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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-K



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x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the fiscal year ended DECEMBER 31, 2004



OR



 ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For
the transition period from  to



Commission File No. 0-18014



PAMRAPO BANCORP, INC.

(Exact name of registrant as specified in its charter)



|                                                              |  |                                     
|------------------------------------------------------------- |  | ------------------------------------
|NEW JERSEY                                                    |  | 22-2984813                          
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. Employer Identification No.)



611 AVENUE C,
BAYONNE, NEW JERSEY 07002

(Address and zip code of principal executive offices)



Registrants telephone number, including area code: (201) 339-4600



Securities registered pursuant to Section 12(b) of the
Act: None

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



Common Stock, par value $0.01 per share

(Title of class)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x         No ̈



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. x



Indicate by check mark whether the registrant
is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x         No ̈



The aggregate market value, based
upon the last sales price as quoted on The Nasdaq Stock Market for June 30, 2004, of the common stock held by non-affiliates of the registrant, i.e., persons other than directors and executive officers of the registrant, is approximately
$86,975,500.



The Registrant had 4,975,542 shares of Common Stock outstanding
as of March 9, 2005.



DOCUMENTS INCORPORATED BY REFERENCE



Portions of the Annual Report to Stockholders for the year ended
December 31, 2004 are incorporated by reference into Parts I and II of this Form 10-K.



Portions of the Proxy Statement for the 2005 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.



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INDEX



|           |  |                                                                                                              |  |     
|---------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|           |  |                                                                                                              |  | PAGE
|PART I     |  |                                                                                                              |  |     
|           |  |                                                                                                             
|Item 1.    |  | Business                                                                                                     |  | 1   
|           |  |                                                                                                             
|Item 2.    |  | Properties                                                                                                   |  | 35  
|           |  |                                                                                                             
|Item 3.    |  | Legal Proceedings                                                                                            |  | 36  
|           |  |                                                                                                             
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                          |  | 36  
|           |  |                                                                                                             
|PART II    |  |                                                                                                              |  |     
|           |  |                                                                                                             
|Item 5.    |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 36  
|           |  |                                                                                                             
|Item 6.    |  | Selected Financial Data                                                                                      |  | 37  
|           |  |                                                                                                             
|Item 7.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 37  
|           |  |                                                                                                             
|Item 7A.   |  | Quantitative and Qualitative Disclosure About Market Risk                                                    |  | 37  
|           |  |                                                                                                             
|Item 8.    |  | Financial Statements and Supplementary Data                                                                  |  | 38  
|           |  |                                                                                                             
|Item 9.    |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                         |  | 38  
|           |  |                                                                                                             
|Item 9A.   |  | Controls and Procedures                                                                                      |  | 38  
|           |  |                                                                                                             
|Item 9B.   |  | Other Information                                                                                            |  | 39  
|           |  |                                                                                                             
|PART III   |  |                                                                                                              |  |     
|           |  |                                                                                                             
|Item 10.   |  | Directors and Executive Officers of the Registrant                                                           |  | 39  
|           |  |                                                                                                             
|Item 11.   |  | Executive Compensation                                                                                       |  | 39  
|           |  |                                                                                                             
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 39  
|           |  |                                                                                                             
|Item 13.   |  | Certain Relationships and Related Transactions                                                               |  | 40  
|           |  |                                                                                                             
|Item 14.   |  | Principal Accountant Fees and Services                                                                       |  | 40  
|           |  |                                                                                                             
|PART IV    |  |                                                                                                              |  |     
|           |  |                                                                                                             
|Item 15.   |  | Exhibits and Financial Statement Schedules                                                                   |  | 41  
|           |  |                                                                                                             
|SIGNATURES |  |                                                                                                              |  | 43  



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Forward-Looking Statements



This Form 10-K may include certain forward-looking statements based on current management expectations. The actual results of Pamrapo
Bancorp, Inc. (the Company) could differ materially from those management expectations. Factors that could cause future results to vary from current management expectations include, but are not limited to, general economic conditions,
legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax authorities, changes in interest rates, deposit flows, the cost of funds,
demand for loan products, demand for financial services, competition, changes in the quality or composition of loan and investment portfolios of Pamrapo Savings Bank, SLA, the Companys wholly-owned subsidiary (the Bank), changes in
accounting principles, policies or guidelines, and other economic, competitive, governmental and technological factors affecting the Companys operations, markets, products, services and prices.



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PART I



Item 1. Business.



Pamrapo Bancorp, Inc. (also
referred to as the Company or the Registrant) was incorporated under Delaware law on June 26, 1989 and changed its state of incorporation from Delaware to New Jersey on March 29, 2001. On November 10, 1989, the Registrant
acquired Pamrapo Savings Bank, S.L.A. (the Bank or Pamrapo) as a part of the Banks conversion from a New Jersey chartered savings association in mutual form to a New Jersey chartered stock savings association. The
Registrant is a savings and loan holding company and is subject to regulation by the Office of Thrift Supervision (OTS), the Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission
(SEC). Currently, the Registrant does not transact any material business other than through its sole subsidiary, the Bank.



Pamrapo was organized in 1887 as Pamrapo Building and Loan Association. On October 6, 1952, it changed its name to Pamrapo Savings and Loan Association, a New Jersey
chartered savings and loan association in mutual form, and in 1988 it changed its name to Pamrapo Savings Bank, S.L.A. The Banks principal office is located in Bayonne, New Jersey. Its deposits are insured up to applicable limits by the
Savings Association Insurance Fund (the SAIF) which is administered by the FDIC. At December 31, 2004, the Bank had total assets of $639.9 million, deposits of $493.4 million and stockholders equity of $51.0 million before
elimination of intercompany accounts with the Company.



As a community-oriented
institution, the Bank is principally engaged in attracting retail deposits from the general public and investing those funds in fixed-rate one- to four-family residential mortgage loans and, to a lesser extent, in multi-family residential mortgage
loans, commercial real estate loans, home equity and second mortgage loans, consumer loans and mortgage-backed securities. The Banks revenues are derived principally from interest on loans and mortgage-backed securities, interest and dividends
on investment securities and short-term investments, and other fees and service charges. The Banks primary sources of funds are deposits and, to a lesser extent, Federal Home Loan Bank of New York (FHLB-NY) advances and other
borrowings.



Market Area



The Bank, which is headquartered in Bayonne, New Jersey, conducts its business through ten
retail banking offices, seven of which are located in Bayonne, New Jersey, one in Hoboken, New Jersey, one in Fort Lee, New Jersey, and one in Monroe, New Jersey. The Banks deposit base is located primarily in Hudson County, with a large
concentration in Bayonne, an older, stable, residential community of one-family and two-family residences and middle income families who have lived in the area for many years. The communities in which the Banks branches are located are
strategically located in the New York City metropolitan area and many residents of these communities commute to Manhattan to work on a daily basis. The Banks lending activities have also been concentrated in Hudson County and to a lesser
extent in Bergen, Monmouth, Middlesex and Ocean Counties, areas which have had a high level of new development in recent years.



1



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Lending Activities



General. Pamrapo principally originates fixed-rate mortgage loans on one- to four-family residential dwellings for retention in its own portfolio. The Bank also
originates acquisition, development and construction loans in addition to multi-family and commercial real estate loans. At December 31, 2004, the Banks total gross loans outstanding amounted to $402.6 million, of which $263.4 million
consisted of loans secured by one- to four-family residential properties, $18.3 million consisted of construction and land loans, and $117.8 million consisted of loans secured by multi-family and commercial real estate. Substantially all of the
Banks real estate loan portfolio consists of conventional mortgage loans.





2



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LOAN PORTFOLIO COMPOSITION



The following table sets forth the composition of the Banks loan and mortgage-backed securities portfolios in dollar amounts and in
percentages at the dates indicated:



|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|------------------------------------------------------- |  | --------------- | ------- | - | ------- | ------ | - | ------ | - | ------- | ---- | ------ | ------ | ---- | - | ------- | - |  | ------ | - |  | ------- | ------- | - | ------ | ------ | - | ------- | - | ------- | - |  | ------ | -
|                                                        |  | At December 31, |        
|                                                        |  | 2000            |         |   | 2001    |        |   | 2002   |   |         | 2003 |        |        | 2004 |  
|                                                        |  | Amount          |         |   | Percent |        |   | Amount |   | Percent |      |        | Amount |      |   | Percent |   |  | Amount |   |  | Percent |         |   | Amount |        |   | Percent |  
|Real Estate Mortgage Loans:                             |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |  
|Permanent:                                              |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Fixed-rate                                              |  | $               | 242,769 |   |         | 78.54  | % |        | $ | 300,778 |      | 81.46  | %      |      | $ | 320,715 |   |  | 82.26  | % |  | $       | 308,437 |   |        | 81.46  | % |         | $ | 319,043 |   |  | 80.61  | %
|Adjustable rate                                         |  |                 | 3,900   |   |         | 1.26   |   |        |   | 2,757   |      | .75    |        |      |   | 2,137   |   |  | .55    |   |  |         | 1,804   |   |        | .48    |   |         |   | 3,039   |   |  | .77    |  
|Construction(1)                                         |  |                 | 10,594  |   |         | 3.43   |   |        |   | 8,471   |      | 2.29   |        |      |   | 7,893   |   |  | 2.02   |   |  |         | 12,599  |   |        | 3.32   |   |         |   | 18,272  |   |  | 4.61   |  
|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Total mortgage loans                                    |  |                 | 257,263 |   |         | 83.23  |   |        |   | 312,006 |      | 84.50  |        |      |   | 330,745 |   |  | 84.83  |   |  |         | 322,840 |   |        | 85.26  |   |         |   | 340,354 |   |  | 85.99  |  
|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Commercial Loans                                        |  |                 | 928     |   |         | .30    |   |        |   | 1,263   |      | .34    |        |      |   | 658     |   |  | .17    |   |  |         | 407     |   |        | .11    |   |         |   | 659     |   |  | .17    |  
|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Consumer Loans:                                         |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Passbook or certificate                                 |  |                 | 691     |   |         | .22    |   |        |   | 689     |      | .19    |        |      |   | 552     |   |  | .14    |   |  |         | 586     |   |        | .16    |   |         |   | 733     |   |  | .19    |  
|Home improvement                                        |  |                 | 561     |   |         | .18    |   |        |   | 576     |      | .16    |        |      |   | 336     |   |  | .09    |   |  |         | 229     |   |        | .06    |   |         |   | 133     |   |  | .03    |  
|Equity and second mortgages                             |  |                 | 52,255  |   |         | 16.91  |   |        |   | 56,958  |      | 15.42  |        |      |   | 59,234  |   |  | 15.19  |   |  |         | 59,758  |   |        | 15.78  |   |         |   | 59,015  |   |  | 14.91  |  
|Automobile                                              |  |                 | 1,545   |   |         | .50    |   |        |   | 1,484   |      | .40    |        |      |   | 1,243   |   |  | 32     |   |  |         | 734     |   |        | .19    |   |         |   | 637     |   |  | .16    |  
|Personal                                                |  |                 | 1,785   |   |         | .58    |   |        |   | 1,294   |      | .35    |        |      |   | 1,298   |   |  | .33    |   |  |         | 1,144   |   |        | .30    |   |         |   | 1,041   |   |  | .26    |  
|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Total consumer loans                                    |  |                 | 56,837  |   |         | 18.39  |   |        |   | 61,001  |      | 16.52  |        |      |   | 62,663  |   |  | 16.07  |   |  |         | 62,451  |   |        | 16.49  |   |         |   | 61,559  |   |  | 15.55  |  
|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Total loans                                             |  |                 | 315,028 |   |         | 101.92 |   |        |   | 374,270 |      | 101.36 |        |      |   | 394,066 |   |  | 101.07 |   |  |         | 385,698 |   |        | 101.86 |   |         |   | 402,572 |   |  | 101.71 |  
|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Less:                                                   |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Allowance for loan losses                               |  |                 | 1,950   |   |         | .63    |   |        |   | 2,150   |      | .58    |        |      |   | 2,550   |   |  | .65    |   |  |         | 2,515   |   |        | .66    |   |         |   | 2,495   |   |  | .63    |  
|Loans in process                                        |  |                 | 2,925   |   |         | .94    |   |        |   | 2,272   |      | .62    |        |      |   | 1,882   |   |  | .48    |   |  |         | 5,168   |   |        | 1.36   |   |         |   | 5,155   |   |  | 1.30   |  
|Deferred loan fees (costs) and discounts                |  |                 | 1,071   |   |         | .35    |   |        |   | 609     |      | .16    |        |      |   | (231    | ) |  | (.06   | ) |  |         | (626    | ) |        | (.16   | ) |         |   | (878    | ) |  | (.22   | )
|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Total                                                   |  |                 | 5,946   |   |         | 1.92   |   |        |   | 5,031   |      | 1.36   |        |      |   | 4,201   |   |  | 1.07   |   |  |         | 7,057   |   |        | 1.86   |   |         |   | 6,772   |   |  | 1.71   |  
|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Total net loans                                         |  | $               | 309,082 |   |         | 100.00 | % |        | $ | 369,239 |      | 100.00 | %      |      | $ | 389,865 |   |  | 100.00 | % |  | $       | 378,641 |   |        | 100.00 | % |         | $ | 395,800 |   |  | 100.00 | %
|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Mortgage-Backed Securities:                             |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |  
|GNMA(2)                                                 |  | $               | 2,768   |   |         | 2.25   | % |        | $ | 2,046   |      | 1.63   | %      |      | $ | 1,214   |   |  | .82    | % |  | $       | 682     |   |        | .31    | % |         | $ | 421     |   |  | .21    | %
|FHLMC(3)(6)                                             |  |                 | 93,218  |   |         | 75.81  |   |        |   | 81,581  |      | 64.98  |        |      |   | 99,981  |   |  | 67.38  |   |  |         | 147,341 |   |        | 66.98  |   |         |   | 140,821 |   |  | 69.99  |  
|FNMA(4)(6)                                              |  |                 | 26,864  |   |         | 21.85  |   |        |   | 41,649  |      | 33.17  |        |      |   | 38,846  |   |  | 26.18  |   |  |         | 55,246  |   |        | 25.12  |   |         |   | 42,660  |   |  | 21.20  |  
|CMO(5)                                                  |  |                 |        |   |         |       |   |        |   |        |      |       |        |      |   | 7,670   |   |  | 5.17   |   |  |         | 15,054  |   |        | 6.84   |   |         |   | 16,027  |   |  | 7.97   |  
|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Total mortgage-backed securities                        |  |                 | 122,850 |   |         | 99.91  |   |        |   | 125,276 |      | 99.78  |        |      |   | 147,711 |   |  | 99.55  |   |  |         | 218,323 |   |        | 99.25  |   |         |   | 199,929 |   |  | 99.37  |  
|                                                        |  |                 |         |   |         |        |   |        |   |        
|Add/Less:                                               |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Premiums (discounts), net (6)                           |  |                 | 205     |   |         | .17    |   |        |   | 234     |      | .18    |        |      |   | 617     |   |  | .41    |   |  |         | 1,632   |   |        | .74    |   |         |   | 1,246   |   |  | .62    |  
|Unrealized (loss) gain on securities available for sale |  |                 | (91     | ) |         | (.08   | ) |        |   | 46      |      | .04    |        |      |   | 58      |   |  | .04    |   |  |         | 25      |   |        | .01    |   |         |   | 16      |   |  | .01    |  
|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  
|Net mortgage-backed securities                          |  | $               | 122,964 |   |         | 100.00 | % |        | $ | 125,556 |      | 100.00 | %      |      | $ | 148,386 |   |  | 100.00 | % |  | $       | 219,980 |   |        | 100.00 | % |         | $ | 201,191 |   |  | 100.00 | %
|                                                        |  |                 |         |   |         |        |   |        |   |         |      |        |        |      |   |         |   |  |        |   |  |         |         |   |        |        |   |         |   |         |   |  |        |  



3



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|(1) | Includes acquisition, development and land loans.
|--- | -------------------------------------------------



|(2) | Government National Mortgage Association (GNMA).
|--- | --------------------------------------------------



|(3) | Federal Home Loan Mortgage Corporation (FHLMC).
|--- | -------------------------------------------------



|(4) | Federal National Mortgage Association (FNMA).
|--- | -----------------------------------------------



|(5) | Collateralized Mortgage Obligations.
|--- | ------------------------------------



|(6) | Includes available for sale securities having a principal balance of $4,165,000 and a net premium of $98,000 for 2000, a principal balance of $3,084,000 and a net premium of $9,000
for 2001, a principal balance of $2,188,000 and a net premium of $2,000 for 2002, a principal balance of $1,537,000 for 2003, and a principal balance of $1,098,000 for 2004.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





4



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The following table sets forth the composition of the Banks gross loan portfolio by type of security at the dates
indicated.



|                               |  |                        |         |                  |        |   |        |      |                  |  |        |        |  |                  |         |  |        |  
|------------------------------ |  | ---------------------- | ------- | ---------------- | ------ | - | ------ | ---- | ---------------- |  | ------ | ------ |  | ---------------- | ------- |  | ------ | -
|                               |  | As of December 31,     |        
|                               |  | 2002                   |         |                  | 2003   |   |        | 2004 |                 
|                               |  | (Dollars in thousands) |        
|                               |  | Amount                 |         | Percent of Total |        |   | Amount |      | Percent of Total |  |        | Amount |  | Percent of Total |        
|One- to four-family            |  | $                      | 295,781 |                  | 75.06  | % |        | $    | 268,243          |  | 69.55  | %      |  | $                | 263,416 |  | 65.43  | %
|Multi-family                   |  |                        | 46,224  |                  | 11.73  |   |        |      | 51,048           |  | 13.23  |        |  |                  | 55,630  |  | 13.82  |  
|Commercial real estate         |  |                        | 38,526  |                  | 9.78   |   |        |      | 49,808           |  | 12.91  |        |  |                  | 62,183  |  | 15.45  |  
|Construction and land          |  |                        | 9,782   |                  | 2.48   |   |        |      | 13,729           |  | 3.56   |        |  |                  | 18,272  |  | 4.54   |  
|Commercial                     |  |                        | 658     |                  | .17    |   |        |      | 407              |  | .11    |        |  |                  | 659     |  | .16    |  
|Consumer-secured and unsecured |  |                        | 3,095   |                  | .78    |   |        |      | 2,463            |  | .64    |        |  |                  | 2,412   |  | .60    |  
|                               |  |                        |         |                  |        |   |        |      |                  |  |        |        |  |                  |         |  |        |  
|Total gross loans              |  | $                      | 394,066 |                  | 100.00 | % |        | $    | 385,698          |  | 100.00 | %      |  | $                | 402,572 |  | 100.00 | %
|                               |  |                        |         |                  |        |   |        |      |                  |  |        |        |  |                  |         |  |        |  



ORIGINATION, PURCHASE AND SALE OF
LOANS AND MORTGAGE-BACKED SECURITIES.The following table sets forth the Banks loan originations, purchases, sales and principal repayments for the periods indicated.



|                                     |  |                         |         |      |   |         |  |   |        
|------------------------------------ |  | ----------------------- | ------- | ---- | - | ------- |  | - | -------
|                                     |  | Year Ended December 31,
|                                     |  | 2002                    |         | 2003 |   | 2004   
|                                     |  | (Dollars in thousands) 
|Mortgage Loans (gross):              |  |                         |         |      |   |         |  |   |        
|At beginning of period               |  | $                       | 312,006 |      | $ | 330,745 |  | $ | 322,840
|                                     |  |                         |         |      |   |         |  |   |        
|Mortgage loans originated:           |  |                         |         |      |   |         |  |   |        
|One- to four-family residential      |  |                         | 113,096 |      |   | 106,685 |  |   | 70,242 
|Multi-family residential             |  |                         | 16,221  |      |   | 11,906  |  |   | 10,254 
|Commercial                           |  |                         | 5,368   |      |   | 7,066   |  |   | 9,803  
|Construction(1)                      |  |                         | 4,693   |      |   | 9,050   |  |   | 12,220 
|                                     |  |                         |         |      |   |         |  |   |        
|Total mortgage loans originated      |  |                         | 139,378 |      |   | 134,707 |  |   | 102,519
|                                     |  |                         |         |      |   |         |  |   |        
|Mortgage loans sold                  |  |                         |        |      |   |        |  |   | 515    
|                                     |  |                         |         |      |   |         |  |   |        
|Charge-offs                          |  |                         | 143     |      |   | 35      |  |   | 39     
|Repayments                           |  |                         | 120,496 |      |   | 142,577 |  |   | 84,451 
|                                     |  |                         |         |      |   |         |  |   |        
|At end of period                     |  | $                       | 330,745 |      | $ | 322,840 |  | $ | 340,354
|                                     |  |                         |         |      |   |         |  |   |        
|Commercial Loans (gross):            |  |                         |         |      |   |         |  |   |        
|At beginning of period               |  | $                       | 1,263   |      | $ | 658     |  | $ | 407    
|Commercial loans originated          |  |                         | 275     |      |   | 280     |  |   | 871    
|Repayments                           |  |                         | 880     |      |   | 531     |  |   | 619    
|                                     |  |                         |         |      |   |         |  |   |        
|At end of period                     |  | $                       | 658     |      | $ | 407     |  | $ | 659    
|                                     |  |                         |         |      |   |         |  |   |        
|Consumer Loans (gross):              |  |                         |         |      |   |         |  |   |        
|At beginning of period               |  | $                       | 61,001  |      | $ | 62,663  |  | $ | 62,451 
|Consumer loans originated            |  |                         | 32,962  |      |   | 33,668  |  |   | 23,649 
|Consumer loans sold                  |  |                         | 148     |      |   |        |  |   |       
|Charge-offs                          |  |                         | 101     |      |   | 92      |  |   | 68     
|Repayments                           |  |                         | 31,051  |      |   | 33,788  |  |   | 24,473 
|                                     |  |                         |         |      |   |         |  |   |        
|At end of period                     |  | $                       | 62,663  |      | $ | 62,451  |  | $ | 61,559 
|                                     |  |                         |         |      |   |         |  |   |        
|Mortgage-backed securities (gross):  |  |                         |         |      |   |         |  |   |        
|At beginning of period               |  | $                       | 125,276 |      | $ | 147,711 |  | $ | 218,323
|Mortgage-backed securities purchased |  |                         | 68,422  |      |   | 160,854 |  |   | 34,453 
|Repayments                           |  |                         | 45,987  |      |   | 90,242  |  |   | 52,847 
|                                     |  |                         |         |      |   |         |  |   |        
|At end of period                     |  | $                       | 147,711 |      | $ | 218,323 |  | $ | 199,929
|                                     |  |                         |         |      |   |         |  |   |        

---

|(1) | Includes acquisition, development and land loans.
|--- | -------------------------------------------------





5



---

LOAN MATURITY. The following table sets forth the maturity of the Banks gross loan portfolio at December 31,
2004. The table does not include prepayments or scheduled principal repayments. Prepayments and scheduled principal repayments on loans totaled $152.4 million, $176.9 million, and $109.5 million for the years ended December 31, 2002, 2003 and 2004,
respectively.



|                                         |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   |         |  
|---------------------------------------- |  | ------------------------------------------------- | ------- | ------------------------------------------------ | - | --------------------- |  | ------------------------------------ | ------ | ---------------- | - | ----- |  | - | --- |  | - | ------- | -
|                                         |  | One- to four- family residentialmortgage loans(1) |         | Multi-family and commercial real estate loans(1) |   | Construction Loans(2) |  | Consumer-secured and unsecured loans |        | Commercial Loans |   | Total | 
|                                         |  | (In thousands)                                    |        
|Amounts due:                             |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   |         |  
|Within 1 year                            |  | $                                                 | 821     |                                                  | $ | 1,758                 |  | $                                    | 14,302 |                  | $ | 168   |  | $ | 462 |  | $ | 17,511  |  
|                                         |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   |         |  
|After 1 year:                            |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   |         |  
|1 to 3 years                             |  |                                                   | 1,367   |                                                  |   | 491                   |  |                                      | 2,547  |                  |   | 528   |  |   | 49  |  |   | 4,982   |  
|3 to 5 years                             |  |                                                   | 5,017   |                                                  |   | 6,642                 |  |                                      |       |                  |   | 956   |  |   | 98  |  |   | 12,713  |  
|5 to 10 years                            |  |                                                   | 21,803  |                                                  |   | 13,381                |  |                                      | 155    |                  |   | 548   |  |   | 50  |  |   | 35,937  |  
|10 to 20 years                           |  |                                                   | 87,947  |                                                  |   | 92,421                |  |                                      |       |                  |   | 212   |  |   |    |  |   | 180,580 |  
|Over 20 years                            |  |                                                   | 146,461 |                                                  |   | 3,120                 |  |                                      | 1,268  |                  |   |      |  |   |    |  |   | 150,849 |  
|                                         |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   |         |  
|Total due after 1 year                   |  |                                                   | 262,595 |                                                  |   | 116,055               |  |                                      | 3,970  |                  |   | 2,244 |  |   | 197 |  |   | 385,061 |  
|                                         |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   |         |  
|Total amounts due                        |  | $                                                 | 263,416 |                                                  | $ | 117,813               |  | $                                    | 18,272 |                  | $ | 2,412 |  | $ | 659 |  |   | 402,572 |  
|                                         |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   |         |  
|Less:                                    |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   |         |  
|Allowance for loan losses                |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   | 2,495   |  
|Loans in process                         |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   | 5,155   |  
|Deferred loan fees (costs) and discounts |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   | (878    | )
|                                         |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   |         |  
|Total                                    |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  | $ | 395,800 |  
|                                         |  |                                                   |         |                                                  |   |                       |  |                                      |        |                  |   |       |  |   |     |  |   |         |  

---

|(1) | Includes equity, second mortgage and home improvement loans.
|--- | ------------------------------------------------------------



|(2) | Includes acquisition, development and land loans.
|--- | -------------------------------------------------



6



---

The following table sets forth at December 31, 2004, the dollar amount of all mortgage, consumer, commercial and
construction loans, due after December 31, 2005, which have fixed interest rates or adjustable interest rates:



|                                            |  |                             |         |                             |   |                          |  |   |        
|------------------------------------------- |  | --------------------------- | ------- | --------------------------- | - | ------------------------ |  | - | -------
|                                            |  | Due after December 31, 2005
|                                            |  | Fixed Rates                 |         | Floating or AdjustableRates |   | Total Due After One Year
|                                            |  | (In thousands)             
|One- to four-family residential (1)         |  | $                           | 257,104 |                             | $ | 5,491                    |  | $ | 262,595
|Construction loans                          |  |                             | 3,970   |                             |   |                         |  |   | 3,970  
|Multi-family and commercial real estate (1) |  |                             | 112,677 |                             |   | 3,378                    |  |   | 116,055
|Commercial loans                            |  |                             | 148     |                             |   | 49                       |  |   | 197    
|Consumer-secured and unsecured loans        |  |                             | 1,511   |                             |   | 733                      |  |   | 2,244  
|                                            |  |                             |         |                             |   |                          |  |   |        
|Totals                                      |  | $                           | 375,410 |                             | $ | 9,651                    |  | $ | 385,061
|                                            |  |                             |         |                             |   |                          |  |   |        

---

|(1) | Includes equity, second mortgage and home improvement loans.
|--- | ------------------------------------------------------------



Residential Mortgage Lending. Pamrapo presently originates first mortgage loans, equity loans, second mortgage loans and improvement loans secured by one- to
four-family residences, multi-family residences and commercial real estate. As of December 31, 2004, 97.6% of the gross loan portfolio were fixed-rate loans and 2.4% were ARMs, and were originated for the Banks portfolio. Residential loan
originations are generally obtained from existing or past customers and members of the local community. As of December 31, 2004, $319.0 million or 79.3% of the Banks total gross loan portfolio consisted of one- to four-family and multi-family
residential mortgage loans. Of this amount $263.4 million were one- to four-family and $55.6 million were multi-family.



The one- to four-family residential loans originated by the Bank are primarily fixed-rate mortgages, generally with terms of 15 or 25 years. Typically, such homes in the
Bayonne area are one- or two-family owner-occupied dwellings. The Bank generally makes one- to four-family residential mortgage loans in amounts up to 80% of the appraised value of the secured property. The Bank will originate loans with
loan-to-value ratios up to 90% within the local community, provided that private mortgage insurance on the amount in excess of such 80% ratio is obtained. Mortgage loans in the Banks portfolio generally include due-on-sale clauses, which
provide the Bank with the contractual right to demand the loan immediately due and payable in the event that the borrower transfers ownership of the property that is subject to the mortgage. It is the Banks policy to enforce due-on-sale
provisions. As of December 31, 2004, the interest rate for one- to four-family residential fixed-rate mortgages offered by the Bank was 5.25% on 15-year loans and 5.50% on 25-year loans.



The Bank also originates loans on multi-family residences. Such residences generally consist
of 6 to 24 units. Such loans are generally fixed-rate loans with interest rates ranging from 1.0% to 1.5% higher than those offered on one- to four-family residences. The Bank generally makes multi family residential loans in amounts up to 75% of
the appraised value of the secured property. Such appraisals are based primarily on the income producing ability of the property. The terms of multi-family residential loans range from 10 to 15 years. As of December 31, 2004, $55.6 million or 13.8%
of the Banks total gross loan portfolio consisted of multi-family residential loans.



7



---

Upon receipt of an application for a mortgage loan from a prospective borrower, a credit report is ordered to verify
information relating to the applicants employment, income and credit standing. A preliminary inspection of the subject premises is made by at least one member of the Executive Committee. The report of that inspection is brought before the
Executive Committee or the full Board of Directors to approve the amount of the loan and the terms. Approval is given subject to a report of value from an independent appraiser and credit approval. Approval of credit is given by the Banks
president or loan officer. It is the Banks policy to obtain title insurance on all real estate loans. Borrowers also must obtain hazard insurance and flood insurance, if required, prior to closing. The Bank generally requires borrowers to
advance funds on a monthly basis together with each payment of principal and interest to a tax escrow account from which the Bank can make disbursements for items such as real estate taxes and certain insurance premiums, if any, as they become due.



Acquisition, Development, Construction and Land Lending. The Bank
originates loans to finance the construction of one- to four-family dwellings, multi-family dwellings and, to a lesser extent, commercial real estate. It also originates loans for the acquisition and development of unimproved property to be used
principally for residential purposes in cases where the Bank is to provide the construction funds to improve the properties.



The interest rates and terms of the construction and land development loans vary, depending upon market conditions, the size of the construction or development project
and negotiations with the borrower. Advances are generally made to the borrower to cover actual construction costs incurred. On larger constructions loans, the Bank requires the project to be built out in phases. Advancement of funds is dependent
upon completion of the project stages. The Bank generally limits its exposure to 75% of the projected market value of the completed project. The amount of the loans are generally determined as follows: (i) land acquisition loans with no immediate
plans for construction are limited to 65% of the appraised value of the land; (ii) acquisition and development loans are limited to 65% of appraised value of the improved lot not to exceed 150% of the original acquisition cost; (iii) in addition to
the disbursement for acquisition and development, in an acquisition, development and construction loan, the Bank will not advance more than 90% of the construction costs; and (iv) loans secured by previously owned vacant land are limited to 65%.
Prior to making any disbursements, the Bank requires that the projects securing the construction and development loans be inspected. The Bank will finance the construction of properties without a prospective buyer or without permanent take-out
financing in place at the time of origination.



The underwriting criteria used
by the Bank are designed to evaluate and minimize the risks of each construction loan. Among other things, the Bank generally considers an appraisal of the project, the reputation of the borrower and the contractor, the amount of the borrowers
equity in the project, independent valuations and review of cost estimates, plans and specifications, preconstruction sale and leasing information, current and expected economic conditions in the area of the project, cash flow projections of the
borrower, and, to the extent available, guarantees by the borrower and/or third parties. All of the Banks acquisition, development and construction loan portfolio is secured by real estate properties located in northern and central New Jersey.



Acquisition, development and construction lending is generally
considered to involve a higher level of risk than one- to four-family permanent residential lending due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on development
projects, real estate developers and managers. In addition, the nature of these loans is



8



---

such that they are generally less predictable and more difficult to evaluate and monitor. As of December 31, 2004, the Banks acquisition, development,
construction and land loans varied in size from $40,000 to $2.3 million, net of loans in process, and represented 4.5% of total gross loans.



Commercial Real Estate Lending. Loans secured by commercial real estate totaled $62.2 million, or 15.5% of the Banks total gross loan portfolio, at December
31, 2004. Commercial real estate loans are generally originated in amounts up to 70% of the appraised value of the property. Such appraised value is determined by an independent appraiser previously approved by the Bank. The Banks commercial
real estate loans are secured by improved property such as office buildings, retail stores, warehouses and other non-residential buildings. Once the loan has been determined to be creditworthy and of sufficient property value, in the case of
corporate borrowers, the Bank obtains a personal guaranty from third party principals of the corporate borrower as supplemental security on the loan. This enables the Bank to proceed against the guarantor in the event of default without first
exhausting remedies against the borrower. Inquiry as to collectibility pursuant to such third party guarantees may be made by means of review of other properties secured by the Bank, personal interviews with the applicants, review of the
applicants personal financial statements and income tax returns and review of credit bureau reports. Borrowers must personally guarantee loans made for commercial real estate. Commercial real estate loans have terms ranging from 5 to 15 years
and are generally fixed-rate loans.



Loans secured by commercial real estate
properties are generally larger and involve a greater degree of risk than residential mortgage loans. Because payments on loans secured by commercial real estate properties are often dependent on successful operation or management of the properties,
repayment of such loans may be subject to adverse conditions in the real estate market or the economy. Emphasis is placed on the income producing capability of the collateral rather than on management-intensive projects.



Consumer and Commercial Lending. The Bank offers various other secured and unsecured
consumer loan products such as automobile loans, personal loans and passbook loans, as well as commercial loans. At December 31, 2004, the balance of such loans was $3.1 million, or 0.8% of the Banks total gross loan portfolio.



Loan Review. The Bank has a formalized loan review program, providing for detailed
post-closing reviews for loans selected from all categories. After review, reports are made to the mortgage and loan officers and the Board of Directors. Classification determination is presently the responsibility of the Asset Classification
Committee. See Classification of Assets. The purpose of these procedures is to enhance the Banks ability to properly document the loans it originates and to improve the performance of such loans.



Lending Authority. The Banks Executive Committee has the authority to approve
loans up to $750,000, with the stipulation that loans approved in excess of $500,000 must be reported at the next Board of Directors meeting. The Banks Vice President and Loan Officer has the authority to approve consumer and equity loans of
up to $150,000.



Loan Servicing. The Bank originated all of the loans it
has sold and services those loans for other investors. Pamrapo receives fees for these servicing activities, which include collecting and remitting loan payments, inspecting the properties and making certain insurance and tax payments are made



9



---

on behalf of the borrowers. At December 31, 2004, the Bank was servicing $929,000 of loans for others.



Loan Origination Fees and Other Fees. Loan origination fees and certain related direct
loan origination costs are deferred and the resulting net amount is amortized over the life of the related loan as an adjustment to the yield of such loans. In addition, commitment fees are required to be offset against related direct costs and the
resulting net amount generally is recognized over the life of the related loans as an adjustment of yield or if the commitment expires unexercised, recognized upon expiration of the commitment. The Bank had $878,000 in net deferred origination costs
at December 31, 2004.



Non-Performing Assets



When a borrower fails to make a required payment by the fifteenth day of the month in which
the payment is due, the Bank sends a late notice advising the borrower that the payment has not been received. In most cases delinquencies are cured promptly; however, if a loan has been delinquent for more than 60 days, the Bank reviews the loan
status more closely and, where appropriate, appraises the condition of the property and the financial circumstances of the borrower. Based upon the results of any such investigation, the Bank (1) may accept a repayment program for the arrearage from
the borrower; (2) may seek evidence, in the form of a listing contract, of efforts by the borrower to sell the property if the borrower has stated that he is attempting to sell; (3) may request a deed in lieu of foreclosure or (4) generally will
initiate foreclosure proceedings when a loan payment is delinquent for more than three monthly installments.



The following table sets forth information regarding non-accrual loans, loans which are 90 days or more delinquent, but on which the Bank is accruing interest and other real estate owned held by the Bank at the dates
indicated:



|                                                               |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      
|-------------------------------------------------------------- |  | ---------------------- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | --- |  | - | -----
|                                                               |  | At December 31,       
|                                                               |  | 2000                   |       | 2001 |   | 2002  |  | 2003 |       | 2004
|                                                               |  | (Dollars in thousands)
|One- to four-family residential real estate loans (1):         |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      
|Non-accrual loans                                              |  | $                      | 1,723 |      | $ | 1,552 |  | $    | 984   |      | $ | 511 |  | $ | 696  
|Accruing loans 90 days overdue                                 |  |                        | 1,217 |      |   | 641   |  |      | 633   |      |   | 378 |  |   | 81   
|                                                               |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      
|Total                                                          |  |                        | 2,940 |      |   | 2,193 |  |      | 1,617 |      |   | 889 |  |   | 777  
|                                                               |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      
|Multi-family residential and commercial real estate loans (1): |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      
|Non-accrual loans                                              |  |                        | 862   |      |   | 662   |  |      | 468   |      |   | 298 |  |   | 1,067
|Accruing loans 90 days overdue                                 |  |                        | 28    |      |   | 362   |  |      | 440   |      |   | 236 |  |   | 236  
|                                                               |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      
|Total                                                          |  |                        | 890   |      |   | 1,024 |  |      | 908   |      |   | 534 |  |   | 1,303
|                                                               |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      
|Construction loans (2):                                        |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      
|Non-accrual loans                                              |  |                        |      |      |   |      |  |      |      |      |   |    |  |   | 456  
|Accruing loans 90 days overdue                                 |  |                        | 114   |      |   |      |  |      |      |      |   |    |  |   |     
|                                                               |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      
|Total                                                          |  |                        | 114   |      |   |      |  |      |      |      |   |    |  |   | 456  
|                                                               |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      
|Commercial loans:                                              |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      
|Non-accrual loans                                              |  |                        | 25    |      |   |      |  |      |      |      |   |    |  |   |     
|Accruing loans 90 days overdue                                 |  |                        |      |      |   |      |  |      | 137   |      |   | 119 |  |   |     
|                                                               |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      
|Total                                                          |  |                        | 25    |      |   |      |  |      | 137   |      |   | 119 |  |   |     
|                                                               |  |                        |       |      |   |       |  |      |       |      |   |     |  |   |      



10



---

(Table of non-accrual assets, continued)



|                                                                      |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|--------------------------------------------------------------------- |  | ---------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|                                                                      |  | At December 31,        |      
|                                                                      |  | 2000                   |       |   | 2001 |   |       | 2002 |  |   | 2003  |   |  | 2004 |      
|                                                                      |  | (Dollars in thousands) |      
|Consumer loans:                                                       |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Non-accrual loans                                                     |  |                        | 93    |   |      |   | 42    |      |  |   | 33    |   |  |      |      |   |  |   | 42    |  
|Accruing loans 90 days overdue                                        |  |                        | 23    |   |      |   | 1     |      |  |   | 6     |   |  |      | 15    |   |  |   | 9     |  
|                                                                      |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total                                                                 |  |                        | 116   |   |      |   | 43    |      |  |   | 39    |   |  |      | 15    |   |  |   | 51    |  
|                                                                      |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total non-performing loans:                                           |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Non-accrual loans                                                     |  |                        | 2,703 |   |      |   | 2,256 |      |  |   | 1,485 |   |  |      | 809   |   |  |   | 2,261 |  
|Accruing loans 90 days overdue                                        |  |                        | 1,382 |   |      |   | 1,004 |      |  |   | 1,216 |   |  |      | 748   |   |  |   | 326   |  
|                                                                      |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total                                                                 |  | $                      | 4,085 |   |      | $ | 3,260 |      |  | $ | 2,701 |   |  | $    | 1,557 |   |  | $ | 2,587 |  
|                                                                      |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total foreclosed real estate, net of related reserves                 |  | $                      | 620   |   |      | $ | 238   |      |  | $ | 155   |   |  | $    |      |   |  | $ |      |  
|                                                                      |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Total non-performing loans and foreclosed real estate to total assets |  |                        | 1.00  | % |      |   | 0.65  | %    |  |   | 0.49  | % |  |      | 0.24  | % |  |   | 0.40  | %
|                                                                      |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  

---

|(1) | Includes equity and second mortgage loans.
|--- | ------------------------------------------



|(2) | Includes acquisition and development loans.
|--- | -------------------------------------------



At December 31, 2002, 2003, and 2004, nonaccrual loans for which interest has been discontinued totaled approximately $1.5 million, $809,000, and $2.3 million,
respectively. During the years ended December 31, 2002, 2003, and 2004, the Bank recognized interest income of approximately $24,000, $35,000, and $94,000, respectively, on these loans. Interest income that would have been recorded, had the loans
been on the accrual status, would have amounted to approximately $151,000, $79,000, and $179,000 for the years ended December 31, 2002, 2003, and 2004, respectively. The Bank is not committed to lend additional funds to the borrowers whose loans
have been placed on nonaccrual status.





11



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Delinquent Loans. At December 31, 2002, 2003, and 2004, respectively, delinquencies in the Banks portfolio
were as follows:



|                                  |  |                        |  |                            |                      |   |                 |                      |                            |   |                 |                 |  |                            |  |   |                 |   |                            |    |  |                 |       |                            |  |    |                 |   |                            |   |  |    |  |   |       |  
|--------------------------------- |  | ---------------------- |  | -------------------------- | -------------------- | - | --------------- | -------------------- | -------------------------- | - | --------------- | --------------- |  | -------------------------- |  | - | --------------- | - | -------------------------- | -- |  | --------------- | ----- | -------------------------- |  | -- | --------------- | - | -------------------------- | - |  | -- |  | - | ----- | -
|                                  |  | At December 31, 2002   |  |                            | At December 31, 2003 |   |                 | At December 31, 2004 |                           
|                                  |  | 60-89 Days             |  |                            | 90 Days or more      |   |                 | 60-89 Days           |                            |   | 90 Days or more |                 |  | 60-89 Days                 |  |   | 90 Days or more |  
|                                  |  | Number of Loans        |  | Principal Balance of Loans |                      |   | Number of Loans |                      | Principal Balance of Loans |   |                 | Number of Loans |  | Principal Balance of Loans |  |   | Number of Loans |   | Principal Balance of Loans |    |  | Number of Loans |       | Principal Balance of Loans |  |    | Number of Loans |   | Principal Balance of Loans |  
|                                  |  | (Dollars in thousands) | 
|Delinquent loans                  |  | 35                     |  | $                          | 1,764                |   |                 | 35                   |                            | $ | 2,701           |                 |  | 18                         |  | $ | 1,574           |   |                            | 22 |  | $               | 1,557 |                            |  | 13 |                 | $ | 694                        |   |  | 28 |  | $ | 2,587 |  
|As a percent of total gross loans |  |                        |  |                            | 0.45                 | % |                 |                      |                            |   | 0.69            | %               |  |                            |  |   | 0.41            | % |                            |    |  |                 | 0.40  | %                          |  |    |                 |   | 0.17                       | % |  |    |  |   | 0.64  | %





12



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As of December 31, 2004, the Bank had 28 loans which were 90 days or more past due totaling $2.6 million. The average
balance of such loans was approximately $92,000. Management is of the opinion that the Bank will not incur any additional substantial losses on such loans, giving consideration to existing loan loss reserves. Most of the loans are of moderate size;
with the largest balance being $515,000. All loans are within the Banks lending areas.



The Banks level of non-performing loans 90 days or more delinquent increased from $1.6 million at December 31, 2003 to $2.6 million at December 31, 2004. The total of such loans in the lower risk one- to
four-family residential category decreased to $777,000 or 30.0% of non-performing loans 90 days or more delinquent at December 31, 2004 when compared with $889,000 or 57.1% of non-performing loans 90 days or more delinquent at December 31, 2003.
Non-performing multi-family residential, commercial real estate and construction loans, loans normally having greater elements of risk increased from $534,000 at December 31, 2003 to $1.8 million at December 31, 2004.



Classified Assets. Federal regulations provide for the classification of loans and
other assets such as debt and equity securities considered to be of lesser quality as substandard, doubtful or loss assets. Assets which do not currently expose the insured institution to sufficient risk to
warrant classification in one of the aforementioned categories but possess weaknesses are designated special mention by management.



A classification of either substandard or doubtful requires the establishment of general allowances for loan losses in an amount deemed prudent by management. Assets
classified as loss require either a specific allowance for losses equal to 100% of the amount of the asset so classified or a charge off of such amount.



A savings institutions determination as to the classification of its assets and the amount of its valuation allowances is subject to
review by the OTS which can order the establishment of additional general or specific loss allowances. The OTS, in conjunction with the other federal banking agencies, has adopted an interagency policy statement on the allowance for loan and lease
losses. The policy statement provides guidance for financial institutions on both the responsibilities of management for the assessment and establishment of adequate allowances and guidance for banking agency examiners to use in determining the
adequacy of general valuation allowances. Generally, the policy statement requires that institutions have effective systems and controls to identify, monitor and address asset quality problems; have analyzed all significant factors that affect the
collectibility of the portfolio in a reasonable manner; and have established acceptable allowance evaluation processes that meet the objectives set forth in the policy statement.



Management of the Bank has classified $2.5 million of its assets as substandard and approximately $211,000 as loss based upon its review of
the Banks loan portfolio. Such review, among other things, takes into consideration the appraised value of underlying collateral, economic conditions and paying capacity of the borrowers. However, the Banks Asset Classification Committee
carefully monitors all of the Banks delinquent loans to determine whether or not they should be classified. At a minimum, the Bank classifies all foreclosed real estate and non-performing loans 90 days or more delinquent as substandard
assets. At December 31, 2004, the allowance for loan losses totaled $2.5 million.



13



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Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses based
on managements evaluation of the risk inherent in its loan portfolio and changes in the nature and volume of its loan activity. Such evaluation, which includes a review of all loans of which full collectibility may not be reasonably assured,
considers among other matters, the estimated net realizable value of the underlying collateral, economic conditions, historical loan loss experience and other factors that warrant recognition in providing for an adequate loan loss allowance.



During the years ended December 31, 2002, 2003, and 2004, gross charge-offs
totaled $244,000, $126,000, and $107,000, respectively.



The following
table sets forth the activity of the Banks allowance for loan losses at the dates indicated:



|                                                                                           |  |                                       |       |   |      |   |       |      |  |   |       |   |  |      |        |   |  |   |       |  
|------------------------------------------------------------------------------------------ |  | ------------------------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ------ | - |  | - | ----- | -
|                                                                                           |  | At or for the year ended December 31, |      
|                                                                                           |  | 2000                                  |       |   | 2001 |   |       | 2002 |  |   | 2003  |   |  | 2004 |       
|                                                                                           |  | (Dollars in thousands)                |      
|Balance at beginning of period                                                             |  | $                                     | 2,000 |   |      | $ | 1,950 |      |  | $ | 2,150 |   |  | $    | 2,550  |   |  | $ | 2,515 |  
|                                                                                           |  |                                       |       |   |      |   |       |      |  |   |       |   |  |      |        |   |  |   |       |  
|Provision for loan losses                                                                  |  |                                       | 208   |   |      |   | 459   |      |  |   | 634   |   |  |      | 84     |   |  |   | 82    |  
|                                                                                           |  |                                       |       |   |      |   |       |      |  |   |       |   |  |      |        |   |  |   |       |  
|Net charge-offs:                                                                           |  |                                       |       |   |      |   |       |      |  |   |       |   |  |      |        |   |  |   |       |  
|Real estate mortgage loans                                                                 |  |                                       | 235   |   |      |   | 65    |      |  |   | 143   |   |  |      | 35     |   |  |   | 39    |  
|Consumer loans                                                                             |  |                                       | 33    |   |      |   | 183   |      |  |   | 101   |   |  |      | 91     |   |  |   | 68    |  
|Commercial loans                                                                           |  |                                       |      |   |      |   | 25    |      |  |   |      |   |  |      |       |   |  |   |      |  
|Recoveries                                                                                 |  |                                       | 10    |   |      |   | 14    |      |  |   | 10    |   |  |      | 7      |   |  |   | 5     |  
|                                                                                           |  |                                       |       |   |      |   |       |      |  |   |       |   |  |      |        |   |  |   |       |  
|                                                                                           |  |                                       |       |   |     
|Net charge-offs                                                                            |  |                                       | 258   |   |      |   | 259   |      |  |   | 234   |   |  |      | 119    |   |  |   | 102   |  
|                                                                                           |  |                                       |       |   |      |   |       |      |  |   |       |   |  |      |        |   |  |   |       |  
|                                                                                           |  |                                       |       |   |     
|Balance at end of period                                                                   |  | $                                     | 1,950 |   |      | $ | 2,150 |      |  | $ | 2,550 |   |  | $    | 2,515  |   |  | $ | 2,495 |  
|                                                                                           |  |                                       |       |   |      |   |       |      |  |   |       |   |  |      |        |   |  |   |       |  
|                                                                                           |  |                                       |       |   |     
|Ratio of net charge offs during the period to average loans receivable during the period   |  |                                       | .09   | % |      |   | .08   | %    |  |   | .06   | % |  |      | .04    | % |  |   | .03   | %
|Ratio of allowance for loan losses to total outstanding loans (gross) at the end of period |  |                                       | .62   | % |      |   | .57   | %    |  |   | .65   | % |  |      | .65    | % |  |   | .62   | %
|Ratio of allowance for loan losses to non-performing loans                                 |  |                                       | 47.74 | % |      |   | 65.95 | %    |  |   | 94.41 | % |  |      | 161.53 | % |  |   | 96.44 | %





14



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The following table sets forth the breakdown of the allowance for loan losses by loan category for the periods indicated.
Management believes that the allowance can be allocated by category only on an approximate basis. The allocation to the allowance by category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb
losses in any category.



|                               |  |                 |       |        |   |        |  |        |       |        |   |       |  |   |      
|------------------------------ |  | --------------- | ----- | ------ | - | ------ |  | ------ | ----- | ------ | - | ----- |  | - | -----
|                               |  | At December 31,
|                               |  | 2000            |       | 2001   |   | 2002   |  | 2003   |       | 2004  
|                               |  | Amount          |       | Amount |   | Amount |  | Amount |       | Amount
|                               |  | (In thousands) 
|Real estate mortgage loans (1) |  | $               | 1,750 |        | $ | 1,980  |  | $      | 2,150 |        | $ | 2,240 |  | $ | 2,270
|Consumer loans                 |  |                 | 200   |        |   | 150    |  |        | 300   |        |   | 200   |  |   | 150  
|Commercial loans               |  |                 |      |        |   | 20     |  |        | 100   |        |   | 75    |  |   | 75   
|                               |  |                 |       |        |   |        |  |        |       |        |   |       |  |   |      
|                               |  |                 |       |        |  
|Total allowance                |  | $               | 1,950 |        | $ | 2,150  |  | $      | 2,550 |        | $ | 2,515 |  | $ | 2,495
|                               |  |                 |       |        |   |        |  |        |       |        |   |       |  |   |      

---

|(1) | Includes equity and second mortgages.
|--- | -------------------------------------





15



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Mortgage-Backed Securities. The Bank has significant investments in mortgage-backed securities and has, during
periods when loan demand was low and the interest yields on alternative investments was minimal, utilized such investments as an alternative to mortgage lending. All of the securities in the portfolio were insured or guaranteed by GNMA, FNMA or
FHLMC and have coupon rates as of December 31, 2004 ranging from 3.03% to 10.0%. At December 31, 2004, the unamortized principal balance of mortgage-backed securities, both held to maturity and available for sale, totaled $199.9 million or 31.2% of
total assets. The carrying value of such securities amounted to $148.4 million, $220.0 million, and $201.2 million at December 31, 2002, 2003, and 2004, respectively, and the fair market value of such securities totaled approximately $154.2 million,
$220.6 million, and $201.4 million at December 31, 2002, 2003, and 2004, respectively.



The following table sets forth the contractual maturities of the Banks gross mortgage-backed securities portfolio which includes available for sale and held to maturity at December 31, 2004.



|                            |  |                                                         |    |            |   |            |  |            |       |                    |   |         |  |   |       |  |   |        
|--------------------------- |  | ------------------------------------------------------- | -- | ---------- | - | ---------- |  | ---------- | ----- | ------------------ | - | ------- |  | - | ----- |  | - | -------
|                            |  | Contractual Maturities Due in Year(s) EndedDecember 31,
|                            |  | 2005- 2006                                              |    | 2007- 2008 |   | 2009- 2013 |  | 2014- 2023 |       | 2024 andThereafter |   | Total  
|                            |  | (In thousands)                                         
|Mortgage-backed securities: |  |                                                         |    |            |   |            |  |            |       |                    |   |         |  |   |       |  |   |        
|Held to maturity            |  | $                                                       | 20 |            | $ | 198        |  | $          | 8,612 |                    | $ | 182,508 |  | $ | 7,491 |  | $ | 198,829
|Available for sale          |  |                                                         |   |            |   |           |  |            |      |                    |   | 899     |  |   | 201   |  |   | 1,100  
|                            |  |                                                         |    |            |   |            |  |            |       |                    |   |         |  |   |       |  |   |        
|Total                       |  | $                                                       | 20 |            | $ | 198        |  | $          | 8,612 |                    | $ | 183,407 |  | $ | 7,692 |  | $ | 199,929
|                            |  |                                                         |    |            |   |            |  |            |       |                    |   |         |  |   |       |  |   |        



Mortgage-backed securities are a low
risk investment for the Bank. The Banks substantial investment in mortgage-backed securities will significantly enhance the Banks ability to meet risk based capital requirements as mortgage-backed securities are assigned a risk rating,
generally from 0% to 20%. Based on historical experience, the Bank believes that the mortgage-backed securities will be repaid significantly in advance of the stated maturities reflected in the above table.



Investment Activities



SAIF-insured savings institutions have the authority to invest in various types of liquid assets, including United States Treasury
obligations, securities of various federal agencies, certain certificates of deposit of insured banks and savings institutions, certain bankers acceptances, repurchase agreements and federal funds. Subject to various restrictions, SAIF-insured
savings institutions may also invest their assets in commercial paper, corporate debt securities and mutual funds whose assets conform to the investments that a SAIF-insured savings institution is otherwise authorized to make directly.



The Board of Directors sets the investment policy of the Bank. This policy dictates that
investments will be made based on the safety of the principal, liquidity requirements of the Bank and the return on the investment and capital appreciation. The Banks Chief Executive Officer may make investments up to $10 million, subject to
ratification by the Banks Board of Directors.



The Banks
conservative policy does not permit investment in junk bonds or speculative strategies based upon the rise and fall of interest rates. Pamrapos goal, however, has always been to realize



16



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the greatest possible return commensurate with its interest rate risk. Pamrapo has emphasized shorter term securities for their liquidity to increase
sensitivity of its investment securities to changes in interest rates.



As a
member of the FHLB-NY, the Bank is required to maintain liquid assets which meet regulatory safety and soundness standards. See Regulation Federal Home Loan Bank System.



Investment Portfolio



The following table sets forth certain information regarding the Banks investment portfolio, which includes available for sale
securities carried at fair value and held to maturity, at the dates indicated:



|                                                     |  |                 |        |            |   |               |  |            |        |               |   |            |  |   |        |  |   |       
|---------------------------------------------------- |  | --------------- | ------ | ---------- | - | ------------- |  | ---------- | ------ | ------------- | - | ---------- |  | - | ------ |  | - | ------
|                                                     |  | At December 31,
|                                                     |  | 2002            |        | 2003       |   | 2004         
|                                                     |  | AmortizedCost   |        | Fair Value |   | AmortizedCost |  | Fair Value |        | AmortizedCost |   | Fair Value
|                                                     |  | (In thousands) 
|Investments:                                         |  |                 |        |            |   |               |  |            |        |               |   |            |  |   |        |  |   |       
|Mutual Funds available for sale                      |  | $               | 1,442  |            | $ | 1,442         |  | $          | 1,474  |               | $ | 1,464      |  | $ | 1,509  |  | $ | 1,488 
|Equity securities available for sale                 |  |                 | 7      |            |   | 327           |  |            | 7      |               |   | 356        |  |   | 7      |  |   | 505   
|FHLB-NY stock                                        |  |                 | 4,403  |            |   | 4,403         |  |            | 4,744  |               |   | 4,744      |  |   | 5,152  |  |   | 5,152 
|Subordinated Notes                                   |  |                 | 7,095  |            |   | 7,461         |  |            | 9,422  |               |   | 9,950      |  |   | 9,309  |  |   | 9,831 
|Trust originated preferred security                  |  |                 | 500    |            |   | 525           |  |            | 500    |               |   | 540        |  |   | 500    |  |   | 532   
|Net unrealized gain on available for sale securities |  |                 | 346    |            |   |              |  |            | 379    |               |   |           |  |   | 510    |  |   |      
|                                                     |  |                 |        |            |   |               |  |            |        |               |   |            |  |   |        |  |   |       
|                                                     |  |                 |        |            |   |              
|Total investment securities                          |  | $               | 13,793 |            | $ | 14,158        |  | $          | 16,526 |               | $ | 17,054     |  | $ | 16,987 |  | $ | 17,508
|                                                     |  |                 |        |            |   |               |  |            |        |               |   |            |  |   |        |  |   |       
|                                                     |  |                 |        |            |   |              
|Other interest-earning assets:                       |  |                 |        |            |   |               |  |            |        |               |   |            |  |   |        |  |   |       
|Interest bearing deposits                            |  | $               | 17,685 |            | $ | 17,685        |  | $          | 4,197  |               | $ | 4,197      |  | $ | 9,579  |  | $ | 9,579 
|                                                     |  |                 |        |            |   |               |  |            |        |               |   |            |  |   |        |  |   |       
|                                                     |  |                 |        |            |   |              
|Total investment portfolio                           |  | $               | 31,478 |            | $ | 31,843        |  | $          | 20,723 |               | $ | 21,251     |  | $ | 26,566 |  | $ | 27,087
|                                                     |  |                 |        |            |   |               |  |            |        |               |   |            |  |   |        |  |   |       



The Bank has no investments with any
one issuer which exceeded 10% of stockholders equity.



Sources of
Funds



General. Deposits are the primary source of the Banks
funds for use in lending and for other general business purposes. In addition to deposits, the Bank obtains funds from advances from the FHLB-NY and other borrowings.



Deposits. Pamrapo offers a variety of deposit accounts having a wide range of interest rates and terms. The Banks deposits
consist of regular savings, non-interest bearing demand, NOW and Super NOW, money market and certificate accounts. Pamrapos deposits are obtained primarily from the Hudson County area. The Bank relies primarily on customer service and
long-standing relationships with customers to attract and retain deposits. Deposits decreased by $2.8 million or 0.57% from $492.2 million at December 31, 2003 to $489.4 million at December 31, 2004.



The flow of deposits is influenced significantly by general economic conditions, changes in
the money market and prevailing interest rates and competition.



17



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Deposit Portfolio. The following table sets forth the distribution and weighted average nominal interest rate of
the Banks deposit accounts at the dates indicated:



|                                                     |  |                 |         |                     |        |   |                               |      |   |                        |   |                     |  |        |                               |  |      |        |  |                     |         |  |                               |   |  |      |  
|---------------------------------------------------- |  | --------------- | ------- | ------------------- | ------ | - | ----------------------------- | ---- | - | ---------------------- | - | ------------------- |  | ------ | ----------------------------- |  | ---- | ------ |  | ------------------- | ------- |  | ----------------------------- | - |  | ---- | -
|                                                     |  | At December 31, |        
|                                                     |  | 2002            |         |                     | 2003   |   |                               | 2004 |  
|                                                     |  | Amount          |         | % of Total Deposits |        |   | Weighted Average Nominal Rate |      |   | Amount                 |   | % of Total Deposits |  |        | Weighted Average Nominal Rate |  |      | Amount |  | % of Total Deposits |         |  | Weighted Average Nominal Rate |  
|                                                     |  |                 |         |                     |        |   |                               |      |   | (Dollars in thousands) |   |                     |  |        |                               |  |      |        | 
|Passbook and club Accounts                           |  | $               | 155,431 |                     | 34.89  | % |                               | 2.34 | % |                        | $ | 179,463             |  | 36.46  | %                             |  | 1.35 | %      |  | $                   | 171,573 |  | 35.06                         | % |  | 1.25 | %
|0.00% demand                                         |  |                 | 26,314  |                     | 5.91   |   |                               | 0.00 |   |                        |   | 30,255              |  | 6.15   |                               |  | 0.00 |        |  |                     | 37,277  |  | 7.62                          |   |  | 0.00 |  
|NOW                                                  |  |                 | 32,813  |                     | 7.37   |   |                               | 1.26 |   |                        |   | 41,433              |  | 8.42   |                               |  | 1.00 |        |  |                     | 38,699  |  | 7.91                          |   |  | 1.00 |  
|Super NOW                                            |  |                 | 387     |                     | .09    |   |                               | 1.26 |   |                        |   | 159                 |  | .03    |                               |  | 1.00 |        |  |                     | 366     |  | .07                           |   |  | 1.00 |  
|Money market demand                                  |  |                 | 32,594  |                     | 7.31   |   |                               | 2.11 |   |                        |   | 38,495              |  | 7.82   |                               |  | 1.33 |        |  |                     | 38,263  |  | 7.82                          |   |  | 1.50 |  
|                                                     |  |                 |         |                     |        |   |                               |      |   |                        |   |                     |  |        |                               |  |      |        |  |                     |         |  |                               |   |  |      |  
|Total passbook, club, NOW, and money market accounts |  |                 | 247,539 |                     | 55.57  |   |                               | 1.92 |   |                        |   | 289,805             |  | 58.88  |                               |  | 1.16 |        |  |                     | 286,178 |  | 58.48                         |   |  | 1.09 |  
|                                                     |  |                 |         |                     |        |   |                               |      |   |                        |   |                     |  |        |                               |  |      |        |  |                     |         |  |                               |   |  |      |  
|                                                     |  |                 |         |                     |        |   |                               |      |  
|Certificate accounts:                                |  |                 |         |                     |        |   |                               |      |   |                        |   |                     |  |        |                               |  |      |        |  |                     |         |  |                               |   |  |      |  
|91-day money market                                  |  |                 | 2,730   |                     | .61    |   |                               | 2.14 |   |                        |   | 1,713               |  | .35    |                               |  | 1.26 |        |  |                     | 1,307   |  | .27                           |   |  | 1.41 |  
|26-week money market                                 |  |                 | 26,300  |                     | 5.90   |   |                               | 2.55 |   |                        |   | 21,443              |  | 4.36   |                               |  | 1.62 |        |  |                     | 21,898  |  | 4.47                          |   |  | 1.87 |  
|12- to 30-month money market                         |  |                 | 124,535 |                     | 27.95  |   |                               | 3.07 |   |                        |   | 129,345             |  | 26.28  |                               |  | 2.25 |        |  |                     | 127,064 |  | 25.97                         |   |  | 2.41 |  
|30- to 48-month money market                         |  |                 | 13,054  |                     | 2.93   |   |                               | 4.77 |   |                        |   | 16,633              |  | 3.38   |                               |  | 3.93 |        |  |                     | 20,307  |  | 4.15                          |   |  | 3.54 |  
|IRA and KEOGH                                        |  |                 | 31,250  |                     | 7.02   |   |                               | 3.55 |   |                        |   | 33,222              |  | 6.75   |                               |  | 2.68 |        |  |                     | 32,596  |  | 6.66                          |   |  | 2.40 |  
|Negotiated rate                                      |  |                 | 99      |                     | .02    |   |                               | 2.25 |   |                        |   |                    |  |       |                               |  |     |        |  |                     |        |  |                              |   |  |     |  
|                                                     |  |                 |         |                     |        |   |                               |      |   |                        |   |                     |  |        |                               |  |      |        |  |                     |         |  |                               |   |  |      |  
|                                                     |  |                 |         |                     |        |   |                               |      |  
|Total certificates                                   |  |                 | 197,968 |                     | 44.43  |   |                               | 3.18 |   |                        |   | 202,356             |  | 41.12  |                               |  | 2.39 |        |  |                     | 203,172 |  | 41.52                         |   |  | 2.45 |  
|                                                     |  |                 |         |                     |        |   |                               |      |   |                        |   |                     |  |        |                               |  |      |        |  |                     |         |  |                               |   |  |      |  
|                                                     |  |                 |         |                     |        |   |                               |      |  
|Total deposits                                       |  | $               | 445,507 |                     | 100.00 | % |                               | 2.48 | % |                        | $ | 492,161             |  | 100.00 | %                             |  | 1.66 | %      |  | $                   | 489,350 |  | 100.00                        | % |  | 1.65 | %
|                                                     |  |                 |         |                     |        |   |                               |      |   |                        |   |                     |  |        |                               |  |      |        |  |                     |         |  |                               |   |  |      |  





18



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The following table sets forth the deposit activity of the Bank for the periods indicated:



|                                    |  |                         |        |      |   |        |  |   |         |  
|----------------------------------- |  | ----------------------- | ------ | ---- | - | ------ |  | - | ------- | -
|                                    |  | Year Ended December 31, |       
|                                    |  | 2002                    |        | 2003 |   | 2004   | 
|                                    |  | (In thousands)          |       
|Deposits net of withdrawals         |  | $                       | 17,438 |      | $ | 36,962 |  | $ | (10,933 | )
|Interest credited                   |  |                         | 11,483 |      |   | 9,692  |  |   | 8,122   |  
|                                    |  |                         |        |      |   |        |  |   |         |  
|                                    |  |                         |       
|Net increase (decrease) in deposits |  | $                       | 28,921 |      | $ | 46,654 |  | $ | (2,811  | )
|                                    |  |                         |        |      |   |        |  |   |         |  



The following table sets forth, by
various rate categories, the amount of certificate accounts outstanding as of the dates indicated and the periods to maturity of the certificate accounts outstanding at December 31, 2004.



|               |  |                 |         |                                   |   |         |  |                  |         |           |   |             |  |                          |        |  |   |       |  |   |      
|-------------- |  | --------------- | ------- | --------------------------------- | - | ------- |  | ---------------- | ------- | --------- | - | ----------- |  | ------------------------ | ------ |  | - | ----- |  | - | -----
|               |  | At December 31, |         | At December 31, 2004, Maturing in
|               |  | 2002            |         | 2003                              |   | 2004    |  | One Year or Less |         | Two Years |   | Three Years |  | Greater than Three Years
|               |  | (In thousands) 
|2.99% or less  |  | $               | 74,055  |                                   | $ | 168,371 |  | $                | 181,566 |           | $ | 155,042     |  | $                        | 24,286 |  | $ | 2,173 |  | $ | 65   
|3.00% to 4.99% |  |                 | 115,030 |                                   |   | 27,494  |  |                  | 19,204  |           |   | 3,042       |  |                          | 5,685  |  |   | 4,448 |  |   | 6,029
|5.00% to 5.99% |  |                 | 6,049   |                                   |   | 4,137   |  |                  | 2,402   |           |   | 843         |  |                          | 991    |  |   |      |  |   | 568  
|6.00% to 6.99% |  |                 | 2,627   |                                   |   | 2,353   |  |                  |        |           |   |            |  |                          |       |  |   |      |  |   |     
|7.00% to 7.99% |  |                 | 207     |                                   |   |        |  |                  |        |           |   |            |  |                          |       |  |   |      |  |   |     
|               |  |                 |         |                                   |   |         |  |                  |         |           |   |             |  |                          |        |  |   |       |  |   |      
|Total          |  | $               | 197,968 |                                   | $ | 202,355 |  | $                | 203,172 |           | $ | 158,927     |  | $                        | 30,962 |  | $ | 6,621 |  | $ | 6,662
|               |  |                 |         |                                   |   |         |  |                  |         |           |   |             |  |                          |        |  |   |       |  |   |      



At December 31, 2004, the Bank had
outstanding $71.0 million in certificate accounts in amounts of $100,000 or more maturing as follows:



|                               |  |                |       
|------------------------------ |  | -------------- | ------
|                               |  | Amount        
|                               |  | (In thousands)
|Three months or less           |  | $              | 10,910
|Over three through six months  |  |                | 11,422
|Over six through twelve months |  |                | 30,908
|Over twelve months             |  |                | 17,280
|                               |  |                |       
|Total                          |  | $              | 70,520
|                               |  |                |       



Borrowings. Although deposits
are the Banks primary source of funds, the Bank utilizes borrowings when they are a less costly source of funds or can be invested at a positive rate of return.



Pamrapo obtains advances from the FHLB-NY upon the security of its capital stock of the FHLB-NY and a blanket assignment of the Banks
unpledged qualifying mortgage loans, mortgage-backed securities and investment securities. Such advances are made pursuant to several different credit programs, each of which has its own interest rate and range of maturities. As of December 31,
2004, outstanding advances from the FHLB-NY amounted to $89.0 million.



19



---

The following table sets forth certain information regarding FHLB-NY advances, all of which are at fixed rates, maturing
in the periods indicated:



|                        |  |                               |  |        |        |                              |       |        |   |                               |  |        |  |   |       
|----------------------- |  | ----------------------------- |  | ------ | ------ | ---------------------------- | ----- | ------ | - | ----------------------------- |  | ------ |  | - | ------
|                        |  | At December 31,              
|                        |  | 2002                          |  | 2003   |        | 2004                        
|                        |  | (Amounts in Thousands)       
|                        |  |                               |  |        |        |                             
|Maturing byDecember 31, |  | WeightedAverage Interest Rate |  | Amount |        | WeightedAverageInterest Rate |       | Amount |   | WeightedAverage Interest Rate |  | Amount
|2003                    |  | 5.51%                         |  | $      | 27,340 |                              |      |        |   |                              |  |       |  |   |      
|2004                    |  | 3.49%                         |  |        | 12,000 |                              | 2.80% |        | $ | 17,000                        |  |       |  |   |      
|2005                    |  | 3.99%                         |  |        | 13,000 |                              | 3.21% |        |   | 20,000                        |  | 3.21%  |  | $ | 20,000
|2006                    |  | 4.47%                         |  |        | 12,000 |                              | 3.35% |        |   | 25,000                        |  | 3.31%  |  |   | 32,000
|2007                    |  | 3.50%                         |  |        | 3,000  |                              | 2.75% |        |   | 8,000                         |  | 2.83%  |  |   | 15,000
|2008                    |  | 4.85%                         |  |        | 7,000  |                              | 4.85% |        |   | 7,000                         |  | 4.53%  |  |   | 12,000
|2010                    |  | 6.19%                         |  |        | 10,000 |                              | 6.19% |        |   | 10,000                        |  | 6.19%  |  |   | 10,000
|                        |  |                               |  |        |        |                              |       |        |   |                               |  |        |  |   |       
|                        |  |                               |  | $      | 84,340 |                              |       |        | $ | 87,000                        |  |        |  | $ | 89,000
|                        |  |                               |  |        |        |                              |       |        |   |                               |  |        |  |   |       



The Bank has a mortgage loan of
$325,000 in connection with the purchase of premises. The mortgage loan carries an interest rate of 8% and is amortized over a 12 year term. The unpaid mortgage loan balance at December 31, 2004 amounted to $84,000.



Competition



Pamrapo has substantial competition for both loans and deposits. The New York City metropolitan area has a high density of financial
institutions, many of which are significantly larger and have substantially greater financial resources than the Bank, and all of which are competitors of the Bank to varying degrees. The Bank faces significant competition both in making mortgage
loans and in attracting deposits. The Banks competition for loans comes principally from savings and loan associations, savings banks, mortgage banking companies, insurance companies, commercial banks and other institutional lenders. Its most
direct competition for deposits has historically come from savings and loan associations, savings banks, commercial banks, credit unions and other financial institutions. The Bank faces additional competition for deposits from short-term money
market funds and other corporate and government securities funds. The Bank faces increased competition among financial institutions for deposits. Competition also may increase as a result of the continuing reduction in the effective restrictions on
the interstate operations of financial institutions and legislation authorizing the acquisition of thrifts by Banks.



The Bank competes for loans principally through the interest rates and loan fees it charges and the efficiency and quality of services it provides borrowers and real
estate brokers. It competes for deposits through pricing, service and by offering a variety of deposit accounts. New powers for thrift institutions provided by New Jersey and federal legislation enacted in recent years have resulted in increased
competition between savings banks and other financial institutions for both deposits and loans. Management believes that implementation of new powers set forth in such recent legislation is expected to intensify this competition.



Subsidiaries



Pamrapo is generally permitted under New Jersey law and the regulations of the Commissioner of the New Jersey Department of Banking and
Insurance (the Commissioner) to invest an amount



20



---

equal to 3% of its assets in subsidiary service corporations. As of December 31, 2004, Pamrapo had $175,000 of its assets invested in Pamrapo Service
Corporation (the Corporation), a wholly owned subsidiary of the Bank. Currently, the Corporations only activity is marketing products such as annuities, life insurance, mutual funds and other equity securities and providing
financial planning services.



Yields Earned and Rates Paid



The Banks earnings depend primarily on its net interest income. Net interest income
is affected by (i) the volume of interest-earning assets and interest-bearing liabilities, (ii) rates of interest earned on interest-earning assets and rates paid on interest-bearing liabilities and (iii) the difference (interest rate
spread) between rates of interest earned on interest-earning assets and rates paid on interest-bearing liabilities. When interest-earning assets approximate or exceed interest-bearing liabilities, any positive interest rate spread will
generate net interest income.



A large portion of the Banks real estate
loans are long-term, fixed-rate loans. Accordingly, the average yield recognized by the Bank on its total loan portfolio changes slowly and generally does not keep pace with changes in interest rates on deposit accounts and borrowings. At December
31, 2004, approximately 97.6% of the Banks gross mortgage loan portfolio, excluding mortgage-backed securities, consisted of fixed-rate mortgage loans with original terms consisting primarily of 15 to 30 years. Accordingly, when interest rates
rise, the Banks yield on its loan portfolio increases at a slower pace than the rate by which its cost of funds increases, which may adversely impact the Banks interest rate spread.





21



---

The following tables set forth for the periods indicated information regarding the average balances of interest-earning
assets and interest-bearing liabilities, the dollar amount of interest income earned on such assets and the resultant yields, the dollar amount of interest expense paid on such liabilities and the resultant costs. The tables also reflect the
interest rate spread for such periods, the net yield on interest-earning assets (i.e., net interest income as a percentage of average interest-earning assets) and the ratio of average interest-earning assets to average interest-bearing liabilities.
Average balances are based on month-end amounts.



|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|-------------------------------------------------------------------------------- |  | ----------------------- | ------- | -------- | ---- | ----------- |  | ---- | ---------------------- |  | -------- | ------- | ----------- | - | ------ | --------------- | ---- | -------- |  | ----------- | ------- |  | - | ------ |  | ----- | -
|                                                                                 |  | Year Ended December 31, |        
|                                                                                 |  | 2002                    |         |          | 2003 |             |  | 2004 |                       
|                                                                                 |  | Average Balance         |         | Interest |      | Yield/ Cost |  |      | Average Balance        |  | Interest |         | Yield/ Cost |   |        | Average Balance |      | Interest |  | Yield/ Cost |        
|                                                                                 |  |                         |         |          |      |             |  |      | (Dollars in thousands) |  |          |         |             |   |        |                 |     
|Interest-earning assets:                                                         |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|Loans (1)                                                                        |  | $                       | 384,671 |          | $    | 29,267      |  | 7.61 | %                      |  | $        | 376,029 |             | $ | 26,102 |                 | 6.94 | %        |  | $           | 385,628 |  | $ | 24,861 |  | 6.45  | %
|Mortgage-backed securities                                                       |  |                         | 127,674 |          |      | 7,765       |  | 6.08 |                        |  |          | 199,551 |             |   | 9,570  |                 | 4.80 |          |  |             | 215,855 |  |   | 10,091 |  | 4.67  |  
|Investments                                                                      |  |                         | 7,163   |          |      | 518         |  | 7.23 |                        |  |          | 10,523  |             |   | 737    |                 | 7.00 |          |  |             | 11,773  |  |   | 845    |  | 7.18  |  
|Other interest-earning assets                                                    |  |                         | 25,534  |          |      | 508         |  | 1.99 |                        |  |          | 18,506  |             |   | 346    |                 | 1.87 |          |  |             | 13,785  |  |   | 187    |  | 1.36  |  
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Total interest-earning assets                                                    |  |                         | 545,042 |          |      | 38,058      |  | 6.98 |                        |  |          | 604,609 |             |   | 36,755 |                 | 6.08 |          |  |             | 627,041 |  |   | 35,984 |  | 5.74  |  
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Non-interest-earning assets                                                      |  |                         | 18,397  |          |      |             |  |      |                        |  |          | 18,348  |             |   |        |                 |      |          |  |             | 14,304  |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Total assets (1)                                                                 |  | $                       | 563,439 |          |      |             |  |      |                        |  | $        | 622,957 |             |   |        |                 |      |          |  | $           | 641,345 |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Interest-bearing liabilities:                                                    |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|Passbook and club account                                                        |  | $                       | 145,051 |          |      | 3,428       |  | 2.36 |                        |  | $        | 169,415 |             |   | 3,118  |                 | 1.84 |          |  | $           | 176,158 |  | $ | 2,391  |  | 1.36  |  
|NOW and money market accounts                                                    |  |                         | 62,683  |          |      | 1,081       |  | 1.72 |                        |  |          | 73,798  |             |   | 1,029  |                 | 1.39 |          |  |             | 78,994  |  |   | 949    |  | 1.20  |  
|Certificates of Deposits                                                         |  |                         | 193,654 |          |      | 6,974       |  | 3.60 |                        |  |          | 202,513 |             |   | 5,544  |                 | 2.74 |          |  |             | 203,503 |  |   | 4,782  |  | 2.35  |  
|Advances and other borrowings                                                    |  |                         | 75,525  |          |      | 3,807       |  | 5.04 |                        |  |          | 90,222  |             |   | 3,742  |                 | 4.15 |          |  |             | 90,303  |  |   | 3,270  |  | 3.62  |  
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Total interest-bearing liabilities                                               |  |                         | 476,913 |          |      | 15,290      |  | 3.21 |                        |  |          | 535,948 |             |   | 13,433 |                 | 2.51 |          |  |             | 548,958 |  |   | 11,392 |  | 2.08  |  
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Non-interest-bearing liabilities:                                                |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|Non-interest-bearing demand accounts                                             |  |                         | 27,363  |          |      |             |  |      |                        |  |          | 29,601  |             |   |        |                 |      |          |  |             | 32,878  |  |   |        |  |       |  
|Other                                                                            |  |                         | 10,120  |          |      |             |  |      |                        |  |          | 7,045   |             |   |        |                 |      |          |  |             | 6,558   |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Total non-interest-bearing liabilities                                           |  |                         | 37,483  |          |      |             |  |      |                        |  |          | 36,646  |             |   |        |                 |      |          |  |             | 39,436  |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Total liabilities                                                                |  |                         | 514,396 |          |      |             |  |      |                        |  |          | 572,594 |             |   |        |                 |      |          |  |             | 588,394 |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Stockholders equity                                                             |  |                         | 49,043  |          |      |             |  |      |                        |  |          | 50,363  |             |   |        |                 |      |          |  |             | 52,951  |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Total liabilities and stockholders equity                                       |  | $                       | 563,439 |          |      |             |  |      |                        |  | $        | 622,957 |             |   |        |                 |      |          |  | $           | 641,345 |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Net interest income/interest rate spread                                         |  |                         |         |          | $    | 22,768      |  | 3.77 | %                      |  |          |         |             | $ | 23,322 |                 | 3.57 | %        |  |             |         |  | $ | 24,592 |  | 3.66  | %
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Net interest-earning assets/net yield on interest-earning assets                 |  | $                       | 68,129  |          |      |             |  | 4.18 | %                      |  | $        | 68,661  |             |   |        |                 | 3.86 | %        |  | $           | 78,083  |  |   |        |  | 3.92  | %
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  
|                                                                                 |  |                         |         |          |      |             |  |      |                       
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                         |         |          |      | 1.14x       |  |      |                        |  |          |         |             |   | 1.13x  |                 |      |          |  |             |         |  |   |        |  | 1.14x |  
|                                                                                 |  |                         |         |          |      |             |  |      |                        |  |          |         |             |   |        |                 |      |          |  |             |         |  |   |        |  |       |  

---

|(1) | Non-accruing loans are part of the average balances of loans outstanding.
|--- | -------------------------------------------------------------------------





22



---

Interest Rate Sensitivity Analysis



The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are interest rate
sensitive and by monitoring an institutions interest rate sensitivity gap. An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period. The
interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing within that time
period. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities. A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount
of interest rate sensitive assets. During a period of rising interest rates, a negative gap would tend to adversely affect net interest income while a positive gap would tend to result in an increase in net interest income. During a period of
falling interest rates, a negative gap would tend to result in an increase in net interest income while a positive gap would tend to adversely affect net interest income.



The following table sets forth the amounts of interest-earning assets and interest-bearing liabilities outstanding at December 31, 2004,
which are expected to reprice or mature in each of the future time periods shown. Except as stated below, the amount of assets and liabilities shown which reprice or mature during a particular period were determined in accordance with the
contractual terms of the asset or liability. Loans and mortgage-backed securities that have adjustable rates are shown as being due in the period during which the interest rates are next subject to change. The Bank has assumed that its passbook
savings and club accounts which totaled $171.6 million at December 31, 2004, are withdrawn at the following rates, 25.21% are rate sensitive within a one year time frame and the remainder will be withdrawn at an annual rate of 16.88% on the
cumulative declining balance of such accounts during the periods shown. The Bank has further assumed that its money market accounts which totaled $38.3 million at December 31, 2004, are withdrawn at the following rates, 26.59% are rate sensitive
within a one year time frame and the remainder will be withdrawn at an annual rate of 22.74% on the cumulative declining balance of such accounts during the periods shown.



Additionally, the Bank has assumed that its NOW and Super NOW accounts which totaled $39.1 million at December 31, 2004, are withdrawn at
the following rates, 20.97% are rate sensitive within a one year time frame and the remainder will be withdrawn at an annual rate of 15.56% on the cumulative declining balance of such accounts during the periods shown.





23



---

|                                                                                    |  |                |          |    |                             |   |          |                              |  |   |                               |    |  |                                |          |    |                   |   |         |       |  |   |         |   |  |   |        
|----------------------------------------------------------------------------------- |  | -------------- | -------- | -- | --------------------------- | - | -------- | ---------------------------- |  | - | ----------------------------- | -- |  | ------------------------------ | -------- | -- | ----------------- | - | ------- | ----- |  | - | ------- | - |  | - | -------
|                                                                                    |  | 1 Year or Less |          |    | More than 1 Year to 3 Years |   |          | More than 3 Years to 5 Years |  |   | More than 5 Years to 10 Years |    |  | More than 10 Years to 20 Years |          |    | More than20 Years |   |         | Total
|                                                                                    |  | (In thousands)
|Interest-earning Assets:                                                            |  |                |          |    |                             |   |          |                              |  |   |                               |    |  |                                |          |    |                   |   |         |       |  |   |         |   |  |   |        
|Loans                                                                               |  | $              | 17,511   |    |                             | $ | 4,982    |                              |  | $ | 12,713                        |    |  | $                              | 35,937   |    |                   | $ | 180,580 |       |  | $ | 150,849 |   |  | $ | 402,572
|Mortgage-backed securities (1)                                                      |  |                | 1,102    |    |                             |   | 214      |                              |  |   | 956                           |    |  |                                | 10,913   |    |                   |   | 182,853 |       |  |   | 3,891   |   |  |   | 199,929
|Investments (1)                                                                     |  |                | 500      |    |                             |   | 1,000    |                              |  |   |                              |    |  |                                | 8,000    |    |                   |   |        |       |  |   |        |   |  |   | 9,500  
|Other interest-earning assets (2)                                                   |  |                | 16,240   |    |                             |   |         |                              |  |   |                              |    |  |                                |         |    |                   |   |        |       |  |   |        |   |  |   | 16,240 
|                                                                                    |  |                |          |    |                             |   |          |                              |  |   |                               |    |  |                                |          |    |                   |   |         |       |  |   |         |   |  |   |        
|                                                                                    |  |                |          |    |                             |   |         
|Total interest-earning assets                                                       |  |                | 35,353   |    |                             |   | 6,196    |                              |  | $ | 13,669                        |    |  | $                              | 54,850   |    |                   | $ | 363,433 |       |  | $ | 154,740 |   |  | $ | 628,241
|                                                                                    |  |                |          |    |                             |   |          |                              |  |   |                               |    |  |                                |          |    |                   |   |         |       |  |   |         |   |  |   |        
|                                                                                    |  |                |          |    |                             |   |         
|Interest-bearing Liabilities:                                                       |  |                |          |    |                             |   |          |                              |  |   |                               |    |  |                                |          |    |                   |   |         |       |  |   |         |   |  |   |        
|NOW and Super NOW Accounts (3)                                                      |  |                | 8,189    |    |                             |   | 8,872    |                              |  |   | 6,314                         |    |  |                                | 8,953    |    |                   |   | 5,495   |       |  |   | 1,242   |   |  |   | 39,065 
|Money market accounts                                                               |  |                | 10,173   |    |                             |   | 11,578   |                              |  |   | 6,807                         |    |  |                                | 7,134    |    |                   |   | 2,390   |       |  |   | 181     |   |  |   | 38,263 
|Passbook and club accounts                                                          |  |                | 43,252   |    |                             |   | 39,671   |                              |  |   | 27,407                        |    |  |                                | 36,948   |    |                   |   | 20,472  |       |  |   | 3,823   |   |  |   | 171,573
|Certificate accounts                                                                |  |                | 158,927  |    |                             |   | 37,583   |                              |  |   | 6,662                         |    |  |                                |         |    |                   |   |        |       |  |   |        |   |  |   | 203,172
|Advances and other borrowings                                                       |  |                | 20,037   |    |                             |   | 47,047   |                              |  |   | 12,000                        |    |  |                                | 10,000   |    |                   |   |        |       |  |   |        |   |  |   | 89,084 
|                                                                                    |  |                |          |    |                             |   |          |                              |  |   |                               |    |  |                                |          |    |                   |   |         |       |  |   |         |   |  |   |        
|Total interest-bearing liabilities                                                  |  |                | 240,578  |    |                             |   | 144,751  |                              |  |   | 59,190                        |    |  |                                | 63,035   |    |                   |   | 28,357  |       |  |   | 5,246   |   |  |   | 541,157
|                                                                                    |  |                |          |    |                             |   |          |                              |  |   |                               |    |  |                                |          |    |                   |   |         |       |  |   |         |   |  |   |        
|                                                                                    |  |                |          |    |                             |   |         
|Interest sensitivity gap per period                                                 |  | $              | (205,225 | )  |                             | $ | (138,555 | )                            |  | $ | (45,521                       | )  |  | $                              | (8,185   | )  |                   | $ | 335,076 |       |  | $ | 149,494 |   |  | $ | 87,084 
|                                                                                    |  |                |          |    |                             |   |          |                              |  |   |                               |    |  |                                |          |    |                   |   |         |       |  |   |         |   |  |   |        
|                                                                                    |  |                |          |    |                             |   |         
|Cumulative interest sensitivity gap                                                 |  | $              | (205,225 | )  |                             | $ | (343,780 | )                            |  | $ | (389,301                      | )  |  | $                              | (397,486 | )  |                   | $ | (62,410 | )     |  | $ | 87,084  |   |  |   |        
|                                                                                    |  |                |          |    |                             |   |          |                              |  |   |                               |    |  |                                |          |    |                   |   |         |       |  |   |         |   |  |   |        
|                                                                                    |  |                |          |    |                             |   |         
|Cumulative gap as a percent of total assets                                         |  |                | (32.67   | %) |                             |   | (54.72   | %)                           |  |   | (61.97                        | %) |  |                                | (63.27   | %) |                   |   | (9.93   | %)    |  |   | 13.86   | % |  |   |        
|                                                                                    |  |                |          |    |                             |   |          |                              |  |   |                               |    |  |                                |          |    |                   |   |         |       |  |   |         |   |  |   |        
|                                                                                    |  |                |          |    |                             |   |         
|Cumulative interest-sensitive assets as a percent of interest-sensitive liabilities |  |                | 14.70    | %  |                             |   | 10.78    | %                            |  |   | 12.42                         | %  |  |                                | 21.69    | %  |                   |   | 88.35   | %     |  |   | 116.09  | % |  |   |        
|                                                                                    |  |                |          |    |                             |   |          |                              |  |   |                               |    |  |                                |          |    |                   |   |         |       |  |   |         |   |  |   |        

---

|(1) | Includes available for sale securities under 1 year or less.
|--- | ------------------------------------------------------------

|(2) | Includes FHLB-NY stock, mutual funds and interest-earning deposits in banks, all of which have no stated maturity.
|--- | ------------------------------------------------------------------------------------------------------------------

|(3) | Excludes non-interest bearing accounts.
|--- | ---------------------------------------



Rate/Volume Analysis



Changes in net interest income are attributable to three factors: (i) a change in volume or amount of an interest-earning asset or interest-bearing liability, (ii) a change in interest rates or (iii) a change caused
by a combination of changes in volume and interest rate. The table below sets forth certain information regarding changes in interest income and interest expense of the Bank for the periods indicated, reflecting the extent to which such changes are
attributable to changes in volume and changes in rate. The amount attributable to a change in volume or amount is calculated by multiplying the average interest rate for the prior period by the increase (decrease) in the average balance of the
related asset or liability. The amount attributable to a change in rate is calculated by multiplying the increase (decrease) in the average interest rate from the prior period by the average balance of the related asset or liability for the prior
period. The rate/volume change represents a



24



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change in rate multiplied by a change in volume and is allocated proportionately to volume and rate changes.



|                              |  |                            |       |   |                            |   |        |                |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|----------------------------- |  | -------------------------- | ----- | - | -------------------------- | - | ------ | -------------- |  | - | ------ | - |  | ---- | ----- | - | --- | - | ------ | - |  | - | ------ | -
|                              |  | Year Ended December 31,    |      
|                              |  | 2003 v. 2002               |       |   | 2004 v. 2003               |  
|                              |  | Increase (decrease) due to |       |   | Increase (decrease) due to |  
|                              |  | Volume                     |       |   | Rate                       |   |        | Net            |  |   | Volume |   |  | Rate |       |   | Net |  
|                              |  |                            |       |   |                            |   |        | (In thousands) |  |   |        |   |  |      |      
|Interest income:              |  |                            |       |   |                            |   |        |                |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|Loans                         |  | $                          | (646  | ) |                            | $ | (2,519 | )              |  | $ | (3,165 | ) |  | $    | 664   |   |     | $ | (1,905 | ) |  | $ | (1,241 | )
|Mortgaged-backed securities   |  |                            | 4,359 |   |                            |   | (2,554 | )              |  |   | 1,805  |   |  |      | 798   |   |     |   | (277   | ) |  |   | 521    |  
|Investments                   |  |                            | 243   |   |                            |   | (24    | )              |  |   | 219    |   |  |      | 87    |   |     |   | 21     |   |  |   | 108    |  
|Other interest-earning assets |  |                            | (140  | ) |                            |   | (22    | )              |  |   | (162   | ) |  |      | (88   | ) |     |   | (71    | ) |  |   | (159   | )
|                              |  |                            |       |   |                            |   |        |                |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|                              |  |                            |       |   |                            |  
|Total interest income         |  |                            | 3,816 |   |                            |   | (5,119 | )              |  |   | (1,303 | ) |  |      | 1,461 |   |     |   | (2,232 | ) |  |   | (771   | )
|                              |  |                            |       |   |                            |   |        |                |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|                              |  |                            |       |   |                            |  
|Interest expense:             |  |                            |       |   |                            |   |        |                |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|Passbook and club accounts    |  |                            | 571   |   |                            |   | (881   | )              |  |   | (310   | ) |  |      | 123   |   |     |   | (850   | ) |  |   | (727   | )
|NOW and money market accounts |  |                            | 191   |   |                            |   | (243   | )              |  |   | (52    | ) |  |      | 72    |   |     |   | (152   | ) |  |   | (80    | )
|Certificates of deposit       |  |                            | 312   |   |                            |   | (1,742 | )              |  |   | (1,430 | ) |  |      | 27    |   |     |   | (789   | ) |  |   | (762   | )
|Advance and other borrowings  |  |                            | 738   |   |                            |   | (803   | )              |  |   | (65    | ) |  |      | 3     |   |     |   | (475   | ) |  |   | (472   | )
|                              |  |                            |       |   |                            |   |        |                |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|                              |  |                            |       |   |                            |  
|Total interest expense        |  |                            | 1,812 |   |                            |   | (3,669 | )              |  |   | (1,857 | ) |  |      | 225   |   |     |   | (2,266 | ) |  |   | (2,041 | )
|                              |  |                            |       |   |                            |   |        |                |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|                              |  |                            |       |   |                            |  
|Net change in net interest    |  | $                          | 2,004 |   |                            | $ | (1,450 | )              |  | $ | 554    |   |  | $    | 1,236 |   |     | $ | 34     |   |  | $ | 1,270  |  
|                              |  |                            |       |   |                            |   |        |                |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  



REGULATION AND
SUPERVISION



General



The Company, as a savings and loan holding company, is required to file certain reports
with, and otherwise comply with the rules and regulations of the Office of Thrift Supervision (OTS) under the Home Owners Loan Act, as amended (the HOLA). In addition, the activities of savings institutions, such as the
Bank, are governed by the HOLA and the Federal Deposit Insurance Act (FDI Act).



The Bank is subject to extensive regulation, examination and supervision by the OTS, as its primary federal regulator, and the Federal Deposit Insurance Corporation (FDIC), as the deposit insurer. The Bank
is a member of the Federal Home Loan Bank (FHLB) System and its deposit accounts are insured up to applicable limits by the Savings Association Insurance Fund (SAIF) managed by the FDIC. The Bank must file reports with the
OTS and the FDIC concerning its activities and financial condition in addition to obtaining regulatory approvals prior to entering into certain transactions such as mergers with, or acquisitions of, other savings institutions. The OTS and/or the
FDIC conduct periodic examinations to test the Banks safety and soundness and compliance with various regulatory requirements. This regulation and supervision establishes a comprehensive framework of activities in which an institution can
engage and is intended primarily for the protection of the insurance fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and
examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes. Any change in such regulatory requirements and policies, whether by the OTS, the FDIC
or the Congress, could have a material



25



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adverse impact on the Company, the Bank and their operations. Certain of the regulatory requirements applicable to the Bank and to the Company are referred
to below or elsewhere herein. The description of statutory provisions and regulations applicable to savings institutions and their holding companies set forth in this Form 10-K does not purport to be a complete description of such statutes and
regulations and their effects on the Bank and the Company.



Holding Company
Regulation



The Company is a nondiversified unitary savings and loan
holding company within the meaning of the HOLA. As a unitary savings and loan holding company, the Company generally is not restricted under existing laws as to the types of business activities in which it may engage, provided that the Bank
continues to be a qualified thrift lender (QTL). Upon any non-supervisory acquisition by the Company of another savings institution or savings bank that meets the QTL test and is deemed to be a savings institution by the OTS, the Company
would become a multiple savings and loan holding company (if the acquired institution is held as a separate subsidiary) and would be subject to extensive limitations on the types of business activities in which it could engage. The HOLA limits the
activities of a multiple savings and loan holding company and its non-insured institution subsidiaries primarily to activities permissible for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act (BHC Act),
subject to the prior approval of the OTS, and certain activities authorized by OTS regulation, and no multiple savings and loan holding company may acquire more than 5% the voting stock of a company engaged in impermissible activities.



The HOLA prohibits a savings and loan holding company, directly or indirectly, or through
one or more subsidiaries, from acquiring more than 5% of the voting stock of another savings institution or holding company thereof, without prior written approval of the OTS or acquiring or retaining control of a depository institution that is not
insured by the FDIC. In evaluating applications by holding companies to acquire savings institutions, the OTS must consider the financial and managerial resources and future prospects of the company and institution involved, the effect of the
acquisition on the risk to the insurance funds, the convenience and needs of the community and competitive factors.



The OTS is prohibited from approving any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one
state, subject to two exceptions: (i) the approval of interstate supervisory acquisitions by savings and loan holding companies and (ii) the acquisition of a savings institution in another state if the laws of the state of the target savings
institution specifically permit such acquisitions. The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.



Although savings and loan holding companies are not subject to specific capital requirements or specific restrictions on the payment of dividends or other capital
distributions, HOLA does prescribe such restrictions on subsidiary savings institutions as described below. The Bank must notify the OTS within 30 days before declaring any dividend to the Company. In addition, the financial impact of a holding
company on its subsidiary institution is a matter that is evaluated by the OTS, and the agency has authority to order cessation of activities or divestiture of subsidiaries deemed to pose a threat to the safety and soundness of the subsidiary
institution.



26



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Federal Savings Institution Regulation



Capital Requirements. The OTS capital regulations require savings institutions to meet three minimum capital standards: a 1.5%
tangible capital ratio, a 4% leverage (core) capital ratio and an 8% risk-based capital ratio. Core capital is defined as common stockholders equity (including retained earnings), certain noncumulative perpetual preferred stock and related
surplus, minority interests in equity accounts of consolidated subsidiaries less intangibles other than certain mortgage servicing rights and credit card relationships. The OTS regulations require that, in meeting the tangible, leverage (core) and
risk-based capital standards, institutions must generally deduct investments in and loans to subsidiaries engaged in activities that are not permissible for a national bank.



The risk-based capital standard for savings institutions requires the maintenance of total capital (which is defined as core capital and
supplementary capital) to risk-weighted assets of 8%. In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet assets, are multiplied by a risk-weight factor of 0% to 100%, as assigned by the OTS capital
regulation based on the risks the OTS believes are inherent in the type of asset. The components of core capital are equivalent to those discussed earlier under the 4% leverage standard. The components of supplementary capital currently include
cumulative preferred stock, long-term perpetual preferred stock, mandatory convertible securities, subordinated debt and intermediate preferred stock and, within specified limits, the allowance for loan and lease losses. Overall, the amount of
supplementary capital included as part of total capital cannot exceed 100% of core capital.



The OTS regulatory capital requirements also incorporate an interest rate risk component. Savings institutions with above normal interest rate risk exposure are subject to a deduction from total capital
for purposes of calculating their risk-based capital requirements. A savings institutions interest rate risk is measured by the decline in the net portfolio value of its assets (i.e., the difference between incoming and outgoing discounted
cash flows from assets, liabilities and off-balance sheet contracts) that would result from a hypothetical 200 basis point increase or decrease in market interest rates divided by the estimated economic value of the institutions assets, as
calculated in accordance with guidelines set forth by the OTS. A savings institution whose measured interest rate risk exposure exceeds 2% must deduct an amount equal to one-half of the difference between the institutions measured interest
rate risk and 2%, multiplied by the estimated economic value of the institutions total assets. That dollar amount is deducted from an institutions total capital in calculating compliance with its risk-based capital requirement. Under the
rule, there is a two quarter lag between the reporting date of an institutions financial data and the effective date for the new capital requirement based on that data. A savings institution with assets of less than $300 million and risk-based
capital ratios in excess of 12% is not subject to the interest rate risk component, unless the OTS determines otherwise. The Director of the OTS may waive or defer a savings institutions interest rate risk component on a case-by-case basis.
For the present time, the OTS has deferred implementation of the interest rate risk component. At December 31, 2004, the Bank met each of its capital requirements.



The following table presents the Banks capital position at December 31, 2004:



|                |  |                        |        |                |   |              |  |               |        |  |                 |   |  |      |  
|--------------- |  | ---------------------- | ------ | -------------- | - | ------------ |  | ------------- | ------ |  | --------------- | - |  | ---- | -
|                |  | ActualAmount           |        | RequiredAmount |   | ExcessAmount |  | ActualPercent |        |  | RequiredPercent |  
|                |  | (Dollars in thousands) |       
|Tangible        |  | $                      | 50,724 |                | $ | 9,604        |  | $             | 41,120 |  | 7.92            | % |  | 1.50 | %
|Core (Leverage) |  |                        | 50,724 |                |   | 25,610       |  |               | 25,114 |  | 7.92            | % |  | 4.00 | %
|Risk-based      |  |                        | 53,008 |                |   | 26,694       |  |               | 26,314 |  | 15.89           | % |  | 8.00 | %



27



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Prompt Corrective Regulatory Action. Under the OTS prompt corrective action regulations, the OTS is required to
take certain supervisory actions against undercapitalized institutions, the severity of which depends upon the institutions degree of undercapitalization. Generally, a savings institution that has a total risk-based capital of less than 8% or
a leverage ratio or a Tier 1 capital ratio that is less than 4% is considered to be undercapitalized. A savings institution that has a total risk-based capital ratio less than 6%, a Tier 1 capital ratio of less than 3% or a leverage
ratio that is less than 3% is considered to be significantly undercapitalized and a savings institution that has a tangible capital to assets ratio equal to or less than 2% is deemed to be critically undercapitalized. Subject
to a narrow exception, the banking regulator is required to appoint a receiver or conservator for an institution that is critically undercapitalized. The regulation also provides that a capital restoration plan must be filed with the OTS
within 45 days of the date a savings institution receives notice that it is undercapitalized, significantly undercapitalized or critically undercapitalized. Compliance with the plan must be guaranteed by any
parent holding company. In addition, numerous mandatory supervisory actions become immediately applicable to the institution depending upon its category, including, but not limited to, increased monitoring by regulators and restrictions on growth,
capital distributions and expansion. The OTS could also take any one of a number of discretionary supervisory actions, including the issuance of a capital directive and the replacement of senior executive officers and directors.



Insurance of Deposit Accounts. Deposits of the Bank are presently insured by SAIF. The
FDIC maintains a risk-based assessment system by which institutions are assigned to one of three categories based on their capitalization and one of three subcategories based on examination ratings and other supervisory information. An
institutions assessment rate depends upon the categories to which it is assigned. Assessment rates for SAIF member institutions are determined semiannually by the FDIC and currently range from zero basis points for the healthiest institutions
to 27 basis points for the riskiest.



In addition to the assessment for deposit
insurance, institutions are required to pay on bonds issued in the late 1980s by the Financing Corporation (FICO) to recapitalize the predecessor to the SAIF. The BIF and SAIF have equal sharing of FICO payments between the members of
both insurance funds.



The Banks assessment rate for the year
ended December 31, 2004 was 0 basis points and no premiums were paid for this period. Payments on the FICO bonds amounted to $73,000. A significant increase in SAIF insurance premiums would likely have an adverse effect on the operating expenses and
results of operations of the Bank.



Insurance of deposits may be terminated by
the FDIC upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or the
OTS. The management of the Bank does not know of any practice, condition or violation that might lead to termination of deposit insurance.



Thrift Rechartering Legislation. Various proposals to eliminate the federal thrift charter, create a uniform financial institutions charter and abolish the OTS
have been introduced in past sessions of Congress. The Bank is unable to predict whether such legislation would be enacted or the extent to which the legislation would restrict or disrupt its operations.



28



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Loans to One Borrower. Under the HOLA, savings institutions are generally subject to the limits on loans to one
borrower applicable to national banks. Generally, savings institutions may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of its unimpaired capital and surplus. An additional amount may be lent, equal to
10% of unimpaired capital and surplus, if such loan is fully secured by readily-marketable collateral, which is defined to include certain financial instruments and bullion. At December 31, 2004, the Banks limit on loans to one borrower was
$7.7 million. At December 31, 2004, the Banks largest aggregate outstanding balance of loans to one borrower was $4.2 million.



QTL Test. The HOLA requires savings institutions to meet a QTL test. Under the QTL test, a savings association is required to maintain at least 65% of its
portfolio assets (total assets less: (i) specified liquid assets up to 20% of total assets; (ii) intangibles, including goodwill; and (iii) the value of property used to conduct business) in certain qualified thrift
investments (primarily residential mortgages and related investments, including certain mortgage-backed and related securities) in at least 9 months out of each 12 month period. A savings association that fails the QTL test must either convert
to a bank charter or operate under certain restrictions. As of December 31, 2004, the Bank maintained 83.7% of its portfolio assets in qualified thrift investments and, therefore, met the QTL test.



Limitation on Capital Distributions. OTS regulations impose limitations upon all
capital distributions by savings institutions, such as cash dividends, payments to repurchase or otherwise acquire its shares, payments to shareholders of another institution in a cash-out merger and other distributions charged against capital. The
rule establishes three tiers of institutions, which are based primarily on an institutions capital level. An institution that exceeds all fully phased-in capital requirements before and after a proposed capital distribution (Tier 1
Bank) and has not been advised by the OTS that it is in need of more than normal supervision, could, after prior notice but without obtaining approval of the OTS, make capital distributions during a calendar year equal to the greater of (i)
100% of its net earnings to date during the calendar year plus the amount that would reduce by one-half its surplus capital ratio (the excess capital over its fully phased-in capital requirements) at the beginning of the calendar year or
(ii) 75% of its net earnings for the previous four quarters. Any additional capital distributions would require prior regulatory approval. In the event the Banks capital fell below its regulatory requirements or the OTS notified it that it was
in need of more than normal supervision, the Banks ability to make capital distributions could be restricted. In addition, the OTS could prohibit a proposed capital distribution by any institution, which would otherwise be permitted by the
regulation, if the OTS determines that such distribution would constitute an unsafe or unsound practice. At December 31, 2004, the Bank was classified as a Tier 1 Bank.



Under OTS capital distribution regulations, an application to and the prior approval of the OTS is required before an institution makes a
capital distribution if (1) the institution does not meet certain criteria for expedited treatment for applications under the regulations, (2) the total capital distributions by the institution for the calendar year exceed net income for
that year plus the amount of retained net income for the preceding two years, (3) the institution would be undercapitalized following the distribution or (4) the distribution would otherwise be contrary to a statute, regulation or agreement with the
OTS. If an application is not required, the institution may still need to give advance notice to the OTS of the capital distribution.



Liquidity. Until recently, the Bank is required to maintain an average daily balance of specified liquid assets equal to a monthly average of not less than a
specified percentage of its net withdrawable



29



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deposit accounts plus short-term borrowings. Effective March 15, 2001, the liquidity requirement to which the Bank is held under HOLA was amended to
eliminate the specific percentage requirement, but retained the requirement that an institution maintain sufficient liquidity to ensure its safe and sound operation. The Banks average liquidity ratio for the month of December 2004
calculated using the ratio calculation of HOLA prior to March 15, 2001 was 3.15%, and in the opinion of management meets current requirements for Banks safe and sound operation. The Bank has never been subject to monetary penalties for failure
to meet its liquidity requirements.



Assessments. Savings
institutions are required to pay assessments to the OTS to fund the agencys operations. The general assessments, paid on a semi-annual basis, are based upon the savings institutions total assets, including consolidated subsidiaries, as
reported in the Banks latest quarterly thrift financial report. The assessments paid by the Bank for the fiscal year ended December 31, 2004 totaled $136,000.



Branching. OTS regulations permit nationwide branching by federally chartered savings institutions to the extent allowed by federal
statute. This permits federal savings institutions to establish interstate networks and to geographically diversify their loan portfolios and lines of business. The OTS authority preempts any state law purporting to regulate branching by federal
savings institutions.



Transactions with Related Parties. The
Banks authority to engage in transactions with related parties or affiliates (i.e., any company that controls or is under common control with an institution, including the Company and its non-savings institution
subsidiaries) is limited by Sections 23A and 23B of the Federal Reserve Act (FRA). Section 23A restricts the aggregate amount of covered transactions with any individual affiliate to 10% of the capital and surplus of the savings
institution. The aggregate amount of covered transactions with all affiliates is limited to 20% of the savings institutions capital and surplus. Certain transactions with affiliates are required to be secured by collateral in an amount and of
a type described in Section 23A and the purchase of low quality assets from affiliates is generally prohibited. Section 23B generally requires that certain transactions with affiliates, including loans and asset purchases, be on terms and under
circumstances, including credit standards, that are substantially the same or at least as favorable to the institution as those prevailing at the time for comparable transactions with non-affiliated companies.



Enforcement. Under the FDI Act, the OTS has primary enforcement responsibility over
savings institutions and has the authority to bring actions against the institution and all institution-affiliated parties, including stockholders, and any attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful
action likely to have an adverse effect on an insured institution. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors to institution of receivership,
conservatorship or termination of deposit insurance. Civil penalties cover a wide range of violations and can amount to $25,000 per day, or even $1 million per day in especially egregious cases. Under the FDI Act, the FDIC has the authority to
recommend to the Director of the OTS enforcement action to be taken with respect to a particular savings institution. If action is not taken by the Director, the FDIC has authority to take such action under certain circumstances. Federal law also
establishes criminal penalties for certain violations.



Standards for Safety
and Soundness. The FDI Act requires each federal banking agency to prescribe for all insured depository institutions standards relating to, among other things, internal controls,



30



---

information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, and compensation, fees and
benefits and such other operational and managerial standards as the agency deems appropriate. The federal banking agencies have adopted final regulations and Interagency Guidelines Prescribing Standards for Safety and Soundness
(Guidelines) to implement these safety and soundness standards. The Guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before
capital becomes impaired. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the Guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve
compliance with the standard, as required by the FDI Act. The final rule establishes deadlines for the submission and review of such safety and soundness compliance plans.



Standards for Safeguarding Customer Information. In 1999, the President signed the Gramm-Leach-Bliley Act was into law. Section 501
of the Act requires that bank regulatory agencies establish appropriate standards for financial institutions relating to the administrative, technical, and physical safeguards for customer records and information. Accordingly, the OTS, the FDIC, the
Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System published Interagency Guidelines for Safeguarding Customer Information in February of 2001. The Customer Information Guidelines require the Bank to
adopt a comprehensive written information security program that is designed to protect against unauthorized access to or use of customers nonpublic personal information. All elements of the security program must be coordinated among all parts
of the bank. The Board of Directors of the Bank must approve the written information security program and oversee its the development, implementation and maintenance. The Bank must identify reasonably foreseeable internal and external threats that
could result in unauthorized disclosure, misuse, alteration or destruction of customer information or customer information systems, assess the likelihood and potential damage of these threats (taking into consideration the sensitivity of customer
information), and assess the sufficiency of policies, procedures, customer information systems, and other arrangements in place to control risks. In order to manage and control any risk, the Bank should design its information security program to
control the identified risks, commensurate with the sensitivity of the information as well as the complexity and scope of the banks activities and adopt such measures listed in the Guidelines regarding access, controls, encryption and other
procedures that the bank concludes are appropriate. In addition, Banks are required to exercise due diligence in selecting service providers having access to customer information, require such service providers by contract to implement appropriate
measures designed to meet the objectives of the Guidelines, and monitor such service providers to confirm that they have satisfied their obligations under the contract. The Bank must report to its board at least annually describing the overall
status of the information security program and the Banks compliance with the Guidelines.



Federal Reserve System



The Federal
Reserve Board regulations require savings institutions to maintain non-interest earning reserves against their transaction accounts. The Federal Reserve Board regulations generally require that reserves be maintained against aggregate transaction
accounts as follows: for accounts aggregating $44.3 million or less (subject to adjustment by the Federal Reserve Board) the reserve requirement was 3%; and for accounts aggregating greater than $44.3 million, the reserve requirement was $1.395
million plus 10% (subject to adjustment by the Federal Reserve Board) against that portion of total transaction accounts in excess of $46.5 million. The first $4.9 million of



31



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otherwise reservable balances (subject to adjustments by the Federal Reserve Board) were exempted from the reserve requirements. The Bank maintained
compliance with the foregoing requirements. The balances maintained to meet the reserve requirements imposed by the Federal Reserve Board may be used to satisfy liquidity requirements imposed by the OTS.



New Jersey Law



The Commissioner regulates, among other things, the Banks internal business procedures as well as its deposits, lending and investment
activities. The Commissioner must approve changes to the Banks Certificate of Incorporation, establishment or relocation of branch offices, mergers and the issuance of additional stock. In addition, the Commissioner conducts periodic
examinations of First Savings. Certain of the areas regulated by the Commissioner are not subject to similar regulation by the FDIC.



Recent federal and state legislative developments have reduced distinctions between commercial banks and SAIF-insured savings institutions in New Jersey with respect to
lending and investment authority, as well as interest rate limitations. As federal law has expanded the authority of federally chartered savings institutions to engage in activities previously reserved for commercial banks, New Jersey legislation
and regulations (parity legislation) have given New Jersey chartered savings institutions, such as the Bank, the powers of federally chartered savings institutions.



New Jersey law provides that, upon satisfaction of certain triggering conditions, as determined by the Commissioner, insured institutions or
savings and loan holding companies located in a state which has reciprocal legislation in effect on substantially the same terms and conditions as stated under New Jersey law may acquire, or be acquired by New Jersey insured institutions or holding
companies on either a regional or national basis. New Jersey law explicitly prohibits interstate branching.



Sarbanes-Oxley Act of 2002



On July 30,
2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the Act), implementing legislative reforms intended to address corporate and accounting improprieties. The Act generally applies to all companies, both U.S. and
non-U.S., that file or are required to file periodic reports with the SEC under the Securities Exchange Act of 1934, as amended (Exchange Act). The Act includes very specific additional disclosure requirements and new corporate
governance rules, requires the SEC and securities exchanges to adopt extensive additional disclosure, corporate governance and other related rules and mandates further studies of specified issues by the SEC and the Comptroller General.



The Act addresses, among other matters:



| |  |  | audit committees;
| | - |  | -----------------



| |  |  | certification of financial statements by the chief executive officer and the chief financial officer;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | the forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuers securities by directors and senior officers in the twelve month period
following initial publication of any financial statements that later require restatement;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a prohibition on insider trading during pension plan black out periods;
| | - |  | -----------------------------------------------------------------------



32



---

| |  |  | disclosure of off-balance sheet transactions;
| | - |  | ---------------------------------------------



| |  |  | a prohibition on personal loans to directors and officers;
| | - |  | ----------------------------------------------------------



| |  |  | expedited filing requirements for Forms 4s;
| | - |  | --------------------------------------------



| |  |  | disclosure of a code of ethics and filing a Form 8-K for a change or waiver of such code;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | real time filing of periodic reports;
| | - |  | ---------------------------------------



| |  |  | the formation of a public accounting oversight board;
| | - |  | -----------------------------------------------------



| |  |  | auditor independence; and
| | - |  | -------------------------



| |  |  | various increased criminal penalties for violations of securities laws.
| | - |  | -----------------------------------------------------------------------



The Company is continuing to monitor the passage of the new and amended regulations and is taking appropriate measures to comply with them. Although the Company will
incur additional expense in complying with the various provisions of the Act and the new and amended regulations, management does not expect that such compliance will have a material impact on the Companys results of operations or financial
condition.



The USA Patriot Act of 2001



The USA Patriot Act of 2001, as amended (the Patriot Act), has imposed
substantial new record-keeping and due diligence obligations on banks and other financial institutions, with a particular focus on detecting and reporting money-laundering transactions involving domestic or international customers. The U.S. Treasury
Department has issued and will continue to issue regulations clarifying the Patriot Acts requirements. The Patriot Act requires all financial institutions, as defined, to establish certain anti-money laundering compliance and due
diligence programs.



FEDERAL AND STATE TAXATION



Federal Taxation



General. The Company and the Bank report their income on a consolidated basis and the
accrual method of accounting, and are subject to federal income taxation in the same manner as other corporations with some exceptions, including particularly the Banks reserve for bad debts discussed below. The following discussion of tax
matters is intended only as a summary and does not purport to be a comprehensive description of the tax rules applicable to the Bank or the Company. The Bank has not been audited by the IRS in the past nine years. For its 2004 taxable year, the Bank
is subject to a maximum federal income tax rate of 35%.



Bad Debt
Reserves. For fiscal years beginning prior to December 31, 1995, thrift institutions which qualified under certain definitional tests and other conditions of the Internal Revenue Code of 1986 (the Code) were permitted to use certain
favorable provisions to calculate their deductions from taxable income for annual additions to their bad debt reserve. A reserve could be established for bad debts on qualifying real property loans (generally secured by interests in real property
improved or to be improved) under (i) the Percentage of Taxable Income Method (the PTI Method) or (ii) the Experience Method. The Banks reserve for nonqualifying loans was computed using the Experience Method.



The Small Business Job Protection Act of 1996 (the 1996 Act), which was
enacted on August 20, 1996, requires savings institutions to recapture (i.e., take into income) certain portions of their accumulated bad debt reserves. The 1996 Act repeals the reserve method of accounting for bad



33



---

debts effective for tax years beginning after 1995. Thrift institutions that would be treated as small banks are allowed to utilize the Experience Method
applicable to such institutions, while thrift institutions that are treated as large banks (those generally exceeding $500 million in assets) are required to use only the specific charge-off method. Thus, the PTI Method of accounting for bad debts
is no longer available for any financial institution.



A thrift institution
required to change its method of computing reserves for bad debts will treat such change as a change in method of accounting, initiated by the taxpayer, and having been made with the consent of the IRS. Any Section 481(a) adjustment required to be
taken into income with respect to such change generally will be taken into income ratably over a six-taxable year period, beginning with the first taxable year beginning after 1995, subject to the residential loan requirement.



Distributions. Under the 1996 Act, if the Bank makes non-dividend
distributions to the Company, such distributions will be considered to have been made from the Banks unrecaptured tax bad debt reserves (including the balance of its reserves as of December 31, 1987) to the extent thereof, and then from
the Banks supplemental reserve for losses on loans, to the extent thereof, and an amount based on the amount distributed (but not in excess of the amount of such reserves) will be included in the Banks income. Non-dividend distributions
include distributions in excess of the Banks current and accumulated earnings and profits, as calculated for federal income tax purposes, distributions in redemption of stock, and distributions in partial or complete liquidation. Dividends
paid out of the Banks current or accumulated earnings and profits will not be so included in the Banks income.



The amount of additional taxable income triggered by a non-dividend is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the
distribution. Thus, if the Bank makes a non-dividend distribution to the Company, approximately one and one-half times the amount of such distribution (but not in excess of the amount of such reserves) would be includable in income for federal
income tax purposes, assuming a 35% federal corporate income tax rate. The Banks does not intend to pay dividends that would result in a recapture of any portion of its bad debt reserves.



State and Local Taxation



New Jersey Taxation. The Bank, its subsidiary, Pamrapo Service Corporation, and the Company file separate New Jersey income tax returns. For New Jersey income tax
purposes, savings institutions are presently taxed at a rate equal to 9% of taxable income. For this purpose, taxable income generally means federal taxable income, subject to certain adjustments (including addition of interest income on
state and municipal obligations). For New Jersey tax purposes, regular corporations are presently taxed at a rate equal to 9% of taxable income (7.5% is the rate if taxable income is less than $100,000).



Personnel



As of December 31, 2004, the Bank had 99 full-time employees and 14 part-time employees. The employees are not represented by a collective
bargaining unit and the Bank considers its relationship with its employees to be good.



34



---

Website Access to Company Reports



The Companys Internet address is www.pamrapo.com. The Company makes available free of charge through the Investor Relations
section of its website its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably
practicable after these materials are electronically filed with, or furnished to, the SEC.



Item 2. Properties.



The Bank conducts its
business through ten branch offices and one administrative office. Four offices have drive-up facilities. The Bank has ten automatic teller machines at its branch facilities and six other off-site locations. The following table sets forth
information relating to each of the Banks offices as of December 31, 2004. The total net book value of the Banks premises and equipment at December 31, 2004 was $4.0 million.



|                                                      |  |                    |  |                |       |    
|----------------------------------------------------- |  | ------------------ |  | -------------- | ----- | ---
|Location                                              |  | Year Office Opened |  | Net Book Value |      
|                                                      |  |                    |  | (In thousands) |      
|Executive Office 591-597 Avenue C Bayonne, New Jersey |  | 1985               |  | $              | 1,601 |    
|Branch Offices                                        |  |                    |  |                |       |    
|611 Avenue C Bayonne, New Jersey                      |  | 1984               |  |                | 629   |    
|155 Broadway Bayonne, New Jersey                      |  | 1973               |  |                | 97    |    
|175 Broadway Bayonne, New Jersey                      |  | 1985               |  |                |      | (1)
|861 Broadway Bayonne, New Jersey                      |  | 1962               |  |                | 112   |    
|987 Broadway Bayonne, New Jersey                      |  | 1977               |  |                | 240   |    
|1475 Bergen Boulevard Fort Lee, New Jersey            |  | 1990               |  |                |      | (1)
|544 Broadway Bayonne, New Jersey                      |  | 1995               |  |                | 14    | (1)
|401 Washington Street Hoboken, New Jersey             |  | 1990               |  |                | 159   | (1)
|473 Spotswood Englishtown Road Monroe, New Jersey     |  | 1998               |  |                | 263   | (1)
|181 Avenue A Bayonne, New Jersey                      |  | 2004               |  |                | 176   | (1)
|                                                      |  |                    |  |                |       |    
|Net book value of properties                          |  |                    |  |                | 3,291 |    
|Furnishings and equipment (2)                         |  |                    |  |                | 728   |    
|                                                      |  |                    |  |                |       |    
|Total premises and equipment                          |  |                    |  | $              | 4,019 |    
|                                                      |  |                    |  |                |       |    

| | 
| | 



| | (1) | Leased Property.
| | --- | ----------------



| | (2) | Includes off-site ATMs.
| | --- | -----------------------



35



---

Item 3. Legal Proceedings.



The Company is from
time to time a party to litigation which arises primarily in the ordinary course of business. In the opinion of management, the ultimate disposition of any such existing litigation should not have a material effect on the consolidated financial
position of the Company.



Item 4. Submission of Matters to a Vote of Security Holders.



None.





PART II



Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.



Information relating to the market for Registrants common stock and related stockholder matters appears under Market for Common Stock and Related Matters in the
Registrants 2004 Annual Report to Stockholders on page 45 and is incorporated herein by reference.



The following table contains information about the Companys purchases of its equity securities during the fourth quarter of 2004.



Issuer Purchases of Equity Securities



|                                      |  |                                               |  |                                   |       |                                                                                       |       |                                                                                                                        |       
|------------------------------------- |  | --------------------------------------------- |  | --------------------------------- | ----- | ------------------------------------------------------------------------------------- | ----- | ---------------------------------------------------------------------------------------------------------------------- | ------
|Period                                |  | Total Numberof Shares (or Units)Purchased (1) |  | Average PricePaid per Share(Unit) |       | Total Numberof Shares (or Units)Purchased asPart of PubliclyAnnouncedPlans orPrograms |       | MaximumNumber (orApproximateDollar Value) ofShares (or Units)that May Yet BePurchased Underthe Plans orPrograms
(2)(3)
|October 1, 2004 to October 31, 2004   |  | 6,000                                         |  | $                                 | 23.10 |                                                                                       | 6,000 |                                                                                                                        | 86,034
|November 1, 2004 to November 30, 2004 |  |                                              |  |                                   |      |                                                                                       |      |                                                                                                                        | 86,034
|December 1, 2004 to December 31, 2004 |  |                                              |  |                                   |      |                                                                                       |      |                                                                                                                        | 86,034
|                                      |  |                                               |  |                                   |       |                                                                                       |       |                                                                                                                        |       
|Total                                 |  | 6,000                                         |  |                                   |       |                                                                                       | 6,000 |                                                                                                                        |       
|                                      |  |                                               |  |                                   |       |                                                                                       |       |                                                                                                                        |       

---



|(1) | Represents shares purchased from an employee that exercised a stock option.
|--- | ---------------------------------------------------------------------------



|(2) | As of December 31, 2004.
|--- | ------------------------



|(3) | The Companys share repurchase program that authorized the Company to purchase up to 256,000 shares of common stock was announced on August 22, 2000.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------



36



---

Item 6. Selected Financial Data.



The selected
financial data appears under Selected Consolidated Financial Condition and Operating Data of the Company in the Registrants 2004 Annual Report to Stockholders on pages 43 and 44 and is incorporated herein by reference.



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.



The above-captioned information appears under Managements Discussion and Analysis of Financial Condition and Results of Operations in the Registrants 2004
Annual Report to Stockholders on pages 9 through 13 and is incorporated herein by reference.



Item 7A. Quantitative and Qualitative Disclosure About Market Risk



Management of Interest Rate Risk. The ability to maximize net interest income is largely dependent upon the achievement of a positive interest rate spread that can be sustained during fluctuations in prevailing
interest rates. Interest rate sensitivity is a measure of the difference between amounts of interest-earning assets and interest-bearing liabilities which either reprice or mature within a given period of time. The difference, or the interest rate
repricing gap, provides an indication of the extent to which an institutions interest rate spread will be affected by changes in interest rates. A gap is considered positive when the amount of interest-rate sensitive assets exceeds
the amount of interest-rate sensitive liabilities, and is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest-rate sensitive assets. Generally, during a period of rising interest rates, a
negative gap within shorter maturities would adversely affect net interest income, while a positive gap within shorter maturities would result in an increase in net interest income, and during a period of falling interest rates, a negative gap
within shorter maturities would result in an increase in net interest income while a positive gap within shorter maturities would result in a decrease in net interest income.



Because the Banks interest-bearing liabilities which mature or reprice within short periods exceed its interest-earning assets with
similar characteristics, material and prolonged increases in interest rates generally would adversely affect net interest income, while material and prolonged decreases in interest rates generally would have a positive effect on net interest income.



The Banks current investment strategy is to maintain an overall
securities portfolio that provides a source of liquidity and that contributes to the Banks overall profitability and asset mix within given quality and maturity considerations. Securities classified as available for sale provide management
with the flexibility to make adjustments to the portfolio given changes in the economic or interest rate environment, to fulfill unanticipated liquidity needs, or to take advantage of alternative investment opportunities.



Net Portfolio Value. The Banks interest rate sensitivity is monitored by
management through the use of the OTS model which estimates the change in the Banks net portfolio value (NPV) over a range of interest rate scenarios. NPV is the present value of expected cash flows from assets, liabilities, and
off-balance sheet contracts. The NPV ratio, under any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same scenario. The OTS produces its analysis based upon data submitted on the
Banks quarterly Thrift Financial



37



---

Reports. The following table, which sets forth the Banks NPV as of December 31, 2004, was calculated by the OTS:



|                                                      |  |                        |         |               |                                             |         |                |  |     |           |  |       |                        |  |      |  
|----------------------------------------------------- |  | ---------------------- | ------- | ------------- | ------------------------------------------- | ------- | -------------- |  | --- | --------- |  | ----- | ---------------------- |  | ---- | -
|                                                      |  | Net Portfolio Value    |         |               | NPV as Percent of Portfolio Value of Assets |        
|Change in Interest Rates In Basis Points (Rate Shock) |  | Amount                 |         | Dollar Change |                                             |         | Percent Change |  |     | NPV Ratio |  |       | Change In Basis Points | 
|                                                      |  | (Dollars in Thousands) |        
|300                                                   |  | $                      | 39,589  |               | $                                           | (55,727 | )              |  | (58 | )         |  | 6.35  | %                      |  | (754 | )
|200                                                   |  |                        | 58,474  |               |                                             | (36,843 | )              |  | (39 | )         |  | 9.08  | %                      |  | (482 | )
|100                                                   |  |                        | 78,008  |               |                                             | (17,308 | )              |  | (18 | )         |  | 11.71 | %                      |  | (218 | )
|Static                                                |  |                        | 95,316  |               |                                             |        |                |  |    |           |  | 13.90 | %                      |  |     |  
|-100                                                  |  |                        | 105,769 |               |                                             | (10,453 | )              |  | 11  |           |  | 15.13 | %                      |  | 124  |  



Certain shortcomings are inherent in
the methodology used in the above interest rate risk measurements. Modeling changes in NPV require the making of certain assumptions which may or may not reflect the manner in which actual yields and costs respond to changes in market interest
rates. In this regard, the NPV model presented assumes that the composition of the Banks interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a
particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Accordingly, although the NPV measurements and net interest income models
provide an indication of the Banks interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on the Banks net
interest income and will differ from actual results.



Item 8. Financial Statements and Supplementary Data.



The consolidated financial statements, and related notes thereto, of the Company and its subsidiaries, together with the report thereon by Radics & Co., LLC appear in the Registrants 2004 Annual Report to Stockholders on pages 14
through 41 and are incorporated herein by reference.



Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.



Not Applicable.



Item 9A. Controls and Procedures



As of the end
of the period covered by this report, based on an evaluation of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), each of the chief executive officer and the chief financial
officer of the Company has concluded that the Companys disclosure controls and procedures are effective to ensure that



38



---

information required to be disclosed by the Company in its Exchange Act reports is recorded, processed, summarized and reported within the applicable time
periods specified by the SECs rules and forms.



There were no changes in
the Companys internal control over financial reporting that occurred during the Companys most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys internal control over
financial reporting.



Managements annual report on internal control over
financial reporting and the corresponding attestation report of Radics & Co., LLC will be provided in an amendment to this Annual Report on Form 10-K, which will be filed no later than 45 days after March 16, 2005.



Item 9B. Other Information



None.





PART III



Item 10. Directors and Executive Officers of the Registrant.



On March 9, 2004, the Company adopted a Code of Ethics for its Principal Executive Officer and Senior Financial Officers (the Code of Ethics). A copy of the Code of Ethics is filed as an exhibit to this
Form 10-K. The Code of Ethics is also available free of charge by writing to the Secretary of the Company at 611 Avenue C, Bayonne, New Jersey 07002.



The information relating to directors and executive officers of the Registrant and with respect to compliance with Section 16(a) of the Exchange Act is incorporated
herein by reference to the Registrants Proxy Statement for the Annual Meeting of Stockholders to be held on April 27, 2005, which will be filed with the SEC not later than 120 days after the end of the Registrants fiscal year 2004
(Proxy Statement).



Item 11. Executive Compensation.



The information
relating to executive compensation is incorporated herein by reference to the Registrants Proxy Statement.



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.



The information relating to security ownership of certain beneficial owners and management is incorporated herein by reference to the Registrants Proxy Statement.



39



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Equity Compensation Plan Information



The following table gives information about the Companys common stock that may be issued upon the exercise of options,
warrants and rights under all existing equity compensation plans as of December 31, 2004.



Equity Compensation Plan Information



|                                                       |  |                                                                                            |     |  |                                                                            |       |                                                                                                                                            |       
|------------------------------------------------------ |  | ------------------------------------------------------------------------------------------ | --- |  | -------------------------------------------------------------------------- | ----- | ------------------------------------------------------------------------------------------------------------------------------------------ | ------
|Plan Category                                          |  | (a)Number of Securitiesto be Issued UponExercise ofOutstanding Options,Warrants and Rights |     |  | (b)Weighted AverageExercise Price ofOutstandingOptions, Warrantsand Rights |       | (c)Number of Securities RemainingAvailable for Future IssuanceUnder Equity CompensationPlans (Excluding SecuritiesReflected in Column
(a))
|Equity Compensation Plans Approved by Stockholders     |  | 117,569                                                                                    | (1) |  | $                                                                          | 22.56 |                                                                                                                                            | 22,380
|Equity Compensation Plans Not Approved by Stockholders |  | 0                                                                                          |     |  |                                                                            | 0     |                                                                                                                                            | 0     
|                                                       |  |                                                                                            |     |  |                                                                            |       |                                                                                                                                            |       
|Total                                                  |  | 117,569                                                                                    |     |  |                                                                            |       |                                                                                                                                            | 22,380

---

|(1) | These options were granted under the Companys 2003 Stock-Based Incentive Plan.
|--- | -------------------------------------------------------------------------------



Item 13. Certain Relationships and Related Transactions.



The information relating to certain relationships and related transactions is incorporated herein by reference to the Registrants Proxy Statement.



Item 14. Principal Accountant Fees and Services.



The information relating to principal accounting fees and services is incorporated herein by reference to the Registrants Proxy Statement.



40



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PART IV



Item 15. Exhibits and Financial Statement Schedules.



Page



(a)  The following
documents are filed as a part of this report:



1.      Consolidated Financial Statements of Pamrapo Bancorp, Inc. are incorporated by reference to the indicated pages of the

2004 Annual Report to Stockholders.

| |  |                                                                                                                  |  |   
| |  | ---------------------------------------------------------------------------------------------------------------- |  | --
| |  |                                                                                                                 
| |  | Consolidated Statements of Financial Condition as of December 31, 2003 and 2004                                  |  | 14
| |  |                                                                                                                 
| |  | Consolidated Statements of Income for the Years Ended December 31, 2002, 2003, and 2004                          |  | 15
| |  |                                                                                                                 
| |  | Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2002, 2003, and 2004            |  | 16
| |  |                                                                                                                 
| |  | Consolidated Statements of Changes in Stockholders Equity for the Years Ended December 31, 2002, 2003, and 2004 |  | 17
| |  |                                                                                                                 
| |  | Consolidated Statements of Cash Flows for the Years Ended December 31, 2002, 2003, and 2004                      |  | 18
| |  |                                                                                                                 
| |  | Notes to Consolidated Financial Statements                                                                       |  | 20
| |  |                                                                                                                 
| |  | Report of Independent Registered Public Accounting Firm                                                          |  | 41
| |  |                                                                                                                 
| |  | Management Responsibility Statement                                                                              |  | 42



The remaining information appearing in
the 2004 Annual Report to Stockholders is not deemed to be filed as part of this report, except as expressly provided herein.



| | 2. | All schedules are omitted because they are not required or applicable, or the required information is shown in the consolidated financial statements or the notes thereto.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------





41



---

| | 3. | Exhibits.
| | -- | ---------



The following exhibits are filed as part of this report, and this list includes the Exhibit Index.



|      |  |                                                                                                                                                                    
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1.1 |  | Certificate of Incorporation of Pamrapo Bancorp, Inc., as filed with the State of New Jersey on February 7, 20011                                                  
|3.1.2 |  | Certificate of Amendment to Certificate of Incorporation of Pamrapo Bancorp, Inc., as filed with the State of New Jersey on May 1,
20032                           
|3.2   |  | Bylaws of Pamrapo Bancorp, Inc.1                                                                                                                                   
|4     |  | Stock Certificate of Pamrapo Bancorp, Inc.3                                                                                                                        
|10.1  |  | Employment Agreement between the Bank and William J. Campbell.3*                                                                                                   
|10.2  |  | Employment Agreement between the Company and William J. Campbell.3*                                                                                                
|10.3  |  | Special Termination Agreement (Hughes).4*                                                                                                                          
|10.4  |  | Special Termination Agreement (Russo).3*                                                                                                                           
|10.5  |  | Change of Control Agreement (Walter).5*                                                                                                                            
|10.6  |  | Board of Directors Compensation and Trust Agreement.3                                                                                                             
|10.7  |  | Pamrapo Bancorp, Inc. 2003 Stock-Based Incentive Plan.6*                                                                                                           
|11    |  | Computation of earnings per share (filed herewith).                                                                                                                
|13    |  | Portions of the 2004 Annual Report to Stockholders (filed herewith).                                                                                               
|14    |  | Code of Ethics.7                                                                                                                                                   
|21    |  | Subsidiary information is incorporated herein by reference to Part ISubsidiaries.                                                                               
|23    |  | Consent of Auditors (filed herewith).                                                                                                                              
|31.1  |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                               
|31.2  |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                               
|32.1  |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (filed herewith).
|32.2  |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (filed herewith).

| | 
| | 

| | 1 | Incorporated herein by reference to the Form 10-K Annual Report, filed on April 30, 2001.
| | - | -----------------------------------------------------------------------------------------



| | 2 | Incorporated herein by reference to the Form 10-Q Quarterly Report, filed on November 12,
2003.
| | - | -----------------------------------------------------------------------------------------------



| | 3 | Incorporated herein by reference to the Form S-1 Registration Statement, as amended, filed on August 11, 1989, Registration No. 33-30370.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | 4 | Incorporated herein by reference to the Form 10-Q Quarterly Report, filed on May 6, 1997.
| | - | -----------------------------------------------------------------------------------------



| | 5 | Incorporated herein by reference to the Form 10-K Annual Report, filed on March 27, 2002.
| | - | -----------------------------------------------------------------------------------------



| | 6 | Incorporated herein by reference to the 2003 Annual Meeting Proxy Statement, filed on March 31, 2003.
| | - | -----------------------------------------------------------------------------------------------------



| | 7 | Incorporated herein by reference to the Form 10-K Annual report, filed on March 15, 2004.
| | - | -----------------------------------------------------------------------------------------



*Management contract or compensatory plan or arrangement.





42



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SIGNATURES



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



PAMRAPO BANCORP, INC.

Dated:  March 16, 2005

By:

/s/  William J. CampbellWilliam J. Campbell President and Chief Executive
Officer




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



|                                              |  |                                                                                |  |               
|--------------------------------------------- |  | ------------------------------------------------------------------------------ |  | --------------
|Name                                          |  | Title                                                                          |  | Date          
|                                              |  |                                                                               
|/s/  William J. CampbellWilliam J. Campbell   |  | President, Chief Executive Officer and
Director (Principal Executive Officer)  |  | March 16, 2005
|                                              |  |                                                                               
|/s/  Kenneth D. WalterKenneth D. Walter       |  | Treasurer/Chief Financial Officer (Principal Financial
and Accounting Officer) |  | March 16, 2005
|                                              |  |                                                                               
|/s/  Daniel J. MassarelliDaniel J. Massarelli |  | Chairman of the Board and Director                                             |  | March 16, 2005
|                                              |  |                                                                               
|/s/  John A. MorecraftJohn A. Morecraft       |  | Vice Chairman of the Board and Director                                        |  | March 16, 2005
|                                              |  |                                                                               
|/s/  Patrick D. ConaghanPatrick D. Conaghan   |  | Director                                                                       |  | March 16, 2005
|                                              |  |                                                                               
|/s/  James J. KennedyJames J. Kennedy         |  | Director                                                                       |  | March 16, 2005
|                                              |  |                                                                               
|/s/  Dr. Jaime PortelaDr. Jaime Portela       |  | Director                                                                       |  | March 16, 2005
|                                              |  |                                                                               
|/s/  Francis J. ODonnellFrancis J. ODonnell |  | Director                                                                       |  | March 16, 2005