.




§
            Expected
                life represents the period of time that the option is expected to
                be
                outstanding, taking into account the contractual term, vesting period
                and
                historical exercise/forfeiture behavior, if
                any.




The
      Company granted 4,500 shares of restricted stock under the 2006 Plan for the
      year ended December 31, 2006, at a weighted average grant price of $17.18.
      The
      grant price is the fair value or price of the Company’s stock the day following
      the approval of the grant. The grants vest over 4 years.




Stock
      compensation expense recognized in earnings for the year ended December 31,
      2006
      was approximately $7,000 and the related tax benefit was approximately $3,000.




As
      of
      December 31, 2006, there was $153,118 of unrecognized compensation cost related
      to non-vested share-based compensation arrangements granted under the Company’s
      stock-based plans. That cost is expected to be recognized over a remaining
      weighted average requisite service period of 3.9 years.




A
      summary
      of the status of the Company’s stock options as of December 31, 2006, 2005 and
      2004 and the changes during the years ending on those dates is presented in
      the
      table below.


2006
              
              2005
              
              2004Stock
                  Options
              
              Number
                of
                Shares
              
              Weighted
                Average
                Exercise
                Price
              
              Number
                  of
                Shares
              
              Weighted
                Average
                Exercise
                Price
              
              Number
                  of
                Shares
              
              Weighted
                Average
                Exercise
                PriceOutstanding,
                  beginning of year
              
              
              374,841
              
              $
              9.35
              
              
              543,690
              
              $
              8.07
              
              
              797,860
              
              $
              6.53Granted
              
              
              15,400
              
              
              15.52
              
              
              21,013
              
              
              15.33
              
              
              111,366
              
              
              14.76Exercised
              
              
              (220,435
              )
              
              6.04
              
              
              (176,018
              )
              
              5.83
              
              
              (352,201
              )
              
              6.66Terminated
              
              
              (1,808
              )
              
              13.05
              
              
              (13,843
              )
              
              12.81
              
              
              (13,335
              )
              
              8.09Outstanding,
                  end of year
              
              
              167,997
              
              $
              14.22
              
              
              374,841
              
              $
              9.35
              
              
              543,690
              
              $
              8.06Exercisable,
                  end of year
              
              
              152,597
              
              
              
              
              
              374,841
              
              
              
              
              
              338,408Weighted
                  average fair value ofoptions
                  granted during the year
              
              
              
              
              $
              15.52
              
              
              
              
              $
              15.33
              
              
              
              
              $
              14.76




The
      aggregate intrinsic value of stock options outstanding and exercisable at
      December 31, 2006, was $620,164 and $583,408, respectively. The aggregate
      intrinsic value represents the total pre-tax intrinsic value calculated by
      multiplying the number of shares of in-the-money options times the difference
      between the Company’s closing stock price on the last trading day of the fourth
      quarter of 2006 and the exercise price.




44
 *Table
          of Contents*


The
      aggregate intrinsic value of stock options exercised for the years ended
      December 31, 2006, 2005 and 2004 was $1,993,377, $1,608,420, and $2,676,961,
      respectively. Exercise of stock options for the year ended December 31, 2006
      resulted in cash receipts of approximately $711,215.




The
      following table summarizes the status of non-vested stock options for the year
      ending December 31, 2006. At the present time, all non-vested stock options
      are
      expected to vest according to their vesting schedules.


2006Stock
                  Options
              
              Number
                  of
                Shares
              
              Weighted
                Average
                Grant
                Date
                  Fair
                ValueNon-vested,
                  beginning of year
              
              
              -
              
              
              -Granted
              
              
              15,400
              
              $
              15.52Vested
              
              
              -
              
              
              -Forfeited
                  or expired
              
              
              -
              
              
              -Non-vested,
                  end of year
              
              
              15,400
              
              $
              15.52Weighted
                  average fair value ofoptions
                  granted during the year
              
              
              
              
              $
              15.52
  A
        summary
        of the status of the Company’s restricted stock as of December 31,
        2006 and the
        changes during the year ending on that date is presented in the table
        below. The
        aggregate intrinsic value of restricted stock outstanding at December 31,
        2006
        was $3,295.
  2006Restricted
                  Stock
              
              Number
                  of
                Shares
              
              Weighted
                Average
                Grant
                Date
                  Fair
                ValueOutstanding,
                  beginning of year
              
              
              -
              
              
              -Granted
              
              
              4,500
              
              $
              17.18Exercised
              
              
              -
              
              
              -Forfeited
              
              
              -
              
              
              -Outstanding,
                  end of year.
              
              
              4,500
              
              $
              17.18Weighted
                  average fair value ofawards
                  granted during the year
              
              
              
              
              $
              17.18


The
      following table summarizes information about stock options outstanding and
      exercisable at December 31, 2006.




Options
                        Outstanding
                    
                    Options
                        ExercisableRange
                        of
                      Exercise
                        Prices
                    
                    Number
                      Outstanding
                    
                    Weighted
                        Average
                      Remaining
                        Contractual Life
                    
                    Weighted
                        Average
                      Exercise
                        Price
                    
                    Number
                      Outstanding
                    
                    Weighted
                        Average
                      Exercise
                        Price$8.21
                        to $13.00
                    
                    
                    43,592
                    
                    
                    3.56
                        years
                    
                    $
                    11.72
                    
                    
                    
                    43,592
                    
                    
                    $
                    11.72$14.96
                        to $16.27
                    
                    
                    124,405
                    
                    
                    5.97
                        years
                    
                    $
                    15.17
                    
                    
                    
                    109,055
                    
                    
                    $
                    15.03167,997
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    152,597
  The
        following table summarizes information about restricted stock outstanding
        at
        December 31, 2006.
  Restricted
                  Shares OutstandingRange
                  of Grant
                Date
                  Fair Values
              
              Number
                Outstanding
              
              Weighted
                  Average
                Remaining
                  Contractual Life
              
              Weighted
                  Average
                Grant
                  Date Fair Value$17.15
                  to $17.40
              
              4,500
              
              3.97
                  years
              
              $17.18


45
 *Table
          of Contents*







The
      Company’s present policy is to issue new shares upon share award
      exercise.




NOTE
      12 - BENEFIT PLANS




**EMPLOYEE
      401(** **k)
      PLAN**


The
      Company has a 401(k) savings plan covering substantially all employees. Under
      the plan the Company matches 50% of employee contributions for all participants
      with less than 5 years employment, not to exceed 2% of their salary, 75% of
      employee contributions for all participants with 6 years through 10 years of
      employment, not to exceed 3% of their salary, and 100% of employee contributions
      for all participants with more than 10 years of employment, not to exceed 4%
      of
      their salary. The Company expensed approximately $787,000, $763,000 and $726,000
      for 2006, 2005 and 2004, respectively, for purposes of its 401(k) savings plan.
      Included in the expense is a profit sharing percentage which is determined
      on an
      annual basis in addition to the matched employee contribution.




**EXECUTIVE
      SUPPLEMENTAL RETIREMENT PLAN**


The
      Company has three participants in its Executive Supplemental Retirement Plan
      (“ESRP”), which is a non-contributory non-qualified benefit plan designed to
      provide key executives with a supplemental retirement income benefit upon
      reaching the benefit age of 65. The aggregate annual pre-tax benefit of the
      ESRP
      was actuarially determined to be $322,891 and will be paid over a period of
      10
      to 15 years. The Company intends to fund its obligations under the ESRP with
      the
      increase in cash surrender value of bank-owned life insurance policies it
      purchased on the lives of the executives. For the years ended December 31,
      2006,
      2005 and 2004, $266,000, $254,000 and $290,000, respectively, was contributed
      by
      the Company to the retirement income trust fund and charged to
      operations.




**DIRECTOR
      RETIREMENT PLANS**


The
      Company’s Director Emeritus Plan (“DEP”) is a non-contributory non-qualified
      benefit plan designed to provide nonemployee directors with a certain amount
      of
      additional compensation (“Emeritus Benefit”) after retirement from active
      service. The aggregate annual Emeritus Benefit was actuarially determined to
      be
      $150,000 and will be paid over a period of 10 years.




The
      components of net periodic plan costs charged to operations for the DEP were
      as
      follows:




(in
                thousands)
            
            Years
                Ended December 31,2006
            
            2005Service
                cost
            
            $
            28
            
            $
            38Interest
                cost
            
            
            47
            
            
            27Net
                periodic benefit expense
            
            $
            75
            
            $
            65




The
      Company has one director participating in its optional Director Supplemental
      Retirement Plan (“DSRP”). The DSRP is a non-contributory non-qualified benefit
      plan designed to provide the director with a supplemental retirement income
      benefit upon reaching the benefit age of 65. The annual pre-tax benefit of
      the
      DSRP was actuarially determined to be $23,160 and will be paid over a period
      of
      10 years. For the years ended December 31, 2006, 2005 and 2004, $7,000, $6,000
      and $6,000, respectively, was contributed by the Company to the retirement
      income trust fund and charged to operations.




The
      Company intends to fund its obligations under the DEP and the DSRP with the
      increase in cash surrender value of bank-owned life insurance policies it
      purchased on the lives of the plans’ participants.




**DIRECTOR
      DEFERRED COMPENSATION PLAN**


The
      Company‘s Director Deferred Compensation Plan (“DDCP”) is a non-qualified
      deferred compensation benefit plan designed to provide participating directors
      with the ability to defer a certain portion of their fees to be earned in the
      future in the form of a deferred compensation benefit. A participating director
      could defer payment of a specified amount up to 100% of his monthly board fees
      and/or stipend as a director of both the Company and GCB using fees actually
      earned in 1997 for a 5-year period commencing January 1999 and ending December
      2003. Deferred amounts earn interest at the rate of 10% per annum. At benefit
      eligibility date, the benefit under the DDCP is payable in the form of a monthly
      annuity for 10 years. A majority of nonemployee directors of the Company that
      were eligible at the time are participating in the DDCP. The Company intends
      to
      fund its obligations under the DDCP with the increase in cash surrender value
      of
      a bank-owned life insurance policy it purchased on the lives of the
      participants.




46
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NOTE
      13 - COMMITMENTS AND CONTINGENCIES




**LEASE
      OBLIGATIONS**




The
      Company and its subsidiaries lease banking facilities and other office space
      under operating leases that expire at various dates through 2014 and that
      contain certain renewal options. Rent expenses charged to operations
      approximated $915,000, $858,000 and $794,000 for the years ended December 31,
      2006, 2005 and 2004, respectively. Included in these amounts were $279,000
      in
      2006, $263,000 in 2005 and $275,000 in 2004 paid to related parties. As of
      December 31, 2006, future approximate minimum annual rental payments under
      these
      leases are as follows:




(in
                thousands)2007
            
            $
            8782008
            
            
            7932009
            
            
            6872010
            
            
            5912011
            
            
            337Thereafter
            
            
            190Total
            
            $
            3,476




**LITIGATION**




The
      Company and its subsidiaries may, in the ordinary course of business, become
      a
      party to litigation involving collection matters, contract claims and other
      legal proceedings relating to the conduct of their business. In
      management ’ s
      judgment, the consolidated financial position of the Company will not be
      affected materially by the final outcome of any present legal proceedings or
      other contingent liabilities and commitments.




**NOTE
      14 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF
      CREDIT RISK**




GCB
      is
      party to financial instruments with off-balance sheet risk in the normal course
      of business to meet the financing needs of its customers. These financial
      instruments include commitments to extend credit and standby letters of credit.
      Such financial instruments are recorded in the financial statements when they
      become payable. Those instruments involve, to varying degrees, elements of
      credit and interest rate risks in excess of the amount recognized in the
      consolidated balance sheets. The contract or notional amounts of those
      instruments reflect the extent of involvement GCB has in particular classes
      of
      financial instruments.




GCB’s
      exposure to credit loss in the event of nonperformance by the other party to
      the
      financial instrument for commitments to extend credit and standby letters of
      credit is represented by the contractual or notional amount of those
      instruments. GCB uses the same credit policies in making commitments and
      conditional obligations as it does for on-balance sheet instruments. GCB
      generally requires collateral or other security to support financial instruments
      with credit risk.




The
      approximate contract amounts are as follows:




(in
                thousands)
            
            December
                31,2006
            
            2005Financial
                instruments whose contract amounts represent credit risk:Commitments
                to extend credit
            
            $
            147,563
            
            $
            201,557Standby
                letters of credit and financial guarantees written
            
            
            3,524
            
            
            3,065




Commitments
      to extend credit are agreements to lend to a customer as long as there is no
      violation of any condition established in the contract. Commitments generally
      have fixed expiration dates or other termination clauses and may require payment
      of a fee. Since many of the commitments are expected to expire without being
      drawn upon, the total commitment amounts do not necessarily represent future
      cash requirements. GCB evaluates each customer’s creditworthiness on a
      case-by-case basis. The amount of collateral obtained, if deemed necessary
      by
      GCB upon extension of credit, is based on management’s credit
      evaluation.




Standby
      letters of credit are conditional commitments issued by GCB to guarantee a
      customer's performance to a third party. Those guarantees are primarily issued
      to support public and private borrowing arrangements. The credit risk involved
      in issuing letters of credit is essentially the same as that involved in
      extending loan facilities to customers. GCB holds deposit accounts, residential
      or commercial real estate, accounts receivable, inventory and equipment as
      collateral supporting those commitments for which collateral is deemed
      necessary. The extent of collateral held for those commitments at December
      31,
      2006 and 2005 varies based on GCB’s credit evaluation. Generally, letters of
      credit are good for a term of one year at which time they are automatically
      renewed for the same term. Amounts due under these letters of credit would
      be
      reduced by any proceeds that the Company would be able to




47
 *Table
          of Contents*


obtain
      in
      liquidating the collateral for the loans, which varies depending on the
      customer. Letters of credit are granted primarily to commercial
      borrowers.




GCB
      grants various commercial and consumer loans, primarily within the State of
      New
      Jersey. The Company’s lease receivables are more diversified nationally.
      Although GCB has a diversified loan portfolio, a large portion of its loans
      are
      secured by commercial or residential real property and the borrowers' ability
      to
      timely honor their loan payment obligations is dependent on the economy.




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




SFAS
      No.107, *Disclosures
      about Fair Value of Financial Instruments* ,
      requires disclosure of the estimated fair value of an entity ’ s
      assets
      and liabilities considered to be financial instruments. For the Company, as
      for
      most financial institutions, the majority of its assets and liabilities are
      considered financial instruments as defined in SFAS No.107. However, many such
      instruments lack an available trading market, as characterized by a willing
      buyer and seller engaging in an exchange transaction. Also, it is the Company’s
      general practice and intent to hold its financial instruments to maturity and
      not to engage in trading or sales activities. Therefore, the Company had to
      use
      significant estimations and present value calculations to prepare this
      disclosure.




Changes
      in the assumptions or methodologies used to estimate fair values may materially
      affect the estimated amounts. Also, there may not be reasonable comparability
      between the Company and other institutions due to the wide range of permitted
      assumptions and methodologies in the absence of active markets. This lack of
      uniformity gives rise to a high degree of subjectivity in estimating financial
      instrument fair values. Estimated fair values have been determined by the
      Company using the best available data and an estimation methodology suitable
      for
      each category of financial instruments. The estimation methodologies used are
      outlined below.




For
      cash
      and cash equivalents and interest-bearing deposits with banks, the carrying
      values approximate their fair values. The estimated fair values of investment
      securities are based on quoted market prices if available, or on quoted market
      prices of comparable instruments if quoted market prices are not
      available.




The
      net
      loan and lease portfolio is valued using a present value discounted cash flow
      method where market prices were not available. The discount rate used in these
      calculations is the estimated current market rate adjusted for credit risk.
      The
      carrying values of accrued interest receivable and bank-owned life insurance
      approximate their fair values.




The
      estimated fair values of non interest-bearing demand deposits, interest-bearing
      checking deposits, savings and certain types of money market accounts are,
      by
      their definition, equal to the amounts payable on demand at the reporting date
      (i.e., their carrying values). The carrying values of variable rate deposit
      accounts and federal funds purchased approximate their fair values. For fixed
      maturity certificates of deposit, fair value is estimated using the rates
      currently offered for deposits of similar remaining maturities. The carrying
      value of accrued interest payable approximates its fair value.




The
      estimated fair values of securities sold under agreements to repurchase and
      FHLB
      advances are based on the discounted value of estimated cash flows.  The
      discounted rate is estimated using the rates currently offered for similar
      instruments. The estimated fair value of subordinated debentures is based on
      quoted market prices.




The
      fair
      value of commitments to extend credit is estimated based on the amount of
      unamortized deferred loan commitment fees. The fair value of letters of credit
      is based on the amount of unearned fees plus the estimated cost to terminate
      the
      letters of credit. Fair values of unrecognized financial instruments, including
      commitments to extend credit and the fair value of letters of credit, are
      considered immaterial.




The
      carrying values and estimated fair values of the Company’s financial instruments
      are as follows:




(in
                thousands)
            
            December
                31,2006
            
            2005Carrying
              Value
            
            Estimated
              Fair
                Value
            
            Carrying
              Value
            
            Estimated
              Fair
                ValueFinancial
                assets:Cash
                and cash equivalents
            
            $
            53,869
            
            $
            53,869
            
            $
            64,980
            
            $
            64,980Due
                from banks - interest bearing
            
            
            26,359
            
            
            26,359
            
            
            11,600
            
            
            11,600Investment
                securities available-for-sale
            
            
            64,942
            
            
            64,942
            
            
            83,977
            
            
            83,977Investment
                securities held-to-maturity
            
            
            36,391
            
            
            36,225
            
            
            50,220
            
            
            49,685Loans
                and leases, net of unearned income
            
            
            721,430
            
            
            718,079
            
            
            670,391
            
            
            670,310Financial
                liabilities:Time
                deposits
            
            $
            193,875
            
            $
            192,702
            
            $
            213,174
            
            $
            211,223All
                other deposits
            
            
            533,437
            
            
            533,437
            
            
            522,906
            
            
            522,906Federal
                funds purchased
            
            
            10,000
            
            
            10,000
            
            
            -
            
            
            -Securities
                sold under agreements to repurchase
            
            
            8,246
            
            
            8,215
            
            
            9,126
            
            
            9,094FHLB
                Advances
            
            
            96,000
            
            
            97,208
            
            
            80,000
            
            
            81,079Subordinated
                debentures
            
            
            24,743
            
            
            24,456
            
            
            24,743
            
            
            25,980





48
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          of Contents*


**NOTE
      16 - REGULATORY MATTERS AND CAPITAL REQUIREMENTS**




New
      Jersey state law permits a bank subsidiary to pay dividends to its parent
      company provided there is no impairment of the subsidiary's capital accounts
      and
      provided the subsidiary maintains a surplus of not less than 50% of its capital
      stock, or if payment of the dividend will not reduce the subsidiary's surplus.
      As of December 31, 2006 and 2005, respectively, GCB had $38.8 million and $33.8
      million, of funds available for the payment of dividends to the
      Company.




The
      Company and GCB are subject to various regulatory capital requirements
      administered by the federal banking agencies including the Federal Reserve.
      Failure to meet minimum capital requirements can initiate certain mandatory
      and
      possible additional discretionary actions by regulators that, if undertaken,
      could have a material effect on the Company’s financial statements. Under
      capital adequacy guidelines and the regulatory framework for prompt corrective
      action, the Company and GCB must meet specific capital guidelines that involve
      quantitative measures of their assets, liabilities, and certain off-balance
      sheet items as calculated under regular accounting practices. The capital
      amounts and classifications are also subject to qualitative judgments by the
      regulators about components, risk weightings and other factors.




Quantitative
      measures established by regulations to ensure capital adequacy require the
      Company and GCB to maintain minimum amounts and ratios of total and Tier I
      capital to risk-weighted assets. Management believes the Company and GCB met
      all
      capital adequacy requirements to which they were subject as of December 31,
      2006.




As
      of
      December 31, 2006, GCB was categorized as well-capitalized under the regulatory
      framework for prompt corrective action. To be categorized as well-capitalized,
      GCB must maintain minimum total risk-based, Tier I risk-based, and Tier I
      leverage ratios as set forth in the following table. Management believes no
      conditions or events have occurred since the most recent FDIC notification
      that
      has changed the category of GCB.




( dollars
                  in thousands)
              
              
              
              
              
              
              
              
              
              
              
              To
                  Be Well-CapitalizedFor
                  Capital
              
              Under
                  Prompt CorrectiveActual
              
              Adequacy
                  Purposes
              
              Action
                  ProvisionsAmount
              
              Ratio
              
              Amount
              
              Ratio
              
              Amount
              
              RatioAs
                of December 31, 2006Total
                  risk-based capitalGreater
                  Community Bancorp
              
              $
              90,065
              
              
              11.84
              %
              
              $
              60,855
              
              
              8.00
              %
              
              
              n/a
              
              
              n/aGreater
                  Community Bank
              
              
              83,991
              
              
              11.09
              %
              
              
              60,589
              
              
              8.00
              %
              
              $
              75,736
              
              
              10.00
              %Tier
                  I risk-based capitalGreater
                  Community Bancorp
              
              
              76,521
              
              
              10.06
              %
              
              
              30,426
              
              
              4.00
              %
              
              
              n/a
              
              
              n/aGreater
                  Community Bank
              
              
              74,562
              
              
              9.85
              %
              
              
              30,279
              
              
              4.00
              %
              
              
              45,418
              
              
              6.00
              %Tier
                  I leverage capitalGreater
                  Community Bancorp
              
              
              76,521
              
              
              8.38
              %
              
              
              36,526
              
              
              4.00
              %
              
              
              n/a
              
              
              n/aGreater
                  Community Bank
              
              
              74,562
              
              
              8.20
              %
              
              
              36,372
              
              
              4.00
              %
              
              
              45,465
              
              
              5.00
              %As
                  of December 21, 2005Total
                  risk-based capitalGreater
                  Community Bancorp
              
              $
              87,127
              
              
              12.19
              %
              
              $
              57,179
              
              
              8.00
              %
              
              
              n/a
              
              
              n/aGreater
                  Community Bank
              
              
              80,704
              
              
              11.32
              %
              
              
              57,035
              
              
              8.00
              %
              
              
              71,293
              
              
              10.00
              %Tier
                  I risk-based capitalGreater
                  Community Bancorp
              
              
              73,668
              
              
              10.31
              %
              
              
              28,581
              
              
              4.00
              %
              
              
              n/a
              
              
              n/aGreater
                  Community Bank
              
              
              71,803
              
              
              10.07
              %
              
              
              28,522
              
              
              4.00
              %
              
              
              42,782
              
              
              6.00
              %Tier
                  I leverage capitalGreater
                  Community Bancorp
              
              
              73,668
              
              
              8.35
              %
              
              
              35,290
              
              
              4.00
              %
              
              
              n/a
              
              
              n/aGreater
                  Community Bank
              
              
              71,803
              
              
              7.97
              %
              
              
              36,037
              
              
              4.00
              %
              
              
              45,046
              
              
              5.00
              %





49
 *Table
          of Contents*


**NOTE
      17 - CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY**




The
      condensed financial information of the parent company (Greater Community
      Bancorp) only is presented in the following three tables:




**CONDENSED
      BALANCE SHEETS**


(in
      thousands)





December
                31,2006
            
            2005ASSETS:Cash
            
            $
            2,599
            
            $
            1,902Investment
                securities available-for-sale
            
            
            3,559
            
            
            3,771Investment
                in subsidiaries
            
            
            87,350
            
            
            84,021Other
                assets
            
            
            805
            
            
            894Total
                assets
            
            $
            94,313
            
            $
            90,588LIABILITIES
                AND SHAREHOLDERS’ EQUITY:Subordinated
                debentures
            
            $
            24,743
            
            $
            24,743Other
                liabilities
            
            
            1,995
            
            
            1,304Shareholders’
                equity
            
            
            67,575
            
            
            64,541Total
                liabilities and shareholders’ equity
            
            $
            94,313
            
            $
            90,588




**CONDENSED
      STATEMENTS OF INCOME**


(in
      thousands)




Years
                  Ended December 31,2006
              
              2005
              
              2004INCOME:Dividends
                  from bank subsidiary
              
              $
              3,800
              
              $
              2,500
              
              $
              -Interest
                  income
              
              
              225
              
              
              200
              
              
              241Gain
                  on sale of investment securities
              
              
              483
              
              
              554
              
              
              1,1204,508
              
              
              3,254
              
              
              1,361EXPENSES:Interest
                  on subordinated debentures
              
              
              2,028
              
              
              2,028
              
              
              2,028Other
                  expenses
              
              
              288
              
              
              221
              
              
              2302,316
              
              
              2,249
              
              
              2,258Income
                  (loss) before income taxes
              
              
              2,192
              
              
              1,005
              
              
              (897
              )Provision
                  for income taxes (benefit)
              
              
              (712
              )
              
              (719
              )
              
              (399
              )Equity
                  in undistributed income of subsidiaries
              
              
              2,649
              
              
              7,130
              
              
              8,284NET
                  INCOME
              
              $
              5,553
              
              $
              8,854
              
              $
              7,786


50
 *Table
          of Contents*


**CONDENSED
      STATEMENTS OF CASH FLOWS**


(in
      thousands)




Years
                Ended December 31,2006
            
            2005
            
            2004CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                income
            
            $
            5,553
            
            $
            8,854
            
            $
            7,786Adjustments
                to reconcile net income to cash provided by operating
                activities:Gain
                on sale of investment securities available-for-sale
            
            
            (506
            )
            
            (554
            )
            
            (1,120
            )Recognized
                loss on impaired securities
            
            
            23
            
            
            -
            
            
            -Stock-based
                compensation
            
            
            7
            
            
            11
            
            
            -Decrease
                in other assets
            
            
            90
            
            
            64
            
            
            54Increase
                (decrease) in other liabilities
            
            
            691
            
            
            (133
            )
            
            (568
            )Equity
                in undistributed income of subsidiaries
            
            
            (2,649
            )
            
            (7,130
            )
            
            (8,284
            )Net
                cash provided by (used in) operating activities
            
            
            3,209
            
            
            1,112
            
            
            (2,132
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Purchase
                of investment securities available-for-sale
            
            
            (45
            )
            
            -
            
            
            (352
            )Proceeds
                from the sale of investment securities available-for-sale
            
            
            740
            
            
            930
            
            
            3,564Payments
                from investments in and advances to subsidiaries
            
            
            (327
            )
            
            (154
            )
            
            (2,823
            )Proceeds
                from advances to subsidiaries
            
            
            -
            
            
            -
            
            
            1,736Net
                cash provided by investing activities
            
            
            368
            
            
            776
            
            
            2,125CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from issuance of common stock
            
            
            560
            
            
            892
            
            
            629Proceeds
                from exercise of stock options
            
            
            1,147
            
            
            1,570
            
            
            3,830Dividends
                paid
            
            
            (4,587
            )
            
            (4,008
            )
            
            (3,472
            )Net
                cash provided by (used in) financing activities
            
            
            (2,880
            )
            
            (1,546
            )
            
            987NET
                INCREASE IN CASH AND CASH EQUIVALENTS
            
            $
            697
            
            $
            342
            
            $
            980CASH
                AND CASH EQUIVALENTS, beginning of year
            
            
            1,902
            
            
            1,560
            
            
            580CASH
                AND CASH EQUIVALENTS, end of year
            
            $
            2,599
            
            $
            1,902
            
            $
            1,560





51
 *Table
          of Contents*


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




The
      following reflects summarized 2006 and 2005 quarterly financial data of the
      Company which, in the opinion of management, reflects all adjustments,
      consisting only of normal recurring adjustments, necessary for a fair
      presentation of the Company’s results of operations.




(in
                thousands, except per share data)
            
            Quarters
                EndedDecember
                31
            
            September
                30
            
            June
                30
            
            March
                31**2006**Interest
                income
            
            $
            14,323
            
            $
            13,855
            
            $
            13,379
            
            $
            13,333Interest
                expense
            
            
            6,615
            
            
            6,093
            
            
            5,321
            
            
            5,041Net
                interest income
            
            
            7,708
            
            
            7,762
            
            
            8,058
            
            
            8,292Provision
                for loan and lease losses
            
            
            226
            
            
            177
            
            
            314
            
            
            -Non-interest
                income
            
            
            1,802
            
            
            1,614
            
            
            1,541
            
            
            1,328Non-interest
                expense
            
            
            6,911
            
            
            5,633
            
            
            6,220
            
            
            5,959Income
                before provision for income taxes
            
            
            2,373
            
            
            3,566
            
            
            3,065
            
            
            3,661Provision
                for income taxes
            
            
            3,798
            
            
            1,164
            
            
            951
            
            
            1,200Net
                income
            
            $
            (1,425
            )
            $
            2,402
            
            $
            2,114
            
            $
            2,461Earnings
                per share—basic
            
            $
            (0.17
            )
            $
            0.29
            
            $
            0.26
            
            $
            0.30Earnings
                per share—diluted
            
            $
            (0.17
            )
            $
            0.29
            
            $
            0.25
            
            $
            0.30Average
                common shares outstanding—basic
            
            
            8,368
            
            
            8,351
            
            
            8,341
            
            
            8,304Average
                common shares outstanding—diluted
            
            
            8,368
            
            
            8,383
            
            
            8,378
            
            
            8,340**2005**Interest
                income
            
            $
            13,036
            
            $
            12,706
            
            $
            11,890
            
            $
            11,030Interest
                expense
            
            
            4,626
            
            
            4,382
            
            
            4,011
            
            
            3,551Net
                interest income
            
            
            8,410
            
            
            8,324
            
            
            7,879
            
            
            7,479Provision
                for loan and lease losses
            
            
            371
            
            
            260
            
            
            229
            
            
            211Non-interest
                income
            
            
            1,399
            
            
            1,379
            
            
            1,658
            
            
            1,786Non-interest
                expense
            
            
            6,163
            
            
            6,053
            
            
            6,039
            
            
            5,854Income
                before provision for income taxes
            
            
            3,275
            
            
            3,390
            
            
            3,269
            
            
            3,200Provision
                for income taxes
            
            
            1,063
            
            
            1,122
            
            
            1,058
            
            
            1,037Net
                income
            
            $
            2,212
            
            $
            2,268
            
            $
            2,211
            
            $
            2,163Earnings
                per share—basic
            
            $
            0.27
            
            $
            0.28
            
            $
            0.28
            
            $
            0.27Earnings
                per share—diluted
            
            $
            0.27
            
            $
            0.27
            
            $
            0.27
            
            $
            0.26Average
                common shares outstanding—basic
            
            
            8,166
            
            
            8,088
            
            
            8,025
            
            
            7,969Average
                common shares outstanding—diluted
            
            
            8,307
            
            
            8,265
            
            
            8,241
            
            
            8,219




During
      the fourth quarter of 2006, upon review of its tax positions the Company
      recorded an incremental provision for income taxes of $3.3 million and a charge
      to non-interest expense for $880,000 for estimated interest on income taxes
      in
      recognition of an income tax liability.





52
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          of Contents*


**McGladrey
                  & Pullen, LLP**One
                  Valley Square, Ste. 250612
                  Township Line RoadBlue
                  Bell, PA 19422-2700**O**215-641-8600**F**215-641-8680


**Report
      of Independent Registered Public Accounting Firm on Consolidated Financial
      Statements**





To
      the
      Board of Directors and Stockholders


Greater
      Community Bancorp


Totowa,
      New Jersey








We
      have
      audited the consolidated balance sheets of Greater Community Bancorp and
      Subsidiaries as of December 31, 2006 and 2005, and the related consolidated
      statements of income, stockholders’ equity and cash flows for each of the three
      years in the period ended December 31, 2006. These financial statements are
      the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these financial statements based on our audits.





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





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Greater Community Bancorp
      and Subsidiaries as of December 31, 2006 and 2005, and the results of their
      operations and their cash flows for each of the three years in the period ended
      December 31, 2006 in conformity with U.S. generally accepted accounting
      principles.





As
      discussed in Note 1 to the consolidated financial statements, in 2006 Greater
      Community Bancorp and Subsidiaries adopted Statement of Financial Accounting
      Standards No, 123R, “Share-Based Payment”.





We
      have
      also audited, in accordance with the standards of the Public Company Accounting
      Oversight Board (United States), the effectiveness of Greater Community Bancorp
      and Subsidiaries internal control over financial reporting as of December 31,
      2006, based on the criteria established in Internal Control—Integrated Framework
      issued by the Committee of Sponsoring Organizations of the Treadway Commission
      (“COSO”) and our report dated March 12, 2007 expressed an unqualified opinion on
      management’s assessment of the effectiveness of Greater Community Bancorp and
      Subsidiaries internal control over financial reporting and an unqualified
      opinion on the effectiveness of the Greater Community Bancorp and Subsidiaries
      internal control over financial reporting.








*/s/
      McGladrey & Pullen, LLP*





Blue
      Bell, Pennsylvania


March
      12,
      2007







McGladrey
      & Pullen, LLP is a member firm of RSM International -


an
      affiliation of separate and independent legal entities.







53
 *Table
          of Contents*


**Item
      9. Changes in and Disagreements withAccountants on Accounting and
      Financial Disclosure.**




None.




**Item
      9A. Controls andProcedures.**




(a)
      Evaluation of Disclosure Controls and Procedures.




The
      management of the Company, including the Chief Executive Officer and the Chief
      Financial Officer, have conducted an evaluation of the effectiveness of the
      Company’s disclosure controls and procedures pursuant to Rule 13a-14 under the
      Securities Exchange Act of 1934 as of the end of the period covered by this
      report (the “Evaluation Date”). Based on that evaluation, the Chief Executive
      Officer and the Chief Financial Officer concluded that, as of the Evaluation
      Date, the Company’s disclosure controls and procedures were effective in
      ensuring that all material information relating to the Company, including our
      consolidated subsidiaries, required to be filed in this report has been made
      known to them in a timely manner.




(b)
      Management’s Report on Internal Control Over Financial Reporting.




Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting, as such term is defined in Exchange Act Rule 13a-15(f)
      under the Securities Exchange Act of 1934. Under the supervision and with the
      participation of principal executive officer and principal financial officer,
      we
      conducted an evaluation of the effectiveness of our control over financial
      reporting based on the framework in *Internal
      Control-Integrated Framework* issued
      by the Committee of Sponsoring Organizations of the Treadway Commission
      (“COSO”). Based on our evaluation under the framework, management has concluded
      that our internal control over financial reporting was effective as of December
      31, 2006.




Management’s
      assessment of the effectiveness of our internal control over financial reporting
      as of December 31, 2006 has been audited by McGladrey & Pullen, LLP, an
      independent registered public accounting firm, as stated in their report which
      is included herein.




(c)
      Changes in Internal Control Over Financial Reporting.




There
      have not been any changes in the Company’s internal control over financial
      reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
      Exchange Act) during the final fiscal quarter of the year to which this report
      relates that have materially affected, or are reasonably likely to materially
      affect, the Company’s internal control over financial reporting.




**Item
      9B. OtherInformation.**




None.









54
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          of Contents*


**McGladrey
                  & Pullen, LLP**One
                  Valley Square, Ste. 250612
                  Township Line RoadBlue
                  Bell, PA 19422-2700**O**215-641-8600**F**215-641-8680











**Report
      of Independent Registered Public Accounting Firm on Internal Control over
      Financial Reporting**











To
      the
      Board of Directors and Stockholders


Greater
      Community Bancorp


Totowa,
      New Jersey








We
      have
      audited management’s assessment, included in the accompanying Management’s
      Report on Internal Control Over Financial Reporting, that Greater Community
      Bancorp and Subsidiaries (the “Company’) maintained effective internal control
      over financial reporting as of December 31, 2006, based on criteria established
      in Internal Control—Integrated Framework issued by the Committee of Sponsoring
      Organizations of the Treadway Commission (COSO). The Company’s management is
      responsible for maintaining effective internal control over financial reporting
      and for its assessment of the effectiveness of internal control over financial
      reporting. Our responsibility is to express an opinion on management’s
      assessment and an opinion on the effectiveness of the company’s internal control
      over financial reporting based on our audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether effective
      internal control over financial reporting was maintained in all material
      respects. Our audit included obtaining an understanding of internal control
      over
      financial reporting, evaluating management’s assessment, testing and evaluating
      the design and operating effectiveness of internal control, and performing
      such
      other procedures as we considered necessary in the circumstances. We believe
      that our audit provides a reasonable basis for our opinion.





A
      company’s internal control over financial reporting is a process designed to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles. A company’s internal control over
      financial reporting includes those policies and procedures that (1) pertain
      to
      the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the company; (2)
      provide reasonable assurance that transactions are recorded as necessary to
      permit preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the company are
      being made only in accordance with authorizations of management and directors
      of
      the company; and (3) provide reasonable assurance regarding prevention or timely
      detection of unauthorized acquisition, use, or disposition of the company’s
      assets that could have a material effect on the financial
      statements.





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













McGladrey
      & Pullen, LLP is a member firm of RSM International -


an
      affiliation of separate and independent legal entities.


55
 *Table
          of Contents*








To
      the
      Board of Directors and Stockholders


Greater
      Community Bancorp


Page
      2











In
      our
      opinion, management’s assessment that Greater Community Bancorp and Subsidiaries
      maintained effective internal control over financial reporting as of December
      31, 2006, is fairly stated, in all material respects, based on criteria
      established in Internal Control—Integrated Framework issued by the Committee of
      Sponsoring Organizations of the Treadway Commission (COSO). Also in our opinion,
      Greater Community Bancorp and Subsidiaries maintained, in all material respects,
      effective internal control over financial reporting as of December 31, 2006,
      based on criteria established in Internal Control—Integrated Framework issued by
      the Committee of Sponsoring Organizations of the Treadway Commission
      (COSO).





We
      have
      also audited, in accordance with the standards of the Public Company Accounting
      Oversight Board (United States), the consolidated financial statements as of
      and
      for the year ended December 31, 2006 of Greater Community Bancorp and
      Subsidiaries and our report dated March 12, 2007 expressed an unqualified
      opinion.











*/s/
      McGladrey & Pullen, LLP*








Blue
      Bell, Pennsylvania


March
      12,
      2007































56
 *Table
          of Contents*


**PART
      III**




**Item
      10. Directors, ExecutiveOfficers and Corporate
      Governance.**




Directors
      and Executive Officers: Information required by Items 401, 405, 406 and
      407(c)(3), (d)(4) and (d)(5) of Reg. S-K is incorporated by reference to
“Proposal-Election of Directors” and “Governance of the Company—Section 16(a)
      Beneficial Ownership Reporting Compliance”, “—Code of Ethics” and “—Committees
      of the Board of Directors” contained in the registrant's definitive Proxy
      Statement for its 2007 Annual Meeting of Stockholders furnished to the
      Commission pursuant to Regulation 14A (“the 2007 Annual Meeting Proxy
      Statement”).




Other
      Significant Employees: Not applicable.




Family
      Relationships: Anthony M. Bruno, Jr., Chairman, President and CEO of the Company
      and GCB. Robert C. Soldoveri, a director of the Company, is Mr. Bruno’s first
      cousin.




Involvement
      in Certain Legal Proceedings: Not applicable.




**Item
      11.** **ExecutiveCompensation.**




Information
      required by Items 402 and 407(e)(4) and (e)(5) of Reg. S-K is incorporated
      by
      reference to “Executive Compensation and Other Benefits” and “Governance of the
      Company—Compensation of Directors” contained in the 2007 Annual Meeting Proxy
      Statement.




**Item
      12. SecurityOwnership of Certain Beneficial Owners and
      Management and Related Stockholder Matters.**




Information
      required by Item 201(d) of Reg. S-K is contained in Part II, Item 5. of this
      report and is incorporated herein by reference.




Information
      required by Item 403(a) of Reg. S-K is incorporated by reference to “Governance
      of the Company—Share Ownership of Management and Directors” contained in the
      2007 Annual Meeting Proxy Statement.




Changes
      in Control: Not applicable. The registrant knows of no contractual arrangements
      of a nature described in Item 403(c) of Reg. S-K that may, at a future date,
      result in a change of control of the registrant.




**Item
      13. CertainRelationships and Related Transactions, and Director
      Independence.**




Information
      required by Items 404 and 407(a) of Reg. S-K is incorporated by reference to
      “Governance of the Company—Certain Relationships and Related Transactions” and
“--Director Independence” contained in the 2007 Annual Meeting Proxy Statement.




**Item
      14. Principal AccountingFees and Services.**




Information
      required by Item 9(e) of Schedule 14A is incorporated by reference to
“Governance of the Company—Fees of Independent Auditors for 2006 and 2005”
contained in the 2007 Annual Meeting Proxy Statement.






**PART
      IV**




**Item
      15. Exhibits, Financial Statement Schedules.**




(a)
            This
                report includes financial statements for the Company's fiscal year
                ended
                December 31, 2006.




(b)
            Exhibits.
                An Exhibit Index has been filed as part of this Report on page E-1.
                Such
                Exhibit Index is incorporated herein by reference. The exhibits are
                being
                filed with the SEC but are not part of the annual report sent to
                stockholders.




(c)
            Financial
                Statement Schedules. Not
                applicable.









57
 *Table
          of Contents*


**SIGNATURES**




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




**Greater
                  Community Bancorp**(“registrant”)Date:
                  March 15, 2007
              BY:
              */s/
                  Anthony M. Bruno, Jr.*Anthony
                  M. Bruno, Jr.Chairman,
                  President and CEO*(Principal
                  Executive Officer)*Date:
                  March 15, 2007
              BY*:*
              */s/
                  Stephen J. Mauger*Stephen
                  J. MaugerSenior
                  Vice President, Treasurer and Chief Financial Officer*(Principal
                  Financial and Accounting
                  Officer)*




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated .




Date:
                  March 15, 2007
              BY:
              */s/
                  Anthony M. Bruno, Jr*.Anthony
                  M. Bruno, Jr.Chairman,
                  President & CEODate:
                  March 15, 2007
              BY:
              */s/
                  Angelo J. Genova*Angelo
                  J. GenovaDirectorBY:
              */s/
                  Charles J. Volpe*Charles
                  J. VolpeDirectorDate:
                  March 15, 2007
              BY:
              */s/
                  M. A. Bramante*M.
                  A. BramanteDirectorDate:
                  March 15, 2007
              BY:
              */s/
                  Alfred R. Urbano*Alfred
                  R. UrbanoDirectorDate:
                  March 15, 2007
              BY:
              */s/
                  Robert C. Soldoveri*Robert
                  C. SoldoveriDirectorDate:
                  March 15, 2007
              BY:
              */s/
                  William T. Ferguson*William
                  T. FergusonDirectorDate:
                  March 15, 2007
              BY:
              */s/
                  David Waldman*David
                  WaldmanDirector





58
 *Table
          of Contents*


**E****XHIBIT
      INDEX**




Certain
      of the following exhibits, as indicated parenthetically, were previously filed
      as exhibits to registration statements filed by Greater Community Bancorp
      (“registrant”) under the Securities Act of 1933, as amended, or to reports or
      registration statements filed by registrant under the Securities Exchange Act
      of
      1934, as amended (the “Exchange Act”), respectively, and are hereby incorporated
      by reference to such statements or reports. Registrant’s Exchange Act filing
      number is 0-14294.




**Exhibit**




No.
            
            Description3.1
            
            Restated
                Certificate of Incorporation of the Company (incorporated by reference
                to
                Exhibit 3.4 to Form 10-QSB for the quarter ended June 30, 1998, filed
                on
                August 14, 1998)3.2
            
            Bylaws
                of the Company as amended and restated effective November 21, 2006
                (incorporated by reference to Exhibit 3.3 to Form 8-K filed on November
                22, 2006)4.1
            
            Junior
                Subordinated Indenture between the Company and Deutsche Bank Trust
                Company
                Americas as Trustee, dated May 24, 2002 (incorporated by reference
                to
                Exhibit 4.1 to Form S-3 Registration Statement filed by GCB Capital
                Trust
                II and Greater Community Bancorp under the Securities Act of 1933,
                Registration Nos. 333-89050, 333-89050-01, filed May 24,
                2002)4.2
            
            Amended
                and Restated Trust among Greater Community Bancorp as Depositor,
                Deutsche
                Bank Trust Company Americas as Property Trustee, and Deutsche Bank
                Trust
                (Delaware) as Delaware Trustee, dated May 24, 2002 (incorporated
                by
                reference to Exhibit 4.4 to Form S-3 Registration Statement filed
                by GCB
                Capital Trust II and Greater Community Bancorp under the Securities
                Act of
                1933, Registration Nos. 333-89050, 333-89050-01, filed May 24,
                2002)4.3
            
            Guarantee
                Agreement between Greater Community Bancorp (as Guarantor) and Deutsche
                Bank Trust Company Americas (as Trustee) dated May 24, 2002 (incorporated
                by reference to Exhibit 4.6 to Form S-3 Registration Statement filed
                by
                GCB Capital Trust II and Greater Community Bancorp under the Securities
                Act of 1933, Registration Nos. 333-89050, 333-89050-01, filed May
                24,
                2002)10.1
            *
            Executive
                Supplemental Retirement Income Agreement for George E. Irwin dated
                as of
                January 1, 1999 among Great Falls Bank, George E. Irwin and Greater
                Community Bancorp (as guarantor) (incorporated by reference to Exhibit
                10.4 to Form 10-K for the year ended December 31, 1999)10.2
            *
            Executive
                Supplemental Retirement Income Agreement for C. Mark Campbell dated
                as of
                January 1, 1999 among Bergen Commercial Bank, C. Mark Campbell and
                Greater
                Community Bancorp (as guarantor) (incorporated by reference to Exhibit
                10.5 to Form 10-K for the year ended December 31, 1999)10.3
            *
            Greater
                Community Bancorp 2001 Employee Stock Option Plan Adopted February
                20,
                2001 (incorporated by reference to Exhibit 10.6 to Form 10-K for
                the year
                ended December 31, 2000)10.4
            *
            Greater
                Community Bancorp 2001 Stock Option Plan for Nonemployee Directors
                Adopted
                February 20, 2001 (incorporated by reference to Exhibit 10.7 to Form
                10-K
                for the year ended December 31, 2000)10.5
            *
            Amended
                Employment Agreement of George E. Irwin dated August 1, 2003 (incorporated
                by reference to Exhibit 10.8 to Form 8-K filed on August 1,
                2003)10.6
            *
            Executive
                Supplemental Retirement Income Agreement for Anthony M. Bruno, Jr.
                dated
                as of February 1, 2004 among Greater Community Bank, Anthony M. Bruno,
                Jr.
                and Greater Community Bancorp (as guarantor) (incorporated by reference
                to
                Exhibit 10.9 to Form 10-Q filed on May 10, 2004)10.7
            *
            Amended
                Employment and Waiver Agreement of George E. Irwin dated December
                20, 2004
                (incorporated by reference to Exhibit 10.10 to Form 8-K filed on
                December
                22, 2004)10.8
            *
            Employment
                Agreement of Anthony M. Bruno, Jr. dated March 2, 2005 (incorporated
                by
                reference to Exhibit 10.11 to Form 8-K filed on March 8,
                2005)10.9
            *
            Separation
                and Release Agreement of Erwin D. Knauer dated December 31, 2004
                (incorporated by reference to Exhibit 10.13 to Form 10-Q filed on
                May 9,
                2005)10.10
            *
            Employment
                Agreement of C. Mark Campbell as of July 31, 2006 (incorporated by
                reference to Exhibit 10.14 to Form 8-K filed on July 11,
                2006)10.11
            *
            Amendment
                No. 1 to Employment Agreement of Anthony M. Bruno, Jr. as of August
                15,
                2006 (incorporated by reference to Exhibit 10.15 to Form 8-K filed
                on
                August 21, 2006)10.12
            *
            Amendment
                No. 2 to Employment Agreement of Anthony M. Bruno, Jr. as of December
                20,
                2006 (incorporated by reference to Exhibit 10.16 to Form 8-K filed
                on
                December 27, 2006)


E-1
 *Table
          of Contents*


**EXHIBIT
      INDEX**


(continued)


**Exhibit**




No.
            
            Description





10.13
            *
            Greater
                Community Bancorp 2006 Long-Term Stock Compensation Plan Adopted
                April 18,
                2006 (incorporated by reference to Exhibit 99 to Form S-8 Registration
                Statement filed by Greater Community Bancorp under the Securities
                Act of
                1933, Registration No. 333-134205, filed May 17, 2006)10.14
            *
            Form
                of Restricted Stock Granting Agreement under Greater Community Bancorp
                2006 Long-Term Stock Compensation Plan (incorporated by reference
                to
                Exhibit 10.17 to Form 8-K filed on December 27, 2006)10.15
            *
            Form
                of Stock Option Granting Agreement under Greater Community Bancorp
                2006
                Long-Term Stock Compensation Plan (incorporated by reference to Exhibit
                10.18 to Form 8-K filed on December 27, 2006)10.16
            *
            Employment
                Agreement of Mary E. Smith dated January 1, 2005 between Greater
                Community
                Bank and Mary E. Smith21
            
            Subsidiaries
                of Registrant23.1
            
            Consent
                of McGladrey and Pullen, LLPs31.1
            
            Certification
                of Chief Executive Officer dated March 15, 200731.2
            
            Certification
                of Chief Financial Officer dated March 15, 200732.1
            
            Certification
                of Officers pursuant to 18 U.S.C. Section 1350 dated March 15,
                2007*
            Designates
                management or compensatory agreements, plans or arrangements required
                to
                be filed as exhibits pursuant to Item 15(b) of Form 10-K.






E-2