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

                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 2008

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

                      For the transition period from __ to __

                       Commission file number 000-1330039

                      AMERICAN BANCORP OF NEW JERSEY, INC.
             (Exact name of registrant as specified in its charter)

          New Jersey                                     55-0897507
          ----------                                     ----------
 (State or other jurisdiction                           (I.R.S. Employer
 of incorporation or organization)                    Identification Number)


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

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

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

                                Yes [ X ] No [ ]

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

Large accelerated     Accelerated       Non-accelerated      Smaller reporting
 filer [ ]            filer [ X ]         filer [ ]             company [ ]
                                     (Do not check if a smaller
                                         reporting company)

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

As of  August  8,  2008,  there  were  10,945,856  outstanding  shares  of  the
Registrant's Common Stock.


<PAGE>


                      AMERICAN BANCORP OF NEW JERSEY, INC.

                                Table of Contents


PART I - FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
<S>  <C>      <C>    <C>                                                                                <C>

     Item 1.    Financial Statements                                                                          3
                Notes to Financial Statements                                                                 9

     Item 2.    Management's Discussion and Analysis of Financial Condition and
                Results of Operations                                                                        14

     Item 3.    Quantitative and Qualitative Disclosures About Market Risk                                   36

     Item 4.    Controls and Procedures                                                                      41

PART II - OTHER INFORMATION

     Item 1.    Legal Proceedings                                                                            42
     Item 1A.   Risk Factors                                                                                 42
     Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds                                  42
     Item 3.    Defaults Upon Senior Securities                                                              42
     Item 4.    Submission of Matters to a Vote of Securities Holders                                        42
     Item 5.    Other Information                                                                            42
     Item 6.    Exhibits                                                                                     43


FORM 10-Q SIGNATURE PAGE                                                                                     44
</TABLE>
CERTIFICATIONS

                                       2
<PAGE>



PART I - FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

American Bancorp of New Jersey, Inc.
Statements of Financial Condition
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
<S>                                                                          <C>               <C>

                                                                                    June 30,       September 30,
                                                                                      2008              2007
                                                                                      ----              ----
ASSETS
Cash and cash equivalents
     Cash and due from banks                                                     $    9,952          $   9,983
     Interest-earning deposits                                                        1,711             14,638
     Federal funds sold                                                              20,980             12,800
                                                                                  ----------         ---------
         Total cash and cash equivalents                                             32,643             37,421

Securities available-for-sale                                                        85,136             58,093
Securities held-to-maturity (fair value, June 30, 2008 - $6,818 September 30,
   2007 - $6,671)                                                                     6,856              6,730
Loans held for sale                                                                       -              1,243
Loans receivable, net of allowance for loan losses (June 30, 2008 - $2,965,
   September 30, 2007 - $2,568)                                                     471,220            437,883
Premises and equipment                                                               12,038             10,856
Federal Home Loan Bank stock, at cost                                                 3,014              2,553
Cash surrender value of life insurance                                               13,619             13,214
Accrued interest receivable                                                           2,365              2,212
Other assets                                                                          3,832              3,533
                                                                                 ----------          ---------
     Total assets                                                                $  630,723            573,738
                                                                                 ==========          =========

LIABILITIES AND EQUITY
Deposits
     Non-interest-bearing                                                        $   30,558         $   30,494
     Interest-bearing                                                               420,202            398,106
                                                                                 ----------         ----------
         Total deposits                                                             450,760            428,600

Advance payments by borrowers for taxes and insurance                                 2,925              2,702
Borrowings                                                                           81,564             37,612
Accrued expenses and other liabilities                                                4,581              4,231
                                                                                 ----------         ----------
         Total liabilities                                                       $  539,830         $  473,145


Commitments and contingent liabilities

Equity
      Preferred stock, $.10 par value, 10,000,000 shares authorized at June 30,
           2008 and September 30, 2007;                                                   -                  -

      Common stock, $.10 par value, 20,000,000 shares authorized, 14,527,953
        shares issued at June 30, 2008 and September 30, 2007;
        10,948,286 and 11,946,190 outstanding
        at June 30, 2008 and September 30, 2007;                                      1,453              1,453

     Additional paid in capital                                                     115,235            113,607
     Unearned ESOP shares                                                            (7,762)            (8,099)
     Retained earnings                                                               23,430             24,258
     Treasury Stock; 3,579,667 and 2,581,763 shares
        at June 30, 2008 and September 30, 2007                                     (40,805)           (30,353)
     Accumulated other comprehensive loss                                              (658)              (273)
                                                                                 ----------         ----------
         Total equity                                                                90,893            100,593
                                                                                 ----------         ----------
              Total liabilities and equity                                       $  630,723         $  573,738
                                                                                 ==========         ==========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements

                                       3
<PAGE>


American Bancorp of New Jersey, Inc.
Statements of Income
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
<S>                                                            <C>          <C>              <C>            <C>

                                                                     Nine Months Ended               Three Months Ended
                                                                         June 30,                        June 30,
                                                                         --------                        --------
                                                                    2008            2007            2008           2007
                                                                    ----            ----            ----           ----
Interest and dividend income
   Loan, including fees                                         $  20,107       $  18,206       $   6,685      $   6,299
   Securities                                                       2,461           2,306           1,132            699
   Federal funds sold and other                                       819             863             146            510
                                                                ---------       ---------       ---------      ---------
      Total interest income                                        23,387          21,375           7,963          7,508

Interest expense
   NOW and money market                                             2,790           2,140             659          1,072
   Savings                                                          1,577           2,054             456            657
   Certificates of deposit                                          7,285           6,124           2,436          2,182
   Borrowings                                                       1,714           1,767             699            533
                                                                ---------       ---------       ---------      ---------
      Total interest expense                                       13,366          12,085           4,250          4,444

Net interest income                                                10,021           9,290           3,713          3,064

Provision for loan losses                                             431             320             121             77
                                                                ----------      ---------       ---------      ---------

Net interest income after provision for loan losses                 9,590           8,970           3,592          2,987

Noninterest income
   Deposit service fees and charges                                   704             518             262            183
   Income from cash surrender value of life insurance                 405             337             139            127
   Gain on sale of loans                                                9              42               -             30
   Loss on sales of securities available-for-sale                      (5)            (11)              -              -
   Other                                                              201             165              80             68
                                                                ---------       ---------       ---------      ---------
      Total noninterest income                                      1,314           1,051             481            408

Noninterest expense
   Salaries and employee benefits                                   6,729           6,345           2,174          2,254
   Occupancy and equipment                                          1,414             744             506            282
   Data processing                                                    591             549             208            191
   Advertising and marketing                                          171             244              39             78
   Professional and consulting                                        308             299             110             95
   Legal                                                              160             110              41             27
   Other                                                              890             826             342            277
                                                                ---------       ---------       ---------      ---------
      Total noninterest expense                                    10,263           9,117           3,420          3,204

Income before provision for income taxes                              641             904             653            191

Provision for income taxes                                            129             276             222             41
                                                                ---------       ---------       ---------      ---------

Net income                                                        $   512         $   628         $   431        $   150

Comprehensive income                                              $   127          $  957       $   (466)        $   151

Earnings per share:
     Basic                                                       $   0.05        $   0.05        $   0.04       $   0.01
     Diluted                                                     $   0.05        $   0.05        $   0.04       $   0.01
</TABLE>

     See accompanying notes to unaudited consolidated financial statements

                                       4

<PAGE>


American Bancorp of New Jersey, Inc.
Statements of Shareholders' Equity
Nine months ended June 30, 2007
(in thousands, except share data)
(unaudited)

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                                                                  Accumulated                                Compre-
                                        Additional      Unearned                    Other                                    hensive
                              Common     Paid-In         ESOP       Retained     Comprehensive                     Total     Income
                              Stock      Capital         Shares     Earnings        Income      Treasury Stock     Equity    (Loss)
                              -----      -------         ------      --------        ------      --------------    ------    ------
Balance at
  September 30, 2006        $ 1,453    $   111,780     $  (8,549)   $  25,438     $  (881)       $   (4,380)    $ 124,861
Cumulative effect of
   adoption of SAB 108            -              -             -          130           -                 -           130
Balance at
  October 1, 2006           $ 1,453    $   111,780     $  (8,549)   $  25,568        (881)       $   (4,380)    $ 124,991

RSP stock grants
   (6,249 shares issued)          -            (76)            -           -            -                76             -
RSP shares earned including
   tax benefit of vested
   awards                         -            904             -           -            -                 -           904
Share purchases
   (1,700,603 shares)             -              -             -           -            -           (20,347)      (20,347)
Stock options earned                           422             -           -            -                 -           422
ESOP shares earned                -            127           337           -            -                 -           464
Cash dividends paid
   $0.12 per share                -              -             -      (1,421)           -                 -        (1,421)

Comprehensive income
    Net income                    -              -             -         628            -                 -           628
    Change in unrealized
      loss on securities
      available-for-sale,
      net of taxes                -                            -           -          329                 -           329
                            -------    -----------     ---------    --------      -------         ---------     ---------
         Total  comprehensive
         income                                                                                                             $   957
                                                                                                                            =======

Balance at
  June 30, 2007             $ 1,453    $   113,157     $  (8,212)   $  24,775        (552)         (24,651)     $ 105,970
                            =======    ===========     =========    =========     =======         ========       =========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements
                                       5

<PAGE>


American Bancorp of New Jersey, Inc.
Statements of Shareholders' Equity
Nine months ended June 30, 2008
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                               Accumulated                                   Compre-
                                     Additional       Unearned                    Other                                      hensive
                        Common        Paid-In           ESOP      Retained     Comprehensive      Treasury         Total      Income
                         Stock        Capital          Shares     Earnings         Loss             Stock         Equity      (Loss)
                         -----        -------          ------     --------         ----             -----         ------      ------
Balance at
   September 30, 2007  $  1,453    $   113,607     $  (8,099)   $  24,258      $  (273)         $ (30,353)     $ 100,593
RSP shares earned
   including tax benefit
   of vested awards          -           1,010             -            -            -                  -          1,010
Tax benefit on dividends
   paid on unvested RSP
   shares                    -              66             -            -            -                  -             66
Share purchases
   (1,002,070 shares)        -               -             -            -            -            (10,500)       (10,500)
Stock options earned                       490             -            -            -                  -            490
Stock options exercised      -             (19)            -            -            -                 48             29
ESOP shares earned           -              81           337            -            -                  -            418
Cash dividends paid
   $0.13 per share           -               -             -       (1,340)           -                  -         (1.340)

Comprehensive income
   Net income                -               -             -          512            -                  -            512        512
   Change in unrealized
    loss on securities
    available-for-sale,
    net of taxes             -               -             -            -         (385)                 -           (385)      (385)
                       -------     -----------     ---------    ---------      -------          ---------      ---------  ----------
       Total  comprehensive
         income                                                                                                           $     127
                                                                                                                          ==========

Balance at
June 30, 2008          $  1,453    $   115,235     $   (7,762)  $  23,430      $  (658)         $ (40,805)     $  90,893
                       ========    ===========     ==========   =========      =======          =========      =========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements
                                       6
<PAGE>


American Bancorp of New Jersey, Inc.
Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
<S>                                                             <C>                      <C>

                                                                            Nine Months Ended
                                                                                June 30,
                                                                                --------
                                                                       2008            2007
                                                                       ----            ----
Cash flows from operating activities
    Net Income                                                         $ 512          $   628
    Adjustments to reconcile net income to net cash
       provided by operating activities
       Depreciation and amortization                                     411              261
       Net amortization and accretion of premiums and discounts          (54)             (10)
       Losses on sales of securities available-for-sale                    5               11
       ESOP compensation expense                                         418              464
       RSP compensation expense                                          979              833
       SOP compensation expense                                          490              422
       Provision for loan losses                                         431              320
       Increase in cash surrender value of life insurance               (405)            (337)
       Gain on sale of loans                                              (7)             (42)
       Proceeds from sales of loans                                    1,869            8,421
       Origination of loans held for sale                               (619)          (8,882)
       Increase in accrued interest receivable                          (153)            (183)
       Decrease (increase) in other assets                               398              (41)
       Change in deferred income taxes                                  (405)            (269)
       Decrease in other liabilities                                     350              187
                                                                       -----          -------
           Net cash provided by operating activities                   4,220            1,783

Cash flows from investing activities
    Net increase in loans receivable                                 (33,768)          (27,259)
    Purchases of securities held-to-maturity                          (1,108)                -
    Maturities of securities held-to-maturity                              -             2,000
    Principal paydowns on securities held-to-maturity                    972             1,319
    Purchases of securities available-for-sale                       (54,841)           (4,990)
    Sales of securities available-for-sale                            11,510             3,227
    Maturities of securities available-for-sale                        2,000            11,000
    Principal paydowns on securities available-for-sale               13,670            13,028
    Purchase of Federal Home Loan Bank stock                            (958)           (1,999)
    Redemption of Federal Home Loan Bank stock                           497             2,711
    Purchase of bank-owned life insurance                                  -            (4,000)
    Purchase of premises and equipment                                (1,593)           (4,079)
                                                                     --------       ----------
       Net cash used in investing activities                         (63,619)           (9,042)

Cash flows from financing activities
    Net increase in deposits                                          22,160            82,769
    Net change in advance payments by borrowers for taxes and
           insurance                                                     223               399
    Proceeds from borrowings                                          55,000                 -
    Repayment of borrowings                                          (11,048)           (6,047)
    Net change in Federal Home Loan Bank of New York overnight
           lines of credit                                                 -           (10,400)
    RSP tax benefit of vested awards                                      31                71
    Tax benefit on dividends paid on unvested RSP shares                  66                 -
    Proceeds from stock option exercises                                  29                 -
    Cash dividends paid                                               (1,340)           (1,421)
    RSP and treasury share purchases                                 (10,500)          (20,347)
                                                                     -------         ---------
    Net cash provided by financing activities                         54,621            45,024
    Net change in cash and cash equivalents                           (4,778)           37,765
    Cash and cash equivalents at beginning of year                    37,421             7,165
                                                                     -------         ---------

Cash and cash equivalents at end of period                        $   32,643       $    44,930
                                                                  ==========       ===========
                                  (Continued)
                                       7
<PAGE>


American Bancorp of New Jersey, Inc.
Statements of Cash Flows
(in thousands)
(unaudited)
                                                                          Nine Months Ended
                                                                               June 30,
                                                                               --------
                                                                      2008              2007
                                                                      ----              ----
Supplemental cash flow information:
    Cash paid during the period for
       Interest                                                 $    10,067       $    12,232
       Income taxes, net of refunds                                     506               867



Supplemental disclosures of non-cash financing transaction:
    Cumulative effect of adoption of SAB 108                              -               130
</TABLE>

     See accompanying notes to unaudited consolidated financial statements
                                       8
<PAGE>


American Bancorp of New Jersey, Inc.
Notes To Unaudited Financial Statements
 (in thousands)

Note 1 - Basis of Presentation

     American  Bancorp  of New  Jersey,  Inc.  (the  "Company")  is a New Jersey
chartered  corporation  organized in May 2005 that was formed for the purpose of
acquiring all of the capital  stock of American Bank of New Jersey,  a federally
chartered Bank, (the "Bank"),  which was previously owned by ASB Holding Company
("ASBH"). ASBH was a federally chartered corporation organized in June 2003 that
was formed for the purpose of  acquiring  all of the capital  stock of the Bank,
which was previously  owned by American  Savings,  MHC (the "MHC"),  a federally
chartered  mutual  holding  company.  The Bank had  previously  converted from a
mutual to a stock savings bank in a mutual  holding  company  reorganization  in
1999 in which no stock was issued to any person other than the MHC.

     On October 3, 2003,  ASB  Holding  Company,  the  predecessor  of  American
Bancorp of New  Jersey,  Inc.,  completed  a minority  stock  offering  and sold
1,666,350 shares of common stock in a subscription offering at $10 per share and
received  proceeds of  $16,060,000,  net of  offering  costs of  $603,000.  ASBH
contributed $9,616,000, or approximately 60% of the net proceeds, to the Bank in
the  form of a  capital  contribution.  ASBH  loaned  $1,333,080  to the  Bank's
employee stock  ownership plan ("ESOP") and the ESOP used those funds to acquire
133,308 shares of common stock at $10 per share.

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

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

     As part of the second step  conversion,  each of the 1,666,350  outstanding
shares of ASBH held by public  shareholders  was  exchanged  for  2.55102 of the
Company's shares.  This exchange  resulted in an additional  4,250,719 shares of
the Company being issued, for a total of 14,169,469 outstanding shares.

     The accompanying  unaudited  consolidated  financial statements include the
accounts  of the  Company and its wholly  owned  subsidiaries,  the Bank and ASB
Investment Corp. (the "Investment  Corp.") as of June 30, 2008 and September 30,
2007 and for the three and nine months  ended June 30,  2008 and June 30,  2007.
Significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.  References in this Quarterly  Report on Form 10-Q to the Company
generally  refer to the  Company  and the Bank,  unless  the  context  indicates
otherwise.  References to "we," "us," or "our" refer to the Bank or Company,  or
both, as the context indicates.

     The primary  business of the Company is the  ownership  of the Bank and the
Investment  Corp.  The  Bank  provides  a full  range  of  banking  services  to
individual and corporate  customers  located primarily in the New Jersey and New
York metropolitan  area. The Bank is subject to competition from other financial
institutions  and to the  regulations of certain  federal and state agencies and
undergoes periodic examinations by those regulatory authorities.  The Investment
Corp.  was  organized  for the  purpose  of  selling  insurance  and  investment

                                       9
<PAGE>

products,  including annuities, to customers of the Bank and the general public,
with  initial  activities  limited  to the sale of  fixed  rate  annuities.  The
Investment Corp. has had limited activity to date.

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States  of  America  for  interim  financial  information  and  with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all the  information  and notes  required by  accounting  principles
generally  accepted  in the United  States of  America  for  complete  financial
statements.  These interim  statements  should be read in  conjunction  with the
consolidated  financial  statements and notes  included in the Company's  Annual
Report on Form 10-K for the year ended  September  30, 2007.  The  September 30,
2007 balance sheet presented herein has been derived from the audited  financial
statements included in the consolidated  financial statements and notes included
in the  Annual  Report on Form  10-K  filed  with the  Securities  and  Exchange
Commission,  but  does  not  include  all  disclosures  required  by  accounting
principles generally accepted in the United States of America.

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

     Interim  statements are subject to possible  adjustment in connection  with
the annual audit of the Company for the year ending  September  30, 2008. In the
opinion  of  management  of the  Company,  the  accompanying  unaudited  interim
consolidated financial statements reflect all of the adjustments  (consisting of
normal  recurring   adjustments)  necessary  for  a  fair  presentation  of  the
consolidated  financial position and consolidated  results of operations for the
periods presented.

     The results of  operations  for the nine months ended June 30, 2008 are not
necessarily  indicative  of the results to be expected  for the full year or any
other period.

Note 2 - Earnings Per Share (EPS)

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

                                       10

<PAGE>


     The factors used in the earnings per share computation follow (in thousands
except share data).
<TABLE>
<CAPTION>
<S>                                             <C>             <C>              <C>            <C>

                                                     Nine Months Ended                  Three Months Ended
                                                          June 30,                           June 30,
                                                          --------                           --------
                                                   2008              2007              2008             2007
                                                   ----              ----              ----             ----
Basic
    Net income                             $        512       $       628    $          431         $      150

Weighted average common shares
   outstanding                               10,167,297        11,729,700         9,862,522          11,273,478

    Basic earnings per common share        $       0.05       $      0.05    $         0.04         $      0.01
                                           ============        ==========    ==============          ==========

Diluted
    Net income                             $        512       $       628    $          431         $       150

Weighted average common shares
   outstanding  for basic earnings per
   common share                              10,167,297        11,729,700         9,862,522          11,273,478

Add:  Dilutive effects of assumed
   exercises of  stock options                  143,583           159,507           151,380             145,837

Add:  Dilutive effects of full vesting
   of stock  awards                              15,922            31,808            13,601              25,127
                                           ------------           -------    --------------        ------------

Average shares and dilutive
   potential  common shares                  10,326,802        11,921,015        10,027,503          11,444,442
                                           ============        ==========    ==============        ============

Diluted earnings per common share          $       0.05      $       0.05   $          0.04        $       0.01
                                           ============      ============   ===============        ============
</TABLE>


Note 3 - Other Stock-Based Compensation

At June 30, 2008, all shares and options available under the 2005 Restricted
Stock Plan, 2005 Stock Option Plan and the 2006 Equity Incentive Plan had been
awarded to participants.

                                       11

<PAGE>


A summary of the  activity  in the  Company's  stock  option  plans for the nine
months ended June 30, 2008 and 2007 is as follows.

<TABLE>
<CAPTION>
<S>                                                          <C>        <C>     <C>    <C>               <C>


                                                                           For the nine months ended
                                                                  June 30, 2008                June 30, 2007
                                                                  -------------                -------------

                                                                            Weighted                      Weighted
                                                                            Average                       Average
                                                                            Exercise                      Exercise
                                                              Shares         Price          Shares         Price
                                                              -----          -----          ------         -----
                       Outstanding at beginning of
                          period                            1,416,948     $    9.26      1,397,854      $   9.23
                       Granted                                      -             -         19,094         11.87
                       Exercised                              ( 4,166)         6.80              -             -
                       Forfeited or expired                         -             -              -             -
                                                           ----------    ----------   ------------      --------

                       Outstanding at end of period         1,412,782     $    9.27      1,416,948      $   9.26
                                                           ==========     =========     ==========      ========

                       Options exercisable at period
                          end                                 733,125    $     8.82        417,094      $   8.43
                                                           ==========    ==========     ==========      ========
                       Weighted average remaining
                          contractual life                                7.1 years                    8.0 years
</TABLE>


A summary of the status of the Company's nonvested  restricted stock plan shares
as of June 30, 2008 and 2007 and changes  during the nine months  ended June 30,
2008 and 2007 are as follows.

<TABLE>
<CAPTION>
<S>                                                          <C>         <C>             <C>             <C>


                                                                           For the nine months ended
                                                                  June 30, 2008                June 30, 2007
                                                                  -------------                -------------

                                                                            Weighted                      Weighted
                                                                            Average                       Average
                                                                           Grant Date                    Grant Date
                                                                Shares     Fair Value      Shares         Fair Value
                                                                ------     ----------      ------        -----------
                       Outstanding at beginning of
                          period                               414,281    $  10.13        520,126     $    10.04
                       Granted                                       -           -          6,249          11.87
                       Vested                                 (129,112)       9.85       (112,094)          9.80
                       Forfeited or expired                          -           -              -              -
                                                           -----------    ---------    ----------      ---------

                       Outstanding at end of period            285,169   $    10.25       414,281     $    10.13
                                                           ===========   ==========    ==========     ==========
</TABLE>


Note 4 - Recent Accounting Pronouncements

     In July 2006,  the FASB released  Interpretation  No. 48,  "Accounting  for
Uncertainty in Income Taxes." This Interpretation  revises the recognition tests
for tax positions  taken in tax returns such that a tax benefit is recorded only
when it is more  likely  than not that the tax  position  will be  allowed  upon
examination by taxing authorities. The amount of such a tax benefit to record is
the largest amount that is more likely than not to be allowed.  Any reduction in

                                       12
<PAGE>

deferred  tax  assets  or  increase  in  tax  liabilities   upon  adoption  will
correspondingly  reduce retained earnings. The adoption of Interpretation No. 48
on October 1, 2007 did not have a material impact on the Company's  consolidated
financial statements.

     In  September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards No. 157 "Fair Value Measurements" ("SFAS No. 157"), which defines fair
value,  establishes a framework for measuring  fair value in generally  accepted
accounting  principles,  and expands  disclosures about fair value measurements.
SFAS No. 157 is  effective  for  financial  statements  issued for fiscal  years
beginning  after  November 15,  2007.  In February  2008,  the FASB issued Staff
Position (FSP) 157-2,  Effective Date of FASB Statement No. 157. This FSP delays
the  effective  date of FAS 157 for all  nonfinancial  assets  and  nonfinancial
liabilities,  except those that are  recognized  or disclosed at fair value on a
recurring basis (at least annually) to fiscal years beginning after November 15,
2008, and interim  periods  within those fiscal years.  The adoption of SFAS No.
157 when it becomes effective for the Company on October 1, 2008 is not expected
to have a material impact on the Company's consolidated financial statements.

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

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

     On November 5, 2007,  the SEC issued  Staff  Accounting  Bulletin  No. 109,
Written Loan  Commitments  Recorded at Fair Value through  Earnings ("SAB 109").
Previously,  SAB 105, Application of Accounting  Principles to Loan Commitments,
stated that in  measuring  the fair value of a  derivative  loan  commitment,  a
company should not incorporate the expected net future cash flows related to the
associated  servicing of the loan. SAB 109 supersedes SAB 105 and indicates that
the expected net future cash flows  related to the  associated  servicing of the
loan should be included in measuring fair value for all written loan commitments
that are accounted for at fair value through  earnings.  SAB 105 also  indicated
that  internally-developed  intangible  assets should not be recorded as part of
the fair value of a derivative loan  commitment,  and SAB 109 retains that view.
SAB 109 is  effective  for  derivative  loan  commitments  issued or modified in
fiscal  quarters  beginning after December 15, 2007. The Company does not expect
the impact of this standard to be material.

                                       13
<PAGE>



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

Forward-Looking Statements

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

Business Strategy

     Our business strategy has been to operate as a well-capitalized independent
financial  institution  dedicated  to  providing  convenient  access and quality
service  at  competitive  prices.  During  recent  years,  we  have  experienced
significant loan and deposit growth. Our current strategy seeks to continue that
growth  while  we  evolve  from a  traditional  thrift  institution  into a full
service,  community  bank.  Our key business  strategies are  highlighted  below
accompanied  by a brief overview of our progress in  implementing  each of these
strategies:

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

          Having opened three full service  branches  located in Verona,  Nutley
          and Clifton,  New Jersey during fiscal 2007, the Company currently has
          no plans or  commitments to open  additional de novo deposit  branches
          during  fiscal  2008.   Rather,   the  Company   continues  to  direct
          significant   strategic   effort  toward   achieving  and  maintaining
          profitability  within  each of  these  three  branches.  Based  on the
          Company's  internal  branch  profitability  model,  the Verona branch,
          which  opened in  December  2006,  achieved  profitability  during the
          quarter  ended  March 31,  2008 and  continued  to operate  profitably
          during the quarter ended June 30, 2008.  The Bank's Nutley and Clifton
          branches, which opened in May and August of 2007,  respectively,  have
          not yet  achieved  quarterly  profitability.  However,  the  operating
          losses for each of the two branches decreased during the quarter ended
          June 30,  2008  compared  with prior  quarters.  Notwithstanding  this
          current  focus,  the  Company  would  consider  additional   branching
          projects during fiscal 2008 if appropriate opportunities were to arise
          but generally expects to revisit  additional  branching  opportunities
          after fiscal 2008.

                                       14

<PAGE>


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

          For the fiscal year ended  September 30, 2007, our  commercial  loans,
          including multi-family,  nonresidential real estate,  construction and
          business loans,  grew $45.7 million,  or 47.5%,  from $96.2 million to
          $141.9  million.  This increase  resulted in commercial  loans growing
          from 24.1% to 32.4% of loans  receivable,  net for fiscal  2007.  Such
          growth  continued  during the nine months ended June 30, 2008 when our
          commercial  loans grew an additional  $32.5  million,  or 22.9%,  from
          $141.9  million  to  $174.4  million   increasing  the  percentage  of
          commercial  loans from  32.4% to 37.0% of loans  receivable,  net.  We
          expect to  continue  our  strategic  emphasis  on  commercial  lending
          throughout the remainder of fiscal 2008 and thereafter.

     o    Continue to implement or enhance alternative delivery channels for the
          origination and servicing of loan and deposit products.

          In support of this  objective,  during  fiscal  2007,  we  completed a
          significant  overhaul of our Internet website which serves as a portal
          through which our customers  access a growing menu of online services.
          While  enhancing  our online  services  for retail  customers,  we are
          concurrently  addressing  the  growth  in  business  demand  for  such
          services.  Toward  that end,  we have  expanded  our  business  online
          banking  product and service  offerings  to now include  remote  check
          deposit,  online cash management and online bill payment  services for
          business.

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

          We will  continue  to cross  market  other  products  and  services to
          promote multiple  account/service  relationships  and the retention of
          long term customers and core  deposits.  These efforts are expected to
          be directed to customers within all five of the Bank's branches.

     o    Utilize capital market tools to effectively manage capital and enhance
          shareholder value.

          Toward  that  end,  the  Company  had  completed  two  previous  share
          repurchase  plans during fiscal 2007 through which it repurchased  ten
          percent and five percent,  respectively,  of its  outstanding  shares.
          During the quarter ended December 31, 2007, the Company  completed its
          third share  repurchase  program  through  which it  repurchased  five
          percent of its outstanding  shares. A fourth share repurchase plan for
          an additional five percent of its outstanding  shares was announced in
          January 2008 and remains ongoing at June 30, 2008.  Additionally,  the
          Company  increased its quarterly  dividend paid to  shareholders  from
          $0.04 per share to $0.05 per share  during the quarter  ended June 30,
          2008.

     A number of the strategies  outlined above have had a detrimental impact on
short term  earnings.  Notwithstanding,  we expect to continue to execute  these
growth and  diversification  strategies  designed to enhance future earnings and
resist  adverse  changes  in  market  conditions  toward  the goal of  enhancing
shareholder  value.  Toward that end, our deposit pricing  strategy  through the
prior  quarter  ended  March 31,  2008  continued  to reduce  interest  costs by
incrementally  lowering  interest rates paid on de novo branch deposits acquired
during fiscal 2007 from the higher promotional rates initially offered.  By June
30,  2008,  most  deposits  acquired  through  those de novo  branches no longer
reflected the effects of promotional pricing. Additionally, we would expect that
the prior  reductions in market interest rates and steepening of the yield curve
during  fiscal  2008 may  continue  to have a  beneficial  impact  on  earnings.
However,  the  resiliency of the Bank's branch  deposits to future  movements in
market  interest  rates  and/or  competitive   pricing  pressures  -  and  their
respective impact on earnings - can not be assured.

                                       15

<PAGE>


Executive Summary

     The Company's  results of operations  depend  primarily on its net interest
income.  Net interest  income is the difference  between the interest  income we
earn  on  our   interest-earning   assets  and  the   interest  we  pay  on  our
interest-bearing  liabilities. It is a function of the average balances of loans
and investments versus deposits and borrowed funds outstanding in any one period
and the yields  earned on those loans and  investments  versus the cost of those
deposits and borrowed funds. Our loans consist primarily of residential mortgage
loans,  comprising  first and second  mortgages and home equity lines of credit,
and commercial loans,  comprising  multi-family and  nonresidential  real estate
mortgage loans, construction loans and business loans. Our investments primarily
include U.S.  Agency  residential  mortgage-related  securities and U.S.  Agency
debentures.  Our  interest-bearing   liabilities  consist  primarily  of  retail
deposits,  advances  from the  Federal  Home  Loan  Bank of New  York and  other
borrowings  associated  with  reverse  repurchase  agreement  transactions  with
institutional counterparties.

     During the first nine months of fiscal  2008,  the  Company's  net interest
rate spread increased 30 basis points to 1.74% in comparison to 1.44% for all of
fiscal 2007. The increase in net interest rate spread resulted  primarily from a
reduction in the Company's cost of interest-bearing  liabilities which decreased
33 basis  points to 3.88%  from 4.21% for those same  comparative  periods.  The
decrease in interest costs was partially  offset by a reduction in the Company's
yield on earning assets which  decreased one basis point to 5.63% from 5.64% for
the same  comparative  periods.  This  widening of our net interest  rate spread
reversed the trend of spread compression  previously reported during fiscal 2007
when the Company's net interest rate spread decreased 36 basis points from 1.80%
during fiscal 2006.

     In large part,  the  improvements  in net interest rate spread for the nine
months  ended June 30, 2008  resulted  from  continued  decreases in the cost of
retail deposits  augmented by the addition of lower cost  borrowings  during the
year.  The decrease in retail deposit  interest  costs  continues to reflect the
overall reduction in market interest rates coupled with the downward  adjustment
of interest rates paid on deposits  acquired through the de novo branches opened
during  fiscal 2007 on which the Company  originally  paid  higher,  promotional
interest rates.  By contrast,  the effects of lower market interest rates on the
Company's adjustable rate loans,  including  construction loans,  business loans
and home equity lines of credit, have been substantially  offset by the positive
effect on overall loan yields  attributable to the Company's  commercial lending
strategies.

     The factors  resulting in the widening of the  Company's  net interest rate
spread also positively impacted the Company's net interest margin.  However, the
impact of improved  net  interest  rate spread was  substantially  offset by the
impact of the Company's share  repurchase  program on the Company's net interest
margin.  The foregone  interest  income on the earning assets used to fund share
repurchases contributed  significantly to limiting the increase in the Company's
net  interest  margin  which  increased  two basis  points to 2.41% for the nine
months ended June 30, 2008 from 2.39% for all of fiscal 2007.

     Our  net  interest  rate  spread  and  margin  may  be  adversely  affected
throughout several possible interest rate  environments.  The risks presented by
movements in interest rates is addressed  more fully under Item 3.  Quantitative
and Qualitative Disclosures About Market Risk found later in this report.

     Our  results of  operations  are also  affected by our  provision  for loan
losses. For the nine months ended June 30, 2008, the Company recorded a net loan
loss  provision of $431,000.  The  provision for loan losses for the nine months
ended June 30, 2008 generally  reflected the Bank's increased strategic emphasis
in commercial  lending and the comparatively  higher rate of growth in such loan
balances  than in earlier  years.  The  provision  for loan  losses for the nine
months  ended  June 30,  2008 also  reflected  a specific  provision  of $34,000
attributable  to one impaired  construction  loan, a portion of which was deemed
uncollectible by management and was therefore  charged off in the second quarter
of fiscal  2008.  No other  additions  to the  allowance  for loan  losses  were
required  during the nine  months  ended June 30, 2008 for  nonperforming  loans
which  decreased as a percentage  of total assets to 0.14% at June 30, 2008 from

                                       16

  <PAGE>

0.22% at September 30, 2007.  Net loan loss  provision  expense,  reflected as a
percentage of average earning assets, increased one basis point to 0.10% for the
nine months ended June 30, 2008 from 0.09% reported for fiscal 2007.

     Our  results  of  operations  also  depend on our  noninterest  income  and
noninterest  expense.  Noninterest  income  includes  deposit  service  fees and
charges, income on the cash surrender value of life insurance, gains on sales of
loans and securities, gains on sales of other real estate owned and loan related
fees and  charges.  Excluding  gains and losses on sale of  assets,  noninterest
income as a percentage of average  assets  increased  four basis points to 0.30%
for the nine  months  ended  June 30,  2008 from  0.26%  for all of fiscal  2007
primarily due to increases in deposit services fees and charges.  Such increases
were attributable, in part, to deposit service fees and charges at the Bank's de
novo branches opened during fiscal 2007. However, the reported increase was also
due to growth in  deposit-related  fees and  charges  within  the  Bank's  other
branches.

     Gains and  losses on sale of  assets,  excluded  in the  comparison  above,
typically  resulted from the Company selling long term, fixed rate mortgage loan
originations  into  the  secondary  market.  Demand  for  such  loans  typically
fluctuates with market interest rates. As interest rates rise, market demand for
long term,  fixed rate mortgage  loans  diminishes in favor of hybrid ARMs which
the Company has historically  retained in its portfolio rather than selling into
the  secondary  market.  Consequently,  the  gains  and  losses on sale of loans
reported by the Company have  fluctuated with market  conditions.  Additionally,
such  gains and  losses  also  reflected  the  impact of  infrequent  investment
security  sales for  asset/liability  management  purposes.  As a percentage  of
average total assets,  gains and losses on asset sales for the nine months ended
June 30, 2008 totaled less than 0.01% which was  relatively  unchanged  from the
0.01% reported for all of fiscal 2007.

     Noninterest expense includes salaries and employee benefits,  occupancy and
equipment  expenses,  data  processing  and  other  general  and  administrative
expenses.  As a percentage of average total assets,  noninterest expense for the
nine months ended June 30, 2008 totaled  2.32%  representing  an increase of one
basis point from 2.31% reported for all of fiscal 2007.

     The noninterest  expense reported above for the first nine months of fiscal
2008 fully reflects the ongoing costs of the three full service  branches opened
during the prior fiscal  year.  In general,  management  expects  occupancy  and
equipment  expense to increase in the future as we continue to implement  our de
novo  branching  strategy  to expand our branch  office  network.  However,  the
Company  currently  has no  plans  or  commitments  to open  additional  de novo
branches during fiscal 2008.  Rather,  the Company expects to direct significant
strategic effort toward achieving and maintaining  profitability  within each of
these three branches while revisiting  additional branching  opportunities after
fiscal 2008.  Notwithstanding  the expected de novo branching  hiatus for fiscal
2008, our current business plan targets the opening of up to three additional de
novo  branches  over  approximately  the next  five  years.  The  costs for land
purchases or leases,  branch  construction costs and ongoing operating costs for
additional branches will impact future earnings.

     The Company also expects occupancy expense to continue to reflect the costs
associated with the relocation of the Bank's  Bloomfield  branch which opened in
April 2008.  This  relocation  has  significantly  upgraded and  modernized  the
Bloomfield branch facility  supporting the Company's deposit growth and customer
service  enhancement  objectives.  The  relocation  will also support  potential
expansion of the  administrative  and lending  office space within the Company's
existing  headquarters  facility,  where the branch had previously been located,
should such expansion be required to support the Company's business plan.

     In an effort to reduce ongoing  operating  expenses,  the Company enacted a
reduction in workforce  during the first quarter of fiscal 2008 resulting in the
elimination of five managerial and administrative support positions.  Salary and

                                       17
<PAGE>

employee benefit expense reductions  resulting from this initiative are expected
to total  approximately  $388,000 per year which began during the second quarter
of fiscal 2008,  equal to annual after-tax  earnings of approximately  $0.02 per
share based upon the Company's outstanding shares at June 30, 2008. This action,
in conjunction  with other  adjustments to staffing,  has enabled the Company to
reduce the number of full time equivalent  employees by nearly 10% during fiscal
2008.

     The effect of these  compensation  expense  reduction  measures  during the
first nine months of fiscal 2008 was somewhat muted by an offsetting increase in
expense  attributable to the death of a Director  Emeritus of the Company during
the second fiscal quarter. Under the terms of the Company's restricted stock and
stock option plans, the vesting of the remaining  unearned  benefits accruing to
the director  through these plans was  automatically  accelerated.  As such, the
Company incurred an acceleration of the remaining  pre-tax  expenses  associated
with these benefits totaling approximately $254,000 during that period.

     Notwithstanding, the Company will continue to monitor its employee staffing
levels in  relation to the goals and  objectives  of its  business  plan and may
consider further  opportunities to adjust such staffing levels,  as appropriate,
to support the achievement of those goals and objectives.

     In total,  our  annualized  return on average  assets  increased  two basis
points to 0.12% for the nine  months  ended June 30,  2008 from 0.10% for all of
fiscal 2007, while annualized return on average equity increased 21 basis points
to 0.72% from 0.51% for the same comparative periods.

Comparison of Financial Condition at June 30, 2008 and September 30, 2007

     Our total assets increased by $57.0 million,  or 9.9%, to $630.7 million at
June 30, 2008 from $573.7 million at September 30, 2007. The increase  primarily
reflected  comparatively  higher  balances of  investment  securities  and loans
receivable,  net partially offset by lower balances of cash and cash equivalents
and loans held for sale.

     Cash and cash  equivalents  decreased by $4.8 million,  or 12.8%,  to $32.6
million at June 30,  2008 from $37.4  million at  September  30,  2007.  The net
decrease in cash and cash equivalents  primarily  reflects cash outflows funding
share repurchases and growth in loans  receivable,  net partially offset by cash
inflows from investment  security  maturities and repayments,  reductions in the
balance of loans held for sale and continued net growth in deposits.

     The  balance  of  cash  and  cash  equivalents  continues  to  reflect  the
accumulation of short term, interest-earning investments which resulted from the
net cash inflows associated with deposit growth during fiscal 2007 and the first
nine months of fiscal  2008.  The Company  expects to continue  reinvesting  the
proceeds  received  through its growth in deposits into the loan  portfolio over
time as lending  opportunities arise. To the extent supported by loan demand and
origination  volume,  the Company expects to reinvest  deposit proceeds into its
commercial loan portfolio.  such loans. However, the net addition of residential
mortgages to the loan portfolio,  including longer term, fixed rate one- to four
family  mortgages which were  historically  sold into the secondary  market,  is
expected to continue augmenting the growth in commercial loans as a reinvestment
alternative  for  a  portion  of  the  accumulated  balance  of  cash  and  cash
equivalents.   (See  further   discussion  in  the  subsequent   section  titled
"Quantitative and Qualitative Disclosures About Market Risk".)

     Securities  classified as  available-for-sale  increased $27.0 million,  or
46.6%,  to $85.1  million at June 30, 2008 from $58.1  million at September  30,
2007 while securities held-to-maturity increased approximately $126,000, or 1.9%
to $6.9 million from $6.7 million for those same comparative periods.

     The net increase in available-for-sale  securities was largely attributable
to a  wholesale  growth  transaction  in March 2008  through  which the  Company
purchased approximately $50.0 million of mortgage-related  investment securities

                                       18


<PAGE>

funded by an equivalent  amount of borrowings.  The ongoing net interest  income
resulting from this transaction  continues to augment the Company's  earnings to
offset a portion of the near term costs  associated  with executing its business
plan.  Through this  transaction,  the Company took advantage of the opportunity
presented  by recent  turmoil  in the  mortgage  securities  markets  to acquire
agency, AAA-rated mortgage-related securities at historically wide interest rate
spreads in  relation to the cost of  wholesale  funding  sources.  The growth in
available-for-sale  securities  associated  with this  transaction was partially
offset by the  continued  reinvestment  of a  significant  portion  of the funds
received from maturing debentures and other mortgage-related security repayments
into the loan portfolio.

     The following  table compares the  composition of the Company's  investment
securities  portfolio by security  type as a percentage  of total assets at June
30, 2008 with that of September 30, 2007.  Amounts reported  exclude  unrealized
gains and losses on the available for sale portfolio.
<TABLE>
<CAPTION>
<S>                                            <C>              <C>                 <C>            <C>

                                                      June 30, 2008                       September 30, 2007
                                                      -------------                       ------------------
                                                                  Percent of                            Percent of
Type of Securities                              Amount           Total Assets            Amount        Total Assets
------------------                              ------           ------------            ------        ------------
                                                                    (Dollars in thousands)
                                                                     --------------------

Fixed rate MBS                                $    49,174            7.79%            $    11,454           2.00%
ARM MBS                                            10,127            1.61                  14,470           2.52
Fixed rate CMO                                     31,950            5.07                  35,280           6.14
Floating rate CMO                                   1,846            0.29                   2,047           0.36
Fixed rate agency debentures                            -               -                   2,000           0.35
                                          -----------------       ------------        -----------        -------

Total                                         $    93,097           14.76%            $    65,251          11.37%
                                              ===========         =======             ===========        =======
</TABLE>

     Assuming no change in interest  rates,  the  estimated  average life of the
investment securities portfolio was 5.27 years and 2.24 years, respectively,  at
June 30, 2008 and  September  30, 2007.  Assuming a  hypothetical  immediate and
permanent  increase in interest rates of 300 basis points, the estimated average
life of the  portfolio  would have extended to 6.23 years and 2.65 years at June
30, 2008 and September 30, 2007, respectively.

     Loans  receivable,  net  increased  by $33.3  million,  or 7.6%,  to $471.2
million at June 30, 2008 from $437.9  million at September 30, 2007.  The growth
was  comprised of net increases in commercial  loans  totaling  $32.5 million or
22.9%. Such loans include multi-family, nonresidential real estate, construction
and business  loans.  The increase in loans  receivable,  net also  included net
increases  in home equity loans and home equity  lines of credit  totaling  $1.8
million and net increases in consumer  loans of $247,000.  Offsetting the growth
in these  categories  was a  $799,000  decrease  in the  balance of one- to four
family  first  mortgages  resulting  from  diminished  loan  origination  volume
stemming from slowing purchase and refinance activity coupled with the Company's
reduced strategic emphasis on the origination of such loans.  Additionally,  the
Company  reported a net  increase  to the  allowance  for loan  losses  totaling
$397,000.

     One- to four-family  mortgage loans are generally  grouped by the Bank into
one of three categories based upon underwriting criteria:  "Prime",  "Alt-A" and
"Sub-prime"  mortgages.  Sub-prime  loans are  generally  defined by the Bank as
loans to borrowers with deficient credit histories and/or higher  debt-to-income
ratios. Loans falling within the Alt-A category, as defined by the Bank, include
loans to borrowers with blemished  credit  credentials that are less severe than
those  characterized  by Sub- prime loans but  otherwise  preclude the loan from
being  considered  Prime.  Alt-A  loans  may  also  be  characterized  by  other

                                       19


<PAGE>

underwriting  or  documentation  exceptions  such as  reduced  or  limited  loan
documentation.  Loans  without the  deficiencies  or  exceptions  characterizing
Sub-prime  and Alt-A loans are  considered  Prime and comprise  the  significant
majority of the one- to four family  mortgages  originated  and  retained by the
Bank.

     The Bank does not currently offer Sub-prime loan programs.  Prior to fiscal
2007, the Bank had offered a limited number of one- to four-family loan programs
through  which it  originated  and retained  Sub-prime  loans to borrowers  with
deficient credit histories or higher debt-to-income ratios. At June 30, 2008 and
September 30, 2007, the remaining balance of these loans was approximately  $1.2
million  and  $1.4   million,   respectively,   comprising   10  and  11  loans,
respectively,  at each date. All such loans were  performing in accordance  with
their terms for the periods reported.

     Through  fiscal 2007,  the Bank offered an Alt-A stated income loan program
by which  it  originated  and  retained  loans to  borrowers  whose  income  was
affirmatively  stated at the time of application,  but not verified by the Bank.
The Bank  discontinued that program in the first quarter of fiscal 2008. At June
30,  2008 and  September  30,  2007,  the  remaining  balance of these loans was
approximately $7.8 million and $8.6 million, respectively,  comprising 28 and 29
loans, respectively, at each date. Two of these loans, with balances of $421,000
and $371,000 were 30 and 60 days past due,  respectively,  at June 30, 2008 with
the latter being paid in full during July, 2008.

     The Bank  continues  to offer a  limited  Alt-A  program  through  which it
originates  and sells all such loans to Fannie Mae under its  Expanded  Approval
program on a non-recourse,  servicing  retained basis. A significant  portion of
the loans  originated under this remaining Alt-A program support the procurement
of mortgage financing for first time home buyers.

     At June 30, 2008 and September 30, 2007, respectively,  the balance of one-
to four-family mortgage loans included $23.9 million and $22.6 million of thirty
year  adjustable rate loans with initial fixed interest rate periods of three to
five years during which time monthly loan payments comprise interest only. After
the initial period,  the monthly  payments on such loans are adjusted to reflect
the collection of both interest and principal over the loan's  remaining term to
maturity.

     The  following two tables  compare the  composition  of the Company's  loan
portfolio  by loan type as a  percentage  of total  assets at June 30, 2008 with
that of September 30, 2007.  Amounts reported exclude  allowance for loan losses
and net deferred origination costs.

                                       20

<PAGE>


     The  table  below  generally  defines  loan  type by loan  maturity  and/or
repricing characteristics:
<TABLE>
<CAPTION>
<S>                                     <C>             <C>                     <C>                <C>

                                                    June 30, 2008                        September 30, 2007
                                                    -------------                        ------------------
                                                                  Percent of                              Percent of
Type of Loans                                    Amount          Total Assets           Amount           Total Assets
-------------                                    ------          ------------           ------           ------------
                                                                   (Dollars in thousands)
                                                                    --------------------

Construction (1)                            $    41,931              6.65%         $    32,592              5.68%
Prime-indexed Land                                2,232              0.35                    -                 -
1/1 and 3/3 ARMs                                  7,289              1.16                7,642              1.33
3/1 and 5/1 ARMs                                131,982             20.92              142,254             24.80
5/5 and 10/10 ARMs                               45,858              7.27               46,017              8.02
7/1 and 10/1 ARMs                                 4,978              0.79                3,500              0.61
15 year fixed or less                           143,473             22.74              129,158             22.52
Greater than 15 year fixed                       64,366             10.21               52,012              9.07
Prime-indexed HELOC                              21,739              3.45               19,756              3.44
Consumer  (2)                                       902              0.14                  655              0.11
Business  (3)                                     8,449              1.34                7,024              1.22
                                            -----------           -------          -----------           -------

Total                                       $   473,199             75.02%         $   440,610             76.80%
                                            ===========           =======          ===========           =======
</TABLE>

(1)  Construction loans are generally floating rate with original  maturities of
     two years or less.
(2)  Consumer  loans are generally  fixed rate with original  maturities of less
     than five years.
(3)  Business  loans  are  generally   fixed  or  floating  rate  with  original
     maturities of five years or less.


         The table below generally defines loan type by collateral or purpose:
<TABLE>
<CAPTION>
<S>                                             <C>               <C>           <C>              <C>

                                                    June 30, 2008                        September 30, 2007
                                                    -------------                        ------------------
                                                                Percent of                              Percent of
Type of Loans                                  Amount          Total Assets           Amount           Total Assets
-------------                                  ------          ------------           ------           ------------
                                                                   (Dollars in thousands)
                                                                    --------------------
Construction (1)                            $    41,931              6.65%         $    32,592              5.68%
1-4 family mortgage                             275,995             43.75              278,183             48.50
Multifamily (5+) mortgage                        33,354              5.29               30,585              5.33
Nonresidential mortgage                          85,577             13.57               68,474             11.94
Land                                              5,252              0.83                3,341              0.58
1-4 family HELOC                                 21,739              3.45               19,756              3.44
Consumer  (2)                                       902              0.14                  655              0.11
Business  (3)                                     8,449              1.34                7,024              1.22
                                            -----------           -------          -----------           -------

Total                                       $   473,199             75.02%         $   440,610             76.80%
                                            ===========           =======          ===========           =======
</TABLE>

(1)  Construction loans generally include loans  collateralized by land and one-
     to  four  family,  multifamily  and  commercial  buildings  in  process  of
     construction.
(2)  Consumer  loans  generally  include  secured  account  loans and  unsecured
     overdraft protection balances.
(3)  Business loans generally  include  secured and unsecured  business lines of
     credit and term notes.

                                       21

<PAGE>


     Total deposits  increased by $22.2  million,  or 5.2%, to $450.8 million at
June 30,  2008 from  $428.6  million  at  September  30,  2007.  This net growth
reflected increases in certificates of deposit and noninterest-bearing  checking
accounts of $36.6 million and $64,000, respectively, offset by reductions in the
balance of  interest-bearing  checking,  including  money market  checking,  and
savings accounts of $13.7 million and $819,000,  respectively. These net changes
reflect,  in  part,  the  disintermediation  of a  portion  of the  non-maturity
deposits generated through the three branches opened during fiscal 2007 on which
interest rates have been reduced from the higher,  promotional levels originally
paid.

     The following  table  compares the  composition  of the  Company's  deposit
portfolio by category as a percentage of total assets at June 30, 2008 with that
of September 30, 2007.
<TABLE>
<CAPTION>
<S>                                      <C>                  <C>               <C>       <C>         <C>

                                                     June 30, 2008                       September 30, 2007
                                                     -------------                       ------------------
                                                                Percent of                              Percent of
Deposit category                                Amount          Total Assets          Amount           Total Assets
----------------                                ------          ------------          ------           ------------
                                                                    (Dollars in thousands)
                                                                     --------------------

Noninterest bearing checking                  $    30,558            4.84%            $    30,494           5.31%
Money market checking                              75,866           12.03                  92,550          16.13
Interest bearing checking                          22,262            3.53                  19,245           3.35
Money market savings                                8,097            1.28                  10,263           1.79
Other savings                                      83,862           13.30                  82,515          14.38
Certificates of deposit                           230,115           36.49                 193,533          33.74
                                              -----------         -------             -----------        -------

Total                                         $   450,760           71.47%            $   428,600          74.70%
                                              ===========         =======             ===========        =======
</TABLE>

     The following  table  compares the  composition  of the  Company's  deposit
portfolio by branch as a  percentage  of total assets at June 30, 2008 with that
of September 30, 2007.

<TABLE>
<CAPTION>
<S>                                      <C>            <C>                     <C>                <C>

                                                     June 30, 2008                       September 30, 2007
                                                     -------------                       ------------------
                                                                 Percent of                             Percent of
Branch                                          Amount          Total Assets            Amount         Total Assets
------                                          ------          ------------            ------         ------------
                                                                      (Dollars in thousands)
                                                                       --------------------
Bloomfield                                  $     229,834           36.45%          $     223,557          38.97%
Cedar Grove                                       113,309           17.96                 111,030          19.35
Verona                                             50,914            8.07                  55,193           9.62
Nutley                                             30,611            4.85                  23,534           4.10
Clifton                                            26,092            4.14                  15,286           2.66
                                            -------------     -----------           -------------      ---------


Total                                       $     450,760           71.47%          $     428,600          74.70%
                                            =============     ===========           =============      =========
</TABLE>

     The  reported  reduction  in the Verona  branch  deposit  balances  largely
reflects the outflow of a portion of the deposits  generated through this branch
during the prior fiscal year on which  interest rates have been reduced from the
higher, promotional levels originally paid.

     Borrowings increased $44.0 million, or 116.9%, to $81.6 million at June 30,
2008 from $37.6  million at September  30, 2007.  The growth in  borrowings  was
primarily  attributable to the additions in FHLB advances and reverse repurchase
agreements  associated with the $50.0 million wholesale growth transaction noted
earlier  partially offset by the net repayment of $6.0 million of maturing fixed
rate FHLB term advances.

                                       22

<PAGE>


     The following  table compares the  composition  of the Company's  borrowing
portfolio by remaining  term to maturity as a percentage of total assets at June
30,  2008 with that of  September  30,  2007.  Scheduled  principal  payments on
amortizing borrowings are reported as maturities.
<TABLE>
<CAPTION>
<S>                                           <C>              <C>               <C>                  <C>

                                                    June 30, 2008                        September 30, 2007
                                                    -------------                        ------------------
                                                                  Percent of                              Percent of
Remaining Term                                   Amount          Total Assets           Amount           Total Assets
--------------                                   ------          ------------           ------           ------------
                                                                   (Dollars in thousands)
                                                                    --------------------
Overnight                                   $         -                 -%         $         -                 -%
One year or less                                 16,564              2.63               12,065              2.10
Greater than one to two years                    16,000              2.54                7,547              1.32
Greater than two to three years                   6,000              0.95                6,000              1.05
Greater than three to four years                  6,000              0.95                6,000              1.05
Greater than four to five years                   2,000              0.32                5,000              0.87
More than five years (1)                         35,000              5.54                1,000              0.17
                                            -----------           -------          -----------           -------
Total                                       $    81,564             12.93%         $    37,612              6.56%
                                            ===========           =======          ===========           =======
</TABLE>

(1)  Borrowing  category  includes two reverse  repurchase  agreements  totaling
     $35.0  million  originally  drawn in March 2008 and  maturing in March 2018
     whose terms  enable the  counterparty,  at their  option,  to require  full
     repayment of the borrowing at par prior to maturity. Early repayment may be
     required  on  one  $25.0  million  borrowing  on  or  after  the  two  year
     anniversary  of its original  funding.  Similarly,  early  repayment may be
     required on the remaining $10.0 million borrowing on or after the four year
     anniversary of its original funding.

     Equity  decreased  $9.7 million,  or 9.6% to $90.9 million at June 30, 2008
from $100.6 million at September 30, 2007.  The reported  decrease in equity was
primarily  attributable to a $10.5 million  increase in Treasury stock resulting
from the Company's share repurchases during the first nine months of fiscal 2008
during which time the Company had repurchased a total of 1,002,070  shares at an
average price of $10.44 per share.

Comparison of Operating Results for the Three Months Ended June 30, 2008 and
June 30, 2007

     General.  The Company  recorded net income of $431,000 for the three months
ended June 30, 2008,  an increase of  $281,000,  or 187.3% from the three months
ended  June 30,  2007 when the  Company  reported  net income of  $150,000.  The
increase  in net income  resulted  from  increases  in net  interest  income and
noninterest  income  partially  offset  by  increases  in  noninterest  expense,
provision for loan losses and provision for income taxes.

     Interest  Income.  Total interest income increased 6.1% or $455,000 to $8.0
million for the three months ended June 30, 2008 from $7.5 million for the three
months  ended June 30, 2007.  For those same  comparative  periods,  the average
yield on  interest-earning  assets decreased 26 basis points to 5.43% from 5.69%
while the average balance of interest-earning  assets increased $59.1 million to
$586.4 million from $527.3 million.

     Interest  income on loans  increased  $385,000 or 6.1%, to $6.7 million for
the three  months  ended June 30, 2008 from $6.3  million  for the three  months
ended June 30, 2007. This increase was due, in part, to a $40.6 million increase
in the average  balance of loans  receivable,  including loans held for sale, to
$466.2  million for the three months ended June 30, 2008 from $425.6 million for
the three months ended June 30, 2007. The impact of the higher  average  balance
was  partially  offset  by a  reduction  in the  average  yield on  loans  which
decreased  18 basis  points  to 5.74%  from  5.92% for  those  same  comparative
periods.  The increase in the average balance on loans  receivable was primarily
attributable to the Company's strategic emphasis on commercial lending while the
reduction  in  average  yield on loans  generally  reflects  the effect of lower
market interest rates on the floating rate portion of the portfolio.

                                       23

<PAGE>

     Interest income on securities  increased  $433,000 or 62.0% to $1.1 million
for the three  months  ended June 30, 2008 from  $699,000  for the three  months
ended June 30, 2007. The increase was due, in part, to a $33.2 million  increase
in the average  balance of  investment  securities,  excluding the available for
sale mark to market adjustment, to $98.1 million for the three months ended June
30, 2008 from $64.8 million for the three months ended June 30, 2007. The impact
on interest  income  attributable  to this  increase was augmented by a 31 basis
point increase in the average yield on securities which grew to 4.62% from 4.31%
for the same comparative  periods. The increase in yield primarily resulted from
the maturity and repayment of lower yielding investment  securities coupled with
higher yields on newly  purchased  securities,  including  those relating to the
$50.0 million wholesale growth transaction completed in March 2008. The increase
in yield also reflects the repricing of adjustable rate securities in accordance
with the  general  movement of market  interest  rates  between the  comparative
periods.

     Interest and dividend income on federal funds sold, other  interest-earning
deposits  and FHLB stock  decreased  $364,000 to $146,000 for three months ended
June 30, 2008 from  $510,000  for the three  months  ended June 30,  2007.  This
reduction in income was due primarily to a decline in the average yield of these
assets  which  decreased  289  basis  points  to 2.64%  from  5.53% for the same
comparative  periods reflecting  reductions in short term market interest rates.
The impact of the decline in yield was exacerbated by a $14.8 million decline in
the average  balance of these assets to $22.1 million for the three months ended
June 30, 2008 from $36.9  million for the three months ended June 30, 2007.  The
average  balances  reported  and  used for  yield  calculations  reflect,  where
appropriate,  the reduction for outstanding checks issued against such accounts.
This has the effect of increasing the reported yield on such assets.

     Interest  Expense.  Total interest expense decreased by $193,000 or 4.3% to
$4.2  million for the three months ended June 30, 2008 from $4.4 million for the
three  months  ended June 30,  2007.  For those same  comparative  periods,  the
average  cost of  interest-bearing  liabilities  decreased  86 basis points from
4.30% to 3.44%,  while  the  average  balance  of  interest-bearing  liabilities
increased  $80.3  million or 19.4% to $493.9  million for the three months ended
June 30, 2008 from $413.7 million for the three months ended June 30, 2007.

     Interest expense on deposits decreased $360,000 or 9.2% to $3.6 million for
the three  months  ended June 30, 2008 from $3.9  million  for the three  months
ended  June 30,  2007.  This  decrease  was due  largely to a  reduction  in the
Company's  overall cost of  interest-bearing  deposits which  decreased 68 basis
points to 3.21% for the three  months  ended  June 30,  2008 from  3.89% for the
three months ended June 30, 2007. The components of this decrease  include a 190
basis point reduction in the average cost of interest-bearing  checking accounts
to 2.68% from 4.58%,  a 62 basis point  reduction in the average cost of savings
accounts to 2.03% from 2.65% and a 50 basis point  reduction in the average cost
of  certificates  of deposit to 4.36% from 4.86%.  This  decrease in the cost of
interest-bearing  deposits was primarily  attributable  to two related  factors.
First,  the  Company  continued  to reduce the  interest  rates paid on deposits
generated through the three full service branches opened during the prior fiscal
year on which  promotional  interest  rates had  originally  been paid. As noted
earlier, at June 30, 2008, most deposits acquired through those de novo branches
no longer  reflect the effects of  promotional  pricing.  Second,  reductions in
market  interest  rates  enabled  the  Company  to  reduce  rates  paid  on many
interest-bearing deposit types across all branches.

     The impact of the  decrease in the cost of  interest-bearing  deposits  was
partially  offset  by the  growth in the  average  balance  of  interest-bearing
deposits  which grew $39.4 million to $411.7  million for the three months ended
June 30, 2008 from $372.3  million for the three months ended June 30, 2007. The
reported net growth in average interest-bearing  deposits comprised $4.6 million
and $44.1 million of growth in the average balance of interest-bearing  checking
accounts and certificates of deposit, respectively. Offsetting this growth was a
net decline in the average  balance of savings  accounts  totaling  $9.3 million
primarily reflecting the disintermediation of such deposits into higher yielding
time  deposits.  The overall growth in the average  balance of  interest-bearing

                                       24

<PAGE>

deposits for the more recent  period was  primarily  attributable  to the Bank's
three de novo branches which opened during fiscal 2007.

     Interest expense on borrowings increased $166,000 to $699,000 for the three
months  ended June 30, 2008 from  $533,000  for the three  months ended June 30,
2007. This increase was attributable,  in part, to growth in the average balance
of  borrowings  which  increased  $40.8  million to $82.2  million for the three
months  ended June 30, 2008 from $41.4  million for the three  months ended June
30, 2007.  The effects of the higher  average  balance of borrowings on interest
expense were partially offset by a decline in their average cost which decreased
174 basis point to 3.40% for the three months ended June 30, 2008 from 5.14% for
the three  months  ended June 30,  2007.  The  changes in the  average  cost and
average  balance of borrowings  between the two  comparative  periods  generally
reflects the addition of $50.0 million of comparatively lower costing borrowings
relating to the wholesale growth transaction noted earlier,  partially offset by
the  repayment  of all other  maturing  FHLB term  advances  not related to that
transaction since the close of the earlier comparative period.

     Net Interest Income. Net interest income increased by $649,000 or 21.2%, to
$3.7  million for the three months ended June 30, 2008 from $3.1 million for the
three months ended June 30, 2007. The Company's net interest rate spread widened
59 basis points to 1.99% from 1.40% for the same comparative periods,  while the
net interest  margin  increased  21 basis  points to 2.53% from 2.32%.  As noted
earlier,  the change in the  Company's  net  interest  margin was  significantly
impacted by the Company's  share  repurchase  plans.  The average balance of the
Company's  treasury stock increased $16.9 million to $39.6 million for the three
months  ended June 30, 2008 from $22.8  million for the three  months ended June
30,  2007.  Based  upon that  growth in the  average  balance  of the  Company's
treasury stock account and its average yield on interest-earning assets reported
for the earlier  comparative period, the Company estimates that the net increase
of  $649,000  in net  interest  income  was  reduced by  approximately  $240,000
attributable  to interest  earned during the earlier  comparative  period on the
interest-earning   assets  that  were   subsequently   utilized  to  fund  share
repurchases.

     Provision  for Loan  Losses.  Using  the loan  loss  allowance  methodology
described under Critical Accounting Policies found later in this discussion, the
provision for loan losses  totaled  $121,000 for the three months ended June 30,
2008,  representing an increase of $44,000 from the $77,000  provision  reported
for the three months ended June 30, 2007. The provision for loan losses for both
comparative   periods   resulted  from  the   application   of  historical   and
environmental  loss factors  against the net growth in loans in accordance  with
the Bank's loan loss methodology.

     In total,  the  allowance  for loan losses as a  percentage  of gross loans
outstanding  increased to 0.63% at June 30, 2008  representing  an increase of 6
basis points from 0.57% at June 30, 2007.  These ratios  reflect  allowance  for
loan loss balances of $3.0 million and $2.4 million, respectively, at each date.
The overall increase in the ratio of allowance to gross loans reported continues
to reflect the changing  composition  of the  portfolio  with greater  strategic
emphasis on loans with  higher risk  factors.  As noted  earlier,  nonperforming
loans decreased to 0.14% of total assets at June 30, 2008 compared with 0.22% at
June 30, 2007. The level of the allowance is based on estimates and the ultimate
losses may vary from those estimates.

     Noninterest  Income.  Noninterest  income increased $73,000 to $481,000 for
the three  months  ended June 30, 2008 from  $408,000 for the three months ended
June 30,  2007.  The  growth in  noninterest  income  was  partly  the result of
comparative  increases  in deposit  service  fees and charges of  $79,000.  Such
increases were attributable, in part, to deposit service fees and charges at the
Bank's de novo  branches  opened  during  fiscal  2007.  However,  the  reported
increase was also due to growth in  deposit-related  fees and charges within the
Bank's other branches.  For those same comparative periods, the Company reported
an $11,000  increase in income from the cash  surrender  value of life insurance
arising  from  improved  yields on those  assets.  The Company  also  reported a
$13,000 increase in other noninterest income attributable primarily to increases
in loan fees and charges including,  but not limited to, increases in prepayment

                                       25

<PAGE>

penalties and late charges.  The increases in noninterest  income were partially
offset by a  decline  of  $30,000  in gain on sale of loans  resulting  from the
absence of loan sales in the current period.

     Noninterest Expense. Noninterest expense increased $214,000 to $3.4 million
for the three  months ended June 30, 2008 from $3.2 million for the three months
ended June 30, 2007.  Significant  components of this growth in operating  costs
include   comparative   increases  in  several  noninterest  expense  categories
including  occupancy and equipment expense of $224,000,  data processing expense
of $16,000,  legal expense of $14,000,  professional  and consulting  expense of
$15,000 and other noninterest expense of $65,000.  Offsetting these increases in
noninterest expense was a reduction in salaries and employee benefits of $80,000
and a reduction in advertising and marketing expenses of $40,000.

     The  costs of the two  additional  branches  opened in the  latter  half of
fiscal  2007 was a  significant  contributor  to the  reported  net  increase in
occupancy  and  equipment  expense  for the three  months  ended June 30,  2008.
However,  the  reported  increase  also  reflects  the ongoing  operating  costs
associated  with the Bank's  relocated  Bloomfield  branch which opened in April
2008. Additionally,  the increase includes the costs associated with outsourcing
a significant  portion of the Company's  information  technology  infrastructure
support  services.  The reported  increase  resulted from the Bank's decision to
consolidate the provision of a variety of information technology  administration
support services under a single outsourced  service provider.  Such services had
previously  been  rendered by a  combination  of other  outsourced  and in-house
resources.  This decision resulted in the elimination of one managerial position
within the Bank's MIS  department  during the fourth quarter of fiscal 2007. The
reported  increase in data processing  charges was also largely  attributable to
the two additional  branches  opened in the latter half of fiscal 2007 including
increases to both core processing and item processing expenses.

     The  reported  increase in legal  expense  was  primarily  attributable  to
recently  completed   revisions  to  benefit  plan  agreements  as  required  by
newly-implemented  Internal  Revenue Service  regulations  while the increase in
professional and consulting  expenses  resulted from additional costs associated
with  disaster  recovery and  physical  security  planning  and review  services
utilized during the more recent comparative quarter.

     Finally, the growth in other noninterest expense includes increases in FDIC
insurance  expense  resulting  from both growth in the  balance of  FDIC-insured
deposits  plus the  expiration of FDIC  insurance  credits which had reduced the
Bank's net cost of FDIC deposit insurance  premiums over several prior quarters.
Increases in noninterest  expense also included increases in corporate insurance
and  regulatory  assessment  expenses  as  well  as  increases  in  general  and
administrative  expenses  attributable to the two additional  branches opened in
the latter half of fiscal 2007.

     The reported  net  decrease in  compensation  expense was  attributable  to
several  offsetting  factors.  First,  employee  wages and  salaries,  including
bonuses and payroll taxes, decreased due largely to accrued compensation expense
reductions  based on current  year bonus  projections.  This net  decrease  also
reflected  the  growth in  compensation  expense  relating  to the  increase  in
staffing  costs  associated  with the two branches  opened in the latter half of
fiscal 2007.  However,  these  increases have been  substantially  offset by the
Company's workforce reduction efforts which have reduced the Company's number of
full time equivalent employees by nearly 10% during fiscal 2008.

     The  reported  net  decrease in  compensation  expense  also  included  net
increases to employee  healthcare benefit expenses  reflecting the growing level
of health care costs per employee.  Additionally,  expenses  associated with the
Bank's  supplemental  executive  retirement  program  increased  due  largely to
updated assumptions used in benefit accrual calculations.

     Offsetting  these  increases were net  reductions in director  compensation
costs due  largely  to the  absence  in the  current  period of the  changes  in
retirement  plan benefit  accrual  assumptions  that had  increased  the related
expenses  during the earlier  comparative  period.  Additionally,  ESOP  expense

                                       26

<PAGE>

decreased due to the  comparatively  lower average price of the Company's shares
during the more recent comparative period while personnel  procurement  expenses
declined due to the absence of such costs during the current period.

     Finally,  the  reported  decrease in  advertising  and  marketing  expenses
primarily  reflected the absence, in the current period, of de novo branch grand
opening expenses that were incurred during the earlier comparative period.

     Provision  for Income  Taxes.  The  provision  for income  taxes  increased
$181,000 for the three months ended June 30, 2008 compared with the three months
ended June 30, 2007. For the more recent period, the Company's  effective income
tax rate was 33.9%  compared with an effective  income tax rate of 21.5% for the
earlier  comparative  period.  The tax expense in the  current and prior  period
reflects the comparative levels of pre-tax income coupled with the level of "tax
favored" income reported by the Company during each period. "Tax favored" income
arises  from  revenue  sources  on which  the  Company  pays  income  taxes at a
comparatively  lower  effective tax rate than it generally pays on other sources
of income.

     Specifically,  the Company's  effective tax rate is influenced by the level
of  interest  income on  investment  securities  held by the  Bank's  investment
subsidiary,  American Savings Investment Corporation ("ASIC").  ASIC is a wholly
owned New Jersey investment subsidiary formed in August 2004 by American Bank of
New Jersey. The purpose of this subsidiary is to invest in stocks,  bonds, notes
and all types of equity, mortgages,  debentures and other investment securities.
Interest  income from this  subsidiary is taxed by the state of New Jersey at an
effective  rate  lower  than the  statutory  corporate  state  income  tax rate.
Additionally,  the  Company  also  recognizes  tax exempt  income  from the cash
surrender value of bank owned life insurance.

     The Company  recognized  income from these two "tax favored" sources during
both comparative  quarters.  However,  the comparatively lower pretax net income
reported for the earlier quarter  resulted in the items discussed above having a
proportionally greater net beneficial impact on the Company's reported effective
tax rate in the earlier comparative period.

Comparison of Operating Results for the Nine Months Ended June 30, 2008 and June
30, 2007

     General.  The Company  recorded  net income of $512,000 for the nine months
ended June 30, 2008, a decrease of $116,000, or 18.5% from the nine months ended
June 30, 2007 when the Company reported net income of $628,000.  The decrease in
net income resulted from increases in noninterest expense and provision for loan
losses  partially  offset by increases in net  interest  income and  noninterest
income and a decrease in the provision for income taxes.

     Interest  Income.  Total interest income  increased $2.0 million or 9.4% to
$23.4 million for the nine months ended June 30, 2008 from $21.4 million for the
nine months ended June 30, 2007. For those same comparative periods, the average
yield on  interest-earning  assets  increased 2 basis points to 5.63% from 5.61%
while the average balance of interest-earning  assets increased $45.6 million to
$554.1 million from $508.4 million.

     Interest  income on loans increased $1.9 million or 10.4%, to $20.1 million
for the nine months  ended June 30, 2008 from $18.2  million for the nine months
ended June 30, 2007. This increase was due, in part, to a $40.2 million increase
in the average  balance of loans  receivable,  including loans held for sale, to
$455.0  million for the nine months ended June 30, 2008 from $414.8  million for
the nine months ended June 30, 2007.  The impact of the higher  average  balance
was  augmented  by an increase in the average  yield on loans which  increased 4
basis  points to 5.89%  from  5.85%  for those  same  comparative  periods.  The
increase in the  average  balance and yield on loans  receivable  was  primarily
attributable to the Company's strategic emphasis on commercial lending.

                                       27

<PAGE>

     Interest  income on securities  increased  $155,000 or 6.7% to $2.5 million
for the nine months  ended June 30,  2008 from $2.3  million for the nine months
ended June 30, 2007. The increase was due, in part, to a 40 basis point increase
in the yield on  investment  securities  which grew to 4.56% for the nine months
ended June 30,  2008 from 4.16% for the nine  months  ended June 30,  2007.  The
increase in yield  primarily  resulted  from the maturity and repayment of lower
yielding  investment  securities  coupled with higher yields on newly  purchased
securities,  including  those  relating to the $50.0  million  wholesale  growth
transaction  completed in March 2008.  The  increase in yield also  reflects the
repricing of adjustable rate securities in accordance with the general  movement
of market interest rates between the comparative periods. The impact on interest
income  attributable to the increase in the yield was partially offset by a $1.9
million decline in the average balance of investment  securities,  excluding the
available  for sale mark to market  adjustment,  to $72.0  million  for the nine
months ended June 30, 2008 from $73.9 million for the nine months ended June 30,
2007.

     Interest and dividend income on federal funds sold, other  interest-earning
deposits and FHLB stock decreased  $45,000 to $818,000 for the nine months ended
June 30,  2008 from  $863,000  for the nine  months  ended June 30,  2007.  This
decrease in income was due  primarily to a decline in the average yield on these
assets  which  decreased  180  basis  points  to 4.04%  from  5.84% for the same
comparative  periods reflecting  reductions in short term market interest rates.
The  impact of the  decline  in yield  was  partially  offset by a $7.3  million
increase in the average  balance of these  assets to $27.0  million for the nine
months ended June 30, 2008 from $19.7 million for the nine months ended June 30,
2007. The average  balances  reported and used for yield  calculations  reflect,
where  appropriate,  the reduction for  outstanding  checks issued  against such
accounts. This has the effect of increasing the reported yield on such assets.

     Interest Expense. Total interest expense increased by $1.3 million or 10.6%
to $13.4  million for the nine months ended June 30, 2008 from $12.1 million for
the nine months ended March 31, 2007. For those same  comparative  periods,  the
average  cost of  interest-bearing  liabilities  decreased  27 basis points from
4.15% to 3.88%,  while  the  average  balance  of  interest-bearing  liabilities
increased  $70.5  million or 18.2% to $458.8  million for the nine months  ended
June 30, 2008 from $388.3 million for the nine months ended June 30, 2007.

     Interest  expense  on  deposits  increased  $1.3  million or 12.9% to $11.7
million for the nine months ended June 30, 2008 from $10.3  million for the nine
months  ended June 30,  2007.  This  increase  was due  largely to growth in the
average balance of interest-bearing  deposits which grew $61.8 million to $403.9
million for the nine months ended June 30, 2008 from $342.1 million for the nine
months ended June 30, 2007. The reported net growth in average  interest-bearing
deposits  comprised  $37.5  million  and $36.2  million of growth in the average
balance of  interest-bearing  checking  accounts  and  certificates  of deposit,
respectively. Offsetting this growth was a net decline in the average balance of
savings   accounts   totaling   $11.9   million    primarily    reflecting   the
disintermediation of such deposits into higher yielding time deposits.

     The overall growth in the average balance of interest-bearing  deposits for
the more recent  period was primarily  attributable  to the Bank's three de novo
branches  which  opened  during  fiscal  2007.  The growth in  deposits at these
branches contributed  significantly to the reported increase in deposit interest
expense.

     The impact on interest  expense  attributable  to the growth in the average
balance of interest-bearing  deposits was partially offset by a reduction in the
cost  of  such   deposits.   Specifically,   the   Company's   overall  cost  of
interest-bearing deposits decreased 17 basis points to 3.85% for the nine months
ended June 30,  2008 from 4.02% for the nine  months  ended June 30,  2007.  The
components  of this decrease  include a 72 basis point  reduction in the average
cost of interest-bearing checking accounts to 3.58% from 4.30%, a 35 basis point
reduction in the average  cost of savings  accounts to 2.32% from 2.67% and an 8
basis  point  reduction  in the cost of  certificates  of  deposit to 4.64% from
4.72%.  As noted in the prior section  discussing  the  comparative  three month

                                       28

<PAGE>

periods,  the decrease in the cost of  interest-bearing  deposits was  primarily
attributable to two related factors. First, the Company has reduced the interest
rates paid on deposits  generated through the three full service branches opened
during the prior fiscal year on which promotional  interest rates had originally
been paid. As noted earlier,  at June 30, 2008, most deposits  acquired  through
those de novo  branches no longer  reflect the effects of  promotional  pricing.
Second,  reductions in market interest rates enabled the Company to reduce rates
paid on many interest-bearing deposit types across all branches.

     Interest  expense on borrowings  decreased  $53,000 to $1.7 million for the
nine months ended June 30, 2008 from $1.8 million for the nine months ended June
30, 2007.  This decrease was due, in part,  to a 95 basis point  decrease in the
cost of  borrowings  to 4.16% for the nine months ended June 30, 2008 from 5.11%
for the nine  months  ended  June 30,  2007.  The  impact  on  interest  expense
attributable to this decrease in cost was partially offset by an increase in the
average balance of borrowings  which increased $8.8 million to $54.9 million for
the nine months ended June 30, 2008 from $46.1 million for the nine months ended
June 30, 2007. The changes in the average cost and average balance of borrowings
between the two  comparative  periods  generally  reflects the addition of $50.0
million of  comparatively  lower  costing  borrowings  relating to the wholesale
growth transaction noted earlier, partially offset by the repayment of all other
maturing FHLB term advances not related to that  transaction  since the close of
the earlier comparative period.

     Net Interest Income.  Net interest income increased by $731,000 or 7.9%, to
$10.0  million for the nine months ended June 30, 2008 from $9.3 million for the
nine  months  ended June 30,  2007.  For those  same  comparative  periods,  the
Company's net interest  rate spread  widened 28 basis points to 1.74% from 1.46%
while the net interest  margin  decreased 3 basis points to 2.41% from 2.44%. As
noted earlier, the change in the Company's net interest margin was significantly
impacted by the Company's  share  repurchase  plans.  The average balance of the
Company's  treasury stock  increased $19.0 million to $36.0 million for the nine
months ended June 30, 2008 from $17.0 million for the nine months ended June 30,
2007.  Based upon that growth in the average  balance of the Company's  treasury
stock account and its average yield on interest-earning  assets reported for the
earlier  comparative  period,  the Company  estimates  that the net  increase of
$731,000  in  net  interest  income  was  reduced  by   approximately   $799,000
attributable  to interest  earned during the earlier  comparative  period on the
interest-earning   assets  that  were   subsequently   utilized  to  fund  share
repurchases.

     Provision  for Loan  Losses.  Using  the loan  loss  allowance  methodology
described under Critical Accounting Policies found later in this discussion, the
provision  for loan losses  totaled  $431,000 for the nine months ended June 30,
2008,  representing  an increase of $111,000 from the nine months ended June 30,
2007.  The expense in the current  nine month  period  reflected a provision  of
$34,000  attributable to one impaired  construction  loan, that portion of which
was deemed uncollectible by management during its asset quality review conducted
at March 31, 2008 and  therefore  charged off. By  contrast,  the expense in the
earlier comparative period reflected a reversal of an $86,000 impairment reserve
that was no longer required. Excluding these adjustments, the provision for loan
losses for both comparative  periods resulted from the application of historical
and  environmental  loss factors  against the net growth in loans in  accordance
with the Bank's loan loss methodology.

     In total,  the  allowance  for loan losses as a  percentage  of gross loans
outstanding  increased to 0.63% at June 30, 2008  representing  an increase of 6
basis points from 0.57% at June 30, 2007.  These ratios  reflect  allowance  for
loan loss balances of $3.0 million and $2.4 million,  respectively.  The overall
increase in the ratio of allowance to gross loans reported  continues to reflect
the changing  composition  of the portfolio with greater  strategic  emphasis on
loans with higher risk factors. As noted earlier,  nonperforming loans decreased
to 0.14% of total assets at June 30, 2008  compared with 0.22% at June 30, 2007.
The level of the  allowance  is based on estimates  and the ultimate  losses may
vary from those estimates.

                                       29


<PAGE>

     Noninterest  Income.  Noninterest income increased $263,000 to $1.3 million
for the nine months  ended June 30,  2008 from $1.1  million for the nine months
ended June 30, 2007. The growth in  noninterest  income was partly the result of
comparative  increases in deposit  service  fees and charges of  $186,000.  Such
increases were attributable, in part, to deposit service fees and charges at the
Bank's de novo  branches  opened  during  fiscal  2007.  However,  the  reported
increase was also due to growth in  deposit-related  fees and charges within the
Bank's other  branches.  The Company also reported a $68,000  increase in income
from the cash surrender value of life insurance attributable to a combination of
higher average  balances and improved  yields on those assets.  The Company also
reported a $37,000 increase in other noninterest income  attributable  primarily
to increases in loan fees and charges  including,  but not limited to, increases
in prepayment  penalties and late charges.  The increases in noninterest  income
were partially offset by a decline of $33,000 in gain on sale of loans resulting
from fewer loans sold during the more recent comparative period

     Noninterest  Expense.  Noninterest  expense increased $1.1 million to $10.3
million for the nine months  ended June 30, 2008 from $9.1  million for the nine
months ended June 30, 2007.  Significant  components of this growth in operating
costs include  comparative  increases in several  noninterest expense categories
including  salaries and employee  benefits  expense of $384,000,  occupancy  and
equipment expense of $670,000, data processing expense of $41,000, legal expense
of $50,000 and other noninterest expense of $64,000.  Offsetting these increases
in noninterest  expense was a reduction in advertising and marketing expenses of
$73,000.

     The net  increase in salaries and  employee  benefits  for the  comparative
periods was significantly impacted by of the death of a director emeritus of the
Company,  during  the  quarter  ended  March  31,  2008.  Under the terms of the
Company's  restricted stock and stock option plans, the vesting of the remaining
unearned  benefits  accruing  to the former  director  through  these  plans was
automatically accelerated.  As such, the Company incurred an acceleration of the
remaining pre-tax expenses associated with these benefits totaling approximately
$254,000  during the quarter  ended March 31, 2008  resulting  in an increase in
such  expenses of  approximately  $210,000  between the  comparative  nine month
periods.

     The remaining increase in compensation  expense was attributable to several
other offsetting factors. First, a portion of the growth in compensation expense
relates to the  increase  in staffing  costs  associated  with the two  branches
opened in the latter half of fiscal 2007.  However,  these  increases  have been
partially offset by the Company's workforce reduction efforts which have reduced
the  Company's  number of full time  equivalent  employees  by nearly 10% during
fiscal 2008.  Increased branch staffing costs have also been partially offset by
accrued compensation expense reductions based on current year bonus projections.

     The reported  increase in compensation  expense also included net increases
to employee  healthcare benefit expenses  reflecting the growing level of health
care  costs per  employee.  Additionally,  expenses  associated  with the Bank's
supplemental  executive  retirement  program  increased  due  largely to updated
assumptions used in benefit accrual calculations.

     Offsetting  these  increases were net  reductions in director  compensation
costs due  largely  to the  absence  in the  current  period of the  changes  in
retirement  plan benefit  accrual  assumptions  that had  increased  the related
expenses  during the earlier  comparative  period.  Additionally,  ESOP  expense
decreased due to the  comparatively  lower average price of the Company's shares
during the more recent comparative period while personnel  procurement  expenses
declined due to the absence of such costs during the current period.

     The  costs of the two  additional  branches  opened in the  latter  half of
fiscal  2007 was a  significant  contributor  to the  reported  net  increase in
occupancy  and  equipment  expense  for the nine  months  ended  June 30,  2008.
However,  the  reported  increase  also  reflects  the ongoing  operating  costs
associated  with the Bank's  relocated  Bloomfield  branch which opened in April
2008. Additionally,  the increase includes the costs associated with outsourcing

                                       30

<PAGE>

a significant  portion of the Company's  information  technology  infrastructure
support  services.  The reported  increase  resulted from the Bank's decision to
consolidate the provision of a variety of information technology  administration
support services under a single outsourced  service provider.  Such services had
previously  been  rendered by a  combination  of other  outsourced  and in-house
resources.  This decision resulted in the elimination of one managerial position
within the Bank's MIS department during the fourth quarter of fiscal 2007.

     The  reported   increase  in  data  processing   charges  was  also  partly
attributable  to the associated  costs of the two additional  branches opened in
the latter half of fiscal 2007 including  increases to both core  processing and
item  processing  expenses.  However,  the  increase  also  included  "one time"
expenses  associated with converting the Bank's official check  processing to an
in-house  system  during the  quarter  and  implementing  additional  commercial
deposit services on its core processing system.

     The reported  increase in legal expense was attributable to several matters
including,  but not limited to, services associated with expanded SEC disclosure
requirements  regarding the Company's  annual meeting proxy  material,  recently
completed revisions to benefit plan agreements as required by  newly-implemented
Internal  Revenue Service  regulations and various other human  resource-related
matters.

     The  growth  in  other  noninterest  expense  includes  increases  in  FDIC
insurance  expense  resulting  from both growth in the  balance of  FDIC-insured
deposits  plus the  expiration of FDIC  insurance  credits which had reduced the
Bank's net cost of FDIC deposit insurance  premiums over several prior quarters.
Increases in noninterest  expense also included increases in corporate insurance
and  regulatory  assessment  expenses  as  well  as  increases  in  general  and
administrative  expenses  attributable to the two additional  branches opened in
the latter half of fiscal 2007.

     Finally,  the comparative  decrease in advertising  and marketing  expenses
primarily  reflected the absence of de novo branch grand opening expenses during
the more recent period that were incurred during the earlier comparative period.

     Provision  for Income  Taxes.  The  provision  for income  taxes  decreased
$263,000 for the nine months ended June 30, 2008  compared  with the nine months
ended June 30, 2007. For the more recent period, the Company's  effective income
tax rate was 20.1%  compared with an effective  income tax rate of 30.5% for the
earlier  comparative  period.  The tax expense in the current and prior  period,
respectively, reflects the comparative levels of pre-tax income coupled with the
level of "tax favored" income  reported by the Company during each period.  "Tax
favored"  income  arises from  revenue  sources on which the Company pays income
taxes at a  comparatively  lower  effective  tax rate than it generally  pays on
other sources of income.

     Specifically,  the Company's  effective tax rate is influenced by the level
of  interest  income on  investment  securities  held by the  Bank's  investment
subsidiary,  American Savings Investment Corporation ("ASIC").  ASIC is a wholly
owned New Jersey investment subsidiary formed in August 2004 by American Bank of
New Jersey. The purpose of this subsidiary is to invest in stocks,  bonds, notes
and all types of equity, mortgages,  debentures and other investment securities.
Interest  income from this  subsidiary is taxed by the state of New Jersey at an
effective  rate  lower  than the  statutory  corporate  state  income  tax rate.
Additionally,  the  Company  also  recognizes  tax exempt  income  from the cash
surrender value of bank owned life insurance.

     The Company  recognized  income from these two "tax favored" sources during
both comparative  periods.  However,  the comparatively  lower pretax net income
reported for the current nine month period resulted in the items discussed above
having a proportionally  greater net beneficial impact on the Company's reported
effective tax rate in the current period.

                                       31


<PAGE>

Critical Accounting Policies

     Various  elements  of  our  accounting  policies,   by  their  nature,  are
inherently  subject to estimation  techniques,  valuation  assumptions and other
subjective  assessments.   The  following  is  a  description  of  our  critical
accounting  policy and an explanation of the methods and assumptions  underlying
its application.

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

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

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

     Application of the Bank's loan loss methodology  outlined above results, in
part,  in  historical  and  environmental  loss  factors  being  applied  to the
outstanding  balance of homogeneous  groups of loans to estimate probable credit
losses.  Both historical and environmental loss factors are reviewed and updated
quarterly,  where  appropriate,  as  part  of  management's  assessment  of  the
allowance for loan losses.  A limited  number of loss factors used in the Bank's
loss provision  calculations  were updated during the nine months ended June 30,
2008 to reflect changes general market and economic conditions,  their effect on
the value of real  estate  collateralizing  the Bank's  loans and the  resulting
tightening of the Bank's loan underwriting standards.

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

                                       32

<PAGE>


Liquidity and Commitments

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

     The Bank's short term liquidity,  represented by cash and cash equivalents,
is a product of its operating,  investing and financing  activities.  The Bank's
primary sources of funds are deposits, amortization,  prepayments and maturities
of outstanding loans and  mortgage-backed  securities,  maturities of investment
securities and other short-term  investments and funds provided from operations.
While  scheduled  payments from the  amortization  of loans and  mortgage-backed
securities and maturing  investment  securities and short-term  investments  are
relatively  predictable sources of funds, deposit flows and loan prepayments are
greatly influenced by the level of market interest rates,  economic  conditions,
and  competition.  In  addition,  the Bank invests  excess  funds in  short-term
interest-earning  assets, which provide liquidity to meet lending  requirements.
The Bank also generates cash through borrowings.  The Bank utilizes Federal Home
Loan Bank  advances and reverse  repurchase  agreements  to leverage its capital
base by providing funds for its lending and investing activities, to enhance its
earnings and to assist in the management of interest rate risk.

     Liquidity  management  is both a daily and  long-term  function of business
management.  Excess  liquidity is generally  invested in short-term  investments
such as overnight  deposits or U.S. Agency  securities.  On a longer-term basis,
the Bank  maintains a strategy of  investing  in various  loan  products  and in
securities collateralized by loans. The Bank uses its sources of funds primarily
to meet its ongoing  commitments,  to pay maturing  certificates  of deposit and
savings  withdrawals,  to fund loan commitments and to maintain its portfolio of
mortgage-backed  securities  and  investment  securities.  At June 30, 2008, the
total  approved  loan  origination  commitments  outstanding  amounted  to $25.0
million.  At the same  date,  unused  lines of credit  were  $29.8  million  and
undisbursed loans in process were $23.0 million.

     Certificates of deposit scheduled to mature in one year or less at June 30,
2008,  totaled  $204.0  million.  Notwithstanding  promotional  deposit  pricing
strategies relating to the Bank's de novo branches,  management's general policy
is to maintain  deposit  rates at levels that are  competitive  with other local
financial  institutions.  Based  on the  competitive  rates  and  on  historical
experience,   management   believes  that  a  significant  portion  of  maturing
certificates  of deposit  will remain with the Bank.  Additionally,  at June 30,
2008 the Bank had $16.6  million of  borrowings  maturing in less than one year,
all of which were advances from the FHLB.  Repayment of FHLB advances  increases
the Bank's  unused  borrowing  capacity  from that source which  totaled  $111.0
million at June 30,  2008.  In  calculating  our  borrowing  capacity,  the Bank
utilizes  the FHLB's  guideline,  which  generally  limits  advances  secured by
residential mortgage collateral to 25% of the Bank's total assets.

                                       33

<PAGE>


     The following  tables disclose our  contractual  obligations and commercial
commitments  as of June 30, 2008.  Scheduled  principal  payments on  amortizing
borrowings are reported as maturities.
<TABLE>
<CAPTION>
<S>                                     <C>          <C>            <C>          <C>              <C>

                                                          Less Than                                      After
                                           Total           1 Year        1-3 Years      4-5 Years       5 Years
                                           -----           ------        ---------      ---------       -------
                                                                    (In thousands)

     Time Deposits                      $   230,115    $  203,980      $    12,643    $     3,852    $     9,640
     Borrowings(1)                           81,564        16,564           22,000          8,000         35,000
                                        -----------      --------      -----------    -----------    -----------

         Total                          $   311,679    $  220,544      $    34,643    $    11,852    $    44,640
                                        ===========    ==========      ===========    ===========    ===========



(1)  At June 30, 2008,  borrowings  include FHLB  advances of $46.6  million and
     reverse repurchase  agreements of $35.0 million.  The total  collateralized
     borrowing  limit at the FHLB was $157.6  million at June 30,  2008 of which
     the $46.6 million of advances were outstanding.



                                               Total
                                              Amounts       Less Than                                  Over
                                             Committed       1 Year        1-3 Years    4-5 Years     5 Years
                                             ---------       ------        ---------    ---------     -------
                                                                        (In thousands)

     Lines of credit(1)                    $    29,821     $     1,848    $   1,908    $     783    $   25,282
     Land lease - Bloomfield                     2,307             120          277          290         1,620
     Building lease - Nutley                     1,431              84          184          188           975
     Loans in  process(1)                       23,003          16,394        6,609            -             -
     Other commitments to
       extend credit(1)                         25,033          25,033            -            -             -
                                           -----------     -----------    ---------    ---------    ----------

         Total                             $    81,595     $    43,479    $   8,978    $   1,261    $   27,977
                                           ===========     ===========    =========    =========    ==========
</TABLE>

(1)  Represents amounts committed to customers.

     In addition to the commitment included in the table above, the Bank has one
outstanding  standby letter of credit totaling  $247,320.  The standby letter of
credit,  which  represents a contingent  liability to the Bank,  expires in June
2009.

Regulatory Capital

     Consistent  with its  goals to  operate a sound  and  profitable  financial
organization,  American  Bank of New  Jersey  actively  seeks  to  maintain  its
classification as a "well capitalized" institution in accordance with regulatory
standards. The Bank's total equity was $78.9 million at June 30, 2008, or 12.51%
of total assets on that date. As of June 30, 2008, the Bank exceeded all capital
requirements of the Office of Thrift Supervision.  The Bank's regulatory capital
ratios at June 30, 2008 were as follows: Core capital, 12.60%; Tier I risk-based
capital,  19.97%; and total risk-based  capital,  20.72%. The regulatory capital
requirements  to be  considered  well  capitalized  are  5.0%,  6.0% and  10.0%,
respectively.

                                       34

<PAGE>


Impact of Inflation

     The consolidated  financial  statements presented herein have been prepared
in accordance with accounting principles generally accepted in the United States
of America.  These principles  require the measurement of financial position and
operating results in terms of historical dollars, without considering changes in
the relative purchasing power of money over time due to inflation.

     Our primary  assets and  liabilities  are monetary in nature.  As a result,
interest  rates  have a more  significant  impact  on our  performance  than the
effects  of  general  levels  of  inflation.  Interest  rates,  however,  do not
necessarily  move in the same  direction or with the same magnitude as the price
of goods and services,  since such prices are affected by inflation. In a period
of rapidly rising  interest rates,  the liquidity and maturity  structure of our
assets and liabilities are critical to the maintenance of acceptable performance
levels.

     The  principal  effect of  inflation,  as distinct  from levels of interest
rates, on earnings is in the area of noninterest expense.  Such expense items as
employee  compensation,  employee benefits and occupancy and equipment costs may
be  subject to  increases  as a result of  inflation.  An  additional  effect of
inflation  is the  possible  increase  in the  dollar  value  of the  collateral
securing loans that we have made. We are unable to determine the extent, if any,
to which  properties  securing our loans have appreciated in dollar value due to
inflation.

Recent Accounting Pronouncements

     See Note 4 - Recent Accounting Pronouncements within the Notes to Unaudited
Financial Statements included in this report.

                                       35


<PAGE>

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Qualitative Analysis.  Because the income on the majority of our assets and
the cost of the majority of our liabilities are sensitive to changes in interest
rates, a significant  form of market risk for us is interest rate risk.  Changes
in interest  rates may have a  significant,  adverse  impact on our net interest
income.

     Our ability to make a profit  largely  depends on our net interest  income,
which could be negatively  affected by changes in interest  rates.  Net interest
income is the difference between:

     o    The  interest  income we earn on our  interest-earning  assets such as
          loans and securities; and

     o    The interest expense we pay on our  interest-bearing  liabilities such
          as deposits and amounts we borrow.

     The rates we earn on our assets and the rates we pay on our liabilities are
generally  fixed  for a  contractual  period  of time.  We,  like  many  savings
institutions,   have  liabilities   that  generally  have  shorter   contractual
maturities  than our assets.  This  imbalance  can create  significant  earnings
volatility,  because  market  interest  rates  change over time.  In a period of
rising interest rates, the interest income earned on our assets may not increase
as rapidly as the  interest  paid on our  liabilities.  In a period of declining
interest  rates the  interest  income  earned on our  assets may  decrease  more
rapidly,  due  to  accelerated  prepayments,  than  the  interest  paid  on  our
liabilities.

     The prepayment characteristics of our loans and mortgage-backed and related
securities are greatly  influenced by movements in market  interest  rates.  For
example, a reduction in interest rates results in increased prepayments of loans
and mortgage-backed and related securities, as borrowers refinance their debt in
order to reduce their borrowing cost. This causes  reinvestment risk, because we
are  generally  not able to  reinvest  prepayment  proceeds  at  rates  that are
comparable to the rates we previously earned on the prepaid loans or securities.
By contrast,  increases in interest  rates reduce the incentive for borrowers to
refinance  their debt. In such cases,  prepayments on loans and  mortgage-backed
and related  securities may decrease thereby extending the average lives of such
assets and reducing the cash flows that are  available to be  reinvested  by the
Company at higher interest rates.

     Tables   presenting  the   composition  and  allocation  of  the  Company's
interest-earning  assets and interest-bearing  liabilities from an interest rate
risk  perspective  are set forth in the preceding  section of this report titled
"Comparison  of Financial  Condition at June 30, 2008 and  September  30, 2007."
These tables present the Company's investment  securities,  loans, deposits, and
borrowings by categories that reflect certain  characteristics of the underlying
assets or liabilities  that impact the Company's  interest rate risk. Shown as a
percentage  of total  assets,  the  comparative  data  presents  changes  in the
composition and allocation of those interest-earning assets and interest-bearing
liabilities that have influenced the level of interest rate risk embedded within
the Company's balance sheet.

     Our net  interest  margin  may be  adversely  affected  throughout  several
possible  interest  rate  environments.  For example,  during  fiscal 2007,  the
continued  inversion of the yield curve,  by which shorter term market  interest
rates  exceed  those of longer term rates,  triggered  further  increases in the
Bank's cost of interest-bearing  liabilities that outpaced our increase in yield
on earning assets  causing  further net interest rate spread  compression.  Such
compression  resulted in a 0.36%  reduction in our net  interest  rate spread to
1.44% for fiscal 2007 from 1.80% for the fiscal year ended September 30, 2006.

     As noted in the  Executive  Summary  discussion  earlier,  that  trend  was
reversed  during  fiscal  2008  when the  Company's  net  interest  rate  spread
increased 30 basis points to 1.74% in comparison to 1.44% for fiscal 2007 as the
Company  substantially  maintained its yield on earning assets while  decreasing
its cost of interest-bearing liabilities. In large part, the improvements in net

                                       36


<PAGE>

interest  rate spread for the nine months ended June 30, 2008  resulted from the
Company's  ability to support its yield on loans through its commercial  lending
strategies  while it decreased  its cost of retail  deposits.  The  reduction in
retail deposit interest costs reflects the overall  reduction in market interest
rates coupled with the downward  adjustment  of interest  rates paid on deposits
acquired  through the de novo  branches  opened  during fiscal 2007 on which the
Company originally paid higher, promotional interest rates.

     Notwithstanding  the reported  improvement  in the net interest rate spread
reported for the first nine months of fiscal 2008,  our earnings may be impacted
by an  "earnings  squeeze" in the future  resulting  from  further  movements in
market interest rates. For example, we are vulnerable to an increase in interest
rates because the majority of our loan portfolio consists of longer-term,  fixed
rate loans and adjustable  rate  mortgages,  most of which are fixed rate for an
initial  period of time. At June 30, 2008,  excluding  allowance for loan losses
and net deferred  origination  costs and  including  loans held for sale,  loans
totaled $473.2 million  comprising  75.02% of total assets.  As presented in the
loan-related  tables in the preceding section of this report titled  "Comparison
of Financial  Condition at June 30, 2008 and September 30, 2007", loans reported
as fixed rate  mortgages  totaled  $207.8 million or 32.9% of total assets while
adjustable  rate  mortgages  ("ARMs")  totaled  $190.1 million or 30.1% of total
assets.  In a rising  rate  environment,  our cost of funds  may  increase  more
rapidly than the interest earned on our loan portfolio and investment securities
portfolio  because our primary  source of funds is deposits  with  substantially
greater repricing sensitivity than that of our loans and investment  securities.
Having   interest-bearing   liabilities   that  reprice  more   frequently  than
interest-earning  assets is detrimental  during periods of rising interest rates
and could cause our net interest  rate spread to shrink  because the increase in
the rates we would earn on our securities and loan portfolios would be less than
the increase in the rates we would pay on deposits and borrowings.

     Notwithstanding  the risks  presented  by the flat to inverted  yield curve
that was  prevalent  during fiscal 2007, or those  resulting  from  increases to
short term interest  rates,  a  significant  decrease in market  interest  rates
could, by contrast,  trigger a new wave of loan refinancing that could result in
the  margin  compression  experienced  in prior  years  when rates fell to their
historical lows.

     The Bank also faces the risk of continued disintermediation of our deposits
into  higher  cost  accounts  as well as the risk of some  amount of  additional
deposit  outflows.  Specifically,  we were  successful  in growing  non-maturity
deposits during fiscal 2007 due, in part, to higher  promotional  interest rates
paid at the Bank's three newest  branches.  Our ability to retain these deposits
as rates on such  accounts  were  incrementally  adjusted  to  "non-promotional"
levels was rigorously  tested during the current year. As evidenced  through the
first nine months of fiscal 2008, a portion of recently acquired deposits may be
subject to further disintermediation into higher yielding deposit accounts, such
as certificates of deposit,  while the most "price  sensitive" of those deposits
may be withdrawn.  Moreover,  recent  volatility  in the financial  institutions
marketplace  may result in upward  pressure  on retail  deposit  pricing  and/or
additional deposit outflows as certain institutions seek to attract liquidity at
comparatively  higher  interest  rates. A portion of the Bank's balance of short
term liquid assets is  attributable  to managing the  contingency of that latter
risk.

                                       37


<PAGE>


     Quantitative  Aspects of Market Risk. The following table presents American
Bank of New Jersey's net portfolio  value as of March 31, 2007 - the latest date
for which  information is available.  The net portfolio  value was calculated by
the Office of Thrift Supervision, based on information provided by the Bank.
<TABLE>
<CAPTION>
<S> <C>          <C>            <C>      <C>                 <C>        <C>                <C>       <C>

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

    +300 bp         70,325        -21,251        -23%         11.45%          -272bp         5.00%        -450bp
    +200 bp         79,039        -12,537        -14%         12.63%          -155bp         6.00%        -300bp
    +100 bp         86,690         -4,886         -5%         13.61%           -57bp         7.00%        -150bp
       0 bp         91,576                                    14.17%                         8.00%
    -100 bp         92,994          1,418         +2%         14.25%            +8bp         7.00%        -150bp
</TABLE>


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

     Strategies  for the  Management of Interest Rate Risk and Market Risk.  The
Board of Directors has established an Asset/Liability Management Committee which
is responsible  for monitoring  interest rate risk. The committee  comprises the
Bank's  Chief  Executive  Officer,  the  Bank's  President  and Chief  Operating
Officer,  the Bank's Senior Vice  President  and Chief  Financial  Officer,  the
Bank's Senior Vice President and Chief Lending  Officer,  the Bank's Senior Vice
President  Commercial Real Estate,  the Bank's VP Branch  Administration and the
Bank's Vice President and  Controller.  Management  conducts  regular,  informal
meetings,  generally on a weekly basis, to address the day-to-day  management of
the assets and  liabilities  of the Bank,  including  review of the Bank's short
term liquidity  position;  loan and deposit  pricing and production  volumes and
alternative funding sources;  current investments;  average lives, durations and
repricing frequencies of loans and securities;  and a variety of other asset and
liability management topics. The committee generally meets quarterly to formally
review  such  matters.  The  results  of the  committee's  quarterly  review are
reported to the full Board,  which makes adjustments to the Bank's interest rate
risk policy and strategies, as it considers necessary and appropriate.

     The qualitative  and  quantitative  interest rate analysis  presented above
indicate that various foreseeable movements in market interest rates may have an
adverse  effect  on our  net  interest  margin  and  earnings.  The  growth  and
diversification  strategies  outlined in the Company's current business plan are

                                       38

<PAGE>

designed not only to enhance earnings, but also to better support the resiliency
of those earnings  throughout  various movements in interest rates.  Toward that
end,  implementation  of the  Company's  business  plan over time is expected to
result  in  a  better   matching  of  the  repricing   characteristics   of  its
interest-earning assets and interest-bearing liabilities. Specific business plan
strategies to achieve this objective include:

     (1) Open up to three de novo  branches  over the next  five  years  with an
emphasis on growth in non-maturity deposits;

     (2)  Attract  and  retain  lower  cost  business  transaction  accounts  by
expanding  and  enhancing   business  deposit  services  including  online  cash
management and remote deposit capture services;

     (3) Attract and retain lower cost  personal  checking and savings  accounts
through expanded and enhanced cross selling efforts;

     (4) Originate and retain  commercial loans with terms that increase overall
loan  portfolio  repricing  frequency  and cash flows while  reducing  call risk
through prepayment compensation provisions;

     (5) Originate and retain one- to four family home equity loans and variable
rate lines of credit to increase  loan  portfolio  repricing  frequency and cash
flows;

     (6)  Originate  both fixed and  adjustable  rate one- to four family  first
mortgage loans eligible for sale in the secondary market and, if warranted, sell
such loans on either a  servicing  retained or  servicing  released  basis.  The
strategy reduces the balance of longer duration and/or non-prepayment  protected
loans while enhancing non interest income.

     At June 30, 2008, the Bank did not have any  outstanding  contracts to sell
mortgage  loans into the  secondary  market.  In  general,  the Bank  intends to
continue  retaining most one- to four family  mortgage loan  originations  for a
period of time to augment the growth in commercial  loans through which the Bank
will reinvest a portion of the balances of cash and cash equivalents accumulated
during fiscal 2007. As discussed in the preceding section titled  "Comparison of
Financial  Condition at June 30, 2008 and  September  30,  2007",  such balances
resulted from significant growth in deposits acquired through the Bank's de novo
branches  opened  during the prior  fiscal year.  The Bank  continues to offer a
limited  Alt-A program  through which it originates  and sells all such loans to
Fannie Mae under its  Expanded  Approval  program on a  non-recourse,  servicing
retained basis.  The Bank will carefully  monitor the earnings,  liquidity,  and
balance  sheet   allocation   impact  of  these   strategies  and  make  interim
adjustments, as necessary, to support achievement of the Company's business plan
goals and objectives.

     In addition to the strategies  noted above, we may utilize other strategies
aimed  at  improving  the  matching  of  interest-earning  asset  maturities  to
interest-bearing liability maturities. Such strategies may include:

     (1)  Purchase  short  to  intermediate   term  securities  and  maintain  a
securities  portfolio  that  provides  a stable  cash  flow,  thereby  providing
investable funds in varying interest rate cycles;

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

     The Bank will also selectively  consider certain  strategies to enhance net
interest  income as  opportunities  arise to do so in a manner that supports the
goals  and  objectives  of the  Company's  business  plan.  Notwithstanding  the
discussion  above,  the  implementation  of these  strategies  may  result in an
acceptable and manageable increase to the level of interest rate risk within the
balance  sheet.  Such an  opportunity  arose during the second quarter of fiscal

                                       39

<PAGE>

2008 when the Company completed a wholesale growth transaction through which the
Company purchased  approximately  $50.0 million of  mortgage-related  investment
securities  funded  by  an  equivalent   amount  of  borrowings.   Through  this
transaction,  the Company took advantage of the opportunity  presented by recent
turmoil  in  the  mortgage  securities  markets  to  acquire  agency,  AAA-rated
mortgage-related  securities  at  historically  wide  interest  rate  spreads in
relation to the cost of wholesale funding sources.

     The ongoing net interest income resulting from this transaction is intended
to augment the  Company's  earnings as it continues to incur the near term costs
associated with executing its business plan. However, the characteristics of the
specific  investment  securities and borrowings  underlying the transaction have
added a measurable and manageable  degree of interest rate risk to the Company's
balance  sheet.  This  additional  risk  primarily  arises  from  the  potential
"mismatch"  between the repricing of investment  security cash flows and that of
the related borrowings.  For example,  mortgage-related  security cash flows are
largely   determined  by  market   interest  rates  and  their  effect  on  loan
prepayments.  Similarly,  market  interest  rates  will  largely  determine  the
likelihood that certain  borrowings  underlying the transaction may require full
repayment at par prior to maturity - an option granted to the reverse repurchase
agreement   counterparty  in  a  portion  of  the  borrowings  utilized  in  the
transaction.

     The  Company  carefully  evaluated  the  impact of the  transaction  on the
Company's  overall  interest  rate risk  profile  from both an earnings  and net
portfolio value perspective. Through this evaluation, the Company confirmed that
movements in market interest rates may significantly  impact the relative market
value of the financial instruments underlying this transaction and the amount of
additional net interest income earned by the Company resulting from it. However,
the Company  concluded that the  additional  interest rate risk, as measured and
evaluated, was both manageable and appropriate given the additional net interest
income  that is  expected  to be earned by the  Company  throughout  the various
market interest rate scenarios modeled.

                                       40

<PAGE>


ITEM 4.    CONTROLS AND PROCEDURES

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

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

                                       41

<PAGE>


PART II - - OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

     At June 30, 2008, the Company and its subsidiaries were not involved in any
pending  proceedings other than the legal proceedings  occurring in the ordinary
course of business.  Such legal  proceedings  in the  aggregate  are believed by
management to be immaterial to the Company's  financial condition and results of
operations.

ITEM 1A.   RISK FACTORS

     There have been no material  changes to the factors  disclosed in Item 1A.,
Risk Factors, in our Annual Report on Form 10-K for the year ended September 30,
2007.

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     The following  table  summarizes our share  repurchase  activity during the
three months ended June 30, 2008 and additional  information regarding our share
repurchase program.
<TABLE>
<CAPTION>
<S>                             <C>             <C>                     <C>                     <C>

                                                                            (c) Total Number
                                                                              of Shares (or         (d) Maximum Number
                                     (a) Total                              Units) Purchased        (or Approximate Dollar
                                      Number              (b)                  as Part Of             Value) of Shares (or
                                     Of Shares        Average Price            Publicly              Units) that May Yet Be
Period                                 Units)        Paid per Share         Announced Plans           Purchased Under
                                     Purchased         (or Unit)              or Programs            Plans or Programs (1)
                                     ---------         ---------              -----------            ---------------------
Repurchases for the Month

April 1 - April 30, 2008                   -                  -                      -                     204,104
May 1 - May 31, 2008                   134,971           $10.51                134,971                      69,133
June 1 - June 30, 2008                  59,244           $10.92                 59,244                       9,889

Total repurchases                      194,215           $10.63                194,215
</TABLE>

(1)  The  shares  reported  were  repurchased  under  a  share  repurchase  plan
     announced by the Company on January 2, 2008 through which five percent,  or
     approximately  575,000,  of  the  Company's  outstanding  shares  would  be
     repurchased through open market or privately negotiated transactions.


ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

     None

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

     None

ITEM 5.  OTHER INFORMATION

     None

                                       42

<PAGE>


ITEM 6.  EXHIBITS

(a)      Exhibits

          10.1 Executive Salary Contination Agreement by and between American
               Bank of New Jersey and Fred G. Kowal, dated June 17, 2008.

          10.2 Employment Agreement by and between American Bank of New Jersey
               and Catherine Bringuier, dated June 17, 2008.

          10.3 Employment Agreement by and between American Bank of New Jersey
               and Eric B. Heyer, dated June 17, 2008.

          10.4 Employment Agreement by and between American Bank of New Jersey
               and Joseph Kliminski, dated June 17, 2008.

          10.5 Employment Agreement by and between American Bank of New Jersey
               and Fred G. Kowal, dated June 17, 2008.

          10.6 Amended and Restated Executive Salary Continuation Agreement by
               and between American Bank of New Jersey and Catherine Bringuier,
               dated June 17, 2008.

          10.7 Amended and Restated Executive Salary Continuation Agreement by
               and between American Bank of New Jersey and Eric B. Heyer,
               dated June 17, 2008.

          10.8 Amended and Restated Executive Salary Continuation Agreement by
               and between American Bank of New Jersey and Joseph Kliminiski,
               dated June 17, 2008.

          10.9 American Bank of New Jersey Director Consultation and Retirement
               Plan as Amended and Restated, Amended as of June 28, 2005,
               Further Amended June 17, 2008.

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

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

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




                                       43


<PAGE>


                                   SIGNATURES


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


                                         American Bancorp of New Jersey, Inc.
                                           (Registrant)


Date: August 11, 2008                    /s/ Joseph Kliminiski
                                         --------------------------------------
                                         Joseph Kliminski
                                         Chief Executive Officer


Date: August 11, 2008                    /s/ Eric B. Heyer
                                         --------------------------------------
                                         Eric B. Heyer
                                         Senior Vice President and
                                         Chief Financial Officer

                                       44