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, 2006                                                                                                                                                    
|--------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|**[   ]** | **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 accelerated filer, or a non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the
Exchange Act.  (Check one):

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

As of February 2, 2007, there were 13,101,372 outstanding shares of the Registrant's Common Stock.



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

**Table of Contents**

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



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**ITEM 1. FINANCIAL STATEMENTS**

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

|                                                                                                                                                                                                                                                         | December 31,2006   | September 30,2006
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | -----------------
|**ASSETS**                                                                                                                                                                                                                                              
|Cash and cash equivalents                                                                                                                                                                                                                               
|Cash and due from banks                                                                                                                                                                                                                                  | $    6,529         | $    6,671       
|Interest-bearing deposits                                                                                                                                                                                                                                | 5,124              | 494              
|Total cash and cash equivalents                                                                                                                                                                                                                          | 11,653             | 7,165            
|                                                                                                                                                                                                                                                        
|Securities available-for-sale                                                                                                                                                                                                                            | 64,348             | 74,523           
|Securities held-to-maturity (fair value: December 31, 2006-$9,987,
September 30, 2006 - $10,423)                                                                                                                                                         | 10,088             | 10,547           
|Loans held for sale                                                                                                                                                                                                                                      | 668                | -                
|Loans receivable, net of allowance for loan losses (December 31, 2006-$2,173,
September 30, 2006-$2,123)                                                                                                                                                 | 409,524            | 398,624          
|Premises and equipment                                                                                                                                                                                                                                   | 7,268              | 6,523            
|Federal Home Loan Bank stock, at cost                                                                                                                                                                                                                    | 3,175              | 3,356            
|Cash surrender value of life insurance                                                                                                                                                                                                                   | 12,830             | 8,747            
|Accrued interest receivable                                                                                                                                                                                                                              | 1,983              | 1,979            
|Other assets                                                                                                                                                                                                                                             | 2,783              | 2,855            
|Total assets                                                                                                                                                                                                                                             | $         524,320  | $         514,319
|                                                                                                                                                                                                                                                        
|**LIABILITIES AND EQUITY**                                                                                                                                                                                                                              
|Deposits                                                                                                                                                                                                                                                
|Non-interest-bearing                                                                                                                                                                                                                                     | $   26,223         | $   23,545       
|Interest-bearing                                                                                                                                                                                                                                         | 327,320            | 303,602          
|Total deposits                                                                                                                                                                                                                                           | 353,543            | 327,147          
|                                                                                                                                                                                                                                                        
|Advance payments by borrowers for taxes and insurance                                                                                                                                                                                                    | 2,369              | 2,466            
|Federal Home Loan Bank advances                                                                                                                                                                                                                          | 52,059             | 56,075           
|Accrued expenses and other liabilities                                                                                                                                                                                                                   | 3,777              | 3,770            
|Total liabilities                                                                                                                                                                                                                                        | $       411,748    | $       389,458  
|Commitments and contingent liabilities                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                        
|Equity                                                                                                                                                                                                                                                  
|Preferred stock, $.10 par value, 10,000,000 and 5,000,000
     shares authorized at December 31, 2006 and September 30, 2006;                                                                                                                            | -                  | -                
|                                                                                                                                                                                                                                                        
|Common stock, $.10 par value, 20,000,000 shares authorized, 
     14,527,953 and 14,527,953 shares issued
     at December 31, 2006 and September 30, 2006;
     13,107,469 and 14,163,220 outstanding
     at December 31, 2006 and September 30, 2006; | 1,453              | 1,453            
|                                                                                                                                                                                                                                                        
|Additional paid in capital                                                                                                                                                                                                                               | 112,168            | 111,780          
|Unearned ESOP shares                                                                                                                                                                                                                                     | (8,437)            | (8,549)          
|Retained earnings                                                                                                                                                                                                                                        | 25,415             | 25,438           
|Treasury Stock; 1,420,484 and 364,733 shares
     at December 31, 2006 and September 30, 2006                                                                                                                                                            | (17,322)           | (4,380)          
|Accumulated other comprehensive loss                                                                                                                                                                                                                     | (705)              | (881)            
|Total equity                                                                                                                                                                                                                                             | 112,572            | 124,861          
|Total liabilities and equity                                                                                                                                                                                                                             | $          524,320 | $         514,319





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

|                                                    |  | **Three Months Ended
December 31,**
|--------------------------------------------------- |  | -----------------------------------
|****                                                |  |                                    
|Interest and dividend income                       
|Loan, including fees                                |  |                                    
|Securities                                          |  |                                    
|Federal funds sold and other                        |  |                                    
|Total interest income                               |  |                                    
|                                                    |  |                                    
|Interest expense                                   
|NOW and money market                                |  |                                    
|Savings                                             |  |                                    
|Certificates of deposit                             |  |                                    
|Federal Home Loan Bank advances                     |  |                                    
|Total interest expense                              |  |                                    
|                                                    |  |                                    
|Net interest income                                 |  |                                    
|                                                    |  |                                    
|Provision for loan losses                           |  |                                    
|                                                    |  |                                    
|Net interest income after provision for loan losses |  |                                    
|                                                    |  |                                    
|Noninterest income                                  |  |                                    
|Deposit service fees and charges                    |  |                                    
|Income from cash surrender value of life insurance  |  |                                    
|Gain on sale of loans                               |  |                                    
|Loss on sales of securities available-for-sale      |  |                                    
|Other                                               |  |                                    
|Total noninterest income                            |  |                                    
|                                                    |  |                                    
|Noninterest expense                                
|Salaries and employee benefits                      |  |                                    
|Occupancy and equipment                             |  |                                    
|Data processing                                     |  |                                    
|Advertising                                         |  |                                    
|Professional and consulting                         |  |                                    
|Legal                                               |  |                                    
|Other                                               |  |                                    
|Total noninterest expense                           |  |                                    
|                                                   
|Income before provision for income taxes            |  |                                    
|Provision for income taxes                          |  |                                    
|                                                   
|Net income                                          |  |                                    
|                                                   
|Comprehensive income (loss)                         |  |                                    
|                                                   
|Earnings per share:                                
|Basic                                               |  |                                    
|Diluted                                             |  |                                    





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**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 | AccumulatedOtherComprehensiveIncome | AmountReclassifiedOn ESOPShares | TotalEquity | Compre-hensiveIncome(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   |                           





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**American Bancorp of New Jersey, Inc.
Statements of Stockholders' Equity
Three months ended December 31, 2006
(in thousands)
(unaudited)**

|                                                                                              | CommonStock | AdditionalPaid-InCapital | UnearnedESOPShares | RetainedEarnings | AccumulatedOtherComprehensiveIncome | Treasury Stock    | TotalEquity | Compre-hensiveIncome(Loss)
|--------------------------------------------------------------------------------------------- | ----------- | ------------------------ | ------------------ | ---------------- | ----------------------------------- | ----------------- | ----------- | --------------------------
|Balance at   September 30, 2006                                                               | $	1,453     | $	111,780                | $	(8,549)          | $	25,438         | $                 	(881)            | $	(4,380)         | $	124,861   |                           
|RSP stock grants                                                                              | -           | (76)                     | -                  | -                | -                                   | 76                | -           |                           
|RSP shares earned                                                                             | -           | 276                      | -                  | -                | -                                   | -                 | 276         |                           
|Treasury share purchases                                                                      | -           | -                        | -                  | -                | -                                   | (13,018)          | (13,018)    |                           
|Stock options earned                                                                          |             | 140                      | -                  | -                | -                                   | -                 | 140         |                           
|ESOP shares earned                                                                            | -           | 48                       | 112                | -                | -                                   | -                 | 160         |                           
|Cash dividends paid - 
  $0.04 per share                                                      | -           | -                        | -                  | (482)            | -                                   | -                 | (482)       |                           
|Cumulative effect of
  adoption of SAB 108                                                    | -           | -                        | -                  | 130              | -                                   | -                 | 130         |                           
|Comprehensive income                                                                         
|Net income                                                                                    | -           | -                        | -                  | 329              | -                                   | -                 | 329         |                           
|Change in unrealized 
      gain on securities 
      available-for-sale, net 
      of taxes | -           | -                        | -                  | -                | 176                                 | -                 | 176         |                           
|Total  comprehensive
         income                                                          |             |                          |                    |                  |                                     |                   |             | $	505                     
|Balance at 
  December 31, 2006                                                               | $	1,453     | $	112,168                | $	(8,437)          | $	25,415         | $	    (705)                         | $        (17,322) | $	112,572   |                           





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

|                                                                                      |  | Three Months Ended
December 31,
|------------------------------------------------------------------------------------- |  | -------------------------------
|                                                                                      |  | 2006                           
|**Cash flows from operating activities**                                             
|Net Income                                                                            |  | $   329                        
|Adjustments to reconcile net income to net cash
     provided by operating activities
|Depreciation and amortization                                                         |  | 79                             
|Net amortization of premiums and discounts                                            |  | (8)                            
|Losses on sales of securities available-for-sale                                      |  | -                              
|ESOP compensation expense                                                             |  | 161                            
|RSP compensation expense                                                              |  | 276                            
|SOP compensation expense                                                              |  | 140                            
|Provision for loan losses                                                             |  | 50                             
|Increase in cash surrender value of life insurance                                    |  | (83)                           
|Gain on sale of loans                                                                 |  | (2)                            
|Proceeds from sales of loans                                                          |  | 838                            
|Origination of loans held for sale                                                    |  | (1,505)                        
|Decrease (increase) in accrued interest receivable                                    |  | (4)                            
|Decrease (increase) in other assets                                                   |  | 171                            
|Change in deferred income taxes                                                       |  | (201)                          
|Increase (decrease) in other liabilities                                              |  | 137                            
|Net cash provided by operating activities                                             |  | 378                            
|                                                                                     
|**Cash flows from investing activities**                                             
|Net increase in loans receivable                                                      |  | (10,950)                       
|Purchases of securities held-to-maturity                                              |  | -                              
|Principal paydowns on securities held-to-maturity                                     |  | 455                            
|Purchases of securities available-for-sale                                            |  | -                              
|Sales of securities available-for-sale                                                |  | -                              
|Maturities of securities available-for-sale                                           |  | 6,000                          
|Principal paydowns on securities available-for-sale                                   |  | 4,465                          
|Purchase of Federal Home Loan Bank stock                                              |  | (1,970)                        
|Redemption of Federal Home Loan Bank stock                                            |  | 2,151                          
|Purchase of bank-owned life insurance                                                 |  | (4,000)                        
|Purchase of premises and equipment                                                    |  | (824)                          
|Net cash used in investing activities                                                 |  | (4,673)                        
|                                                                                     
|**Cash flows from financing activities**                                             
|Net increase in deposits                                                              |  | 26,396                         
|Stock subscriptions held for parent received (refunded or applied)                    |  | -                              
|Net change in advance payments by borrowers for taxes and
insurance                   |  | (97)                           
|Repayment of Federal Home Loan Bank of New York advances                              |  | (2,016)                        
|Net change in Federal Home Loan Bank of New York overnight
  lines of credit          |  | (2,000)                        
|Cash dividends paid                                                                   |  | (482)                          
|MHC Capital infusion                                                                  |  | -                              
|RSP and treasury share purchases                                                      |  | (13,018)                       
|Net proceeds from stock issuance                                                      |  | -                              
|Net cash provided by (used in) financing activities                                   |  | 8,783                          
|Net change in cash and cash equivalents                                               |  | 4,488                          
|Cash and cash equivalents at beginning of year                                        |  | 7,165                          
|Cash and cash equivalents at end of year                                              |  | $          11,653              

(Continued)



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

|                                                                 |  | Three Months Ended
December 31,
|---------------------------------------------------------------- |  | -------------------------------
|                                                                 |  | 2006                           
|Supplemental cash flow information:                             
|Cash paid during the period for                                 
|Interest                                                         |  | $	3,611                        
|Income taxes, net of refunds                                     |  | 1                              
|Supplemental disclosures of non-cash financing transaction:     
|Transfer of stock subscriptions received and deposits to capital |  | -                              
|Cumulative effect of adoption of SAB 108                         |  | 130                            





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

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

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

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

On October 5, 2005, the Company completed a second step conversion in which the
3,888,150 shares of ASB Holding Company held by 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
ESOP which used those funds to acquire 793,500 shares of common stock at $10 per share.

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

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, 2006 and September 30, 2006 and
for the three months ended December 31, 2006 and December 31, 2005.  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



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The accompanying unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America for interim
financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all the information and notes required by accounting principles
generally accepted in the United States of America for complete financial statements.  These interim
statements should be read in conjunction with the consolidated financial statements and notes included
in the Annual Report on Form 10-K.  The September 30, 2006 balance sheet presented herein has been
derived from the audited financial statements included in the consolidated financial statements and
notes included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission,
but does not include all disclosures required by accounting principles generally accepted in the United
States of America.

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

Interim statements are subject to possible adjustment in connection with the annual audit of the
Company for the year ended September 30, 2007.  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, 2006 are not necessarily
indicative of the results to be expected for the full year or any other period.

Note 2 - Earnings Per Share (EPS)

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



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The factors used in the earnings per share computation follow.

|                                                                                | Three Months Ended
|------------------------------------------------------------------------------- | ------------------
|                                                                                | December 31,      
|                                                                                | 2006              
|Basic                                                                          
|Net income                                                                      | $            329  
|                                                                               
|Weighted average common shares
outstanding                                      | 12,324,475        
|                                                                               
|Basic earnings per common
share                                                 | $           0.03  
|                                                                               
|Diluted                                                                        
|Net income                                                                      | $            329  
|                                                                               
|Weighted average common shares
outstanding  for basic earnings per
common share | 12,324,475        
|                                                                               
|Add:  Dilutive effects of assumed
exercises of  stock options                   | 168,094           
|                                                                               
|Add:  Dilutive effects of full vesting
of stock  awards                         | 42,898            
|                                                                               
|Average shares and dilutive
potential  common shares                            | 12,535,467        
|                                                                               
|Diluted earnings per common share                                               | $           0.03  

Note 3 - Other Stock-Based Compensation

During the quarter ended December 31, 2006, the Company awarded the remaining 6,249 RSP shares
and 19,094 SOP options that were available under the Company's applicable benefit plans.  Consequently, at December 31, 2006, all available shares and options relating to the 2005 Restricted Stock Plan, 2005 Stock Option Plan and the 2006 Equity Incentive
Plan had been awarded to participants.



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The fair value of the 19,094 options granted during the current quarter were computed using the Black-Scholes option pricing model, using the following weighted-average assumptions as of the grant date.

|                                                           | **December 19, 2006**
|---------------------------------------------------------- | ---------------------
|**Options Awarded**                                        |                      
|Risk free interest rate                                    | 4.56%                
|                                                           |                      
|Expected option life                                       | 5.00                 
|                                                           |                      
|Expected stock price volatility                            | 12.17%               
|                                                           |                      
|Dividend yield                                             | 1.35%                
|                                                           |                      
|Weighted average fair value of
options granted during year | $     2.20           

A summary of the activity in the Company's stock option plans for the three months ended December 31,
2006 and 2005 is as follows.

|                                            | For the three months ended
|------------------------------------------- | --------------------------
|                                            | December 31, 2006         
|                                            | Shares                    
|Outstanding at beginning of
period          | 1,397,854                 
|Granted                                     | 19,094                    
|Exercised                                   | -                         
|Forfeited or expired                        | -                         
|Outstanding at end of period                | 1,416,948                 
|                                           
|Options exercisable at period
end           | 135,036                   
|Weighted average remaining
contractual life |                           



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A summary of the status of the Company's nonvested restricted stock plan shares as of December 31,
2006 and 2005 and changes during the three months ended December 31, 2006 and 2005 are as follows.

|                                   | For the three months ended
|---------------------------------- | --------------------------
|                                   | December 31, 2006         
|                                   | Shares                    
|                                  
|Outstanding at beginning of
period | 520,126                   
|Granted                            | 6,249                     
|Vested                             | -                         
|Forfeited of expired               | -                         
|Outstanding at end of period       | 526,375                   

Note 4 - Recent Accounting Pronouncements

In July 2006, the FASB released Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes."  This Interpretation revises the recognition tests for tax positions taken in tax
returns such that a tax benefit is recorded only when it is more likely than not that the tax
position will be allowed upon examination by taxing authorities.  The amount of such a tax
benefit to record is the largest amount that is more likely than not to be allowed.   Any reduction
in deferred tax assets or increase in tax liabilities upon adoption will correspondingly reduce
retained earnings.  The Company has not yet determined the effect of adopting this
Interpretation, which is effective for it on October 1, 2007.

In February 2006, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 155 "Accounting for Certain Hybrid Financial Instruments"
("SFAS No. 155"), which amends FASB Statements No. 133, "Accounting For Derivative
Instruments and Hedging Activities" and No. 140, "Accounting For Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities".  SFAS No. 155 is effective for all financial
instruments acquired or issued in fiscal years beginning after September 15, 2006.  The adoption
of SFAS No. 155 in fiscal 2007 has not had a material impact on the Company's consolidated
financial statements.

In March 2006, the FASB issued Statement of Financial Accounting Standards No. 156
"Accounting for Servicing of Financial Assets" ("SFAS No. 156"), which amends FASB Statement
No. 140, "Accounting For Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities" with respect to the accounting for separately recognized servicing assets and
servicing liabilities.  SFAS No. 156 is effective for fiscal years beginning after September 15, 2006.
The adoption of SFAS No. 156 in fiscal 2007 has not had a material impact on the Company's
consolidated financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No.
157 "Fair Value Measurements" ("SFAS No. 157"), which defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements.  SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007.  The adoption of SFAS No. 157 is not
expected to have a material impact on the Company's consolidated financial statements.



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On September 13, 2006, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 108 ("SAB 108").  SAB 108 provides guidance on the consideration of
the effects of prior year misstatements in quantifying current year misstatements for the purpose
of a materiality assessment.  SAB 108 is effective for financial statements issued for fiscal years
ending after November 15, 2006.  Management implemented the guidance issued under SAB 108
during the Company's first fiscal quarter ended December 31, 2006 which resulted in an increase
to retained earnings of $130,000 offset by a decrease in deferred income taxes in the same
amount.  This amount represented the entire balance of an excess income tax liability originally
recorded to the Bank's balance sheet prior to its conversion to a public company in 2003 (see
Statement of Stockholder's Equity for the quarter ended December 31, 2006 above).



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

**Forward-Looking Statements**

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

**Business Strategy**

Our business strategy has been to operate as a well-capitalized independent financial
institution dedicated to providing convenient access and quality service at competitive prices.
During recent years, we have experienced significant loan and deposit growth and our current
strategy seeks to continue that growth.   The highlights of our business strategy include the
following:

> Grow and diversify the deposit mix by emphasizing non-maturity account relationships
> acquired through de novo branching and existing deposit growth.  We currently plan to
> open up to five de novo branches over approximately the next three to five years.
> 
> Grow and diversify the loan mix by increasing commercial loan origination volume while
> increasing the balance of such loans as a percentage of total assets.Grow and diversify noninterest income through supplemental deposit and lending related
> services and strategies.Continue to implement or enhance alternative delivery channels for the origination and
> servicing of loan and deposit products.Broaden and strengthen customer relationships by bolstering cross marketing strategies and
> tactics with a focus on multiple account/service relationships.Utilize capital markets tools to effectively manage capital and enhance shareholder value.



Next Page 15


**Executive Summary**

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

For the fiscal years ended September 30, 2004 and 2005, the Company's net interest spread and
margin remained stable at 2.28% and 2.60%, respectively.  However, for the fiscal year ended September
30, 2006, the Company's net interest spread declined 48 basis points to 1.80% as increases in the
Company's cost of interest-bearing liabilities outpaced the increase in the Company's yield on earning
assets.  This decline was largely attributable to continued upward pressure on the cost of retail deposits
resulting in increases in interest expense which outpaced the increase in interest income resulting from
improved yields on loans.

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
favorable impact on net interest income resulting from the additional earning assets funded by the
additional capital raised in the Company's second-step conversion.  As a result, the Company's net
interest margin increased 13 basis points to 2.73% for the year ended September 30, 2006.

During the first quarter of fiscal 2007, the Company's net interest spread declined 26 basis points
to 1.54% in comparison to 1.80% for all of fiscal 2006, as increases in the yield on earning assets lagged
the continued increases in the Company's cost of interest-bearing liabilities.  This decline was primarily
attributable to increases in the cost of retail deposits which outpaced the improved yields on loans.
Contributing to this increase in the cost of deposits was the impact of higher promotional interest rates
paid on new deposit accounts at the Bank's Verona branch which opened during the quarter ended
December 31, 2006.   However, a significant portion of that increase continued to be attributable to
upward pressure on overall deposit interest rates in the highly competitive markets serviced by the Bank
whose effects were exacerbated by the inverted yield curve.

As noted above, 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
somewhat diminished by the continued favorable impact on net interest income resulting from the
additional earning assets funded by the significant level of capital held by the Company.  As a result, the
Company's net interest margin decreased by 14 basis points from 2.73% for fiscal 2006 to 2.59% for the
first quarter of fiscal 2007.

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 decreased from 0.41% at
September 30, 2006 to 0.32% at December 31, 2006.  For the quarter ended December 31, 2006,
the Company recorded net loan loss provision expense of $50,000.  The expense for the current
quarter reflected the reversal of an $86,000 loss reserve against a previously impaired loan
participation.  Management's review conducted as of December 31, 2006 concluded that, based
upon the loan's consistent payment history and the improved financial



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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 0.22% for the
quarter ended December 31, 2006 - a reduction of 3 basis points from 0.25% for all of fiscal 2006.
This decrease is primarily attributable to a decline in deposit service fees and charges resulting
from reduced customer utilization of overdraft protection services combined with the impact of
enhanced free checking services for business customers.

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 has historically
retained 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.  This was the case in fiscal 2006 when
the Company realized a $271,000 loss on sale of an underperforming investment security.

Noninterest expense includes salaries and employee benefits, occupancy and equipment
expenses, data processing and other general and administrative expenses. Generally, operating
costs have increased since our first public offering in the beginning of fiscal 2004.  Operating as
a public entity resulted in comparatively higher legal, accounting and compliance costs than
had been recorded in the years preceding the Company's stock offerings.  Such costs include
those relating to the Sarbanes-Oxley Act of 2002.  Additionally, the Company is recording
higher employee compensation and benefit expense than it had during those earlier years.  A
portion of this increase is attributable to additional personnel costs associated with executing
the Company's business plan which calls for further branching and increased strategic focus on
commercial lending.  This increase is also attributable, in part, to the implementation of ESOP
benefits resulting from the first and second step conversions that did not exist prior to fiscal
2004.  Additionally, benefit costs have also increased as we granted shares under the restricted
stock and stock option plans approved by shareholders during both fiscal 2005 and fiscal 2006.
In the aggregate, annualized noninterest expense as a percentage of average assets totaled
2.26% for the quarter ended December 31, 2006 - an increase of 18 basis points from 2.08% for
all of fiscal 2006.

Management expects occupancy and equipment expense to increase in future periods as
we continue to implement our de novo branching strategy to expand our branch office
network.  Our business plan targets the opening of up to five de novo branches over a three to
five year timeframe.  Toward that end, we opened our Verona branch in November, 2006 and
took ownership of a site in Clifton, New Jersey for another de novo branch in January, 2007.
Additionally, we continue to evaluate and pursue other retail branching opportunities.  Costs
for land purchases or leases and branch construction costs 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, are expected to 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 commercial loan growth and
diversification



Next Page 17


Finally, management expects the costs associated with the Sarbanes-Oxley Act of 2002
(the "Act") to continue into fiscal 2007, albeit at a comparatively lower level than that recorded
in fiscal 2006 - the first year of compliance with Section 404 of the Act.  In particular,
management expects the cost of the Company's outsourced internal audit services and, to a
lesser extent, that of its external auditors, to be reduced as the Company transitions from
building and implementing its Sarbanes Oxley compliance program to managing and
maintaining it.

In total, our annualized return on average assets decreased 16 basis points to 0.26% for
the quarter ended December 31, 2006 from 0.42% for all of fiscal 2006, while annualized return
on average equity decreased 58 basis points to 1.10% from 1.68% for the same comparative
periods.

Our net interest margin may continue to be adversely affected throughout several
possible interest rate environments.  The risks presented by movements in interest rates is
addressed more fully under Item 3. Quantitative and Qualitative Disclosures About Market
Risk found later in this report.  Additionally, 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 New Jersey and the
New York metropolitan area, downturns in the regional economy could have a negative impact
on our earnings.

**Comparison of Financial Condition at December 31, 2006 and September 30, 2006**

Our total assets increased by $10.0 million, or 1.9%, to $524.3 million at December 31, 2006 from
$514.3 million at September 30, 2006.  The increase reflected net growth in cash and cash equivalents,
loans receivable, net and the cash surrender value of life insurance partially offset by decreases in
securities available for sale and  securities held to maturity.

Cash and cash equivalents increased by $4.5 million, or 62.6%, to $11.7 million at December 31,
2006 from $7.2 million at September 30, 2006.  The increase in cash and cash equivalents was largely
attributable to the accumulation of short term, interest bearing investments which were utilized after the
end of the quarter to reduce borrowings and fund loan growth.

Securities classified as available-for-sale decreased $10.2 million, or 13.6%, to $64.3 million at
December 31, 2006 from $74.5 million at September 30, 2006.  Additionally, securities held to maturity
decreased approximately $459,000, or 4.3% to $10.1 million at December 31, 2006 from $10.5 million at
September 30, 2006.  The net decline in investment balances reflects the Company's continued strategy of
utilizing cash flows from the investment securities portfolio to fund a significant portion of its growth in
commercial real estate and business loans.



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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, 2006 and September 30, 2006.  Amounts
reported exclude unrealized gains and losses on the available for sale portfolio.

|                             | December 31, 2006      | September 30, 2006    
|---------------------------- | ---------------------- | ----------------------
|Type of Securities           | Amount                 | Percent ofTotal Assets
|                             | (Dollars in thousands)
|                            
|Fixed rate MBS               | $	13,651               | 2.60%                 
|ARM MBS                      | 22,031                 | 4.20                  
|Fixed rate CMO               | 30,603                 | 5.84                  
|Floating rate CMO            | 2,268                  | 0.43                  
|Fixed rate agency debentures | 7,000                  | 1.34                  
|Total                        | $	75,553               | 14.41%                

Assuming no change in interest rates, the estimated average life of the investment securities
portfolio was 2.08 years and 2.37 years, respectively, at December 31, 2006 and September 30, 2006.
Assuming a hypothetical immediate and permanent increase in interest rates of 300 basis points, the
estimated average life of the portfolio extends to 2.55 years and 2.57 years at December 31, 2006 and
September 30, 2006, respectively.

Loans receivable, net increased by $10.9 million, or 2.7%, to $409.5 million at December 31, 2006
from $398.6 million at September 30, 2006.  The growth was comprised of net increases in commercial
loans totaling $14.8 million or 15.4%.  Such loans include multi-family, nonresidential real estate,
construction and business loans.  The increase in loans receivable net also included net increases in home
equity loans and home equity lines of credit totaling $1.1 million.  Offsetting the growth in these
categories was a $5.0 million decrease in the balance of 1-4 family first mortgages and net increases to the
allowance for loan losses totaling $50,000.

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, 2006 with that of September 30, 2006.  Amounts reported
exclude allowance for loan losses and net deferred origination costs.



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

|                           | December 31, 2006      | September 30, 2006    
|-------------------------- | ---------------------- | ----------------------
|Type of Loans              | Amount                 | Percent ofTotal Assets
|                           | (Dollars in thousands)
|                          
|Construction               | $	18,416               | 3.51%                 
|1/1 and 3/3 ARMs           | 9,844                  | 1.88                  
|3/1 and 5/1 ARMs           | 139,613                | 26.63                 
|5/5 and 10/10 ARMs         | 44,692                 | 8.52                  
|7/1 and 10/1 ARMs          | 2,053                  | 0.39                  
|15 year fixed or less      | 114,968                | 21.93                 
|Greater than 15 year fixed | 52,636                 | 10.04                 
|Prime-indexed HELOC        | 19,369                 | 3.69                  
|Consumer                   | 743                    | 0.14                  
|Business                   | 8,955                  | 1.71                  
|Total                      | $	411,289              | 78.44%                

At December 31, 2006 and September 30, 2006, respectively, the balance of one-to-four family mortgage
loans included $20.9 million and $20.0 million of thirty year adjustable rate loans with initial fixed
interest rate periods of three to five years during which time monthly loan payments comprise interest
only.  After the initial period, the monthly payments on such loans are adjusted to reflect the collection of
both interest and principal over the loan's remaining term to maturity.

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

|                          | December 31, 2006      | September 30, 2006    
|------------------------- | ---------------------- | ----------------------
|Type of Loans             | Amount                 | Percent ofTotal Assets
|                          | (Dollars in thousands)
|                         
|Construction              | $	18,416               | 3.51%                 
|1-4 family mortgage       | 280,027                | 53.41                 
|Multifamily (5+) mortgage | 34,355                 | 6.55                  
|Nonresidential mortgage   | 46,077                 | 8.79                  
|Land                      | 4,647                  | 0.89                  
|1-4 family HELOC          | 19,369                 | 3.69                  
|Consumer                  | 743                    | 0.14                  
|Business                  | 7,655                  | 1.46                  
|Total                     | $	411,289              | 78.44%                

Total deposits increased by $26.4 million, or 8.0%, to $353.5 million at December 31, 2006
from $327.1 million at September 30, 2006.  This increase was primarily attributable to the
opening of the Bank's newest deposit branch located in Verona, New Jersey.  The Bank
celebrated the Verona branch grand opening on December 2, 2006 with balances at that branch
totaling $26.9 million at December 31, 2006.  In total, noninterest bearing checking accounts
increased approximately $2.7 million or 11.4%% while interest bearing checking accounts,
including a promotional, high yield money market account offered in association with the
Bank's new Verona branch, grew $19.7 million or 62.7%.  For that same



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At December 31, 2006, the Bank held approximately $5.0 million of municipal deposits,
representing a reduction of approximately $11.9 million from $16.9 million at September 30,
2006.  The outflow of municipal deposits included the closing of one municipal account
relationship whose balances at September 30, 2006 totaled approximately $11.8 million.

The following table compares the composition of the Company's deposit portfolio by category as
a percentage of total assets at December 31, 2006 with that of September 30, 2006.

|                             | December 31, 2006      | September 30, 2006    
|---------------------------- | ---------------------- | ----------------------
|Deposit category             | Amount                 | Percent ofTotal Assets
|                             | (Dollars in thousands)
|                            
|Money market checking        | $	35,199               | 6.71%                 
|Noninterest bearing checking | 26,223                 | 5.00                  
|Interest bearing checking    | 15,930                 | 3.04                  
|Money market savings         | 12,656                 | 2.39                  
|Other savings                | 93,046                 | 17.75                 
|Certificates of deposit      | 170,589                | 32.54                 
|Total                        | $	353,543              | 67.43%                

The following table compares the composition of the Company's deposit portfolio by branch as a
percentage of total assets at December 31, 2006 with that of September 30, 2006.

|                 | December 31, 2006      | September 30, 2006    
|---------------- | ---------------------- | ----------------------
|Deposit category | Amount                 | Percent ofTotal Assets
|                 | (Dollars in thousands)
|                
|Bloomfield       | $        225,109       | 42.93%                
|Cedar Grove      | 101,502                | 19.36                 
|Verona           | 26,932                 | 5.14                  
|Total            | $	353,543              | 67.43%                

FHLB advances decreased $4.0 million, or 7.1%, to $52.1 million at December 31, 2006 from $56.1
million at September 30, 2006.  The reduction was primarily attributable to the repayment of maturing
FHLB advances totaling $2.0 million and the reduction of overnight borrowings in the same amount.



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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, 2006 with that of September
30, 2006.  Scheduled principal payments on amortizing borrowings are reported as maturities.

|                     | December 31, 2006      | September 30, 2006    
|-------------------- | ---------------------- | ----------------------
|Remaining Term       | Amount                 | Percent ofTotal Assets
|                     | (Dollars in thousands)
|                    
|Overnight            | $	8,400                | 1.60%                 
|One year or less     | 7,063                  | 1.36                  
|One to two years     | 12,066                 | 2.30                  
|Two to three years   | 7,530                  | 1.44                  
|Three to four years  | 6,000                  | 1.14                  
|Four to five years   | 6,000                  | 1.14                  
|More than five years | 5,000                  | 0.95                  
|Total                | $	52,059               | 9.93%                 

Equity decreased $12.3 million, or 9.8% to $112.6 million at December 31, 2006 from $124.9
million at September 30, 2006.  The decrease was primarily due to the Company's repurchase of its
shares in accordance with its repurchase plan announced in October 2006.  Of the reported decrease in
equity, $12.9 million was attributable to net increases in Treasury stock held at the quarter ended
December 31, 2006.

**Comparison of Operating Results for the Three Months Ended December 31, 2006 and 2005**

**General.**  Net income for the quarter ended December 31, 2006 was $329,000, a decrease of
$334,000, or 50.4% from the quarter ended December 31, 2005.  The decrease in net income resulted from
a decrease in net interest income and an increase in noninterest expense partially offset by a decrease in
the provision for loan losses, an increase in noninterest income and a decrease in the provision for
income taxes.

**Interest Income.**  Total interest income increased 10.3% or $627,000 to $6.7 million for the quarter
ended December 31, 2006 from $6.1 million for the quarter ended December 31, 2005.  For those same
comparative quarters, the average yield on interest-earning assets increased 63 basis points to 5.48%
from 4.85% while the average balance of interest-earning assets decreased $11.4 million or 2.3% to $490.0
million from $501.4 million.

Interest income on loans increased $1.1 million or 23.2%, to $5.8 million for the quarter ended
December 31, 2006 from $4.7 million for the quarter ended December 31, 2005.  This increase was due, in
part, to a $54.1 million increase in the average balance of loans receivable to $403.2 million for the quarter
ended December 31, 2006 from $349.1 million for the quarter December 31, 2005.  In addition, the average
yield on loans increased 36 basis points to 5.73% from 5.37% for those same comparative periods.  The
increase in the average balance and yields of loans receivable was primarily attributable to the
Company's strategic emphasis on commercial lending.

The rise in interest income on loans was augmented by higher interest income on securities,
which increased $64,000 or 8.2% to $841,000 for the quarter ended December 31, 2006 from $777,000 for
the quarter ended December 31, 2005.  The increase was due in part, to a 49 basis point increase in the
average yield on securities which grew to 4.10% from 3.61% for the same comparative periods.  The



Next Page 22


Further, interest and dividend income on federal funds sold, other interest-bearing deposits and
FHLB stock decreased $524,000 to $88,000 for the quarter ended December 31, 2006 from $612,000 for the
quarter ended December 31, 2005.  This decrease was due, in part, to a decline of $61.4 million in the
average balance of these assets to $4.8 million for the quarter ended December 31, 2006 from $66.2
million for the quarter ended December 31, 2005.  The higher average balance in the earlier comparative
quarter reflects the initial receipt of stock offering proceeds from the closing of the Company's second
step conversion and the deployment of those proceeds into other interest-earnings assets during the
quarter.  The impact on interest income attributable to this decline in average balance was partially offset
by a 362 basis point rise in the average yield on these assets which increased to 7.32% from 3.70%.  The
average balances reported and used for yield calculations reflect, where appropriate, the reduction for
outstanding checks issued against such accounts.  This has the effect of increasing the reported yield on
such assets.

**Interest Expense.**  Total interest expense increased by $838,000 or 31.0% to $3.5 million for the
quarter ended December 31, 2006 from $2.7 million for the quarter ended December 31, 2005.  For those
same comparative periods, the average cost of interest-bearing liabilities increased 94 basis points from
2.99% to 3.93%, while the average balance of interest-bearing liabilities decreased $1.5 million or 0.4% to
$359.9 million for the quarter ended December 31, 2006 from $361.4 million for the quarter ended
December 31, 2005.

Interest expense on deposits increased $803,000 or 39.3% to $2.8 million for the quarter ended
December 31, 2006 from $2.0 million for the quarter ended December 31, 2005.  This increase was due, in
part, to the disintermediation of lower cost transaction account balances into higher yielding certificates
of deposit.  For those same comparative periods, the overall average balance of interest-bearing deposits
decreased by $1.6 million. However, within interest-bearing deposits, the average balance of certificates
increased by $14.7 million.  Offsetting this increase were reductions in the average balances of interest-bearing checking accounts and savings accounts by $6.1 million and $10.3 million, respectively.

The impact on interest expense attributable to the disintermediation noted above was reflected in
the 106 basis point increase in the average cost of interest-bearing deposits to 3.72% for the quarter ended
December 31, 2006 from 2.66% for the quarter ended December 31, 2005.  The components of this
increase include a 101 basis point increase in the average cost of certificates of deposit, a 92 basis point
increase in the average cost of interest-bearing checking accounts and a 95 basis point increase in the
average cost of savings accounts.  As noted earlier, the reported increase in the cost of deposits for the
quarter ended December 31, 2006 was impacted by higher promotional interest rates paid on new
deposit accounts at the Bank's Verona branch during the quarter.  However, a significant portion of the
reported increase was attributable to continued upward pressure on overall deposit interest rates in the
highly competitive markets serviced by the Bank.

Interest expense on FHLB advances increased $35,000 to $691,000 for the quarter ended
December 31, 2006 from $656,000 for the quarter ended December 31, 2005.  This increase was due, in
part, to a $149,000 increase in the average balance of advances to $53.9 million for the quarter ended
December 31, 2006 from $53.7 million for the quarter ended December 31, 2005.  The increase was also
attributable to a 24 basis point increase in the average cost of advances from 4.89% for the quarter ended
December 31, 2006 to 5.13% for the same quarter in fiscal 2006.  The higher average cost for the current



Next Page 23


**Net Interest Income.**  Net interest income decreased by $209,000 or 6.2%, to $3.2 million for the
quarter ended December 31, 2006 from $3.4 million for the quarter ended December 31, 2005.  The
Company's net interest rate spread declined 32 basis points from 1.86% to 1.54% for the same
comparative periods, while the net interest margin decreased  11 basis points from 2.70% to 2.59%.

**Provision for Loan Losses.**Using the allowance methodology described under Critical
Accounting Policies found later in this discussion, the provision for loan losses totaled $50,000 for the
quarter ended December 31, 2006, representing a decrease of $36,000 from the quarter ended December
31, 2005.  The provision expense for the quarter ended December 31, 2006 reflected the reversal of an
$86,000 loss reserve against a previously impaired loan participation.  Management's review of the loan
conducted as of December 31, 2006 concluded that, based upon the loan's consistent payment history
and the improved financial performance of the underlying commercial property, the loan was no longer
impaired resulting in the reversal of the prior impairment reserve.  The loan's classification was also
upgraded from doubtful to substandard.  Excluding this adjustment, the Bank's provision expense
totaled $136,000 for the quarter ended December 31, 2006.  This adjusted provision amount reflects the
increase in loan loss provision generally attributable to the comparatively higher net growth in our
commercial loan portfolio.  Specifically, each period's comparative provision resulted largely from the
incremental growth in the outstanding balance of the loans on which historical and environmental loss
factors are applied.  For the quarter ended December 31, 2006, outstanding loan balances, excluding the
allowance for loan loss and loans held for sale , increased $11.0 million to $411.7 million from $400.7
million at the prior quarter ended September 30, 2006.  The growth was comprised of net increases in
commercial loans totaling $14.8 million.  Such loans include multi-family, nonresidential real estate,
construction and business loans.  The increase in loans receivable net also included net increases in home
equity loans and home equity lines of credit totaling $1.1 million.  Offsetting the growth in these
categories was a $5.0 million decrease in the balance of 1-4 family first mortgages.

By comparison, for the three months ended December 31, 2005, total outstanding loan balances,
grew by $13.0 million - an amount exceeding that of the current quarter.  However, the growth was
comprised of net increases in the outstanding balance of commercial loans, as defined above, of
approximately $6.7 million - comparatively lower net growth on those loans on which the Bank applies
relatively higher historical and environment loss factors.  By contrast, loan growth in the earlier quarter
included net increases in one-to-four family mortgages totaling $4.5 million coupled with increases in
home equity loans of $1.8 million - loan types for which the Bank applies comparatively lower historical
and environmental loss factors.

In total, the allowance for loan losses as a percentage of gross loans outstanding was maintained
at 0.53% at December 31, 2006 from the same levels reported at September 30, 2006.  These ratios reflect
allowance for loan loss balances of $2.2 million and $2.1 million, respectively.  Notwithstanding the most
recent quarter to quarter consistency, the overall increase in the ratio of allowance to gross loans reported
in prior quarters reflects the changing composition of the portfolio with greater strategic emphasis on
loans with higher risk factors.  The level of the allowance is based on estimates and the ultimate losses
may vary from those estimates.

**Noninterest Income.**  Noninterest income increased $261,000 to $287,000 for the quarter ended
December 31, 2006 from $26,000 for the quarter ended December 31, 2005.  This increase in noninterest
income was primarily attributable to a $271,000 loss on sale of an underperforming investment security
during the first quarter of fiscal 2006 compared with no such losses in the current quarter.  The net
increase in noninterest income also reflected an $8,000 increase in income from the cash surrender value
of life insurance attributable to a combination of higher average balances and improved yields on those



Next Page 24


**Noninterest Expense.**  Noninterest expense increased $645,000 to $2.9 million for the quarter
ended December 31, 2006 from $2.2 million for the quarter ended December 31, 2005.  Significant
components of this growth in operating costs include comparative increases to salaries and employee
benefits of $567,000, increased occupancy and equipment costs of $18,000, increases in advertising and
marketing costs of $68,000 and increases to other non interest expenses of $50,000.  Offsetting these
increases were decreases of $42,000 in legal costs and $18,000 in professional and consulting fees.

The $567,000 increase in salaries and employee benefits for the comparative quarters includes
increases of $140,000 to employee salaries and payroll taxes.  Such increases were primarily attributable
to growth in the Company's commercial lending staff and additions to retail deposit staff associated with
the Company's branching strategy.  Other noteworthy increases to salaries and employee benefits
resulted from the implementation of the Company's 2006 Equity Incentive Plan approved by
shareholders in May, 2006.  Costs relating to the Company's restricted stock and stock option plans
increased a total of $269,000 from the quarter ended December 31, 2005 to the quarter ended December
31, 2006.  Additionally, ESOP costs increased $28,000 due to an increase in share value.  Finally, the
variance also reflects the reversal of $131,000 of profit sharing expense recorded in the earlier
comparative quarter ended December 31, 2005 resulting from the discontinuation of that benefit plan.

The remaining increases in noninterest expense, including the reported increases in occupancy
and equipment costs of $18,000, advertising and marketing costs of $68,000 and other noninterest
expense of $50,000 were largely attributable to the operation of the Bank's newest branch in Verona, New
Jersey.  In particular, for the quarter ended December 31, 2006, both advertising and marketing and other
noninterest expense included branch start up costs associated with the promotion and operation of that
branch.

Offsetting these increases in noninterest expense were reductions in legal expense and
professional and consulting fees of $42,000 and $18,000, respectively.  The higher legal costs incurred in
the quarter ended December 31, 2005 were largely attributable to matters resulting from the completion
of Company's second step conversion which closed October 5, 2005.  Such matters included significant
modifications to the Company's ESOP for which no equivalent expense was incurred in the current
period.  Comparative decreases in professional and consulting fees were the result of lower internal and
external audit costs associated with the Sarbanes Oxley Act of 2002 during the current quarter.  The
expense incurred in the quarter ended December 31, 2005 included a portion of the first year costs
associated with the development, implementation and audit of controls over financial statement
reporting in accordance with Section 404 of the Act.   The lower costs in the quarter ended December 31,
2006 reflect the reduced financial burden of maintaining and updating those controls as required to
ensure ongoing compliance with the Act.

**Provision for Income Taxes**.  The provision for income taxes decreased $223,000 for the quarter
ended December 31, 2006 compared with the quarter ended December 31, 2005.  For those same
comparative periods, the Company's effective tax rate was 36.4% and 38.3%, respectively.  The net
decrease in the effective tax rate was attributable, in part, to the comparatively higher interest income on
investment securities held by the Bank's investment subsidiary, American Savings Investment
Corporation ("ASIC").  ASIC is a wholly owned New Jersey investment subsidiary formed in August
2004 by American Bank of New Jersey.  The purpose of this subsidiary is to invest in stocks, bonds, notes
and all types of equity, mortgages, debentures and other investment securities.  Interest income from this
subsidiary is taxed by the state of New Jersey at an effective rate lower than the statutory corporate state
income tax rate.  The Company also recorded comparatively higher levels of tax exempt income during



Next Page 25


Offsetting a portion of these tax benefits was the impact of comparatively higher non-deductible
expenses associated with the ESOP attributable to increases in share value.



**Critical Accounting Policies**

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

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

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

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

Application of the Bank's loan loss methodology outlined above results, in part, in historical and
environmental loss factors being applied to the outstanding balance of homogeneous groups of loans to
estimate probable credit losses.  Both historical and environmental loss factors are reviewed and updated
quarterly, where appropriate, as part of management's assessment of the allowance for loan losses.

During the first quarter of fiscal 2007, changes to environmental factors used in the Bank's
allowance for loan loss calculations generally reflected the Company's increased strategic focus on
commercial lending.  Environmental factors applied to the outstanding balance of commercial loans
reflected the changes to overall lending policies, procedures and practices associated with that strategic
emphasis, the increased volume of commercial loans in relation to total loan originations, changes in
credit concentration reflecting larger loan balances to borrowers and concerns about potential  changes in



Next Page 26


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

**Liquidity and Commitments**

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

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

Liquidity management is both a daily and long-term function of business management.  Excess
liquidity is generally invested in short-term investments such as overnight deposits or U.S. Agency
securities.  On a longer-term basis, the Bank maintains a strategy of investing in various loan products
and in securities collateralized by loans.  The Bank uses its sources of funds primarily to meet its ongoing
commitments, to pay maturing certificates of deposit and savings withdrawals, to fund loan
commitments and to maintain its portfolio of mortgage-backed securities and investment securities.  At
December 31, 2006, the total approved loan origination commitments outstanding amounted to $34.2
million.  At the same date, unused lines of credit were $24.9 million and construction loans in process
were $16.4 million.

Certificates of deposit scheduled to mature in one year or less at December 31, 2006, totaled
$144.3 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, 2006 the Bank has $15.5 million of borrowings from the Federal Home Loan Bank of New
York ("FHLB") maturing in one year or less.  Of those advances, $8.4 million represents funds drawn on



Next Page 27


The following tables disclose our contractual obligations and commercial commitments as of December 31, 2006.  Scheduled principal payments on amortizing borrowings are reported as maturities.

|                  | Total          | Less Than1 Year | 1-3 Years | 4-5 Years | After5 Years
|----------------- | -------------- | --------------- | --------- | --------- | ------------
|                  | (In thousands)
|                 
|Time Deposits     | $	170,589      | $144,278        | $	13,847  | $   3,065 | $   9,399   
|FHLB  advances(1) | 52,059         | 15,463          | 19,596    | 12,000    | 5,000       
|Total             | $	222,648      | $159,741        | $	33,443  | $	15,065  | $	14,399    

|(1) | At December 31, 2006, the total collateralized borrowing limit was $125.9 million, of which we
had $52.1 million outstanding.
|--- | -----------------------------------------------------------------------------------------------------------------------------



|                                        | TotalAmountsCommitted | Less Than1 Year | 1-3 Years | 4-5 Years | Over5 Years
|--------------------------------------- | --------------------- | --------------- | --------- | --------- | -----------
|                                        | (In thousands)       
|                                       
|Lines of credit(1)                      | $	24,934              | $   1,944       | $	1,312   | $	617     | $	21,061   
|Land lease                              | 2,407                 | 69              | 277       | 277       | 1,784      
|Construction loans in
  process(1)      | 16,352                | 4,232           | 12,120    | -         | -          
|Other commitments to
  extend credit(1) | 34,169                | 34,169          | -         | -         | -          
|Total                                   | $	77,862              | $	40,414        | $	13,709  | $	894     | $	22,845   

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

In addition to the above commitments, the Company has financial obligations regarding
outstanding contracts for purchase and leases relating to branch sites.  As of December 31, 2006, the Bank
has paid a deposit totaling $147,500 on a purchase contract for a future branch location in Clifton, New
Jersey.  The funds disbursed by the Bank upon the closing of the property in January 2007 included an
additional $1,327,500 representing the remainder of the $1,475,000 purchase price for the property.

As noted in the table above, the Bank has entered into a land lease agreement through which it is
committed to pay $2,407,079 over a 15 year term.  This commitment relates to the relocation of the Bank's
Bloomfield branch site.  Such relocation will significantly upgrade and modernize the Bloomfield branch
facility supporting the Company's deposit growth and customer service enhancement objectives.  The
relocation will also support expansion of the administrative and lending office space within the
Company's existing headquarters facility where the branch is currently located.  This commitment is
contingent upon the fulfillment of certain conditions outlined in the lease contract.



Next Page 28


**Regulatory Capital**

Consistent with its goals to operate a sound and profitable financial organization, American
Bank of New Jersey actively seeks to maintain its classification as a "well capitalized" institution in
accordance with regulatory standards.  The Bank's total equity was $82.8  million at December 31, 2006,
or 16.45% of total assets on that date.  As of December 31, 2006, the Bank exceeded all capital
requirements of the Office of Thrift Supervision.  The Bank's regulatory capital ratios at December 31,
2006 were as follows: Core capital, 16.56%; Tier I risk-based capital, 26.49%; and total Risk-based capital,
27.18%.  The regulatory capital requirements to be considered well capitalized are 5.0%, 6.0% and 10.0%,
respectively.

**Impact of Inflation**

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

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

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

**Recent Accounting Pronouncements**

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



Next Page 29


**ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

**Qualitative Analysis.**  Because the income on the majority of our assets and the cost of the
majority of our liabilities are sensitive to changes in interest rates, a significant form of market risk for us
is interest rate risk, 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;
> andThe interest expense we pay on our interest-bearing liabilities such as deposits and
> amounts we borrow.

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

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

Tables presenting the composition and allocation of the Company's interest-earning assets and
interest-costing liabilities from an interest rate risk perspective are set forth in the preceding section of
this report titled "Comparison of Financial Condition at December 31, 2006 and September 30, 2006."
These tables present the Company's investment securities, loans, deposits, and borrowings by categories
that reflect the interest rate risk characteristics of the underlying assets or liabilities.  Shown as a
percentage of total assets, the comparative data presents changes in the interest rate risk characteristics of
the Company's balance sheet.

Our net interest margin may be adversely affected throughout several possible interest rate
environments.  Foremost, the continued inversion of the yield curve, by which shorter term market
interest rates exceed those of longer term rates, could trigger further 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.  As noted in the Executive Summary discussion earlier, such compression occurred
during the quarter ended December 31, 2006 when our net interest spread shrank 26 basis points to
1.54% from 1.80% for the fiscal year ended September 30, 2006.  During that time, the continued growth
in the Company's commercial lending activities contributed significantly to improved yields on earning
assets, which increased 36 basis points from 5.12% to 5.48%.  However, these improved yields were more
than offset by increases in the cost of interest-bearing liabilities which grew by 61 basis points from 3.32%
to 3.93%.  Contributing to this increase in the cost of interest-bearing liabilities was the impact of higher



Next Page 30


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
hybrid ARMs that are fixed rate for an initial period of time.  At December 31, 2006, excluding allowance
for loan losses and net deferred origination costs and including loans held for sale, loans totaled $411.3
million comprising 78.44% of total assets.  Of those loans, fixed rate mortgages totaled $167.6 million or
32.0% of total assets while hybrid ARMs, including 3/1, 5/1, 7/1, and 10/1 ARMs totaled $196.2 million
or 37.4% of total assets.  In a rising rate environment, our cost of funds may increase more rapidly than
the interest earned on our loan portfolio and investment securities portfolio because our primary source
of funds is deposits with substantially greater repricing sensitivity than that of our loans and investment
securities.  Having interest-bearing liabilities that reprice more frequently than interest-earning assets is
detrimental during periods of rising interest rates and could cause our net interest rate spread to shrink
because the increase in the rates we would earn on our securities and loan portfolios would be less than
the increase in the rates we would pay on deposits and borrowings.

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

The Bank also faces the risk of continued disintermediation of our deposits into higher cost
accounts.  Like many banks, we were successful in growing non-maturity deposits in prior years while
interest rates had 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 challenged.  Additional increases in market interest
rates, particularly shorter term interest rates, could result in further inversion of the yield curve.  Such an
event could exacerbate net interest spread compression by triggering increases in deposit costs resulting
from higher rates paid to retain deposits - a risk compounded by the continued disintermediation of
those deposits into higher cost accounts.



Next Page 31


**Quantitative Aspects of Market Risk.**  The following table presents American Bank of New
Jersey's net portfolio value as of September 30, 2006 - the latest date for which information is available.
The net portfolio value was calculated by the Office of Thrift Supervision, based on information provided
by the Bank.

|                       | Net Portfolio Value | Net Portfolio Valueas % of Present Value of Assets |          | BoardEstablished Limits
|---------------------- | ------------------- | -------------------------------------------------- | -------- | -----------------------
|Changes inRates(1)     | $ Amount            | $ Change                                           | % Change | NetPortfolioValueRatio 
|(Dollars in thousands)
|+300 bp                | 64,266              | -21,293                                            | -25%     | 13.89%                 
|+200 bp                | 72,082              | -13,478                                            | -16%     | 15.23%                 
|+100 bp                | 79,173              | -6,387                                             | -7%      | 16.37%                 
|0 bp                   | 85,559              |                                                    |          | 17.34%                 
|-100 bp                | 90,833              | 5,274                                              | +6%      | 18.07%                 
|-200 bp                | 94,180              | 8,620                                              | +10%     | 18.46%                 

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

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

The qualitative and quantitative interest rate analysis presented above indicate that various
foreseeable movements in market interest rates may have an adverse effect our net interest margin and



Next Page 32


| | (1) | Open up to five de novo branches over the next three to five years with an emphasis on
growth in non-maturity deposits;                                                                                                                                                                                                                          
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Attract and retain lower cost business transaction accounts by expanding and enhancing
business deposit services including online cash management and remote deposit capture
services;                                                                                                                                                           
| | (3) | Attract and retain lower cost personal checking and savings accounts through expanded and
enhanced cross selling efforts and modified ATM surcharge policies,                                                                                                                                                                                    
| | (4) | Originate and retain commercial loans with terms that increase overall loan portfolio
repricing frequency and cash flows while reducing call risk through prepayment
compensation provisions.                                                                                                                                                    
| | (5) | Originate and retain 1-4 family home equity loans and variable rate lines of credit to increase
loan portfolio repricing frequency and cash flows.                                                                                                                                                                                               
| | (6) | Originate both fixed and adjustable rate 1-4 family first mortgage loans eligible for sale in the
secondary market and, if warranted, sell such loans on either a servicing retained or
servicing released basis.  The strategy reduces the balance of longer duration and/or non-prepayment protected loans while enhancing non interest income.

With regard to this last strategy, the Bank currently expects to continue the sale of longer-term,
fixed rate 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, 2006, we sold a total of $838,000 of loans to the Federal National Mortgage
Association and Countrywide Home Loans, Inc. 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, 2006, the Bank had one outstanding contract to sell a $308,000 long term, fixed rate
mortgage loan into the secondary market.  Loans sold under contracts drawn in the future may generate
additional gains or losses on sale of mortgage loans in subsequent periods.

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

| | (1) | Purchase short to intermediate term securities and maintain a securities portfolio that
provides a stable cash flow, thereby providing investable funds in varying interest rate
cycles.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Lengthen the maturities of our liabilities through utilization of FHLB advances and other
wholesale funding alternatives;                                                               



Next Page 33


Finally, in the past, the Company has occasionally prepaid FHLB advances which had resulted
in the recognition of prepayment penalties.  Although no such prepayments were transacted in fiscal
2005 or fiscal 2006, we may evaluate the costs and benefits of prepaying additional borrowings or other
balance sheet restructuring transactions, which may result in additional one-time charges to earnings to
further improve the Bank's net interest spread and margin and enhance future earnings.



Next Page 34


**ITEM 4.	CONTROLS AND PROCEDURES**

| | (a) | Evaluation of disclosure controls and procedures: An evaluation of the Company's disclosure
controls and procedures (as defined in Section 13(a)-15(e) of the Securities Exchange Act of 1934
("the Act") was carried out under the supervision and with the participation of the Company's
Chief Executive Officer, Chief Financial Officer and several other members of the Company's
senior management.  Based on such evaluation, the Company's Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure controls and procedures in
effect as of the end of the period covered by this quarterly report are effective in ensuring that
the information required to be disclosed by the Company in the reports it files or submits under
the Act is (i) accumulated and communicated to the Company's management (including the
Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded,
processed, summarized and reported within the time periods specified in the Securities and
Exchange Commission rules and forms.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | Changes in internal controls: In the quarter ended December 31, 2006, there was no change in the
Company's internal control over financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        



Next Page 35


**PART II - - OTHER INFORMATION**

**ITEM 1.   LEGAL PROCEEDINGS**

At December 31, 2006, the Company and its subsidiaries were not involved in any pending
proceedings other than the legal proceedings occurring in the ordinary course of business.  Such legal
proceedings in the aggregate are believed by management to be immaterial to the Company's financial
condition and results of operations.

**ITEM 1A.   RISK FACTORS**

There have been no material changes to the factors disclosed in Item 1A., Risk Factors, in our Annual
Report on Form 10-K for the year ended September 30, 2006.

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

The following table summarizes our share repurchase activity during the three months ended
December 31, 2006 and additional information regarding our share repurchase program.

|**Period**                     | **(a) Total NumberOf Shares (orUnits) Purchased** | **(b)Average PricePaid per Share(or Unit)** | **(c) Total Numberof Shares (orUnits) Purchasedas Part OfPublicly
Announced Plansor Programs** | **(d) Maximum Number(or Approximate DollarValue) of Shares (or Units) that May Yet BePurchased UnderPlans or Programs**
|------------------------------ | ------------------------------------------------- | ------------------------------------------- | ---------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------
|Repurchases for the Month     
|October 1 - October 31, 2006   | -                                                 | -                                           | -                                                                                             
|November 1 - November 30, 2006 | 562,000                                           | $12.19                                      | 562,000                                                                                       
|December 1 - December 31, 2006 | 500,000                                           | $12.25                                      | 500,000                                                                                       
|                              
|Total repurchases              | 1,062,000                                         | $12.22                                      | 1,062,000                                                                                      | 354,322(1)(2)                                                                                                          

________________

|(1) | As of December 31, 2006, the number reported reflects the remaining number of the original 1,416,322 that could be
repurchased under the Company's 10% repurchase plan announced in October, 2006.                                                                                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The Company had previously completed its repurchase of shares to fund stock awards previously made under the American
Bank of New Jersey 2005 Restricted Stock Plan (208,295 shares) and American Bancorp of New Jersey, Inc. 2006 Equity
Incentive Plan (358,484 shares) during the fiscal year ended September 30, 2006.

**ITEM 3.   DEFAULTS UPON SENIOR SECURITIES**

None

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

None

**ITEM 5.  OTHER INFORMATION**



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None

**ITEM 6.  EXHIBITS**

| | (a) | Exhibits
| | --- | --------
| |     | 31.1    
| |     | 31.2    
| |     | 32      



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SIGNATURES

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

|                          | American Bancorp of New Jersey, Inc.
       (Registrant)                       
|------------------------- | -------------------------------------------------------------------------------
|Date:    February 9, 2007 | /s/ Joseph KliminskiJoseph KliminskiChief Executive Officer                    
|Date:    February 9, 2007 | /s/ Eric B. HeyerEric B. HeyerSenior Vice President and Chief Financial Officer

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