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 December 31, 2007





[ 
 ]   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
              of incorporation or organization)
            
            (I.R.S.
                Employer
              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
              filer
                [   ]
            Accelerated
              filer
                [ X ]
            Non-accelerated
              filer
                [   ]
              (Do
                note check if a smaller reporting company)
            Smaller
                reporting
              company
                [  ]





As
      of
      February 8, 2008, there were 11,358,716 outstanding shares of the Registrant's
      Common Stock.













AMERICAN
      BANCORP OF NEW JERSEY, INC.





Table
      of Contents







PART
                I – FINANCIAL INFORMATION (UNAUDITED)Item
                1.
            Financial
                Statements
            3Notes
                to Financial Statements
            9Item
                2.
            Management's
                Discussion and Analysis of Financial Condition andResults
                of Operations
            14Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            30Item
                4.
            Controls
                and Procedures
            34PART
                II – OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            35Item
                1A.
            Risk
                Factors
            35Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            35Item
                3.
            Defaults
                Upon Senior Securities
            35Item
                4.
            Submission
                of Matters to a Vote of Securities Holders
            35Item
                5.
            Other
                Information
            35Item
                6.
            Exhibits
            36FORM
                10-Q SIGNATURE
                PAGE
            37CERTIFICATIONS




2




ITEM
                1.
            FINANCIAL
                STATEMENTS





American
      Bancorp of New Jersey, Inc.


Statements
      of
      Financial Condition


(in
      thousands, except share data)


(unaudited)


December
                31,
              2007
            
            
            September
                30,
              2007ASSETSCash
                and cash equivalentsCash
                and due from
                banks
            
            $
            6,400
            
            
            $
            9,983Interest-bearing
                deposits
            
            
            13,780
            
            
            
            14,638Federal
                funds
                sold
            
            
            11,700
            
            
            
            12,800Total
                cash and cash
                equivalents
            
            
            31,880
            
            
            
            37,421Securities
                available-for-sale
            
            
            47,673
            
            
            
            58,093Securities
                held-to-maturity (fair value, December 31, 2007-$7,612
              September
                30, 2007 - $6,671)
            
            
            7,564
            
            
            
            6,730Loans
                held for sale
            
            -
            
            
            
            1,243Loans
                receivable, net of allowance for loan losses (December 31, 2007
                -$2,706,
              September
                30, 2007 -$2,568)
            
            
            449,093
            
            
            
            437,883Premises
                and equipment
            
            
            11,482
            
            
            
            10,856Federal
                Home Loan Bank stock, at cost
            
            
            2,508
            
            
            
            2,553Cash
                surrender value of life insurance
            
            
            13,347
            
            
            
            13,214Accrued
                interest receivable
            
            
            2,217
            
            
            
            2,212Other
                assets
            
            
            2,936
            
            
            
            3,533Total
                assets
            
            $
            568,700
            
            
            
            573,738LIABILITIES
                AND EQUITYDepositsNon-interest-bearing
            
            $
            26,137
            
            
            $
            30,494Interest-bearing
            
            
            402,851
            
            
            
            398,106Total
                deposits
            
            
            428,988
            
            
            
            428,600Advance
                payments by borrowers for taxes and insurance
            
            
            2,536
            
            
            
            2,702Federal
                Home Loan Bank advances
            
            
            36,596
            
            
            
            37,612Accrued
                expenses and other liabilities
            
            
            4,062
            
            
            
            4,231Total
                liabilities
            
            $
            472,182
            
            
            $
            473,145Commitments
                and contingent liabilities
            
            
            -
            
            
            
            -EquityPreferred
                stock,
                $.10 par value, 10,000,000 shares authorized
              at
                December 31, 2007 and September 30, 2007;
            
            
            -
            
            
            
            -Common
                stock, $.10
                par value, 20,000,000 shares authorized,
              14,527,953
                and 14,527,953 shares issued
              at
                December
                31, 2007 and September 30, 2007;
              11,509,716
                and 11,946,190 outstanding
              at
                December
                31, 2007 and September 30, 2007;
            
            
            1,453
            
            
            
            1,453Additional
                paid in
                capital
            
            
            114,107
            
            
            
            113,607Unearned
                ESOP
                shares
            
            
            (7,987
            )
            
            
            (8,099
            )Retained
                earnings
            
            
            23,922
            
            
            
            24,258Treasury
                Stock; 3,018,237 and
                2,581,763 shares
              at
                December
                31, 2007 and September 30, 2007
            
            
            (34,906
            )
            
            
            (30,353
            )Accumulated
                other
                comprehensive loss
            
            
            (71
            )
            
            
            (273
            )Total
                equity
            
            
            96,518
            
            
            
            100,593Total
                liabilities and
                equity
            
            $
            568,700
            
            
            $
            573,738





See
            accompanying notes to unaudited consolidated financial statements
 3


American
      Bancorp of New Jersey, Inc.


Statements
      of Income


(in
      thousands, except share data)


(unaudited)


Three
                Months Ended
              December
                31,2007
            
            
            2006Interest
                and dividend incomeLoan,
                including fees
            
            $
            6,738
            
            
            $
            5,779Securities
            
            
            646
            
            
            
            841Federal
                funds sold and other
            
            
            450
            
            
            
            88Total
                interest income
            
            
            7,834
            
            
            
            6,708Interest
                expenseNOW
                and money market
            
            
            1,214
            
            
            
            238Savings
            
            
            605
            
            
            
            712Certificates
                of deposit
            
            
            2,419
            
            
            
            1,897Federal
                Home Loan Bank advances
            
            
            494
            
            
            
            691Total
                interest expense
            
            
            4,732
            
            
            
            3,538Net
                interest income
            
            
            3,102
            
            
            
            3,170Provision
                for loan losses
            
            
            139
            
            
            
            50Net
                interest income after provision for loan losses
            
            
            2,963
            
            
            
            3,120Noninterest
                incomeDeposit
                service fees and charges
            
            
            226
            
            
            
            160Income
                from cash surrender value of life insurance
            
            
            133
            
            
            
            83Gain
                on sale of loans
            
            
            7
            
            
            
            2Loss
                on sales of securities available-for-sale
            
            
            (5
            )
            
            
            -Other
            
            
            34
            
            
            
            42Total
                noninterest income
            
            
            395
            
            
            
            287Noninterest
                expenseSalaries
                and employee benefits
            
            
            2,142
            
            
            
            1,964Occupancy
                and equipment
            
            
            454
            
            
            
            216Data
                processing
            
            
            180
            
            
            
            175Advertising
                and marketing
            
            
            85
            
            
            
            119Professional
                and consulting
            
            
            102
            
            
            
            101Legal
            
            
            51
            
            
            
            43Other
            
            
            262
            
            
            
            272Total
                noninterest expense
            
            
            3,276
            
            
            
            2,890Income
                before provision for income taxes
            
            
            82
            
            
            
            517Provision
                (benefit) for income taxes
            
            
            (11
            )
            
            
            188Net
                income
            
            $
            93
            
            
            $
            329Comprehensive
                income
            
            $
            295
            
            
            $
            505Earnings
                per share:Basic
            
            $
            0.01
            
            
            $
            0.03Diluted
            
            $
            0.01
            
            
            $
            0.03











See
            accompanying notes to unaudited consolidated financial statements
 4


American
      Bancorp of New Jersey, Inc.


Statements
      of Stockholders' Equity


Three
      months ended December 31,  2006


(in
      thousands)


(unaudited)





Common
              Stock
            
            
            Additional
              Paid-In
              Capital
            
            
            Unearned
              ESOP
              Shares
            
            
            Retained
              Earnings
            
            
            Accumulated
              Other
              Comprehensive
              Loss
            
            
            Treasury
                Stock
            
            
            Total
              Equity
            
            
            Compre-
              hensive
              Income
              (Loss)Balance
                at
              September 30,
                2006
            
            $
            1,453
            
            
            $
            111,780
            
            
            $
            (8,549
            )
            
            $
            25,438
            
            
            $
            (881
            )
            
            $
            (4,380
            )
            
            $
            124,861Cumulative
                effect of
              adoption
                of SAB 108
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            130
            
            
            
            -
            
            
            
            -
            
            
            
            130Balance
                at
              October
                1, 2006
            
            
            1,453
            
            
            
            111,780
            
            
            
            (8,549
            )
            
            
            25,568
            
            
            
            (881
            )
            
            
            (4,380
            )
            
            
            124,991RSP
                stock grants (6,249
              shares
                issued)
            
            
            -
            
            
            
            (76
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            76
            
            
            
            -RSP
                shares earned
              including
                tax benefit
              of
                vested awards
            
            
            -
            
            
            
            276
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            276Share
                purchases
              (1,062,000
                shares)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (13,018
            )
            
            
            (13,018
            )Stock
                options earned
            
            
            -
            
            
            
            140
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            140ESOP
                shares earned
            
            
            -
            
            
            
            48
            
            
            
            112
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            160Cash
                dividends paid –
              $0.04
                per share
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (482
            )
            
            
            -
            
            
            
            -
            
            
            
            (482
            )Comprehensive
                incomeNet
                income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            329
            
            
            
            -
            
            
            
            -
            
            
            
            329
            
            
            $
            329Change
                in
                unrealized
              loss
                on
                securities
              available-for-sale,  net
              of
                taxes
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            176
            
            
            
            -
            
            
            
            176
            
            
            
            176Total  comprehensive
              income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            505Balance
                at
              December
                31, 2006
            
            $
            1,453
            
            
            $
            112,168
            
            
            $
            (8,437
            )
            
            $
            25,415
            
            
            $
            (705
            )
            
            $
            (17,322
            )
            
            $
            112,572


See
            accompanying notes to unaudited consolidated financial statements
 5


American
      Bancorp of New Jersey, Inc.


Statements
      of Stockholders' Equity


Three
      months ended December 31, 2007


(in
      thousands)


(unaudited)





Common
              Stock
            
            
            Additional
              Paid-In
              Capital
            
            
            Unearned
              ESOP
              Shares
            
            
            Retained
              Earnings
            
            
            Accumulated
              Other
              Comprehensive
              Loss
            
            
            Treasury
                Stock
            
            
            Total
              Equity
            
            
            Compre-
              hensive
              Income
              (Loss)Balance
                at
              September 30,
                2007
            
            $
            1,453
            
            
            $
            113,607
            
            
            $
            (8,099
            )
            
            $
            24,258
            
            
            $
            (273
            )
            
            $
            (30,353
            )
            
            $
            100,593RSP
                shares earned
              including
                tax benefit
              of
                vested awards
            
            
            -
            
            
            
            278
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            278Tax
                benefit on dividends
              paid
                on unvested RSP
              shares
            
            
            -
            
            
            
            54
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            54Share
                purchases
              (436,474
                shares)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (4,553
            )
            
            
            (4,553
            )Stock
                options earned
            
            
            
            
            
            
            141
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            141ESOP
                shares earned
            
            
            -
            
            
            
            27
            
            
            
            112
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            139Cash
                dividends paid –
              $0.04
                per share
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (429
            )
            
            
            -
            
            
            
            -
            
            
            
            (429
            )Comprehensive
                incomeNet
                income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            93
            
            
            
            -
            
            
            
            -
            
            
            
            93
            
            
            $
            93Change
                in
                unrealized
              loss
                on
                securities
              available-for-sale,  net
              of
                taxes
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            202
            
            
            
            -
            
            
            
            202
            
            
            
            202Total  comprehensive
              income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            295Balance
                at
              December
                31, 2007
            
            $
            1,453
            
            
            $
            114,107
            
            
            $
            (7,987
            )
            
            $
            23,922
            
            
            $
            (71
            )
            
            $
            (34,906
            )
            
            $
            96,518


See
            accompanying notes to unaudited consolidated financial statements
 6


American
      Bancorp of
      New Jersey, Inc.


Statements
      of Cash
      Flows


(in
      thousands)


(unaudited)


Three
                Months Ended
              December
                31,2007
            
            
            2006Cash
                flows from operating activitiesNet
                Income
            
            $
            93
            
            
            $
            329Adjustments
                to reconcile net
                income to net cash
              provided
                by operating
                activitiesDepreciation
                and
                amortization
            
            
            122
            
            
            
            79Net
                amortization and accretion of
                premiums and discounts
            
            
            (20
            )
            
            
            (8
            )Losses
                on sales of securities
                available-for-sale
            
            
            5
            
            
            
            -ESOP
                compensation
                expense
            
            
            139
            
            
            
            161RSP
                compensation
                expense
            
            
            277
            
            
            
            276SOP
                compensation
                expense
            
            
            141
            
            
            
            140Provision
                for loan
                losses
            
            
            139
            
            
            
            50Increase
                in cash surrender value
                of life insurance
            
            
            (133
            )
            
            
            (83
            )Gain
                on sale of
                loans
            
            
            (7
            )
            
            
            (2
            )Proceeds
                from sales of
                loans
            
            
            1,623
            
            
            
            838Origination
                of loans held for
                sale
            
            
            (372
            )
            
            
            (1,505
            )Decrease
                (increase) in accrued
                interest receivable
            
            
            (5
            )
            
            
            (4
            )Decrease
                (increase) in other
                assets
            
            
            772
            
            
            
            171Change
                in deferred income
                taxes
            
            
            (290
            )
            
            
            (201
            )Increase
                (decrease) in other
                liabilities
            
            
            (169
            )
            
            
            137Net
                cash provided by operating
                activities
            
            
            2,315
            
            
            
            378Cash
                flows from investing activitiesNet
                increase in loans
                receivable
            
            
            (11,349
            )
            
            
            (10,950
            )Purchases of securities held-to-maturity
            
            
            (1,108
            )
            
            
            -Principal paydowns on securities held-to-maturity
            
            
            271
            
            
            
            455Purchases
                of securities
                available-for-sale
            
            
            (4,814
            )
            
            
            -Sales
                of securities
                available-for-sale
            
            
            11,510
            
            
            
            -Maturities
                of securities
                available-for-sale
            
            
            -
            
            
            
            6,000Principal
                paydowns on
                securities available-for-sale
            
            
            4,058
            
            
            
            4,465Purchase
                of Federal Home Loan
                Bank stock
            
            
            -
            
            
            
            (1,970
            )Redemption
                of Federal Home
                Loan Bank stock
            
            
            45
            
            
            
            2,151Purchase
                of bank-owned life
                insurance
            
            
            -
            
            
            
            (4,000
            )Purchase
                of premises and
                equipment
            
            
            (748
            )
            
            
            (824
            )Net
                cash used in investing
                activities
            
            
            (2,135
            )
            
            
            (4,673
            )Cash
                flows from financing activitiesNet
                increase in
                deposits
            
            
            388
            
            
            
            26,396Net
                change in advance payments
                by borrowers for taxes and
              insurance
            
            
            (166
            )
            
            
            (97
            )Repayment
                of Federal Home Loan
                Bank of New York advances
            
            
            (1,016
            )
            
            
            (2,016
            )Net
                change in Federal Home
                Loan Bank of New York overnight
              lines
                of credit
            
            
            -
            
            
            
            (2,000
            )RSP
                tax benefit of vested
                awards
            
            
            1
            
            
            
            -Tax
                benefit on dividends paid
                on unvested RSP shares
            
            
            54
            
            
            
            -Cash
                dividends
                paid
            
            
            (429
            )
            
            
            (482
            )RSP
                and treasury share
                purchases
            
            
            (4,553
            )
            
            
            (13,018
            )Net
                cash provided by (used in)
                financing activities
            
            
            (5,721
            )
            
            
            8,783Net
                change in cash and cash
                equivalents
            
            
            (5,541
            )
            
            
            4,488Cash
                and cash equivalents at
                beginning of year
            
            
            37,421
            
            
            
            7,165Cash
                and cash equivalents at end of period
            
            $
            31,880
            
            
            $
            11,653


(Continued)
 7


American
      Bancorp of
      New Jersey, Inc. Statements
        of Cash
        Flows
 (in
        thousands)
 (unaudited)
 Three
                  Months Ended
                December
                  31,2007
              
              
              2006Supplemental
                  cash flow
                  information:Cash
                  paid during the period
                  forInterest
              
              $
              4,747
              
              
              $
              3,611Income
                  taxes,
                  net of refunds
              
              
              -
              
              
              
              1
































































See
            accompanying notes to unaudited financial statements
 8


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 (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 supplanted by American Bancorp of New Jersey as the holding
      company for the Bank.  A total of 9,918,750 shares of common stock
      were sold in the offering at $10 per share through which the Company received
      proceeds of $97,524,302, net of offering costs of $1,663,198.  The
      Company contributed $48,762,151 or approximately 50% of the net proceeds to
      the
      Bank in the form of a capital contribution.  The Company loaned
      $7,935,000 to the Bank's 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 December 31, 2007 and September 30, 2007 and
      for
      the three months ended December 31, 2007 and December 31,
      2006.  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


9


purpose
      of selling insurance and investment products, including annuities, to customers
      of the Bank and the general public, with initial activities limited to the
      sale
      of fixed rate annuities.  The Investment Corp. has had 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 three months ended December 31, 2007 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 stockholders 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


The
      factors used in the earnings per share computation follow.




Three
                  Months EndedDecember
                  31,2007
              
              
              2006BasicNet
                  income
              
              $
              93
              
              
              $
              329Weighted
                  average common shares
                outstanding
              
              
              10,524,887
              
              
              
              12,324,475Basic
                  earnings per common
                  share
              
              $
              0.01
              
              
              $
              0.03DilutedNet
                  income
              
              $
              93
              
              
              $
              329Weighted
                  average common shares
                outstanding  for
                  basic earnings per
                common
                  share
              
              
              10,524,887
              
              
              
              12,324,475Add:  Dilutive
                  effects of assumed
                exercises
                  of  stock options
              
              
              136,904
              
              
              
              168,094Add:  Dilutive
                  effects of full vesting
                of
                  stock  awards
              
              
              18,709
              
              
              
              42,898Average
                  shares and dilutive
                potential  common
                  shares
              
              
              10,680,500
              
              
              
              12,535,467Diluted
                  earnings per common share
              
              $
              0.01
              
              
              $
              0.03


Note
      3 -
      Other Stock-Based Compensation





At
      December 31, 2007, 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


A
      summary
      of the activity in the Company’s stock option plans for the three months ended
      December 31, 2007 and 2006 is as follows.





For
                the three months endedDecember
                31, 2007
            
            
            December
                31, 2006Shares
            
            
            Weighted
              Average
              Exercise
              Price
            
            
            Shares
            
            
            Weighted
              Average
              Exercise
              PriceOutstanding
                at beginning of
              period
            
            
            1,416,948
            
            
            $
            9.26
            
            
            
            1,397,854
            
            
            $
            9.23Granted
            
            
            -
            
            
            
            -
            
            
            
            19,094
            
            
            
            11.87Exercised
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Forfeited
                or expired
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Outstanding
                at end of period
            
            
            1,416,948
            
            
            $
            9.26
            
            
            
            1,416,948
            
            
            $
            9.26Options
                exercisable at period
              end
            
            
            420,912
            
            
            $
            8.46
            
            
            
            138,369
            
            
            $
            6.81Weighted
                average remaining
              contractual
                life
            
            
            
            
            
            7.5
                years
            
            
            
            
            
            
            8.1
                years








A
      summary
      of the status of the Company’s nonvested restricted stock plan shares as of
      December 31, 2007 and 2006 and changes during the three months ended December
      31, 2007 and 2006 are as follows.





For
                the three months endedDecember
                31, 2007
            
            
            December
                31, 2006Shares
            
            
            Weighted
                Average Grant Date Fair Value
            
            
            Shares
            
            
            Weighted
                Average Grant Date Fair ValueOutstanding
                at beginning of
              period
            
            
            414,281
            
            
            $
            10.13
            
            
            
            520,126
            
            
            $
            10.04Granted
            
            
            -
            
            
            
            -
            
            
            
            6,249
            
            
            
            11.87Vested
            
            
            (1,249
            )
            
            
            11.87
            
            
            
            -
            
            
            
            -Forfeited
                or expired
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Outstanding
                at end of period
            
            
            413,032
            
            
            $
            10.12
            
            
            
            526,375
            
            
            $
            10.06








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 deferred tax assets or increase in
      tax liabilities upon


12


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.  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


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:





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





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





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





For
      the
      fiscal year ended September  30, 2007, our commercial loans, including
      multi-family, nonresidential real estate, construction and business loans,
      grew
      $45.7 million, or 47.5%, from $96.2 million to $141.9 million.  This
      increase resulted in commercial loans growing from 24.1% to 32.4% of loans
      receivable, net for fiscal 2007.  Such growth continued during the
      three months ended December 31, 2007 when our commercial loans grew an
      additional $12.0 million, or 8.5%, from $141.9 million to $153.9 million
      increasing the percentage of


14


commercial
      loans from 32.4% to 34.3% of loans receivable, net.  We expect to
      continue our strategic emphasis on commercial lending throughout the remainder
      of fiscal 2008 and thereafter.





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





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





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





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





·
            Utilize
                capital markets tools to effectively manage capital and enhance
                shareholder value.





Toward
      that end, during the quarter ended December 31, 2007, the Company completed
      its
      third share repurchase program through which it repurchased five percent of
      its
      outstanding shares.  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.  A fourth share
      repurchase plan for an additional five percent of its outstanding shares was
      announced in January 2008 and remains ongoing.





A
      number
      of the strategies outlined above have had a detrimental impact on near term
      earnings.  Notwithstanding, we expect to continue to execute these
      growth and diversification strategies designed to enhance future earnings and
      their resiliency to changes in market conditions toward the goal of enhancing
      shareholder value.   Toward that end, we expect that our deposit
      pricing strategy during fiscal 2008 will continue to reduce interest costs
      by
      continuing to incrementally lower interest rates paid on de novo branch deposits
      acquired during fiscal 2007 from the higher promotional rates initially
      offered.  Additionally, we would expect that continued reductions in
      market interest rates and further steepening of the yield curve during fiscal
      2008 may also have a beneficial impact on earnings.  The resiliency of
      the Bank’s de novo branch deposits to further interest rate reductions and
      movements in market interest rates and their respective impact on earnings,
      however, can not be assured.





15


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 and borrowings
      from the Federal Home Loan Bank of New York.





During
      the first three months of fiscal 2008, the Company’s net interest spread
      increased 6 basis points to 1.50% in comparison to 1.44% for fiscal 2007, as
      the
      increase in the yield on earning assets outpaced the increase in the Company's
      cost of interest-bearing liabilities.  This widening of our net
      interest spread reversed the trend of spread compression previously reported
      during fiscal 2007 when the Company’s net interest spread decreased 36 basis
      points from 1.80% during fiscal 2006.  In large part, the improvements
      in net interest spread for the quarter ended December 31, 2007 resulted from
      continued increases in the yield on loans, attributable primarily to the
      Company’s commercial lending strategies, which outpaced the increase in the cost
      of retail deposits.  The slowing rate of increase in retail deposit
      interest costs continued to reflect the highly competitive nature of deposit
      pricing within the markets served by the Company offset, in part, by the
      continued 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.





The
      factors resulting in the widening of the Company’s net interest spread also
      positively impacted the Company’s net interest margin.  However, the
      impact of improved net interest spread was more than 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 the 8 basis point reduction
      in the Company’s net interest margin to 2.31% for the quarter ended December 31,
      2007 from 2.39% for fiscal 2007.





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





Our
      results of operations are also affected by our provision for loan
      losses.  For the three months ended December 31, 2007, the Company
      recorded net loan loss provision expense of
      $139,000.  As  reported for fiscal 2007, the provision for
      loan losses for the quarter ended December 31, 2007 continues to reflect the
      Bank’s increased strategic emphasis in commercial lending and the comparatively
      higher rate of growth in such loan balances than in earlier years.  No
      additions to the allowance for loan losses were required during the quarter
      ended December 31, 2007 for nonperforming loans which decreased as a percentage
      of total assets to 0.14% at December 31, 2007 from 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 three months
      ended December 31, 2007 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 0.02% to 0.27%
      for the three months ended December 31, 2007 from 0.25% for fiscal 2007
      primarily due to increases in deposit services fees and charges.  Such
      increases were


16


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
      primarily 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 three months ended December 31, 2007 totaled 0.01% which
      was consistent with that 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 three months
      ended December 31, 2007 totaled 2.30% representing a decrease of one basis
      point
      from 2.31% reported for fiscal 2007.





The
      noninterest expense reported above for the first quarter 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 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 increase in future periods as a result
      of the relocation of the Bank’s Bloomfield branch.  This relocation
      will significantly upgrade and modernize the Bloomfield branch facility
      supporting the Company’s deposit growth and customer service enhancement
      objectives.  The relocation will also support potential expansion of
      the administrative and lending office space within the Company’s existing
      headquarters facility where the branch is currently located should such
      expansion be required to support the Company’s business plan.  The
      noninterest expense reported above for the first quarter of fiscal 2008 includes
      the land lease costs associated with that forthcoming branch relocation which
      is
      targeted for completion during the second fiscal quarter ending March 31,
      2008.





In
      an
      effort to reduce ongoing operating expenses, the Company enacted a reduction
      in
      workforce during the first quarter of fiscal 2008 resulting in the elimination
      of five managerial and administrative support positions.  Salary and
      employee benefit expense reductions resulting from this strategy are expected
      to
      total approximately $388,000 per year beginning in the second quarter of fiscal
      2008, equal to annual after-tax earnings of approximately $0.02 per share based
      upon the Company’s outstanding shares at December 31, 2007.  The
      Company will continue to monitor its employee staffing levels in relation to
      the
      goals and objectives of its business plan and may consider further opportunities
      to adjust such staffing levels, as appropriate, to support the achievement
      of  those goals and objectives.


17


In
      total,
      our annualized return on average assets decreased three basis points to 0.07%
      for the three months ended December 31, 2007 from 0.10% for fiscal 2007, while
      annualized return on average equity decreased 13 basis points to 0.38% from
      0.51% for the same comparative periods.





Comparison
      of Financial Condition at December 31, 2007 and September 30, 2007





Our
      total
      assets decreased by $5.0 million, or 0.9%, to $568.7 million at December 31,
      2007 from $573.7 million at September 30, 2007.  The decrease
      primarily reflected comparatively lower balances of cash and cash equivalents,
      investment securities and loans held for sale offset by growth in loans
      receivable, net.





Cash
      and
      cash equivalents decreased by $5.5 million, or 14.8%, to $31.9 million at
      December 31, 2007 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 which were partially
      offset by cash inflows from net reductions in investment securities and loans
      held for sale.  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.  The cash inflows from a portion of this deposit growth were
      retained in short term liquid assets given the favorable yields of such assets
      at the time compared with that of other shorter duration investment security
      alternatives.  The Company may reinvest a portion of its short term
      liquid assets into investment securities as that comparative yield relationship
      changes.





Notwithstanding
      this short term investment strategy, the Company expects to reinvest proceeds
      received through its growth in deposits into the loan portfolio over time as
      lending opportunities arise.  To the extent supported by commercial
      loan demand and origination volume, the Company expects to reinvest deposit
      proceeds into such loans.  However, the net addition of residential
      mortgages to the loan portfolio, including longer term, fixed rate 1-4 family
      mortgages previously sold into the secondary market, is expected to augment
      the
      growth in commercial loans as a reinvestment alternative for a portion of the
      accumulated balance of cash and cash equivalents.  (See further
      discussion in the subsequent section titled “Quantitative and Qualitative
      Disclosures About Market Risk”.)





Securities
      classified as available-for-sale decreased $10.4 million, or 17.9%, to $47.7
      million at December 31, 2007 from $58.1 million at September 30,
      2007.  By contrast, securities held-to-maturity increased
      approximately $834,000, or 12.4% to $7.6 million at December 31, 2007 from
      $6.7
      million at September 30, 2007.  The net increase in held-to-maturity
      securities reflected the purchase of one fixed rate mortgage-backed security
      for
      which the institution received Community Reinvestment Act (“CRA”)
      credit.  The overall decline in investment balances reflects the
      Company’s continued strategy of utilizing a portion of the cash flows from the
      investment securities portfolio to augment the funding of its growth in
      commercial real estate and business loans and repay maturing
      borrowings.





The
      following table compares the composition of the Company's investment securities
      portfolio by security type as a percentage of total assets at December 31,
      2007
      with that of September 30, 2007.  Amounts reported exclude unrealized
      gains and losses on the available for sale portfolio.


18





December
                31, 2007
            
            
            September
                30, 2007Type
                of
                Securities
            
            Amount
            
            
            Percent
                of
              Total
                Assets
            
            
            Amount
            
            
            Percent
                of
              Total
                Assets(Dollars
                in
                thousands)Fixed
                rate MBS
            
            $
            11,886
            
            
            
            2.09
            %
            
            $
            11,454
            
            
            
            2.00
            %ARM
                MBS
            
            
            12,916
            
            
            
            2.27
            
            
            
            14,470
            
            
            
            2.52Fixed
                rate CMO
            
            
            26,551
            
            
            
            4.67
            
            
            
            35,280
            
            
            
            6.14Floating
                rate CMO
            
            
            1,996
            
            
            
            0.35
            
            
            
            2,047
            
            
            
            0.36Fixed
                rate agency debentures
            
            
            2,000
            
            
            
            0.35
            
            
            
            2,000
            
            
            
            0.35Total
            
            $
            55,349
            
            
            
            9.73
            %
            
            $
            65,251
            
            
            
            11.37
            %





Assuming
      no change in interest rates, the estimated average life of the investment
      securities portfolio was 2.43 years and 2.24 years, respectively, at December
      31, 2007 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 2.94 years and 2.65 years
      at December 31, 2007 and September 30, 2007, respectively.





Loans
      receivable, net increased by $11.2 million, or 2.6%, to $449.1 million at
      December 31, 2007 from $437.9 million at September 30, 2007.  The
      growth was comprised of net increases in commercial loans totaling $12.0 million
      or 8.4%.  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 $1.3 million.  Offsetting the growth in these
      categories was a $2.0 million decrease in the balance of 1-4 family first
      mortgages resulting from reduced strategic emphasis on the origination of such
      loans and net increases to the allowance for loan losses totaling
      $139,000.





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 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
      December 31, 2007 and September 30, 2007, the remaining balance of these loans
      was approximately $1.3 million and $1.4 million, respectively, comprising 11
      loans for each period.  All such loans were current 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 both December 31, 2007 and September 30, 2007, the
      remaining balance of these loans was approximately $8.5 million, comprising
      27
      loans for each period.  All such loans were current for the periods
      reported.


19


The
      Bank
      continues to offer a limited Alt-A program through which it originates and
      sells
      all such loans to FNMA 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.





The
      following two tables compare the composition of the Company's loan portfolio
      by
      loan type as a percentage of total assets at December 31, 2007 with that of
      September 30, 2007.  Amounts reported exclude allowance for loan
      losses and net deferred origination costs.





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





December
                31, 2007
            
            
            September
                30, 2007Type
                of
                Loans
            
            Amount
            
            
            Percent
                of
              Total
                Assets
            
            
            Amount
            
            
            Percent
                of
              Total
                Assets(Dollars
                in
                thousands)Construction
            
            $
            34,459
            
            
            
            6.06
            %
            
            $
            32,592
            
            
            
            5.68
            %1/1
                and 3/3 ARMs
            
            
            7,630
            
            
            
            1.34
            
            
            
            7,642
            
            
            
            1.333/1
                and 5/1 ARMs
            
            
            141,041
            
            
            
            24.81
            
            
            
            142,254
            
            
            
            24.805/5
                and 10/10 ARMs
            
            
            47,004
            
            
            
            8.27
            
            
            
            46,017
            
            
            
            8.027/1
                and 10/1 ARMs
            
            
            4,434
            
            
            
            0.78
            
            
            
            3,500
            
            
            
            0.6115
                year fixed or less
            
            
            136,514
            
            
            
            24.00
            
            
            
            129,158
            
            
            
            22.52Greater
                than 15 year fixed
            
            
            50,965
            
            
            
            8.96
            
            
            
            52,012
            
            
            
            9.07Prime-indexed
                HELOC
            
            
            20,720
            
            
            
            3.64
            
            
            
            19,756
            
            
            
            3.44Consumer
            
            
            771
            
            
            
            0.14
            
            
            
            655
            
            
            
            0.11Business
            
            
            7,194
            
            
            
            1.26
            
            
            
            7,024
            
            
            
            1.22Total
            
            $
            450,732
            
            
            
            79.26
            %
            
            $
            440,610
            
            
            
            76.80
            %





At
      December 31, 2007 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
      table
      below generally defines loan type by collateral or purpose:





December
                31, 2007
            
            
            September
                30, 2007Type
                of
                Loans
            
            Amount
            
            
            Percent
                of
              Total
                Assets
            
            
            Amount
            
            
            Percent
                of
              Total
                Assets(Dollars
                in
                thousands)Construction
            
            $
            34,459
            
            
            
            6.06
            %
            
            $
            32,592
            
            
            
            5.68
            %1-4
                family mortgage
            
            
            275,271
            
            
            
            48.41
            
            
            
            278,183
            
            
            
            48.50Multifamily
                (5+) mortgage
            
            
            33,059
            
            
            
            5.81
            
            
            
            30,585
            
            
            
            5.33Nonresidential
                mortgage
            
            
            75,920
            
            
            
            13.35
            
            
            
            68,474
            
            
            
            11.94Land
            
            
            3,339
            
            
            
            0.59
            
            
            
            3,341
            
            
            
            0.581-4
                family HELOC
            
            
            20,720
            
            
            
            3.64
            
            
            
            19,756
            
            
            
            3.44Consumer
            
            
            770
            
            
            
            0.14
            
            
            
            655
            
            
            
            0.11Business
            
            
            7,194
            
            
            
            1.26
            
            
            
            7,024
            
            
            
            1.22Total
            
            $
            450,732
            
            
            
            79.26
            %
            
            $
            440,610
            
            
            
            76.80
            %





20


Total
      deposits increased by $388,000, or 0.1%, to $429.0 million at December 31,
      2007
      from $428.6 million at September 30, 2007.  This net growth reflected
      increases in certificates of deposit of $6.3 million offset by reductions in
      other deposit categories.  In particular, the balance of noninterest
      bearing deposits decreased $4.4 million due primarily to the transfer of an
      attorney trust account included in the balance of noninterest-bearing deposits
      at September 30, 2007 to an interest-bearing IOLTA account during the current
      quarter.





The
      following table compares the composition of the Company's deposit portfolio
      by
      category as a percentage of total assets at December 31, 2007 with that of
      September 30, 2007.










December
                31, 2007
            
            
            September
                30, 2007Deposit
                category
            
            Amount
            
            
            Percent
                of
              Total
                Assets
            
            
            Amount
            Percent
                  of
                Total
                  Assets(Dollars
                in
                thousands)Money
                market checking
            
            $
            92,867
            
            
            
            16.32
            %
            
            $
            92,550
            
            
            
            16.13
            %Noninterest
                bearing checking
            
            
            26,137
            
            
            
            4.60
            
            
            
            30,494
            
            
            
            5.31Interest
                bearing checking
            
            
            18,540
            
            
            
            3.26
            
            
            
            19,245
            
            
            
            3.35Money
                market savings
            
            
            9,475
            
            
            
            1.67
            
            
            
            10,263
            
            
            
            1.79Other
                savings
            
            
            82,164
            
            
            
            14.45
            
            
            
            82,515
            
            
            
            14.38Certificates
                of deposit
            
            
            199,805
            
            
            
            35.13
            
            
            
            193,533
            
            
            
            33.74Total
            
            $
            428,988
            
            
            
            75.43
            %
            
            $
            428,600
            
            
            
            74.70
            %





The
      following table compares the composition of the Company's deposit portfolio
      by
      branch as a percentage of total assets at December 31, 2007 with that of
      September 30, 2007.





December
                31, 2007
            
            
            September
                30, 2007Deposit
                category
            
            Amount
            
            
            Percent
                of
              Total
                Assets
            
            
            Amount
            Percent
                  of
                Total
                  Assets(Dollars
                in
                thousands)Bloomfield
            
            $
            222,642
            
            
            
            39.15
            %
            
            $
            223,557
            
            
            
            38.97
            %Cedar
                Grove
            
            
            108,516
            
            
            
            19.08
            
            
            
            111,030
            
            
            
            19.35Verona
            
            
            51,237
            
            
            
            9.01
            
            
            
            55,193
            
            
            
            9.62Nutley
            
            
            21,271
            
            
            
            3.74
            
            
            
            23,534
            
            
            
            4.10Clifton
            
            
            25,322
            
            
            
            4.45
            
            
            
            15,286
            
            
            
            2.66Total
            
            $
            428,988
            
            
            
            75.43
            %
            
            $
            428,600
            
            
            
            74.70
            %





21


FHLB
      advances decreased $1.0 million, or 2.7%, to $36.6 million at December 31,
      2007
      from $37.6 million at September 30, 2007.  The reduction was primarily
      attributable to the repayment of a maturing fixed rate FHLB term
      advance.





The
      following table compares the composition of the Company's borrowing portfolio
      by
      remaining term to maturity as a percentage of total assets at December 31,
      2007
      with that of September 30, 2007.  Scheduled principal payments on
      amortizing borrowings are reported as maturities.





December
                31, 2007
            
            
            September
                30, 2007Remaining
                Term
            
            Amount
            
            
            Percent
                ofTotal Assets
            
            
            Amount
            
            
            Percent
                of Total Assets(Dollars
                in
                thousands)Overnight
            
            $
            -
            
            
            
            -
            %
            
            $
            -
            
            
            
            -
            %One
                year or less
            
            
            12,066
            
            
            
            2.12
            
            
            
            12,065
            
            
            
            2.10One
                to two years
            
            
            7,530
            
            
            
            1.32
            
            
            
            7,547
            
            
            
            1.32Two
                to three years
            
            
            6,000
            
            
            
            1.06
            
            
            
            6,000
            
            
            
            1.05Three
                to four years
            
            
            6,000
            
            
            
            1.06
            
            
            
            6,000
            
            
            
            1.05Four
                to five years
            
            
            5,000
            
            
            
            0.88
            
            
            
            5,000
            
            
            
            0.87More
                than five years
            
            
            -
            
            
            
            -
            
            
            
            1,000
            
            
            
            0.17Total
            
            $
            36,596
            
            
            
            6.44
            %
            
            $
            37,612
            
            
            
            6.56
            %





Equity
      decreased $4.1 million, or 4.1% to $96.5 million at December 31, 2007 from
      $100.6 million at September 30, 2007.  The reported decrease in equity
      was primarily attributable to a $4.6 million increase in Treasury stock
      resulting from the Company’s share repurchases during the first quarter of
      fiscal 2008.





22


Comparison
      of Operating Results for the Three Months Ended December 31, 2007 and December
      31, 2006





General.  Net
      income
      for the three months ended December 31, 2007 was $93,000, a decrease of
      $236,000, or 71.7% from the three months ended December 31, 2006.  The
      decrease in net income resulted from a decrease in net interest income, an
      increase in the provision for loan losses and an increase in noninterest expense
      partially offset by an increase in noninterest income and a decrease in the
      provision for income taxes.





Interest
      Income.  Total interest income increased 16.8% or $1.1 million
      to $7.8 million for the three months ended December 31, 2007 from $6.7 million
      for the three months ended December 31, 2006.  For those same
      comparative periods, the average yield on interest-earning assets increased
      36
      basis points to 5.84% from 5.48% while the average balance of interest-earning
      assets increased $46.9 million to $536.9 million from $490.0
      million.





Interest
      income on loans increased $959,000 or 16.6%, to $6.7 million for the three
      months ended December 31, 2007 from $5.8 million for the three months ended
      December 31, 2006.  This increase was due, in part, to a $40.1 million
      increase in the average balance of loans receivable, including loans held for
      sale, to $443.4 million for the three months ended December 31, 2007 from $403.2
      million for the three months ended December 31, 2006.  In addition,
      the average yield on loans increased 35 basis points to 6.08% from 5.73% for
      those same comparative periods.  The increase in the average balance
      and yield on loans receivable was primarily attributable to the Company’s
      strategic emphasis on commercial lending.





The
      rise
      in interest income on loans was partially offset by lower interest income on
      securities, which decreased $195,000 or 23.2% to $646,000 for the three months
      ended December 31, 2007 from $841,000 for the three months ended December 31,
      2006.  The decrease was due, in part, to a $24.6 million decline in
      the average balance of investment securities, excluding the available for sale
      mark to market adjustment, to $57.4 million for the three months ended December
      31, 2007 from $82.0 million for the three months ended December 31,
      2006.  The impact on interest income attributable to this decrease was
      partially offset by a 40 basis point increase in the average yield on securities
      which grew to 4.50% from 4.10% for the same comparative periods.  The
      increase in yield primarily resulted from the maturity and repayment of lower
      yielding investment securities coupled with higher yields on newly purchased
      securities and existing adjustable rate securities in portfolio which have
      repriced upward in accordance with the general movement of market interest
      rates
      during the prior fiscal year.





Further,
      interest and dividend income on federal funds sold, other interest-bearing
      deposits and FHLB stock increased $363,000 to $450,000 for three months ended
      December 31, 2007 from $88,000 for the three months ended December 31,
      2006.  This growth in income was due primarily to a $32.8 million
      increase in the average balance of these assets to $39.0 million for the three
      months ended December 31, 2007 from $6.3 million for the three months ended
      December 31, 2006.  The impact of the increase in the average balance
      was partially offset by a decline in the average yield of these assets which
      decreased 233 basis points to 4.99% from 7.32% for the same comparative
      periods.  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 $1.2 million or
      33.7% to $4.7 million for the three months ended December 31, 2007 from $3.5
      million for the three months ended December 31, 2006.  For those same
      comparative periods, the average cost of interest-bearing liabilities increased
      40 basis points from 3.93% to 4.33%, while the average balance of
      interest-bearing liabilities increased $77.0 million or 21.4% to $437.0 million
      for the three months ended December 31, 2007 from $359.9 million for the three
      months ended December 31, 2006.


23


Interest
      expense on deposits increased $1.4 million or 48.8% to $4.2 million for the
      three months ended December 31, 2007 from $2.8 million for the three months
      ended December 31, 2006.  This increase was due largely to growth in
      the average balance of interest-bearing deposits which grew $93.3 million to
      $399.4 million for the three months ended December 31, 2007 from $306.0 million
      for the three months ended December 31, 2006.  The reported net growth
      in average interest-bearing deposits comprised $77.5 million and $29.9 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 $14.1
      million.





The
      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,
      coupled with higher promotional interest rates paid on those deposits,
      contributed significantly to the reported increase in deposit interest
      expense.  However, a portion of this increase was also attributable to
      continued upward pressure on deposit interest rates in the other highly
      competitive markets serviced by the Bank.





In
      total,
      the average cost of interest-bearing deposits increased 52 basis points to
      4.24%
      for the three months ended December 31, 2007 from 3.72% for the three months
      ended December 31, 2006.  The components of this increase include a
      148 basis point increase in the average cost of interest-bearing checking
      accounts to 4.41% from 2.93% and a 37 basis point increase in the average cost
      of certificates of deposit to 4.91% from 4.54%, partially offset by a six basis
      point decline in the average cost of savings accounts to 2.62% from
      2.68%.





Interest
      expense on FHLB advances decreased $197,000 to $494,000 for the three months
      ended December 31, 2007 from $691,000 for the three months ended December 31,
      2006.  This decrease was due, in part, to a $16.3 million decrease in
      the average balance of advances to $37.6 million for the three months ended
      December 31, 2007 from $53.9 million for the three months ended December 31,
      2006.  The impact on interest expense from the lower average balances
      reported was offset, in part, by a 13 basis point increase in the average cost
      of advances to 5.26% for the three months ended December 31, 2007 from 5.13%
      for
      the three months ended December 31, 2006.  The higher average cost for
      the current period was primarily attributable to the repayment of maturing
      term
      advances since the close of the earlier comparative period whose total weighted
      average cost was below that of the average outstanding balance during that
      earlier comparative period.





Net
      Interest
      Income.  Net interest income decreased by $68,000 or 2.1%, to
      $3.1 million for the three months ended December 31, 2007 from $3.2 million
      for
      the three months ended December 31, 2006.  The Company’s net interest
      spread declined four basis points to 1.50% from 1.54% for the same comparative
      periods, while the net interest margin decreased 28 basis points to 2.31% from
      2.59%.  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 Company’s treasury stock increased
      $22.3 million to $31.9 million for the three months ended December 31, 2007
      from
      $9.6 million for the three months ended December 31, 2006. Based upon that
      growth in the average balance of the Company’s treasury stock account and its
      average yield on earning assets reported for the earlier comparative period,
      the
      Company estimates that the reported $68,000 decline in net interest income
      includes a decrease of approximately $305,000 attributable to interest earned
      during the earlier comparative period on the 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 $139,000 for the three months ended December 31, 2007,
      representing an increase of $89,000 from the three months ended December 31,
      2006.  The provision expense for the earlier comparative quarter
      reflected the reversal of an $86,000 loss reserve against a previously impaired
      loan participation.  Excluding this adjustment, the Bank’s provision
      expense for the earlier quarter totaled $136,000.  For both
      comparative quarters, the


24


increases
      to the allowance for loan losses resulted from the application of historical
      and
      environmental loss factors against the net growth in loans in accordance with
      the Bank’s loan loss allowance methodology.





In
      total,
      the allowance for loan losses as a percentage of gross loans outstanding
      increased to 0.60% at December 31, 2007 representing an increase of 7 basis
      points from 0.53% at December 31, 2006.  These ratios reflect
      allowance for loan loss balances of $2.7 million and $2.2 million,
      respectively.  The overall increase in the ratio of allowance to gross
      loans reported reflects the changing composition of the portfolio with greater
      strategic emphasis on loans with higher risk factors.  As noted
      earlier, no additions to the allowance for loan losses were required for
      nonperforming loans, which decreased to 0.14% of total assets at December 31,
      2007 from 0.32% at December 31, 2006.  The level of the allowance is
      based on estimates and the ultimate losses may vary from those
      estimates.





Noninterest
      Income.  Noninterest income increased $108,000 to $395,000 for
      the three months ended December 31, 2007 from $287,000 for the three months
      ended December 31, 2006.  The growth in noninterest income was
      attributable, in part, to comparative increases in deposit service fees and
      charges of $66,000.  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 primarily due
      to growth in deposit-related fees and charges within the Bank’s other
      branches.  The Company also reported a $50,000 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.  These
      increases were primarily offset by lower loan servicing fee income attributable
      to a lower outstanding balance of mortgage loans serviced for
      others.





Noninterest
      Expense.  Noninterest expense increased $386,000 to $3.3
      million for the three months ended December 31, 2007 from $2.9 million for
      the
      three months ended December 31, 2006.  Significant components of this
      growth in operating costs include comparative increases to salaries and employee
      benefits of $178,000 and increased occupancy and equipment costs of
      $238,000.  Offsetting these increases were reductions in advertising
      and marketing expenses totaling $34,000.





The
      net
      increase in salaries and employee benefits for the comparative periods includes
      several offsetting components.  Foremost was an increase is employee
      wages and salaries of $209,000 attributable primarily to additional Bank staff
      supporting the three de novo branches opened during fiscal
      2007.  Associated increases in benefits and payroll taxes totaling
      $14,000 and $15,000, respectively, were also recorded in the more recent
      quarter.  Additionally, expenses associated with the Bank’s
      supplemental executive retirement program increased approximately $41,000 due
      largely to updated assumptions used in benefit accrual
      calculations.  Offsetting these increases were comparative decreases
      in year end bonus-related expenses of $74,000 attributable largely to the
      reversal in the current quarter of estimated expense accruals recorded during
      fiscal 2007 that had exceeded actual amounts paid.  Finally, ESOP
      expense for the comparative periods decreased $20,000 due to the comparatively
      lower average price of the Company’s shares during the more recent
      period.





The
      reported reduction in advertising and marketing expenses reflects the higher
      costs in the earlier comparative period attributable to promoting the grand
      opening of the first of the prior year’s three de novo branches during December
      2006.





The
      addition of three de novo branches during fiscal 2007 was a significant
      contributor to the reported net increase in occupancy and equipment expense
      for
      the three months ended December 31, 2007.  However, the reported
      increase also reflects the land lease costs to date associated with the
      relocation of Bank’s Bloomfield branch which is currently under construction and
      targeted for completion during the second fiscal quarter ending March 31,
      2008.  In addition to these branch-related costs, the reported
      increase in occupancy and equipment costs also included a $37,000 increase
      attributable to the expanded outsourcing of network infrastructure management
      services.  The reported increase resulted


25


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.





Provision
      for Income
      Taxes.  The provision for income taxes decreased $199,000 for
      the three months ended December 31, 2007 compared with the three months ended
      December 31, 2006.  For those same comparative periods, the Company’s
      effective tax rate was -13.4% and 36.4%, respectively.  The lower
      effective tax rate in the current period was largely the result of the level
      of
“tax favored” income reported by the Company for the comparative period in
      relation to the level of pretax net income reported by the Company for those
      same periods.  “Tax favored” income arises from revenue sources on
      which the Company pays income taxes at a comparatively lower effective tax
      rate
      than it generally pays on other sources of income.





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





The
      Company recognized income from these two “tax favored” sources during both
      comparative quarters.  However, the comparatively lower pretax net
      income reported for current quarter 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.





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.


26


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.  No significant changes to loss factors
      used in the Bank’s loss provision calculations were made during the quarter
      ended December 31, 2007.





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





Liquidity
      and Commitments





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





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





Liquidity
      management is both a daily and long-term function of business
      management.  Excess liquidity is generally invested in short-term
      investments such as overnight deposits or U.S. Agency securities.  On
      a longer-term basis, the Bank maintains a strategy of investing in various
      loan
      products and in securities collateralized by loans.  The Bank uses its
      sources of funds primarily to meet its ongoing commitments, to pay maturing
      certificates of deposit and savings withdrawals, to fund loan commitments and
      to
      maintain its portfolio of mortgage-backed securities and investment
      securities.  At December 31, 2007, the total approved loan origination
      commitments outstanding amounted to $32.9


27


million.  At
      the same date, unused lines of credit were $28.5 million and undisbursed
      construction loans in process were $19.5 million.





Certificates
      of deposit scheduled to mature in one year or less at December 31, 2007, totaled
      $177.0 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 December 31, 2007 the Bank had $12.1 million
      of borrowings from the Federal Home Loan Bank of New York ("FHLB") maturing
      in
      less than one year.  Repayment of such advances increases the Bank's
      unused borrowing capacity from the FHLB which totaled $105.7 million at December
      31, 2007.  In calculating our borrowing capacity, the Bank utilizes
      the FHLB's guideline, which generally limits advances secured by residential
      mortgage collateral to 25% of the Bank's total assets.





The
      following tables disclose our contractual obligations and commercial commitments
      as of December 31, 2007.  Scheduled principal payments on amortizing
      borrowings are reported as maturities.





Total
              
              
              Less
                  Than
                1
                  Year
              
              
              1-3
                  Years
              
              
              4-5
                  Years
              
              
              After
                5
                  Years(In
                  thousands)Time
                  Deposits
              
              $
              199,805
              
              
              $
              176,982
              
              
              $
              8,451
              
              
              $
              4,335
              
              
              $
              10,037FHLB  advances(1)
              
              
              36,596
              
              
              
              12,066
              
              
              
              13,530
              
              
              
              11,000
              
              
              
              -Total
              
              $
              236,401
              
              
              $
              189,048
              
              
              $
              21,981
              
              
              $
              15,335
              
              
              $
              10,037


(1)
            At
                December 31, 2007, the total collateralized borrowing limit was $142.3
                million, of which we had $36.6 million
                outstanding.







Total
                Amounts
                Committed
              
              
              Less
                  Than
                1
                  Year
              
              
              1-3
                  Years
              
              
              4-5
                  Years
              
              
              Over
                5
                  Years(In
                  thousands)Lines
                  of credit(1)
              
              $
              28,547
              
              
              $
              2,415
              
              
              $
              774
              
              
              $
              437
              
              
              $
              24,921Land
                  lease - Bloomfield
              
              
              2,307
              
              
              
              51
              
              
              
              277
              
              
              
              279
              
              
              
              1,700Building
                  lease - Nutley
              
              
              1,477
              
              
              
              84
              
              
              
              184
              
              
              
              186
              
              
              
              1,023Construction
                  loans inprocess(1)
              
              
              19,503
              
              
              
              13,777
              
              
              
              5,726
              
              
              
              -
              
              
              
              -Other
                  commitments toextend
                  credit(1)
              
              
              32,885
              
              
              
              32,885
              
              
              
              -
              
              
              
              -
              
              
              
              -Total
              
              $
              84,719
              
              
              $
              49,212
              
              
              $
              6,961
              
              
              $
              902
              
              
              $
              27,644


(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 $160,714.  The standby
      letter of credit, which represents a contingent liability to the Bank, expires
      in May 2008.





28


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 $77.7 million at December 31,
      2007, or 13.65% of total assets on that date.   As of December
      31, 2007, the Bank exceeded all capital requirements of the Office of Thrift
      Supervision.  The Bank's regulatory capital ratios at December 31,
      2007 were as follows: Core capital, 13.66%; Tier I risk-based capital, 21.17%;
      and total risk-based capital, 21.91%.  The regulatory capital
      requirements to be considered well capitalized are 5.0%, 6.0% and 10.0%,
      respectively.





Impact
      of Inflation





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





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





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





Recent
      Accounting Pronouncements





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














29


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:





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





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





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





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





Tables
      presenting the composition and
      allocation of the Company's interest-earning assets and interest-costing
      liabilities from an interest rate risk perspective are set forth in the
      preceding section of this report titled "Comparison of Financial Condition
      at
      December 31, 2007 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-costing 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 spread compression.  Such
      compression resulted in a 0.36% reduction in our net interest 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 in the
      first quarter of fiscal 2008 when the Company’s net interest spread increased 6
      basis points to 1.50% in comparison to 1.44% for fiscal 2007 as the increase
      in
      the yield on earning assets outpaced the increase in the Company's cost of
      interest-bearing liabilities.  In large part, the improvements in net
      interest spread for the quarter


30


ended
      December 31, 2007 resulted from continued increases in the yield on loans,
      attributable primarily to the Company’s commercial lending strategies, which
      outpaced the increase in the cost of retail deposits.  The slowing
      rate of increase in retail deposit interest costs continued to reflect the
      highly competitive nature of deposit pricing within the markets served by the
      Company offset, in part, by the continued 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 spread reported for the first quarter of fiscal
      2008, our earnings may continue to 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 December 31, 2007, excluding allowance for loan losses and
      net deferred origination costs and including loans held for sale, loans totaled
      $450.7 million comprising 79.26% of total assets.  As presented in the
      loan-related tables in the preceding section of this report titled "Comparison
      of Financial Condition at December 31, 2007 and September 30, 2007", loans
      reported as fixed rate mortgages totaled $187.5 million or 33.0% of total assets
      while ARMs totaled $200.1 million or 35.2% 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 spread to shrink because the increase in the rates we would
      earn on our securities and loan portfolios would be less than the increase
      in
      the rates we would pay on deposits and borrowings.





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





The
      Bank
      also faces the risk of continued disintermediation of our deposits into higher
      cost accounts as well as the expectation for some amount of deposit
      outflows.  Specifically, we were successful in growing non-maturity
      deposits during fiscal 2007 due, in part, to higher promotional interest rates
      paid at the Bank’s three newest branches.  Our ability to retain these
      deposits as rates on such accounts are incrementally adjusted to
“non-promotional” levels continues to be rigorously tested.  We expect
      that a portion of recently acquired deposits may be subject to disintermediation
      into higher yielding deposit accounts, such as certificates of deposit, while
      the most “price sensitive” of those deposits may be withdrawn.  A
      portion of the Bank’s recent accumulation of short term liquid assets has been
      attributable to managing the contingency of that latter risk.








31


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





Net
                  Portfolio Value
              
              Net
                  Portfolio
                Value
                  as % of
                Present
                  Value of Assets
              
              
              
              Board
                Established
                  LimitsChanges
                  in
                Rates
              
              $
                  Amount
              $
                  Change
              
              %
                  Change
              
              Net
                Portfolio
                Value
                Ratio
              
              Basis
                Point
                Change
              
              Net
                Portfolio
                Value
                Ratio
              
              Basis
                Point
                Change(Dollars
                  in thousands)+300
                  bp
              
              68,496
              -20,370
              
              -23%
              
              12.56%
              
              -289bp
              
              5.00%
              
              -450bp+200
                  bp
              
              75,408
              -13,458
              
              -15%
              
              13.59%
              
              -186bp
              
              6.00%
              
              -300bp+100
                  bp
              
              82,544
              -6,322
              
              -7%
              
              14.60%
              
              -85bp
              
              7.00%
              
              -150bp0 bp
              
              88,866
              
              
              
              
              15.45%
              
              
              
              8.00%-100
                  bp
              
              92,869
              4,003
              
              +5%
              
              15.93%
              
              +48bp
              
              7.00%
              
              -150bp-200
                  bp
              
              94,509
              5,644
              
              +6%
              
              16.06%
              
              +61bp
              
              6.00%
              
              -300bp


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


32


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





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





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





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





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





(5)           
      Originate and retain 1-4 family home equity loans and variable rate lines of
      credit to increase loan portfolio repricing frequency and cash
      flows;





(6)           
      Originate both fixed and adjustable rate 1-4 family first mortgage loans
      eligible for sale in the secondary market and, if warranted, sell such loans
      on
      either a servicing retained or servicing released basis. The strategy reduces
      the balance of longer duration and/or non-prepayment protected loans while
      enhancing non interest income.





At
      December 31, 2007, the Bank did not have any outstanding contracts to sell
      mortgage loans into the secondary market.  In general, the Bank
      intends to discontinue the sale of most 1-4 family mortgage loan originations
      for a period of time to augment the growth in commercial loans through which
      the
      Bank will reinvest a portion of the balances of cash and cash equivalents
      accumulated during fiscal 2007.  As discussed in the preceding section
      titled “Comparison of Financial Condition at December 31, 2007 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 FNMA 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.











33


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 quarter ended December 31, 2007, 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.





34


PART
      II - - OTHER INFORMATION








ITEM
      1.   LEGAL PROCEEDINGS





At
      December 31, 2007, 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 December 31, 2007 and
      additional information regarding our share repurchase program.





Period
            (a)
                Total Number
              Of
                Shares (or
              Units)
                Purchased
            (b)
              Average
                Price
              Paid
                per Share
              (or
                Unit)
            (c)
                Total Number
              of
                Shares (or Units) Purchased as Part Of Publicly
              Announced
                Plans
              or
                Programs
            (d)
                Maximum Number
              (or
                Approximate Dollar
              Value)
                of Shares (or
              Units)
                that May Yet Be
              Purchased
                Under
              Plans
                or
                ProgramsRepurchases
                for the Month
              
              
              October
                1 – October 31, 2007
              November
                1 – November 30, 2007
              December
                1 – December 31, 2007
              
              
              Total
                repurchases
            -
              158,928
              277,546
              
              
              436,474
            -
              $10.50
              $10.34
              
              
              $10.40
            -
              158,928
              277,546
              
              
              436,474
            436,474
              277,546
              -
                (1)





(1)On
      January 3, 2008, the Company announced the initiation of a new stock repurchase
      program to purchase up to an additional 5% of its outstanding
      shares.








ITEM
      3.   DEFAULTS UPON SENIOR SECURITIES





None





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





None








ITEM
      5.  OTHER INFORMATION





None








35


ITEM
      6.  EXHIBITS





(a)
            Exhibits





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.








36


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:
              February
              11, 2008
            /s/
              Joseph
              kliminskiJoseph
                Kliminski
              Chief Executive OfficerDate:
              February
              11, 2008
            /s/
              Eric B.
              HeyerEric
                B. Heyer
              Senior Vice President and Chief Financial
                Officer









37