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, 2005                                                                                                                                                    
|--------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|**[   ]** | **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**(State or other jurisdiction
of incorporation or organization)                                                                                     | **55-0897507**(I.R.S. EmployerIdentification 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 accelerate filer, or a non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the
Exchange Act.  (Check one):

|Large accelerated filer [    ] | Accelerated filer [    ] | Non-accelerated filer [ X ]
|------------------------------ | ------------------------ | ---------------------------

As of February 10, 2006, there were 14,169,469  outstanding shares of the Registrant's Common Stock.

**AMERICAN BANCORP OF NEW JERSEY, INC.**

**Table of Contents**

|**PART I - FINANCIAL INFORMATION (UNAUDITED)**
|----------------------------------------------
|                                              
|Item 1.                                       
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|Item 2.                                       
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|Item 3.                                       
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|Item 4.                                       
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|**PART II - OTHER INFORMATION**               
|Item 1.                                       
|Item 2.                                       
|Item 3.                                       
|Item 4.                                       
|Item 5.                                       
|Item 6.                                       
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|**FORM 10-Q SIGNATURE PAGE**                  
|                                              
|**CERTIFICATIONS**                            

**ITEM 1.  FINANCIAL STATEMENTS**

**American Bancorp of New Jersey, Inc.
Statements of Financial Condition
(in thousands, except share data)
(unaudited)**

|                                                                                                     |                                                                                                                                                                          |                                 |                                            | **December 31,2005** | **September 30,2005**
|---------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------- | ------------------------------------------ | -------------------- | ---------------------
|**ASSETS**                                                                                          
|Cash and cash equivalents                                                                           
|                                                                                                     | Cash and due from banks                                                                                                                                                  | $    2,426                      | $    2,622                                
|                                                                                                     | Interest-bearing deposits                                                                                                                                                | 16,091                          | 105,851                                   
|                                                                                                     | Federal funds sold                                                                                                                                                       | 11,500                          | 17,300                                    
|                                                                                                     |                                                                                                                                                                          | Total cash and cash equivalents | 30,017                                     | 125,773             
|                                                                                                    
|Securities available-for-sale                                                                        | 100,752                                                                                                                                                                  | 62,337                         
|Securities held-to-maturity (fair value: December 31, 2005 -
  $12,243; September 30, 2005 - $7,694) | 12,373                                                                                                                                                                   | 7,824                          
|Loans, net                                                                                           | 354,207                                                                                                                                                                  | 341,006                        
|Loans held for sale                                                                                  | -                                                                                                                                                                        | 280                            
|Premises and equipment                                                                               | 4,151                                                                                                                                                                    | 4,131                          
|Federal Home Loan Bank stock, at cost                                                                | 3,180                                                                                                                                                                    | 3,119                          
|Cash surrender value of life insurance                                                               | 8,508                                                                                                                                                                    | 7,512                          
|Accrued interest receivable                                                                          | 1,812                                                                                                                                                                    | 1,468                          
|Other assets                                                                                         | 1,924                                                                                                                                                                    | 2,410                          
|                                                                                                     | Total assets                                                                                                                                                             | $ 516,924                       | $ 555,860                                 
|**LIABILITIES AND STOCKHOLDERS' EQUITY**                                                            
|Liabilities                                                                                         
|                                                                                                     | Deposits                                                                                                                                                                
|                                                                                                     |                                                                                                                                                                          | Noninterest-bearing             | $ 24,375                                   | $ 25,583            
|                                                                                                     |                                                                                                                                                                          | Interest-bearing                | 302,661                                    | 315,342             
|                                                                                                     |                                                                                                                                                                          |                                 | Total deposits                             | 327,036              | 340,925              
|                                                                                                     | Stock subscriptions received                                                                                                                                             | -                               | 115,201                                   
|                                                                                                     | Advance payments by borrowers for taxes and insurance                                                                                                                    | 2,327                           | 2,443                                     
|                                                                                                     | Federal Home Loan Bank borrowings                                                                                                                                        | 53,719                          | 53,734                                    
|                                                                                                     | Accrued interest payable and other liabilities                                                                                                                           | 4,087                           | 3,578                                     
|                                                                                                     | Common stock in ESOP subject to contingent repurchase obligation                                                                                                         | -                               | 473                                       
|                                                                                                     |                                                                                                                                                                          | Total liabilities               | 387,169                                    | 516,354             
|                                                                                                    
|Stockholders' Equity                                                                                
|                                                                                                     | September 30, 2005 - preferred stock, $.10 par value, 5,000,000
  shares authorized December 31, 2005 - preferred stock, 
  $.10 par value, 10,000,000 shares authorized | -                               | -                                         
|                                                                                                     | September 30, 2005 - Common stock, $.10 par value,
  20,000,000 shares  authorized; 5,554,500 shares issued and outstanding                                             
|                                                                                                     | December 31, 2005 - Common stock, $.10 par value,
  20,000,000 shares  authorized; 14,169,469 shares issued and outstanding                                              | 1,417                           | 555                                       
|                                                                                                     | Additional paid-in capital                                                                                                                                               | 113,621                         | 17,242                                    
|                                                                                                     | Unearned ESOP shares                                                                                                                                                     | (8,887)                         | (1,064)                                   
|                                                                                                     | Unearned RSP shares                                                                                                                                                      | (1,107)                         | (1,212)                                   
|                                                                                                     | Retained earnings                                                                                                                                                        | 25,557                          | 25,417                                    
|                                                                                                     | Accumulated other comprehensive loss                                                                                                                                     | (846)                           | (959)                                     
|                                                                                                     | Amount reclassified on ESOP shares                                                                                                                                       | -                               | (473)                                     
|                                                                                                     |                                                                                                                                                                          | Total stockholders' equity      | 129,755                                    | 39,506              
|                                                                                                     |                                                                                                                                                                          |                                 | Total liabilities and stockholders' equity | $ 516,924            | $ 555,860            

See accompanying notes to unaudited consolidated financial statements

**American Bancorp of New Jersey, Inc.
Statements of Income
(in thousands, except share data)
(unaudited)**

|                                                    |                                                    |                           |                                    |          |  | 
|--------------------------------------------------- | -------------------------------------------------- | ------------------------- | ---------------------------------- | -------- |  | 
|                                                    |                                                    |                           | **Three MonthsEnded December 31,**
|                                                    |                                                    |                           | **2005**                           | **2004**
|Interest and dividend income                       
|                                                    | Loan, including fees                               | $   4,691                 | $   4,137                         
|                                                    | Securities                                         | 777                       | 739                               
|                                                    | Federal funds sold and other                       | 623                       | 28                                
|                                                    |                                                    | Total interest income     | 6,091                              | 4,904   
|                                                   
|Interest expense                                   
|                                                    | NOW and money market                               | 194                       | 99                                
|                                                    | Savings                                            | 516                       | 576                               
|                                                    | Certificates of deposit                            | 1,346                     | 809                               
|                                                    | Federal Home Loan Bank advances                    | 656                       | 696                               
|                                                    |                                                    | Total interest expense    | 2,712                              | 2,180   
|Net interest income                                 | 3,379                                              | 2,724                    
|                                                   
|Provision for loan losses                           | 86                                                 | 41                       
|Net interest income after provision for loan losses | 3,293                                              | 2,683                    
|                                                   
|Noninterest income                                 
|                                                    | Deposit service fees and charges                   | 182                       | 174                               
|                                                    | Income from cash surrender value of life insurance | 76                        | 60                                
|                                                    | Gain on sale of loans                              | 2                         | 1                                 
|                                                    | Loss on sales of securities available-for-sale     | (271)                     | -                                 
|                                                    | Other                                              | 37                        | 12                                
|                                                    |                                                    | Total noninterest income  | 26                                 | 247     
|                                                   
|Noninterest expense                                
|                                                    | Salaries and employee benefits                     | 1,397                     | 1,210                             
|                                                    | Occupancy and equipment                            | 198                       | 205                               
|                                                    | Data processing                                    | 159                       | 146                               
|                                                    | Advertising                                        | 51                        | 64                                
|                                                    | Professional & Consulting                          | 119                       | 67                                
|                                                    | Legal                                              | 85                        | 75                                
|                                                    | Other                                              | 236                       | 190                               
|                                                    |                                                    | Total noninterest expense | 2,245                              | 1,957   
|Income before provision for income taxes            | 1,074                                              | 973                      
|                                                   
|Provision for income taxes                          | 411                                                | 363                      
|Net income                                          | $   663                                            | $   610                  
|Comprehensive income                                | $   776                                            | $   610                  
|Earnings per share:                                
|                                                    | Basic                                              | $ 0.05                    | $ 0.04                            
|                                                    | Diluted                                            | $ 0.05                    | $ 0.04                            

See accompanying notes to unaudited consolidated financial statements

**American Bancorp of New Jersey, Inc.
Statements of Stockholders' Equity
Three months ended December 31, 2004
(in thousands)
(unaudited)**

|                                                                                                                          | CommonStock    | AdditionalPaid-inCapital | UnearnedESOPShares | RetainedEarnings | AccumulatedOtherComprehensiveLoss | AmountReclassifiedOn ESOPShares | TotalEquity   | ComprehensiveIncome(Loss)
|------------------------------------------------------------------------------------------------------------------------- | -------------- | ------------------------ | ------------------ | ---------------- | --------------------------------- | ------------------------------- | ------------- | -------------------------
|Balance at September 30, 2004                                                                                             | $          555 | $         15,687         | $       (1,200)    | $   24,806       | $                 (482)           | $             (52)              | $     39,314  |                          
|ESOP shares earned                                                                                                        | -              | 20                       | 36                 | -                | -                                 | -                               | 56            |                          
|ESOP dividend proceeds                                                                                                    | -              | 100                      | -                  | -                | -                                 | -                               | 100           |                          
|Cash dividends paid - 
  $0.75 per share                                                                                  | -              | -                        | -                  | (1,250)          | -                                 | -                               | (1,250)       |                          
|Reclassification due to
  change in fair value of
  common stock in ESOP
  subject  to contingent
  repurchase obligation | -              | -                        | -                  | -                | -                                 | (252)                           | (252)         |                          
|                                                                                                                         
|Comprehensive income                                                                                                     
|Net income                                                                                                                | -              | -                        | -                  | 610              | -                                 | -                               | 610           |                          
|Change in unrealized gain
    on securities available-for-
    sale,  net of taxes                                        | -              | -                        | -                  | -                | -                                 | -                               | -            
|Total comprehensive
       income                                                                                         | -              | -                        | -                  | -                | -                                 | -                               | -             | $ 610                    
|Balance at
  December 31, 2004                                                                                            | $          555 | $         15,807         | $       (1,164)    | $   24,166       | $                 (482)           | $            (304)              | $      38,578

See accompanying notes to unaudited consolidated financial statements

**American Bancorp of New Jersey, Inc.
Statements of Stockholders' Equity
Three months ended December 31, 2005
(in thousands)
(unaudited)**

|                                                                                    | CommonStock    | AdditionalPaid-inCapital | UnearnedESOPShares | UnearnedRSPShares | RetainedEarnings | AccumulatedOtherComprehensiveLoss | AmountReclassifiedOn ESOPShares | TotalEquity  | ComprehensiveIncome(Loss)
|----------------------------------------------------------------------------------- | -------------- | ------------------------ | ------------------ | ----------------- | ---------------- | --------------------------------- | ------------------------------- | ------------ | -------------------------
|Balance at 
  September 30, 2005                                                    | $          555 | $         17,242         | $       (1,064)    | $       (1,212)   | $   25,417       | $                 (959)           | $              (473)            | $     39,506 |                          
|Issuance and exchange of
  common stock, net of
  issuance costs                    | 862            | 96,661                   | (7,935)            | -                 | -                | -                                 | -                               | 89,588       |                          
|MHC capital infusion from
  merger                                                  | -              | 98                       | -                  | -                 | -                | -                                 | -                               | 98           |                          
|RSP share purchases                                                                 | -              | (420)                    | -                  | -                 | -                | -                                 | -                               | (420)        |                          
|                                                                                   
|RSP shares earned                                                                   | -              | -                        | -                  | 62                | -                | -                                 | -                               | 62           |                          
|RSP share forfeited                                                                 | -              | (43)                     | -                  | 43                | -                | -                                 | -                               | -            |                          
|Stock options earned                                                                | -              | 63                       | -                  | -                 | -                | -                                 | -                               | 63           |                          
|ESOP shares earned                                                                  | -              | 20                       | 112                | -                 | -                | -                                 | -                               | 132          |                          
|Cash dividends paid -
  $0.04 per share                                             | -              | -                        | -                  | -                 | (523)            | -                                 | -                               | (523)        |                          
|Reclassification due to
  change in elimination of
  repurchase obligation          | -              | -                        | -                  | -                 | -                | -                                 | 473                             | 473          |                          
|                                                                                   
|Comprehensive income                                                               
|Net income                                                                          | -              | -                        | -                  | -                 | 663              | -                                 | -                               | 663          |                          
|Change in unrealized gain
     on securities available-for-
     sale, net of taxes | -              | -                        | -                  | -                 | -                | 113                               | -                               | 113          |                          
|Total  comprehensive
       income                                                  | -              | -                        | -                  | -                 | -                | -                                 | -                               | -            | $  776                   
|                                                                                   
|Balance at
  December 31, 2005                                                      | $       1,417  | $       113,621          | $       (8,887)    | $       (1,107)   | $   25,557       | $                 (846)           | -                               | $   129,755  |                          

See accompanying notes to unaudited consolidated financial statements

**American Bancorp of New Jersey, Inc.
Statements of Cash Flows
(in thousands)
(unaudited)**

|                                                 |                                                                                    |                                                    |                                    | **Three Months EndedDecember 31,**
|------------------------------------------------ | ---------------------------------------------------------------------------------- | -------------------------------------------------- | ---------------------------------- | ----------------------------------
|                                                 |                                                                                    |                                                    |                                    | **2005**                          
|**Cash flows from operating activities**        
|                                                 | Net income                                                                         | $   663                                            | $   610                           
|                                                 | Adjustments to reconcile net income to net cash
  provided by operating activities
|                                                 |                                                                                    | Depreciation and amortization                      | 353                                | 91                                
|                                                 |                                                                                    | Net amortization of premiums and discounts         | 8                                  | 35                                
|                                                 |                                                                                    | Losses on sales of securities available-for-sale   | 271                                | -                                 
|                                                 |                                                                                    | ESOP compensation expense                          | 132                                | 156                               
|                                                 |                                                                                    | RSP compensation expense                           | 62                                 | -                                 
|                                                 |                                                                                    | SOP compensation expense                           | 63                                 | -                                 
|                                                 |                                                                                    | Provision for loan losses                          | 86                                 | 41                                
|                                                 |                                                                                    | Increase in cash surrender value of life insurance | (76)                               | (60)                              
|                                                 |                                                                                    | Gain on sale of loans                              | (2)                                | (1)                               
|                                                 |                                                                                    | Proceeds from sales of loans                       | 1,120                              | 141                               
|                                                 |                                                                                    | Origination of loans held for sale                 | (838)                              | (140)                             
|                                                 |                                                                                    | Decrease (increase) in accrued interest receivable | (344)                              | (28)                              
|                                                 |                                                                                    | Decrease (increase) in other assets                | 478                                | 191                               
|                                                 |                                                                                    | Change in deferred income taxes                    | (72)                               | (48)                              
|                                                 |                                                                                    | Increase (decrease) in other liabilities           | 509                                | 319                               
|                                                 |                                                                                    |                                                    | Net cash from operating activities | 2,413                             
|                                                
|**Cash flows from investing activities**        
|                                                 | Net increase in loans receivable                                                   | (13,287)                                           | (9,553)                           
|                                                 | Purchases of securities held-to-maturity                                           | (4,935)                                            | (6,227)                           
|                                                 | Principal paydowns on securities held-to-maturity                                  | 382                                                | 194                               
|                                                 | Purchases of securities available-for-sale                                         | (52,606)                                           | -                                 
|                                                 | Sales of securities available-for-sale                                             | 9,750                                              | -                                 
|                                                 | Calls of securities available-for-sale                                             | -                                                  | 2,000                             
|                                                 | Principal paydowns on securities available-for-salef                               | 4,359                                              | 5,623                             
|                                                 | Purchase of Federal Home Loan Bank stock                                           | (61)                                               | (984)                             
|                                                 | Redemption of Federal Home Loan Bank stock                                         | -                                                  | 500                               
|                                                 | Purchase of bank-owned life insurance                                              | (920)                                              | (1,000)                           
|                                                 | Purchase of premises and equipment                                                 | (373)                                              | (108)                             
|                                                 |                                                                                    | Net cash from investing activities                 | (57,691)                           | (9,555)                           
|                                                
|**Cash from financing activities**              
|                                                 | Net increase (decrease)  in deposits                                               | (13,889)                                           | 6,190                             
|                                                 | Net change in advance payments by borrowers for taxes and insurance                | (116)                                              | (61)                              
|                                                 | Repayment of Federal Home Loan Bank of New York advances                           | (15)                                               | (1,014)                           
|                                                 | Net change in Federal Home Loan Bank of New York OLOC                              | -                                                  | 1,600                             
|                                                 | Net proceeds from stock issuance                                                   | 89,588                                             | -                                 
|                                                 | MHC capital infusion                                                               | 98                                                 | -                                 
|                                                 | RSP share purchases                                                                | (420)                                              | -                                 
|                                                 | Cash dividends paid                                                                | (523)                                              | (1,250)                           
|                                                 | Stock subscriptions refunded or applied                                            | (115,201)                                          | -                                 
|                                                 |                                                                                    | Net cash from financing activities                 | (40,478)                           | 5,465                             
|Net change in cash and cash equivalents          | (95,756)                                                                           | (2,783)                                           
|                                                
|Cash and cash equivalents at beginning of period | 125,773                                                                            | 8,034                                             
|**Cash and cash equivalents at end of period**   | $ 30,017                                                                           | $  5,251                                          

American Bancorp of New Jersey, Inc.
Statements of Cash Flows
(in thousands)
(unaudited)

|                                                                                                                               |                                 |                              |           | **Three Months EndedDecember 31,**
|------------------------------------------------------------------------------------------------------------------------------ | ------------------------------- | ---------------------------- | --------- | ----------------------------------
|                                                                                                                               |                                 |                              |           | **2005**                          
|Supplemental cash flow information:                                                                                           
|                                                                                                                               | Cash paid during the period for
|                                                                                                                               |                                 | Interest                     | $   2,702 | $   2,177                         
|                                                                                                                               |                                 | Income taxes, net of refunds | -         | 48                                
|Supplemental disclosures of non-cash financing transaction:
  Transfer of stock subscriptions received and deposits to capital | 89,588                          | -                           

**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 American Bank of New Jersey, 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 sold to any person other than the MHC.

On October 3, 2003, ASBH 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.  See Note 2 Minority Offering for further discussion.

After the sale of the stock in the minority offering, 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 at which time ASB
Holding Company ceased to exist and American Bancorp of New Jersey, Inc. became the new holding
company for the Bank.  The Company currently holds 100% of the outstanding stock of American Bank
of New Jersey.  See Note 3 Second Step Conversion for further discussion.

The accompanying unaudited consolidated financial statements include the accounts of
American Bancorp of New Jersey, Inc. and its wholly owned subsidiaries, American Bank of New Jersey
and ASB Investment Corp. (the "Investment Corp.") as of December 31, 2005 and for the three months
ended December 31, 2005.  The unaudited consolidated financial statements as of September 30, 2005 and
the three months ended December 31, 2004 are those of ASB Holding Company, the Company's
predecessor.  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 in New Jersey.
The Bank is subject to competition from other financial institutions and to the regulations of certain
federal and state agencies and undergoes periodic examinations by those regulatory authorities.  The
Investment Corp. was organized for the purpose of selling insurance and investment products, including
annuities, to customers of the Bank and the general public, with initial activities limited to the sale of
fixed rate annuities.  The 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

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 ended September 30, 2006.  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, 2005 are not necessarily
indicative of the results to be expected for the full year or any other period.

Note 2 - Minority Offering

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 $1,333,000 to the
Bank's employee stock ownership plan and the ESOP used those funds to acquire 133,000
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.

Note 3 - Second Step Conversion

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

As part of the conversion, the 1,666,350 outstanding shares of ASB Holding Company
were each exchanged for 2.55102 of the Company's shares.  This exchange resulted in an
additional 4,250,719 shares of American Bancorp of New Jersey, Inc. being issued for a total of
14,169,469 outstanding shares.

The Company had stock subscriptions received totaling $115,201,806 at September 30,
2005 pending completion of the conversion and stock offering.  At the time of closing on
October 5, 2005, approximately $91,252,500, less offering expenses, became capital of the
Company with the remainder being returned on oversubscriptions.  The following table
summarizes the pro forma impact of the conversion and stock offering results on the
Company's September 30, 2005 balance sheet.

**Actual and Pro Forma Summary Consolidated Statement of Financial Condition
September 30, 2005**

|                                                                    | **Actual** | **Pro Forma**  
|------------------------------------------------------------------- | ---------- | ---------------
|**ASSETS**                                                         
|Cash and cash equivalents(1)                                        | $	125,773  | $        92,166
|Securities available-for-sale                                       | 62,337     | 62,337         
|Securities held-to-maturity                                         | 7,824      | 7,824          
|Loans held for sale                                                 | 280        | 280            
|Loans receivable, net of allowance for loan losses                  | 341,006    | 341,006        
|Premises and equipment                                              | 4,131      | 4,131          
|Federal Home Loan Bank stock, at cost                               | 3,119      | 3,119          
|Cash surrender value of life insurance                              | 7,512      | 7,512          
|Accrued interest receivable                                         | 1,468      | 1,468          
|Other assets                                                        | 2,410      | 1,797          
|Total assets                                                        | $	555,860  | $	521,640      
|**LIABILITIES AND EQUITY**                                         
|Deposits(2)                                                         | 340,925    | 331,167        
|Stock subscriptions received(3)                                     | 115,201    | -              
|Advance payments by borrowers for taxes and insurance               | 2,443      | 2,443          
|Federal Home Loan Bank advances                                     | 53,734     | 53,734         
|Accrued expenses and other liabilities                              | 3,578      | 4,629          
|Common stock in ESOP subject to contingent repurchase obligation(6) | 473        | -              
|Total liabilities                                                   | 516,354    | 391,973        
|                                                                   
|Equity                                                             
|Common stock and additional paid in capital(4)                      | 17,797     | 115,420        
|Unearned ESOP shares(5)                                             | (1,064)    | (8,999)        
|Unearned RSP shares                                                 | (1,212)    | (1,212)        
|Retained earnings                                                   | 25,417     | 25,417         
|Accumulated other comprehensive loss                                | (959)      | (959)          
|Amount reclassified on ESOP shares(6)                               | (473)      | -              
|Total equity                                                        | 39,506     | 129,667        
|Total liabilities and equity                                        | $	555,860  | $	521,640      

|(1) | Pro forma balance reflects reduction of cash for funding the return of approximately $33.7 million in oversubscriptions.                                                                                                                                                                                                                                                
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Pro forma balance reflects approximately $9.8 million of deposit balances withdrawn to purchase shares in the stock offering.                                                                                                                                                                                                                                           
|(3) | Pro forma balance reflects refund of $33.7 million of oversubscriptions plus the utilization of $81.5 million of subscriptions to
purchase shares in the stock offering.                                                                                                                                                                                                
|(4) | Pro forma balance reflects additional capital from deposits, subscriptions and ESOP purchases of $9.8 million, $81.5 million
and $7.9 million, respectively.  An additional $99,000 of capital was received through the merger of American Savings, MHC
into the Bank.  These additions to capital were offset by stock offering expenses of approximately $1.6 million.
|(5) | Pro forma balance reflects the addition of $7.9 million of unearned shares purchased by the ESOP during the stock offering.                                                                                                                                                                                                                                             
|(6) | Pro forma balance reflects the elimination of ESOP contingent repurchase obligation of $473,000.                                                                                                                                                                                                                                                                        

Note 4 - Earnings Per Share (EPS)

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

The factors used in the earnings per share computation follow.

|                                                                                               | **Three Months Ended
December 31,**         
|---------------------------------------------------------------------------------------------- | --------------------------------------------
|****                                                                                           | **2005**                                    
|                                                                                               | **(Dollars in thousands
except share data)**
|Basic                                                                                         
|Net income                                                                                     | $          663                              
|                                                                                              
|Weighted average common shares outstanding                                                     | 13,178,033                                  
|                                                                                              
|Basic earnings per common share                                                                | $         0.05                              
|Diluted                                                                                       
|Net income                                                                                     | $          663                              
|                                                                                              
|Weighted average common shares
        outstanding for basic earnings
        per common share | 13,178,033                                  
|                                                                                              
|Add:  Dilutive effects of assumed exercises
of stock options                                   | 189,983                                     
|                                                                                              
|Add:  Dilutive effects of full vesting of stock 
        awards                                | 33,045                                      
|Average shares and dilutive potential
         common shares                                   | 13,401,061                                  
|Diluted earnings per common share                                                              | $         0.05                              

Note 5 - Employee Stock Ownership Plan

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

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

At December 31, 2005, the ESOP held 1,133,571 shares of the Company's common stock
and 81,933 of these shares had been allocated to the accounts maintained for participants.
Participants become eligible to receive payment of the vested benefits under the plan upon
retirement, disability or termination of employment.  Participants who elect to receive their
benefit payments in the form of American Bancorp of New Jersey, Inc. common stock may
require the Company to purchase the common stock distributed at fair value during two 60-day
periods.  The first purchase period begins on the date the benefit is paid and the second
purchase period begins on the first anniversary of the payment date.  At September 30, 2005,
this contingent repurchase obligation is reflected in the Company's financial statements as
"Common stock in ESOP subject to contingent repurchase obligation" and reduces stockholder's
equity by an amount that represents the fair value of all the shares of Company common stock
held by the ESOP, without regard to whether it is likely that the shares would be distributed or
that the recipients of the shares would be likely to exercise their right to require the Company
to purchase the shares.  At September 30, 2005, this contingent repurchase obligation reduced
stockholders' equity by $473,000.  On October 5, 2005, the Company completed its second step
offering (as discussed in Note 3 to the consolidated financial statements).  On October 6, 2005,
the Company began trading on Nasdaq which is considered to be an established market under
ERISA regulations.  As a result, effective October 6, 2005, the Company is no longer required to
establish a liability to reflect this repurchase obligation. Consequently, at December 31, 2005,
this contingent repurchase obligation was no longer recorded as a reduction of stockholder's
equity.

Note 6 - Other Stock-Based Compensation

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

As of the closing of the Company's second step conversion on October 5, 2005, each of the ASBH
shares included in the 2005 Restricted Stock Plan and 2005 Stock Option Plan were exchanged for 2.55102
shares of American Bancorp of New Jersey, Inc.  Consequently, awarded shares under the 2005
Restricted Stock Plan and 2005 Stock Option Plan totaled 208,293 and 694,314, respectively, at that time.

Shares of common stock issuable pursuant to outstanding options under the 2005 Stock Option
Plan are considered outstanding for purposes of calculating earnings per share on a diluted basis.  The
Financial Accounting Standards Board has announced a change in the required accounting methods
applicable to stock options that became effective during the quarter ended December 31, 2005.  Under
such accounting requirements, the Company is now required to recognize compensation expense related
to stock options outstanding based upon the fair value of such awards at the date of grant over the
period that such awards are earned.  For the quarter ended December 31, 2005, the Company recognized
approximately $63,000 of compensation expense relating to the 2005 Stock Option Plan.    The Company
recognized approximately $9,000 of income tax benefit resulting from this expense for that period.

For accounting purposes, the Company continues to recognize compensation expense for shares
of common stock awarded under the 2005 Restricted Stock Plan over the vesting period at the fair market
value of the shares on the date they are awarded.  For the quarter ended December 31, 2005, the
Company recognized approximately $85,000 of compensation expense relating to the 2005 Restricted
Stock Plan.   The Company recognized approximately $34,000 of income tax benefit resulting from this expense for that period.

During the quarter ended December 31, 2005, 6,249 RSP shares and 19,094 SOP options that had
been previously awarded were forfeited by a participant due to the participant's discontinued
employment by the Bank.  The Company reversed approximately $6,400 of accrued RSP compensation
expense in the quarter ended December 31, 2005 resulting from that forfeiture.  The Company may
consider awarding such shares and options at a later date.

As of December 31, 2005, there were approximately $1.0 million and $1,1 million, respectively of
total unrecognized compensation costs related to nonvested stock options and nonvested restricted stock
plan shares.   Those costs are expected to be recognized over a weighted-average period of 4.3 years.

For the fiscal year ended September 30, 2005, employee compensation expense under stock
options was reported using the intrinsic value method.  No stock-based compensation cost was reflected
in net income, as all options granted had an exercise price equal to or greater than the market price of the
underlying common stock at date of grant.  For the comparative quarter ended December 31, 2004, no
options had yet been granted by the Company.  Consequently, the pro forma impact on earnings and
earnings per share is not disclosed.  Future reports will illustrate the effect on net income and earnings
per share if expense was measured using the fair value recognition provisions of FASB Statement No.
123, *Accounting for Stock-Based Compensation*for the fiscal 2005 periods presented.

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

|                                                           | **January 20, 2005** | **May 6, 2005**
|---------------------------------------------------------- | -------------------- | ---------------
|**Options Awarded**                                       
|Risk free interest rate                                    | 3.67%                | 3.95%          
|                                                           |                      |                
|Expected option life                                       | 5.0                  | 5.0            
|                                                          
|Expected stock price volatility                            | 22.00%               | 22.00%         
|                                                          
|Dividend yield                                             | 0.00%                | 0.00%          
|                                                           |                      |                
|Weighted average fair value of options granted during
year | $       4.75         | $       5.00   

A summary of the activity in the Company's stock option plan for the quarter ended December 31, 2005
is as follows.

|                                            | Shares   | WeightedAverageExercisePrice
|------------------------------------------- | -------- | ----------------------------
|Outstanding at beginning of period          | 694,314  | $       6.81                
|Granted                                     | -        | -                           
|Exercised                                   | -        | -                           
|Forfeited or expired                        | (19,094) | $       6.80                
|Outstanding at end of period                | 675,220  | $       6.81                
|Options exercisable at period end           | -        | -                           
|Weighted average remaining contractual life |          | 9.3 years                   

A summary of the status of the Company's nonvested restricted stock plan shares as of December 31, 2005 and changes during the quarter ended December 31, 2005 are as follows.

|                                 | Shares  | WeightedAverageGrant-DateFair Value
|-------------------------------- | ------- | -----------------------------------
|Nonvested at beginning of period | 208,293 | $       6.81                       
|Granted                          | -       | -                                  
|Vested                           | -       | -                                  
|Forfeited or expired             | (6,249) | $       6.80                       
|Nonvested at end of period       | 202,044 | $       6.81                       

**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.

**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, peer group
information, and prevailing economic conditions.  Large groups of smaller balance
homogeneous loans, such as residential real estate, small commercial real estate, and home
equity and consumer loans, are evaluated in the aggregate using historical loss factors and peer
group data adjusted for current economic conditions.  Large balance and/or more complex
loans, such as multi-family and commercial real estate loans, are evaluated individually for
impairment. This evaluation is inherently subjective, as it requires estimates that are susceptible
to significant revision, as more information becomes available or as projected events change.

Management assesses the allowance for loan losses quarterly.  While management uses
available information to recognize losses on loans, future loan loss provisions may be necessary
based on changes in economic conditions.  In addition, regulatory agencies, as an integral part
of their examination process, periodically review the allowance for loan losses and may require the Bank to

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.  For example, as a result of
recent loan growth, a large part of the Bank's loan portfolio is considered "unseasoned,"
meaning the loans were originated less than three years ago.  Generally, unseasoned loans
demonstrate a greater risk of credit losses than their seasoned counterparts.  Moreover, in many
cases, these unseasoned loans are obligations of borrowers with whom the Bank has had no
prior payment experience.  These risks are considered in the environmental factors used in the
Bank's loss provision calculations as described above.  Both historical and environmental loss
factors are reviewed and updated quarterly as part of management's assessment of the
allowance for loan losses.

Changes to environmental factors used in the Bank's loss provision calculations
generally reflect the Company's strategic focus on commercial real estate and construction
lending.  Environmental factors applied to the outstanding balance of construction and
commercial mortgages reflect increased balances of unseasoned loans and concerns about
potentially inflated real estate values.  However, the impact of these increases has been partially
offset by reductions in environmental factors attributable to the experience, ability and depth of
lending management and staff both of which were enhanced during the prior fiscal year.

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

**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 and the cost of those deposits and
borrowed funds.  Our interest-earning assets consist primarily of residential mortgage loans,
multi-family and commercial real estate mortgage loans, residential mortgage-related securities
and U.S. Agency debentures.  Interest-bearing liabilities consist primarily of retail deposits and
borrowings from the Federal Home Loan Bank of New York.

During the Company's fiscal year ended September 30, 2004, the general level of market
interest rates increased from the historical lows of the prior periods.  Such increases slowed the
pace of loan refinancing thereby reducing the rate at which the Company's earning assets
prepaid.  Slowing prepayments resulted in a corresponding reduction in the amortization of
deferred costs and premiums thereby increasing the Company's earning asset yields.  The
Company's cost of interest-bearing liabilities lagged the upward movement in current market
interest rates.  After decreasing for thirteen consecutive quarters, the Company's cost of
interest-bearing liabilities remained unchanged for the quarters ended March 31, 2004 and June
30, 2004 before increasing modestly in the final quarter of the fiscal year ended September 30, 2004.  As a result, the Company reported a 16 basis point improvement in its net interest
margin to 2.60% for the year ended September 30, 2004 from 2.44% for the year ended
September 30, 2003.

Through the first half of fiscal 2005, the Company continued to realize improvements in
its net interest margin as increases in earning asset yields continued to outpace those of its
interest bearing-liabilities.  However, that trend reversed in the latter half of 2005 when upward
pressure on the Company's cost of deposits resulted in an increase in the Company's cost of
interest-bearing liabilities greater than the increase in the yield of its interest-earning assets.
For the year ended September 30, 2005, the Company experienced a 16 basis point increase in
its yield on earning assets to 4.84% from 4.68% for year ended September 30, 2004.  This
increase was attributable to a 22 basis point increase in the yield on investment securities and a
207 basis point increase in the yield on interest-bearing deposits and other earning assets.
These increases were offset by a 7 basis point decline in the yield on loans.  Offsetting this
overall improvement in earning asset yields was a 15 basis point increase in the cost of interest-bearing liabilities to 2.56% from 2.41%.  This increase resulted, in part, from a 26 basis point
increase in the cost of interest-bearing deposits.  This increase was offset by an 18 basis point
decrease in the cost of borrowings resulting primarily from increased utilization of overnight
borrowings.  In total, the Company's net interest margin remained unchanged at 2.60% for
fiscal 2005 and fiscal 2004.

During the first quarter of fiscal 2006, the Company's net interest spread declined to
1.87% in comparison to 2.28% for fiscal 2005 as increases in the Company's cost of interest
bearing liabilities continued to outpace the increase in the Company's yield on earning assets.
This decline was attributable, in part, to the Company maintaining a high average balance of
short term, liquid assets during the quarter.  These balances resulted from the initial receipt of
capital from the Company's second step conversion which were deployed into higher yielding
investment securities throughout the quarter.  Additionally, continued upward pressure on the
cost of retail deposits resulted in increases in interest expense which outpaced the increase in
interest income resulting from improved yields on loans.  The average cost of interest bearing
deposits increased 51 basis points from 2.16% for fiscal 2005 to 2.67% for the quarter ended
December 31, 2005.  For the same comparative periods, yield on loans increased 5 basis points
from 5.32% to 5.37%.

The factors resulting in the compression of the Company's net interest spread also
impacted the Company's net interest margin.  However, the effects of that compression were
more than offset by the impact of the additional capital raised in the Company's second-step
conversion.  As a result, the Company's net interest margin increased 11 basis points from
2.60% for fiscal 2005 to 2.71% for the quarter ended December 31, 2005.

Our results of operations are also affected by our provision for loan losses.  Provisions
for specific nonperforming assets and historical losses based on net charge-offs continue to be
nominal due to a history of low charge-offs and the relative stability of nonperforming asset
balances.  Non-performing loans as a percentage of total assets have increased modestly to
0.24% of total assets at December 31, 2005 from 0.21% of total assets at September 30, 2005.
However, management did not perceive this increase in nonperforming assets to require
additional loan loss provisions.  Consequently, loan loss provisions in the current year continue
to be made primarily in connection with the overall growth in portfolio loans.

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, annualized noninterest income as a percentage of average assets totaled 0.23% for the
quarter ended December 31, 2005 - a reduction  of 4 basis points from 0.27% from fiscal 2005.
This decrease is primarily attributable to overall growth in average earning assets outpacing
that of fee income from deposits and loans.   Such growth resulted from the closing of the
Company's second step conversion.

Gains and losses on sale of assets, excluded in the comparison above, typically result
from the Company selling long term, fixed rate mortgage loan originations into the secondary
market for interest rate risk management purposes.  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 retains in the
portfolio rather than selling into the secondary market.  Consequently, the gains and losses on
sale of loans reported by the Company will fluctuate with market conditions.  Additionally,
such gains and losses may also reflect the impact of infrequent investment security sales for
asset/liability management purposes.

Noninterest expense includes salaries and employee benefits, occupancy and equipment
expenses and other general and administrative expenses. Generally, certain operating costs
have increased since the Company's first public offering in the beginning of fiscal 2004.
Operating as a public entity resulted in comparatively higher legal, accounting and compliance
costs throughout fiscal 2004 and fiscal 2005 than had been recorded in earlier years.  This trend
is expected to continue as the Company incurs additional compliance costs associated with the
Sarbanes-Oxley Act of 2002.  Additionally, the Company is recording higher employee
compensation and benefit expense than it had in the years preceding its stock offerings.  Much
of this increase is attributable to the implementation of the ESOP benefit that did not exist prior
to fiscal 2004.  More recently, benefit costs have increased as the Company implemented the
restricted stock and stock option plans.

Noninterest expense as a percentage of average assets totaled 1.74% for the quarter
ended December 31, 2005,  a decrease of 28 basis points from 2.02% for fiscal 2005.  As noted
above, this decrease was largely attributable to the overall growth in average earning assets
which outpaced growth in noninterest expenses.

Notwithstanding the improvements in the noninterest expense ratio note above,
management expects occupancy and equipment expense to increase in future periods as we
implement our de novo branching strategy to expand our branch office network.  Our current
plan is to open up to five de novo branches over approximately the next three years.  As
discussed in our financial statements, we have identified three specific sites for de novo
branches while we continue to evaluate and pursue additional retail branching opportunities.
Costs for land purchase and branch construction will impact earnings going forward.  The
expenses associated with opening new offices, in addition to the personnel and operating costs
that we will have once these offices are open, will significantly increase noninterest expenses.

The Company also expects compensation and occupancy expense to increase in future
periods as additional lending staff is added to support the Bank's loan growth and
diversification strategies.  Implementation of these strategies will likely result in the need to
augment the office space available for our lending and administrative operations in order to
add the personnel called for by our growth plans.

Finally, management expects the ongoing costs associated with the Sarbanes-Oxley Act
of 2002 to also grow as outsourced providers of internal audit and other related services are
utilized to augment management's compliance efforts.

In total, our return on average assets increased 5 basis points to 0.51% for the quarter
ended December 31, 2005 from 0.46% for fiscal 2005 while return on average equity decreased
318 basis points to 2.12% from 5.30% for the same comparative periods.  The reduction in return
on average equity reflects the increase in shareholder's equity resulting from the closing of the
Company's second step conversion during the quarter ended December 31, 2005.

Our net interest margin may be adversely affected in either a rising or falling rate
environment.  A decrease in interest rates could trigger another wave of loan refinancing that
could result in the margin compression previously experienced.  Conversely, further increases
in interest rates from current levels could trigger increases in the Bank's cost of interest-bearing
liabilities that continue to outpace its yield on earning assets causing further net interest spread
compression.   Such compression occurred during the quarter ended December 31, 2005 when
our net interest spread shrank 27 basis point to 1.87% from 2.14% for the preceding quarter
ended September 30, 2005.  As noted earlier, this decline was attributable, in part, to the
Company maintaining a high average balance of short term, liquid assets during the quarter.
These balances resulted from the initial receipt of capital proceeds from the Company's second
step conversion which were deployed into higher yielding investment securities throughout the
quarter.  Higher average balances of short term liquid assets limited the increase in the yield on
earning assets to 3 basis points from 4.85% for the quarter ended September 2005  to 4.88% for
the quarter ended December 2005 quarter.

The increase in yield on earning assets was offset by a 29 basis point increase in the cost
of interest-bearing liabilities from 2.71% for the quarter ended September 2005 to 3.00% for the
quarter ended December 2005 quarter.  This increased cost was attributable, in part, to the
outflow of $115.2 million of subscriptions on which the Company had paid a passbook savings
rate of interest while such funds were held during the second step conversion subscription
period.  Additionally, the Company's cost of retail deposits continues to be subject to
significant upward pressure due to highly competitive market pricing for deposits.

The risk of disintermediation of our deposits into higher cost accounts continues to be
noteworthy given the Bank's substantial net growth in non-maturity deposits during the prior
three years.  Like many banks, we were successful in growing deposits while interest rates
decreased to their historical lows.  However, our ability to retain such deposits at a reasonable
cost, while a highly competitive marketplace adjusts its pricing strategies to an environment of
rising interest rates, continues to be rigorously tested.

Finally, our results of operations may also be affected significantly by other economic
and competitive conditions in our market area as well as changes in applicable laws,
regulations or governmental policies.  Furthermore, because our lending activity is
concentrated in loans secured by real estate located in northern New Jersey, downturns in the
regional economy encompassing New Jersey could have a negative impact on our earnings.

**Comparison of Financial Condition at December 31, 2005 and September 30, 2005**

Our total assets decreased by $39.0 million, or 7.0%, to $516.9 million at December 31,
2005 from $555.9 million at September 30, 2005.  The decrease reflected reductions in cash and
cash equivalents, offset by increases in securities available for sale, securities held to maturity
and loans receivable, net.

At September 30, 2005, the Bank's total assets were inflated by $115.2 million of stock
subscriptions held pending the closing of the Company's second step conversion.  To better
reflect the allocation of the Company's interest-earning assets and interest-costing liabilities, the
September 30, 2005 information presented in the tables below utilizes the pro forma balance of
total assets discussed in Note 3 of the financial statements in percentage of total assets
calculations.

Cash and cash equivalents decreased by $95.8 million, or 76.1%, to $30.0 million at
December 31, 2005 from $125.8 million at September 30, 2005.  The decrease in cash and cash
equivalents was largely attributable to the investment of capital proceeds received following
the closing of the Company's second step conversion into loans receivable, net, securities
available-for-sale and securities held-to-maturity.  Additionally, the Company refunded $33.7
million of oversubscriptions upon closing the second step conversion.

Securities classified as available-for-sale increased $38.4 million, or 61.6%, to $100.8
million at December 31, 2005 from $62.3 million at September 30, 2005.  Additionally, securities
held to maturity increased $4.5 million, or 58.1% to $12.4 million at December 31, 2005 from $7.8
million at September 30, 2005.  The net growth in investments reflects the purchase of $57.5
million of securities during the quarter funded by a portion of the net proceeds received in
Company's second step conversion and the proceeds of a mutual fund sale.  The sale comprised
the Company's entire investment in a mutual fund whose underlying assets consisted primarily
of adjustable rate and other shorter duration mortgage-related securities.

The securities purchased comprised a combination of fixed and adjustable rate MBS,
fixed rate CMOs and fixed rate, non-callable U.S. agency debentures.  Securities were selected
to complement the short average life and stable cash flow characteristics of the Company's
existing securities portfolio.  The Company intends to utilize these cash flows, as well as a
significant portion of the remaining balance of cash and cash equivalents noted above, to fund
its projected growth in commercial real estate and business loans.

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, 2005 and September 30,
2005.  Amounts reported exclude unrealized gains and losses on the available for sale portfolio.

|                             | December 31, 2005      | September 30, 2005    
|---------------------------- | ---------------------- | ----------------------
|Type of Securities           | Amount                 | Percent ofTotal Assets
|                             | (Dollars in thousands)
|Fixed rate MBS               | $	17,100               | 3.31%                 
|ARM MBS                      | 30,582                 | 5.92                  
|Fixed rate CMO               | 40,242                 | 7.78                  
|Floating rate CMO            | 2,668                  | 0.52                  
|ARM mutual fund              | -                      | -                     
|Fixed rate agency debentures | 23,875                 | 4.62                  
|Total                        | $	114,467              | 22.14%                

Assuming no change in interest rates, the estimated average life of the investment securities
portfolio, excluding the ARM mutual fund, was 2.17 years and 2.26 years at December 31, 2005 and
September 30, 2005, respectively.  Assuming a hypothetical immediate and permanent increase in
interest rates of 300 basis points, the estimated average life of the portfolio extends to 2.57 years and 2.67
years at December 31, 2005 and September 30, 2005, respectively.

Loans receivable, net increased by $13.2 million, or 3.9%, to $354.2 million at December 31, 2005
from $341.0 million at September 30, 2005.  The growth was comprised of net increases in multi-family,
commercial real estate and construction loans totaling $5.5 million coupled with net increases in
commercial and business loans totaling $1.1 million.  Together, net growth in these loan balances totaled
$6.6 million comprising approximately half of the Company's net increase in loans receivable for the
quarter.  The remaining net growth in loans included increases in one-to-four family mortgages,
including home equity loans and home equity lines of credit, totaling $6.6 million.

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, 2005 with that of September 30, 2005.  Amounts reported
exclude allowance for loan losses and net deferred origination costs.

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

|                            | December 31, 2005      | September 30, 2005    
|--------------------------- | ---------------------- | ----------------------
|Type of Loans               | Amount                 | Percent ofTotal Assets
|                            | (Dollars in thousands)
|Construction                | $   4,620              | 0.89%                 
|1/1 and 3/3 ARMs            | 4,302                  | 0.83                  
|3/1 and 5/1 ARMs            | 121,244                | 23.45                 
|5/5 and 10/10 ARMs          | 37,733                 | 7.30                  
|7/1 and 10/1 ARMs           | 1,775                  | 0.34                  
|15 year fixed or less       | 109,262                | 21.14                 
|Greater than 15 year fixed  | 58,082                 | 11.24                 
|Home equity lines of credit | 15,247                 | 2.95                  
|Consumer                    | 705                    | 0.14                  
|Commercial                  | 1,897                  | 0.37                  
|Total                       | $ 354,867              | 68.65%                

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

|                            | December 31, 2005      | September 30, 2005    
|--------------------------- | ---------------------- | ----------------------
|Type of Loans               | Amount                 | Percent ofTotal Assets
|                            | (Dollars in thousands)
|Construction                | $   4,620              | 0.89%                 
|1-4 Family Mortgage         | 271,850                | 52.58                 
|Multifamily (5+)  Mortgage  | 29,815                 | 5.77                  
|Non Residential Mortgage    | 30,733                 | 5.95                  
|Home equity lines of credit | 15,247                 | 2.95                  
|Consumer                    | 705                    | 0.14                  
|Commercial                  | 1,897                  | 0.37                  
|Total                       | $ 354,867              | 68.65%                

Total deposits decreased by $13.9 million, or 4.1%, to $327.0 million at December 31, 2005 from $340.9 million at September 30, 2005.  This decrease was primarily attributable to $9.8
million of deposit balances withdrawn to purchase shares in the Company's stock offering.  The
remaining $4.1 million of net deposit withdrawals were primarily attributable to aggressive
deposit competition in the markets served by the Company.  Savings deposits declined $13.2
million, or 10.7% while certificates of deposit declined $171,000.    Checking deposits, including
demand, NOW and money market checking accounts, decreased $530,000 or 0.8% to $64.3
million.

The following table compares the composition of the Company's deposit portfolio by category as
a percentage of total assets at December 31, 2005 with that of September 30, 2005.

|                        | December 31, 2005      | September 30, 2005    
|----------------------- | ---------------------- | ----------------------
|Deposit Category        | Amount                 | Percent ofTotal Assets
|                        | (Dollars in thousands)
|Money market checking   | $  27,287              | 5.28%                 
|Other checking          | 37,032                 | 7.16                  
|Money market savings    | 22,608                 | 4.37                  
|Other savings           | 87,473                 | 16.92                 
|Certificates of deposit | 152,636                | 29.54                 
|Total                   | $ 327,036              | 63.27%                

FHLB advances decreased $15,000, or 0.03%, to $53.7 million at December 31, 2005 due to
amortization on fixed rate amortizing advances.

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, 2005 with that of September
30, 2005.  Scheduled principal payments on amortizing borrowings are reported as maturities.

|                     | December 31, 2005      | September 30, 2005    
|-------------------- | ---------------------- | ----------------------
|Remaining Term       | Amount                 | Percent ofTotal Assets
|                     | (Dollars in thousands)
|Overnight            | $        -             | -%                    
|One year or less     | 10,060                 | 1.95                  
|One to two years     | 7,063                  | 1.37                  
|Two to three years   | 12,066                 | 2.32                  
|Three to four years  | 7,530                  | 1.46                  
|Four to five years   | 6,000                  | 1.16                  
|More than five years | 11,000                 | 2.13                  
|Total                | $	53,719               | 10.39%                

Equity increased $90.2 million, or 228.4% to $129.8 million at December 31, 2005 from $39.5
million at September 30, 2005.  The increase is primarily due to capital proceeds of $89.6 million resulting
from the Company's closing of its second step conversion.  The increase also reflects net income of
$663,000 for the three months ended December 31, 2005, offset by dividends paid of $523,000.  Further,
the amount reclassified on ESOP shares decreased $473,000 to $0.  On October 5, 2005, the Company
completed its second step offering (as discussed in Note 3 to the consolidated financial statements).  On
October 6, 2005, the Company began trading on Nasdaq which is considered to be an established market
under ERISA regulations.  As a result, effective October 6, 2005, the Company is no longer required to
establish a liability to reflect this repurchase obligation.

**Comparison of Operating Results for the Three Months Ended December 31, 2005 and December 31,
2004**

**General.**  Net income for the three months ended December 31, 2005 was $663,000, an increase of
$53,000, or 8.7% from the three months ended December 31, 2004.  The increase in net income resulted
from an increase in net interest income offset by a decrease in non-interest income coupled with increases
in noninterest expense, the provision for loan losses and the provision for income taxes.

**Interest Income.**  Total interest income increased 24.2% or $1.2 million to $6.1 million for the
three months ended December 31, 2005 from $4.9 million for the three months ended December 31, 2004.
For those same comparative quarters, the average yield on interest-earning assets increased 14 basis
points to 4.88% from 4.74% while the average balance of interest-earning assets increased $86.0 million or
20.8% to $499.7 million from $413.7 million.

Interest income on loans increased $554,000 or 13.4%, to $4.7 million for the three months ended
December 31, 2005 from $4.1 million for the same quarter in 2004.  This increase was due, in part, to a
$36.4 million increase in the average balance of loans receivable to $349.2 million for the quarter ended
December 31, 2005 from $312.8 million for the quarter ended December 31, 2004.  In addition, the average
yield on loans increased 8 basis points to 5.37% from 5.29% for those same comparative periods.  The
increase in the average balance of loans receivable was the result of loan originations exceeding
repayments due to strong borrower demand and a growing strategic emphasis on commercial real estate
lending.

The rise in interest income on loans was augmented by higher interest income on securities,
which increased $38,000 or 5.1% to $777,000 for the three months ended December 31, 2005 from
$739,000 for the same three months in 2004.  The increase was due in part, to a 53 basis point increase in
the average yield on securities which grew to 3.69% from 3.16% for the same comparative periods.  The
impact on interest income attributable to this increase was partly offset by a $9.3 million decline in the
average balance of investment securities to $84.3 million for the three months ended December 31, 2005
from $93.6 million for the same 2004 period.  The increase in yield primarily resulted from purchases of
investment securities with the proceeds of the Company's second step conversion and, to a lesser extent,
on slowing prepayments which reduced net premium amortization and higher yields on adjustable rate
securities which have repriced upward in accordance with the general movement of market interest
rates.

Further, interest income on federal funds sold and other interest-bearing deposits increased
$595,000 to $623,000 for the three months ended December 31, 2005 from $28,000 for the same period in
2004.  This increase was due, in part, to an increase of $59.0 million in the average balance of these assets
to $66.2 million for the three months ended December 31, 2005 from $7.2 million for the three months
ended December 31, 2004.  The impact on interest income attributable to this growth was further
augmented by a 223 basis point rise in the average yield on these assets which increased to 3.76% from
1.53%.

**Interest Expense.**  Total interest expense increased by $532,000 or 24.4% to $2.7 million for the
three months ended December 31, 2005 from $2.2 for the same three months in fiscal 2004.  For those
same comparative periods, the average cost of interest-bearing liabilities increased 58 basis points from
2.42% to 3.00%, while the average balance of interest-bearing liabilities increased $1.4 million or 0.4% to
$361.4 million for the three months ended December 31, 2005 from $360.0 million for the same quarter in
fiscal 2004.

Interest expense on deposits increased $572,000 or 38.5% to $2.1 million for the quarter ended
December 31, 2005 from $1.5 million for the quarter ended December 31, 2004.  This increase was due, in
part, to a $7.6 million increase in the average balance of interest-bearing deposits to $307.7 million for the quarter ended December 31, 2005 from $300.0 million for the same quarter in fiscal 2004.  The
components of this net increase for the comparative periods include an increase of $33.5 million in the
average balance of certificates of deposit, a $27.2 million decrease in the average balance of savings
accounts and a $1.3 million increase in the average balance of interest-bearing checking accounts.

The impact on interest expense attributable to the net growth in these average balances was
exacerbated by a 69 basis point increase in the average cost of interest-bearing deposits to 2.67% for the
quarter ended December 31, 2005 from 1.98% for the same quarter in fiscal 2004.  The components of this
increase include an 81 basis point increase in the average cost of certificates of deposit, a 95 basis point
increase in the average cost of interest-bearing checking accounts and a 17 basis point increase in the
average cost of savings accounts.

Interest expense on FHLB advances decreased $40,000 to $656,000 for the three months ended
December 31, 2005 from $696,000 for the same period in fiscal 2004.  This decrease was due, in part, to a
$6.2 million decrease in the average balances to $53.7 million for the three months ended December 31,
2005 from $59.9 million for the same three months in fiscal 2004.  The impact on expense attributable to
this decrease in average balances was partly offset by a 24 basis point increase in the average cost of
advances from 4.65% for the three months ended December 31, 2004 to 4.89% for the same period in
fiscal 2005.  The higher average cost for the current quarter is primarily due to the absence  of overnight
repricing line of credit borrowings whose current cost is less than that of the remaining portfolio of fixed-rate term advances.

**Net Interest Income.**  Net interest income increased by $655,000 or 24.1%, to $3.4 million for the
three months ended December 31, 2005 from $2.7 million for the three months ended December 31, 2004.
The net interest rate spread declined 45 basis points from 2.32% to 1.87% for the same comparative
periods, while the net interest margin increased 8 basis points from 2.63% to 2.71%.

**Provision for Loan Losses.**Using the allowance methodology described earlier, the provision
for loan losses totaled $86,000 for the three months December 31, 2005 representing an increase of $45,000
over the same three months in 2004.  The comparative three month provisions generally resulted from
the incremental growth in the outstanding balance of the loans on which historical and environmental
loss factors are applied offset by changes to environmental loss factors as described earlier.  For the three
months ended December 31, 2005, loans receivable, net increased 3.9% to $354.2 million from $341.0
million at September 30, 2005.  Total gross loan balances, excluding loans held for sale, net deferred loan
costs and the allowance for loan loss, grew $13.0 million or 3.8%.  The growth was comprised of a net
increase in the disbursed balances of construction loans of $3.5 million, net increases in multi-family and
commercial real estate loans totaling $1.9 million and a net increase in commercial loans totaling $1.2
million.  Additional components of the net change in gross loan balances included net increases in one-to-four family mortgages totaling $4.5 million coupled with increases in home equity loans of $1.8
million.

By comparison, loan growth for the three months ended December 30, 2004 totaled $9.5 million
or $3.5 million less than the same comparative period this year.  The growth in this prior comparative
period was comprised of an increase in one-to-four family mortgages totaling $429,000, an increase of
$8.5 million in multi-family and commercial real estate loans, an increase of $47,000 in commercial loans
and an increase of $692,000 in home equity loans, offset by net decreases in the disbursed balances of
construction loans totaling $111,000 and a decrease in consumer loans totaling $27,000.

In total, the allowance for loan losses as a percentage of gross loans outstanding decreased 2
basis points to 0.49% at December 31, 2005 from 0.51% at December 31, 2004.  These ratios reflect
allowance for loan loss balances of $1.7 million and $1.6 million, respectively.  The level of the allowance
is based on estimates and the ultimate losses may vary from those estimates.

**Noninterest Income.**  Noninterest income decreased $221,000 to $26,000 for the three months
ended December 31, 2005 compared to the same period in 2004.  This reduction was primarily
attributable to a $271,000 loss on sale of an underperforming investment security during the quarter.
Excluding that loss, comparative quarterly noninterest income increased by $50,000 due largely to
increases in loan related fee income and improvement in income from cash surrender value of life
insurance.  Deposit service fees and charges increased $8,000 while income from cash surrender value of
life insurance increased by $16,000 reflecting higher policy balances held by the Company.  In addition,
other noninterest income increased by $25,000 resulting primarily from collection of comparatively
higher loan prepayment penalties.

**Noninterest Expense.**  Noninterest expense increased $288,000, or 14.7% to $2.2 million for the
three months ended December 31, 2005 from $2.0 million for the three months ended December 31, 2004.
The comparative increase in noninterest expense was diminished by the reversal of previously accrued
profit sharing expenses totaling $131,000 in the quarter ended December 31, 2005.  Excluding this item,
comparative quarterly noninterest expense increased $419,000.  This increase is attributable to higher
expenses for salaries and benefits, data processing professional and consulting fees, legal fees and other
noninterest expenses, partially offset by decreases in occupancy and equipment and advertising.

Salaries and employee benefits increased $187,000 or 15.5% to $1.4 million for the three months
ended December 31, 2005 as compared to $1.2 million for the same period in 2004.    Salaries and wages
including bonus and payroll taxes, increased $92,000 or 10.3% due, in part, to executive and lending
staffing additions coupled with overall annual increases in employee compensation.  Deferred
compensation benefits costs increased $57,000.  This increase was due in large part to a $76,000 increase
in ESOP expenses attributable to increased plan benefits arising from the Company's second step
conversion (See Note 5 Employee Stock Ownership Plan).    Additionally, the Company recorded
restricted stock plan and stock option benefit plan expenses for the quarter ended December 31, 2005 of
$148,000.  Such expenses were not recorded for the quarter ended December 31, 2004 which preceded
each plan's approval by shareholders on January 20, 2005.  These benefit cost increases were partly offset
by a decrease in profit sharing expense of $175,000 due, in part, to the accrual reversal described earlier,
coupled with the absence of profit sharing expense in the current quarter.  Further, medical insurance
benefit premiums increased $11,000 or 10.1%.  Finally, various employee expenses increased $27,000
resulting from comparatively greater costs associated with training and related lodging, seminars and
conferences as well as other personnel-related services such as temporary help and personnel placement
charges.

Occupancy and equipment expense decreased $7,000 to $198,000 for the three months ended
December 31, 2005 as compared to $205,000 for the same three months in fiscal 2004.  This decrease is
primarily attributable to a $5,000 decrease in computer depreciation expense.  For the same comparative
periods, data processing costs increased $13,000 from $146,000 to $159,000 primarily due to upcoming
enhancements to the Company's internet banking systems.

Legal fees increased $10,000 to $85,000 for the three months ended December 31, 2005 from
$75,000 for the three months ended December 31, 2004.  Additionally, professional and consulting fees,
including auditing and accounting fees, increased $52,000 to $119,000 for those same comparative
periods. In large part, these increases were attributable to consulting costs incurred by the Company
relating to compliance with the Sarbanes Oxley Act of 2002 and the outsourcing of other internal audit-related services.

Advertising expenses decreased $13,000 or 20.3% to $51,000 for the three months ended
December 31, 2005 from $64,000 for the three months ended December 31, 2004, due to lower expenses
for advertising agency fees partly offset by higher expenses for print ads, promotions, and sponsorships. Finally, other noninterest expenses increased $46,000 for the same comparative three month periods due,
in large part, to increases in net loan processing charges and other general and administrative expenses.

Throughout fiscal 2005, cash flows from ASIC were utilized by the Bank to fund loan growth.
This resulted in comparatively lower net income recorded by the investment subsidiary offset by greater
net income recorded by the Bank resulting in the increase in the Company's effective income tax rate.

Additionally, the Company recorded non-deductible expenses associated with incentive stock
options issued under the 2005 Stock Option Plan which increased the Company's effective income tax
rate.

**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 general 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 and
provide funds for its lending and investment 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, 2005, the total approved loan origination commitments outstanding amounted to $23.0
million.  At the same date, unused lines of credit were $17.1 million and construction loans in process
were $1.6 million.

Certificates of deposit scheduled to mature in one year or less at December 31, 2005, totaled
$101.4 million.  Management's policy is to maintain deposit rates at levels that are competitive with other
local financial institutions.  Based on the competitive rates and on historical experience, management
believes that a significant portion of maturing deposits will remain with the Bank.  Additionally, at
December 31, 2005 the Bank has $10.1 million of borrowings from the Federal Home Loan Bank of New
York ("FHLB") maturing in one year or less.  Repayment of such advances increases the Bank's unused
borrowing capacity from the FHLB which, at December 31, 2005 totaled $75.5 million.  In calculating our
borrowing capacity, the Bank utilizes the Federal Home Loan Bank'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, 2005.  Scheduled principal payments on amortizing borrowings are reported as
maturities.

|                                   |                | Less Than  |           |           | After    
|---------------------------------- | -------------- | ---------- | --------- | --------- | ---------
|                                   | Total          | 1 Year     | 1-3 Years | 4-5 Years | 5 Years  
|                                   | (In thousands)
|Time Deposits                      | $  152,637     | $  101,447 | $  35,544 | $   5,114 | $  10,532
|Federal Home Loan Bank advances(1) | 53,719         | 10,060     | 19,129    | 13,530    | 11,000   
|Total                              | $  206,356     | $  111,507 | $  54,673 | $  18,644 | $  21,532

____________________

|(1) | At December 31, 2005, the total collateralized borrowing limit was $129.2 million, of which we
had $53.7 million outstanding.
|--- | -----------------------------------------------------------------------------------------------------------------------------

|                                   | TotalAmountsCommitted | Less Than1 Year | 1-3 Years | 4-5 Years | Over5 Years
|---------------------------------- | --------------------- | --------------- | --------- | --------- | -----------
|                                   | (In thousands)       
|Lines of credit(1)                 | $	17,134              | $  1,307        | $	60      | $	515     | $	15,252   
|Construction loans in process      | 1,598                 | 608             | 990       | -         | -          
|Other commitments to extend credit | 23,014                | 23,014          | -         | -         | -          
|
|Total                              | $	41,746              | $	24,929        | $	1,050   | $	515     | $	15,252   

__________________

|(1) | Represents amounts committed to customers.
|--- | ------------------------------------------

In addition to the above commitments, the Company has financial obligations regarding
outstanding contracts for sale relating to future branch sites.  As of December 31, 2005, the Bank has paid
deposits totaling $417,500 on sale contracts for future branch locations.  Upon closing, the Bank is
committed to disbursing an additional $4,957,500 to fulfill its obligations under these contracts.  These
commitments are contingent upon the fulfillment of certain conditions outlined in the sale contracts.

**Capital**

Consistent with its goals to operate a sound and profitable financial organization, American
Bank of New Jersey actively seeks to maintain a "well capitalized" institution in accordance with
regulatory standards.  The Bank's total equity was $81.4 million at December 31, 2005, or 17.04% of total
assets on that date.  As of December 31, 2005, the Bank exceeded all capital  requirements

**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.

**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, or changes in interest
rates.  Notwithstanding the unpredictability of future interest rates, we expect that 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.

In addition, changes in interest rates can affect the average lives of loans and mortgage-backed and related
securities.  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 prepayments at rates that are comparable to the rates we previously earned
on the prepaid loans or securities.  At December 31, 2005, 76.6% of our loan portfolio was comprised of one- to four-family mortgage loans, which experienced very high prepayment rates during recent years.

Tables presenting the composition and allocation of the Company's interest-earning assets and interest costing
liabilities from an interest rate risk perspective are presented in the preceding section of this report titled "Comparison of
Financial Condition at December 31, 2005 and September 30, 2005".  These tables present the Company's investment
securities, loans, deposits and borrowings by categories that reflect the contractual repricing characteristics of the
underlying assets or liabilities.  Presented as a percentage of total assets, the comparative data presents changes in the
repricing characteristics of the Company's balance sheet - an important component of interest rate risk.

Our net interest rate spread is the difference between the yields we receive on assets and the rates we pay on
liabilities.  Through the first half of fiscal 2005, the Company continued to realize improvements in its net interest spread
as increases in earning asset yields continued to outpace increases in the cost of its interest bearing-liabilities.  However,
that trend reversed in the latter half of 2005 when upward pressure on the Company's cost of deposits resulted in greater
increases in the Company's cost of interest-bearing liabilities than those of its interest earning assets.  The trend of net
interest spread compression continued in the quarter ended December 31, 2005 during which our net interest spread
decreased to 1.87% from 2.28% for the year ended September 30, 2005.

In large part, this net interest rate spread compression resulted from an increase in the Company's cost of
interest-bearing liabilities which outpaced the increase in the Company's yield on earning assets.  This decline was
attributable, in part, to the Company maintaining a high average balance of short term, liquid assets during the quarter.
These balances resulted from the initial receipt of capital proceeds from the Company's second step conversion which were deployed into higher
yielding investment securities throughout the quarter.  Additionally, continued upward
pressure on the cost of retail deposits resulted in increases in interest expense which outpaced the increase in interest
income resulting from improved yields on loans.



Depending upon the movement of market interest rates, our earnings may continue to be impacted by an
"earnings squeeze" in the future.  For example, we are vulnerable to an increase in interest rates because the majority of
our loan portfolio consists of longer-term, fixed rate loans and recently originated hybrid ARMs that are fixed rate for an
initial period of time.  At December 31, 2005, excluding allowance for loan losses and net deferred origination costs and
including loans held for sale, loans totaled $354.9 million comprising 68.7% of total assets.  Of those loans, fixed rate
mortgages totaled $167.3 million or 35.0% of total assets while hybrid ARMs, including 3/1, 5/1, 7/1 and 10/1 ARMs
totaled $165.1 million of 34.5% of total assets.  In an increasing 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 shorter maturities than the maturities on our loans and investment securities.
Having interest-bearing liabilities that reprice more frequently than interest-earning assets will be detrimental during
periods of rising interest rates and could cause our net interest rate spread to shrink because the increase in the rates we
would earn on our securities and loan portfolios would be less than the increase in the rates we would pay on deposits
and borrowings.  This could cause a decrease in our earnings and an "earnings squeeze" just as the decrease in interest
rates in prior periods had impacted our earnings.

The Board of Directors has established an Asset/Liability Management Committee, comprised of the Bank's
Chief Executive Officer, the Bank's President and Chief Operating Officer, the Bank's Executive Vice President and
Corporate Secretary, the Bank's Senior Vice President and Chief Financial Officer, the Bank's Senior Vice President and
Chief Lending Officer and the Bank's Vice President and Controller, which is responsible for monitoring interest rate
risk. The committee 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 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.

To reduce the effect of interest rate changes on net interest income, we seek to utilize various strategies aimed at
improving the matching of interest-earning asset maturities to interest-bearing liability maturities.  The main elements of
these strategies include seeking to:

|(1) | Originate and retain loans with adjustable rate features and fixed rate loans with shorter maturities including
commercial real estate, construction and business loans;                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Originate longer-term, fixed rate loans eligible for sale in the secondary market and, if warranted, sell such
loans;                                                                   
|(3) | Lengthen the maturities of our liabilities through utilization of Federal Home Loan Bank advances;                                                                                      
|(4) | Attract low cost checking and transaction accounts which tend to be less interest rate sensitive; and                                                                                   
|(5) | 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.

**Quantitative Aspects of Market Risk.**  The following table presents American Bank of New Jersey's net portfolio value
as of September 30, 2005, the latest date for which information is available.  The net portfolio value was calculated by the
Office of Thrift Supervision, based on information provided by the Bank.

|                       | Net Portfolio Value | Net PortfolioValue as % ofPresent Value of Assets | BoardEstablished Limits
|---------------------- | ------------------- | ------------------------------------------------- | -----------------------
|Changes inRates(1)     | $ Amount            | $ Change                                          | % Change               
|(Dollars in thousands)
|+300 bp                | 46,276              | -14,300                                           | -24%                   
|+200 bp                | 51,487              | -9,089                                            | -15%                   
|+100 bp                | 56,389              | -4,187                                            | -7%                    
|0 bp                   | 60,576              |                                                   |                        
|-100 bp                | 62,471              | 1,895                                             | +3%                    
|-200 bp                | 60,645              | 69                                                | +0%                    

_________________(1)	The -300bp scenario is not shown due to the low prevailing interest rate environment.

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.

Notwithstanding the discussion above, the qualitative interest rate analysis findings presented
herein indicate that further increases in interest rates would continue to adversely affect our net interest
margin and earnings.  Management is continuing to evaluate and implement a variety of strategies to
manage the earnings risks presented by the continued upward movement in interest rates and flattening
of the yield curve.  The most significant of these are the Company's lending diversification and growth
strategies complemented by strategies focused on growing core deposits.  Such deposit strategies
highlight both retail branch expansion as well as enhancing business banking products and services.

Additionally, the Company expects to continue the sale of longer-term, fixed rate conforming loan
originations into the secondary market while evaluating greater use of the secondary markets for selling
other conforming and non-conforming 1-4 family mortgage loan originations.  For the quarter ended
December 31, 2005, we sold a total of $1.1 million of loans to the Federal National Mortgage Association
which resulted in gains on sales of mortgage loans held for sale of $2,000.  Because we offer borrowers
the option to lock in their interest rate prior to closing their mortgage loans, we may be exposed to
market risk on the loans we sell into

the secondary market.  Once a loan's rate is locked,  the price at which we can sell the loan will vary with movements in market interest rates.  To manage that risk, we may take forward commitments to sell loans at a fixed price.  At December 31, 2005, the Bank had three
outstanding contracts to sell long term, fixed rate mortgage loans totaling $780,000 to Federal National
Mortgage Association.  Loans sold under contracts drawn in the future may generate additional gains or
losses on sale of mortgage loans in subsequent periods.

Finally, during fiscal 2004 we recognized a $125,000 penalty to prepay $3.0 million of fixed rate
FHLB advances with a weighted average cost of 6.28%.  Although no such prepayments were transacted
in fiscal 2005 or during the quarter ended December 31, 2005 we may evaluate the costs and benefits of
further prepayments, which may result in additional one-time charges to earnings in the form of FHLB
prepayment penalties to further improve the Bank's net interest spread and margin and enhance future
earnings.

|**ITEM 4.  CONTROLS AND PROCEDURES**
|------------------------------------
|                                    
|                                    

**PART II - - OTHER INFORMATION**

**ITEM 1.   LEGAL PROCEEDINGS**

At December 31, 2005, 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 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

None

**ITEM 3.   DEFAULTS UPON SENIOR SECURITIES**

None

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

None

**ITEM 5.  OTHER INFORMATION**

None

**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.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

|Date: | February 14, 2006 | /s/ Joseph KliminskiJoseph Kliminski
Chief Executive Officer                    
|----- | ----------------- | --------------------------------------------------------------------------------
|Date: | February 14, 2006 | /s/ Eric B. HeyerEric B. Heyer
Senior Vice President and Chief Financial Officer