**U.S.      SECURITIES AND EXCHANGE COMMISSION**

**FORM      10-KSB**

**(Mark      one)**

|  **| X                |**                              |  ANNUAL                REPORT PURSUANT TO SECTION 13 OR                15(d) OF THE                SECURITIES EXCHANGE ACT OF 1934**For                the Fiscal Year ended December 31, 2005**                                                                                                      |
|------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                             |                                                                                                                                                                                                                                                                                                            |
|  **|                    |  ** |  TRANSITION                REPORT UNDER SECTION 13 OR 15(d) OFTHE                SECURITIES EXCHANGE ACT OF 1934For                  the transition period                  from                                  to  |

**Commission      File Number 000-51408**

**FIRST      VALLEY BANCORP, INC.**

** **
**Connecticut**
**       **
**06-1522403**

**Four      Riverside Avenue, Bristol, CT**
** **
**      06010**

**(860)      582-8868**

**None**

**      X **

**Common      stock, no par value**
**                                     **
**1,187,619**

**X**

----

| **TABLE                    OF CONTENTS** |
|------------------------------------------|
|                                     |   |   |
|                                     |   |   |
| **PART                    I**            |   |   |
|                                     |   |   |
| Item                    1                | -                    Description of Business | 1-6 |
|                                     |   |   |
| Item                    2                | -                    Description of Property | 6 |
|                                     |   |   |
| Item                    3                | -                    Legal Proceedings | 6 |
|                                     |   |   |
| Item                    4                | -                    Submission of Matters to a Vote of Security Holders | 6 |
|                                     |   |   |
| **PART                    II**           |   |   |
|                                     |   |   |
| Item                    5                | -                    Market for Common Equity and Related Stockholder Matters and                    Small                    Business Issuer Purchases of Securities | 7 |
|                                     |   |   |
| Item                    6                | -                    Management’s Discussion and Analysis or Plan of Operations | 8-19 |
|                                     |   |   |
| Item                    7                | -                    Financial Statements | 19 |
|                                     |   |   |
| Item                    8                | -                    Changes In and Disagreements With Accountants on Accounting and                    Financial                    Disclosures | 19 |
|                                     |   |   |
| Item                    8A               | -                    Controls and Procedures | 19 |
|                                     |   |   |
| Item                    8B               | -                    Other Information | 19 |
|                                     |   |   |
| **PART                    III**          |   |   |
|                                     |   |   |
| Item                    9                | -                    Directors, Executive Officers, Promoters and Control Persons;                    Compliance                    with Section 16(a) of the Exchange Act | 20 |
|                                     |   |   |
| Item                    10               | -                    Executive Compensation | 20 |
|                                     |   |   |
| Item                    11               | -                    Security Ownership of Certain Beneficial Owners and Management                    and Related                    Stockholder Matters | 20 |
|                                     |   |   |
| Item                    12               | -                    Certain Relationships and Related Transactions | 20 |
|                                     |   |   |
| Item                    13               | -                    Exhibits | 20-21 |
|                                     |   |   |
| Item                    14               | -                    Principal Accountant Fees and Services | 22 |
|                                     |   |   |
| SIGNATURES                               |  |  23-24 |
|                                     |   |   |
| CERTIFICATIONS                           |   |   |

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**Item        1 - DESCRIPTION OF BUSINESS**

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**Item        2 - DESCRIPTION OF PROPERTY**

**Item        3 - LEGAL PROCEEDINGS**

**Item        4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

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**PART        II**

**Item        5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS        ISSUER PURCHASES OF SECURITIES**

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**Item        6 - MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**

**Cautionary        Statement**

**Overview**

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**Capital        Resources**

**Liquidity**

----

** **

**Asset        / Liability Management and Market Risk**

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**Impact        of Inflation and Changing Prices**

**Off-Balance        Sheet Arrangements**

**Contractual        Obligations**

**Investments**

**Loans**

----

**Deposits**

**Borrowed        Funds**

|                                              |   | For                  the year ended December 31, |   |
|---------------------------------------------------|--------|--------------------------------------------------|--------|
| **Ratios**                                        |   | 2005                                             |   | 2004 |   | 2003 |   |
| Return                  on Average Assets         |   |                                             | 0.54   | % |   | 0.48 | % |   | 0.28 | % |
| Return                  on Average Equity         |   |                                             | 7.94   |   |   | 6.43 |   |   | 2.89 |   |
| Average                  Equity to Average Assets |   |                                             | 6.75   |   |   | 7.51 |   |   | 9.75 |   |
|                                              |   |                                             |   |   |   |   |   |   |   |   |
| Basic                  Income per Share           |   | $                                                | 0.63   |   | $ | 0.49 |   | $ | 0.21 |   |
| Diluted                  Income per Share         |   | $                                                | 0.60   |   | $ | 0.47 |   | $ | 0.21 |   |

----

**Common        Stock Information**

|                                                                                                                                                    |   | **Stock                  Price** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                                                                                                                    |   | **High**                         |   | **Low** |   |
|                                                                                                                                                    |   |                             |   |   |   |
| **2005**                                                                                                                                                |   |                             |   |   |   |
| Quarter                  Ended, December 31.........................................                |   | $                                | 17.00  |   | $ | 16.25 |   |
| Quarter                  Ended, September 30.........................................               |   | $                                | 20.70  |   | $ | 15.00 |   |
| Quarter                  Ended, June 30................................................ |   | $                                | 20.00  |   | $ | 14.00 |   |
| Quarter                  Ended, March 31.............................................       |   | $                                | 20.00  |   | $ | 12.10 |   |
| **2004**                                                                                                                                                |   |                             |   |   |   |   |   |
| Quarter                  Ended, December 31.........................................                |   | $                                | 18.00  |   | $ | 12.25 |   |
| Quarter                  Ended, September 30........................................                |   | $                                | 11.50  |   | $ | 11.23 |   |
| Quarter                  Ended, June 30................................................ |   | $                                | 11.50  |   | $ | 11.25 |   |
| Quarter                  Ended, March 31.............................................       |   | $                                | 11.00  |   | $ | 11.00 |   |
| **2003**                                                                                                                                                |   |                             |   |   |   |   |   |
| Quarter                  Ended, December 31........................................                 |   | $                                | 11.00  |   | $ | 11.00 |   |
| Quarter                  Ended, September 30.......................................                 |   | $                                | 11.00  |   | $ | 11.00 |   |
| Quarter                  Ended, June 30................................................ |   | $                                | 11.00  |   | $ | 11.00 |   |
| Quarter                  Ended, March 31.............................................       |   | $                                | 11.00  |   | $ | 11.00 |   |
| ***The                  closing price on December 31, 2005 was                  $17.00***                                                               |   |                                  |   |

**Dividend        Information**

**YEAR        ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31,        2004**

**Earnings        Review**

----

**Net        Interest Income**

**Interest        Income**

**Interest        Expense**

**Provision        for Loan Losses**

**Noninterest        Income**

**Noninterest        Expense**

----

**Income        Taxes**

**YEAR        ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31,        2003**

**Earnings        Review**

**Net        Interest Income**

**Interest        Income**

**Interest        Expense**

----

**Provision        for Loan Losses**

**Noninterest        Income**

**Noninterest        Expense**

**Income        Taxes**

----

**Average        Balances, Yields and Costs**

|                                                                          |   | **For                  Year Ended**    |                                                                                                     |                                   |
|-------------------------------------------------------------------------------|--------|----------------------------------------|----------------------------------------------------------------------------------------------------------|----------------------------------------|
|                                                                          |   | **December                  31, 2005** |                                                                                                     | **December                  31, 2004** |   |
| **Interest                  Earning Assets:**                                 |   | Average                                |                                                                                                     | Income/                                |   | Average |   | Average |   | Income/ |   | Average |   |
|                                                                          |   | Balance                                |                                                                                                     | Expense                                |   | Rate |   | Balance |   | Expense |   | Rate |   |
|                                                                          |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |
| Federal                  funds sold and moneymarket                  accounts |   | $                                      | 5,846                                                                                                    |                                   | $ | 166 |   |   | 2.84 | % | $ | 3,989 |   | $ | 48 |   |   | 1.20 | % |
| Investment                  securities                                        |   |                                   | 38,088                                                                                                   |                                   |   | 1,419 |   |   | 3.73 |   |   | 37,075 |   |   | 1,309 |   |   | 3.53 |   |
| Loans                                                                         |   |                                   | 89,951                                                                                                   |                                   |   | 6,014 |   |   | 6.69 |   |   | 71,055 |   |   | 4,561 |   |   | 6.42 |   |
| Total                  interest-earnings assets                               |   |                                   | 133,885                                                                                                  |                                   |   | 7,599 |   |   | 5.68 |   |   | 112,119 |   |   | 5,918 |   |   | 5.28 |   |
| Non-interest-earning                  assets                                  |   |                                   | 5,940                                                                                                    |                                   |   |   |   |   |   |   |   | 6,286 |   |   |   |   |   |   |   |
| Total                  assets                                                 |   | $                                      | 139,825                                                                                                  |                                   |   |   |   |   |   |   | $ | 118,405 |   |   |   |   |   |   |   |
|                                                                          |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                  Bearing Liabilities:**                            |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                  accounts                                                 |   |                                   | 3,024                                                                                                    |                                   |   | 19 |   |   | 0.63 | % |   | 2,907 |   |   | 11 |   |   | 0.38 | % |
| Savings                  and money market accounts                            |   |                                   | 43,973                                                                                                   |                                   |   | 573 |   |   | 1.30 |   |   | 41,608 |   |   | 455 |   |   | 1.09 |   |
|                                                                          |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Time                  deposits                                                |   |                                   | 54,060                                                                                                   |                                   |   | 1,667 |   |   | 3.08 |   |   | 40,066 |   |   | 1,009 |   |   | 2.52 |   |
| Borrowed                  money                                               |   |                                   | 12,424                                                                                                   |                                   |   | 467 |   |   | 3.76 |   |   | 10,920 |   |   | 268 |   |   | 2.45 |   |
| Total                  interest- bearing liabilities                          |   |                                   | 113,481                                                                                                  |                                   |   | 2,726 |   |   | 2.40 |   |   | 95,501 |   |   | 1,743 |   |   | 1.82 |   |
| Non-interest-                  bearing demand deposits                        |   |                                   | 15,467                                                                                                   |                                   |   |   |   |   |   |   |   | 12,751 |   |   |   |   |   |   |   |
|                                                                          |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  non-interest-bearing liabilities                       |   |                                   | 1,                  438                                                                                  |                                   |   |   |   |   |   |   |   | 1,260 |   |   |   |   |   |   |   |
| Capital                  accounts                                             |   |                                   | 9,439                                                                                                    |                                   |   |   |   |   |   |   |   | 8,893 |   |   |   |   |   |   |   |
| Total                  liabilities and capital accounts                       |   | $                                      | 139,825                                                                                                  |                                   |   |   |   |   |   |   | $ | 118,405 |   |   |   |   |   |   |   |
|                                                                          |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest income                                          |   |                                   |                                                                                                     |                                   |   | 4,873 |   |   |   |   |   |   |   |   | 4,175 |   |   |   |   |
|                                                                          |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest margin                                          |   |                                   |                                                                                                     |                                   |   |   |   |   | 3.64 | % |   |   |   |   |   |   |   | 3.72 | % |
| Interest                  rate spread                                         |   |                                   |                                                                                                     |                                   |   |   |   |   | 3.28 |   |   |   |   |   |   |   |   | 3.46 |   |
|                                                                          |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                                   | **                               For Year Ended** |                                        |   |
|                                                                          |   |                                   | **December                  31, 2004 **                                                   |                                   |   | **December                  31, 2003 **  |   |
| **Interest                  Earning Assets:**                                 |   |                                   | Average                                                                                                  |                                   |   | Income/ |   |   | Average |   |   | Average |   |   | Income/ |   |   | Average |   |
|                                                                          |   |                                   | Balance                                                                                             |                                   |   | Expense |   |   | Rate |   |   | Balance |   |   | Expense |   |   | Rate |   |
| Federal                  funds sold and money                                 |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| market                  accounts                                              |   | $                                      | 3,989                                                                                                    |                                   | $ | 48 |   |   | 1.20 | % | $ | 3,561 |   | $ | 35 |   |   | 0.98 | % |
| Investment                  securities                                        |   |                                   | 37,075                                                                                                   |                                   |   | 1,309 |   |   | 3.53 |   |   | 27,861 |   |   | 934 |   |   | 3.35 |   |
| Loans                                                                         |   |                                   | 71,055                                                                                                   |                                   |   | 4,561 |   |   | 6.42 |   |   | 49,170 |   |   | 3,487 |   |   | 7.09 |   |
| Total                  interest-earnings assets                               |   |                                   | 112,119                                                                                                  |                                   |   | 5,918 |   |   | 5.28 |   |   | 80,592 |   |   | 4,456 |   |   | 5.53 |   |
| Non-interest-earning                  assets                                  |   |                                   | 6,286                                                                                                    |                                   |   |   |   |   |   |   |   | 4,994 |   |   |   |   |   |   |   |
| Total                  assets                                                 |   | $                                      | 118,405                                                                                                  |                                   |   |   |   |   |   |   | $ | 85,586 |   |   |   |   |   |   |   |
|                                                                          |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                  Bearing Liabilities:**                            |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                  accounts                                                 |   |                                   | 2,907                                                                                                    |                                   |   | 11 |   |   | 0.38 | % |   | 2,749 |   |   | 16 |   |   | 0.58 | % |
| Savings                  and money market accounts                            |   |                                   | 41,608                                                                                                   |                                   |   | 455 |   |   | 1.09 |   |   | 31,144 |   |   | 370 |   |   | 1.19 |   |
| Time                  deposits                                                |   |                                   | 40,066                                                                                                   |                                   |   | 1,009 |   |   | 2.52 |   |   | 28,314 |   |   | 760 |   |   | 2.68 |   |
| Borrowed                  money                                               |   |                                   | 10,920                                                                                                   |                                   |   | 268 |   |   | 2.45 |   |   | 3,711 |   |   | 110 |   |   | 2.96 |   |
| Total                  interest- bearing liabilities                          |   |                                   | 95,501                                                                                                   |                                   |   | 1,743 |   |   | 1.82 |   |   | 65,918 |   |   | 1,256 |   |   | 1.91 |   |
| Non-interest-                  bearing demand deposits                        |   |                                   | 12,751                                                                                                   |                                   |   |   |   |   |   |   |   | 10,539 |   |   |   |   |   |   |   |
| Other                  non-interest-bearing liabilities                       |   |                                   | 1,260                                                                                                    |                                   |   |   |   |   |   |   |   | 785 |   |   |   |   |   |   |   |
| Capital                  accounts                                             |   |                                   | 8,893                                                                                                    |                                   |   |   |   |   |   |   |   | 8,344 |   |   |   |   |   |   |   |
| Total                  liabilities and capital accounts                       |   | $                                      | 118,405                                                                                                  |                                   |   |   |   |   |   |   | $ | 85,586 |   |   |   |   |   |   |   |
|                                                                          |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest income                                          |   |                                   |                                                                                                     |                                   |   | 4,175 |   |   |   |   |   |   |   |   | 3,200 |   |   |   |   |
|                                                                          |   |                                   |                                                                                                     |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest margin                                          |   |                                   |                                                                                                     |                                   |   |   |   |   | 3.72 | % |   |   |   |   |   |   |   | 3.97 | % |
| Interest                  rate spread                                         |   |                                   |                                                                                                     |                                   |   |   |   |   | 3.46 |   |   |   |   |   |   |   |   | 3.62 |   |

----

**Rate/Volume        Analysis**

**(**

|                                               |   | 2005                  Compared to 2004      |   | 2004                  Compared to 2003      |   |
|----------------------------------------------------|--------|---------------------------------------------|--------|---------------------------------------------|--------|
|                                               |   | Increase                  (Decrease) Due to |   | Increase                  (Decrease) Due to |   |
|                                               |   | Rate                                        |   | Volume                                      |   |                    Total |   | Rate |   | Volume |   | Total |   |
| Interest                  Income:                  |   |                                        |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                  funds sold and money      |   |                                        |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| market                  accounts                   |   | $                                           | 88     |                                        | $      | 30 |   | $ | 118 |   | $ | 8 |   | $ | 5 |   | $ | 13 |   |
| Investment                  securities             |   |                                        | 74     |                                        |   | 36 |   |   | 110 |   |   | 52 |   |   | 323 |   |   | 375 |   |
| Loans                                              |   |                                        | 198    |                                        |   | 1,255 |   |   | 1,453 |   |   | (355 | ) |   | 1,429 |   |   | 1,074 |   |
| Total                  interest income             |   |                                        | 360    |                                        |   | 1,321 |   |   | 1,681 |   |   | (295 | ) |   | 1,757 |   |   | 1,462 |   |
|                                          |   |                                        |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  Expense:                 |   |                                        |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                  accounts                      |   |                                        | 8      |                                        |   | 0 |   |   | 8 |   |   | (6 | ) |   | 1 |   |   | (5 | ) |
| Savings                  and money market accounts |   |                                        | 91     |                                        |   | 27 |   |   | 118 |   |   | (33 | ) |   | 118 |   |   | 85 |   |
| Time                  deposits                     |   |                                        | 256    |                                        |   | 402 |   |   | 658 |   |   | (48 | ) |   | 297 |   |   | 249 |   |
| Borrowed                  money                    |   |                                        | 158    |                                        |   | 41 |   |   | 199 |   |   | (22 | ) |   | 180 |   |   | 158 |   |
| Total                  interest expense            |   |                                        | 513    |                                        |   | 470 |   |   | 983 |   |   | (109 | ) |   | 596 |   |   | 487 |   |
|                                               |   |                                        |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change                  in Net interest income     |   | $                                           | (153   | )                                           | $      | 851 |   |   | 698 |   | $ | (186 | ) | $ | 1,161 |   | $ | 975 |   |
|                                               |   |                                        |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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**Item        7 - FINANCIAL STATEMENTS**

**Item        8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL        DISCLOSURES**

**Item        8A - CONTROLS AND PROCEDURES**

**Evaluation        of disclosure controls and procedures**

**Change        in internal controls**

**Item        8B - OTHER INFORMATION**

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**PART        III**

**Item        9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE        WITH SECTION 16(a) OF THE EXCHANGE ACT**

**Item        10 - EXECUTIVE COMPENSATION**

**Item        11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED        STOCKHOLDER MATTERS**

**Item        12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

**Item        13 - EXHIBITS **

| (a)                      List                  of Documents Filed as Part of This Report.                                                                                        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        (1)                                                                                                                                                        |  Financial                  Statements Filed: |
|                                                                                                                                                                                                 | 1. | Report                  of Independent Registered Public Accounting Firm |
|                                                                                                                                                                                                 | 2. | Consolidated                  Statements of Financial Condition as of December 31, 2005 and                  2004 |
|                                                                                                                                                                                                 | 3. | Consolidated                  Statements of Income for each of the three years in the period                  ended                  December 31, 2005 |
|                                                                                                                                                                                                 | 4. | Consolidated                  Statements of Changes in Stockholders' Equity for each of the three                  years                  in the period ended December 31, 2005 |
|                                                                                                                                                                                                 | 5. | Consolidated                  Statements of Cash Flows for each of the three years in the period                  ended                  December 31, 2005 |
|                                                                                                                                                                                                 | 6. | Notes                  to Consolidated Financial Statements |
|        (2)                                                                                                                                                             |  Financial                  Statement Schedules. All schedules are omitted because of the absence                  of                  conditions under which they are  required                  or because the required information                  is included in the financial statement and related                  notes. |
| (b)                     Exhibits:                  The following exhibits are filed as Exhibits to this Form 10-KSB,                  as                  required by Regulation S-B. |
|                                                                                                                                                                                                 | 2 | Agreement                  and Plan of Reorganization by and between Valley Bank and First                  Valley                  Bancorp, Inc. dated as of May 23, 2005 (incorporated by reference                  to                  Company's Form 8-A dated June 27, 2005) |
|                                                                                                                                                                                                 | 3.1 | Certificate                  of Incorporation (incorporated by reference to Company's Form 8-A                  dated                  June 27, 2005) |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 |   |                                                                                       20 |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 | 3.2 | Bylaws                  (incorporated by reference to Company's Form 8-A dated June 27,                  2005) |
|                                                                                                                                                                                                 | 4.1 | Instruments                  Defining Rights of Security Holders (incorporated by reference                  to                  Company's Form 8-A dated June 27, 2005) |
|                                                                                                                                                                                                 | 10.1 | Employment                  Agreement between Valley Bank and Robert L. Messier, Jr. dated                  July 1,                  2004 (incorporated by reference to Company's Form 8-A dated June                  27,                  2005) |
|                                                                                                                                                                                                 | 10.1.1 | Amendment                  to Employment Agreement between Valley Bank and Robert L. Messier,                  Jr.                  dated November 1, 2004 (incorporated by reference to Company's                  Form 8-A                  dated June 27, 2005) |
|                                                                                                                                                                                                 | 10.2 | Change                  in Control Agreement dated October 1, 2004 by and between Valley                  Bank and                  Mark J. Blum (incorporated by reference to Company's Form 8-A dated                  June                  27, 2005) |
|                                                                                                                                                                                                 | 10.3 | Change                  in Control Agreement dated October 1, 2004 by and between Valley                  Bank and                  Anthony M. Mattioli (incorporated by reference to Company's Form                  8-A dated                  June 27, 2005) |
|                                                                                                                                                                                                 | 10.4 | Change                  in Control Agreement dated October 1, 2004 by and between Valley                  Bank and                  Robert L. Messier, Jr. (incorporated by reference to Company's                  Form 8-A                  dated June 27, 2005) |
|                                                                                                                                                                                                 | 10.5 | Stock                  Option and Stock Compensation Plan (incorporated by reference to                  Company's                  Form 8-A dated June 27, 2005) |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 | 14 | Code                  of Ethics |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 | 16 | Letter                  on change in certifying accountant (incorporated by reference to                  Company's                  Form 8-K filed on January 30, 2006) |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 | 21 | Subsidiaries |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 | 23 | Consent                  of Whittlesey & Hadley, P.C. |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 | 31.1 | Chief                  Executive Officer Certification Pursuant to 17 CFR 240.13a-14,                  as adopted                  pursuant to Section 302 of the Sarbanes Oxley Act of                  2002. |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 | 31.2 | Chief                  Financial Officer Certification Pursuant to 17 CFR 240.13a-14,                  as adopted                  pursuant to Section 302 of the Sarbanes Oxley Act of                  2002. |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 | 32.1 | Chief                  Executive Officer Certification Pursuant to 18 U.S.C. Section 1350,                  as                  adopted pursuant to Section 906 of the Sarbanes Oxley Act of                  2002. |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 | 32.2 | Chief                  Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,                  as                  adopted pursuant to Section 906 of the Sarbanes Oxley Act of                  2002. |
|                                                                                                                                                                                                 |   |   |
|                                                                                                                                                                                                 | 99.1 | Proxy                  Statement dated April 21, 2006 for the 2006 Annual Meeting of Shareholders                  of First Valley Bancorp, Inc. (incorporated by reference to Company's                  definitive proxy statement for the Annual Meeting of Shareholders                  schedule                  for May 22, 2006) |

----

**Item        14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES**

**SIGNATURES**

----

----

----

----

|  **Report                  of Independent Registered Public                  Accounting Firm** |  **1** |
|-----------------------------------------------------------------------------------------------------|-------------|
|  **Consolidated                  Statements of Financial Condition**                           |  **2** |
|  **Consolidated                  Statements of Income**                                        |  **3** |
|  **Consolidated                  Statements of Changes in Stockholders’ Equity**         |  **4** |
|  **Consolidated                  Statements of Cash Flows**                                    |  **5** |
|  **Notes                    to Consolidated Financial Statements**                             |  **6** |
|  *1.                  Summary of Significant Accounting Policies*                              |  6     |
|  *2.                  Investment Securities*                                                   |  11    |
|  *3.                  Loans*                                                                   |  13    |
|  *4.                  Premises and Equipment*                                                  |  15    |
|  *5.                  Deposits*                                                                |  16    |
|  *6.                  Borrowed Funds*                                                          |  17    |
|  *7.                  Income Taxes*                                                            |  18    |
|  *8.                  Regulatory Matters*                                                      |  19    |
|  *9.                  Employee Benefits*                                                       |  20    |
|  *10.                  Comprehensive Income*                                                   |  20    |
|  *11.                  Financial Instruments*                                                  |  21    |
|  *12.                  Employee and Director Benefit Plan*                                     |  22    |
|  *13.                  Stock Split*                                                            |  23    |
|  *14.                  Parent Company Only Financial Statements*                               |  24    |
|                                                                                                |        |

----

**Report      of Independent Registered Public Accounting Firm**

----

**Consolidated        Statements of Financial Condition**

|                                                                  |   |  December                31, |   |
|-----------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                  |   |                              |   | 2005 |   | 2004 |   |
|                                                                  |   |                              |   | *(in                thousands, except share data)* |   |
| **ASSETS**                                                            |   |                              |   |   |   |   |   |
| Cash                and due from depository institutions              |   |                              |   |   | $ | 3,447 |   | $ | 5,764 |   |
| Federal                funds sold and money market accounts           |   |                              |   |   |   | 9,220 |   |   | 4,269 |   |
| Investment                securities                                  |   |                              |   |   |   | 33,907 |   |   | 39,548 |   |
| Loans                receivable, net                                  |   |                              |   |   |   | 109,773 |   |   | 77,729 |   |
| Premises                and equipment, net                            |   |                              |   |   |   | 1,435 |   |   | 1,524 |   |
| FHLBB                Stock, at cost                                   |   |                              |   |   |   | 855 |   |   | 727 |   |
| Accrued                income receivable                              |   |                              |   |   |   | 680 |   |   | 560 |   |
| Deferred                income taxes                                  |   |                              |   |   |   | 904 |   |   | 632 |   |
| Other                assets                                           |   |                              |   |   |   | 705 |   |   | 187 |   |
|                                                                  |   |                              |   |   |   |   |   |   |   |   |
| **Total                assets**                                       |   |                              |   |   | $ | 160,926 |   | $ | 130,940 |   |
|                                                                  |   |                              |   |   |   |   |   |   |   |   |
|                                                                  |   |                              |   |   |   |   |   |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**               |   |                              |   |   |   |   |   |   |   |   |
| Liabilities                                                           |   |                              |   |   |   |   |   |   |   |   |
| Deposits                                                              |   |                              |   |   | $ | 129,200 |   | $ | 107,746 |   |
| Borrowed                funds                                         |   |                              |   |   |   | 19,117 |   |   | 12,679 |   |
| Mortgagors'                escrow accounts                            |   |                              |   |   |   | 176 |   |   | 150 |   |
| Other                liabilities                                      |   |                              |   |   |   | 2,733 |   |   | 1,206 |   |
| Total                liabilities                                      |   |                              |   |   |   | 151,226 |   |   | 121,781 |   |
|                                                                  |   |                              |   |   |   |   |   |   |   |   |
| Commitments                and Contingencies                          |   |                              |   |   |   |   |   |   |   |   |
|                                                                  |   |                              |   |   |   |   |   |   |   |   |
| Stockholders'                equity                                   |   |                              |   |   |   |   |   |   |   |   |
| Common                stock, no par value; authorized 3,000,000       |   |                              |   |   |   |   |   |   |   |   |
| shares;                issued and outstanding 1,186,236 and 1,180,231 |   |                              |   |   |   |   |   |   |   |   |
| at                December 31, 2005 and 2004, respectively (Note 13)  |   |                              |   |   |   | 892 |   |   | 887 |   |
| Additional                paid-in capital                             |   |                              |   |   |   | 8,194 |   |   | 8,126 |   |
| Retained                earnings                                      |   |                              |   |   |   | 1,054 |   |   | 305 |   |
| Accumulated                other comprehensive loss                   |   |                              |   |   |   | (440 | ) |   | (159 | ) |
| Total                stockholders' equity                             |   |                              |   |   |   | 9,700 |   |   | 9,159 |   |
|                                                                  |   |                              |   |   |   |   |   |   |   |   |
| **Total                liabilities and stockholders' equity**         |   |                              |   |   | $ | 160,926 |   | $ | 130,940 |   |

----

**Consolidated        **
**Statements of Income**

|                                                                   |   |  For                the Years Ended December 31, |      |
|------------------------------------------------------------------------|--------|-------------------------------------------------------|-----------|
|                                                                   |   | 2005                                                  |      |   |   | 2004 |   |   |   | 2003 |   |
|                                                                   |   | *(in                thousands, except share data)*    |      |
| **Interest                income**                                     |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                on loans                                       |   | $                                                     | 6,014     |   |   |   |   | $ | 4,561 |   |   |   |   | $ | 3,487 |   |
| Interest                and dividends on investments                   |   |                                                  | 1,585     |   |   |   |   |   | 1,357 |   |   |   |   |   | 969 |   |
| Total                interest income                                   |   |                                                  | 7,599     |   |   |   |   |   | 5,918 |   |   |   |   |   | 4,456 |   |
|                                                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                expense**                                    |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                and escrow                                     |   |                                                  | 2,259     |   |   |   |   |   | 1,475 |   |   |   |   |   | 1,146 |   |
| Borrowed                funds                                          |   |                                                  | 467       |   |   |   |   |   | 268 |   |   |   |   |   | 110 |   |
| Total                interest expense                                  |   |                                                  | 2,726     |   |   |   |   |   | 1,743 |   |   |   |   |   | 1,256 |   |
|                                                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                interest income**                                 |   |                                                  | 4,873     |   |   |   |   |   | 4,175 |   |   |   |   |   | 3,200 |   |
|                                                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Provision                for loan losses**                           |   |                                                  | 348       |   |   |   |   |   | 353 |   |   |   |   |   | 278 |   |
|                                                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                interest income after provision for loan losses** |   |                                                  | 4,525     |   |   |   |   |   | 3,822 |   |   |   |   |   | 2,922 |   |
|                                                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Noninterest                income**                                  |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                charges and other fees                          |   |                                                  | 385       |   |   |   |   |   | 327 |   |   |   |   |   | 265 |   |
| Realized                gains on investments                           |   |                                                  | -         |   |   |   |   |   | 6 |   |   |   |   |   | 42 |   |
| Total                noninterest income                                |   |                                                  | 385       |   |   |   |   |   | 333 |   |   |   |   |   | 307 |   |
|                                                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Noninterest                expense**                                 |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries                                                               |   |                                                  | 1,736     |   |   |   |   |   | 1,528 |   |   |   |   |   | 1,319 |   |
| Employee                benefits and taxes                             |   |                                                  | 347       |   |   |   |   |   | 306 |   |   |   |   |   | 249 |   |
| Occupancy                and equipment                                 |   |                                                  | 655       |   |   |   |   |   | 671 |   |   |   |   |   | 671 |   |
| Professional                fees                                       |   |                                                  | 139       |   |   |   |   |   | 145 |   |   |   |   |   | 140 |   |
| Marketing                                                              |   |                                                  | 106       |   |   |   |   |   | 104 |   |   |   |   |   | 73 |   |
| Office                supplies                                         |   |                                                  | 74        |   |   |   |   |   | 67 |   |   |   |   |   | 63 |   |
| Outside                service fees                                    |   |                                                  | 225       |   |   |   |   |   | 146 |   |   |   |   |   | 118 |   |
| Organizational                costs                                    |   |                                                  | 98        |   |   |   |   |   | - |   |   |   |   |   | - |   |
| Other                                                                  |   |                                                  | 329       |   |   |   |   |   | 249 |   |   |   |   |   | 208 |   |
| Total                noninterest expense                               |   |                                                  | 3,709     |   |   |   |   |   | 3,216 |   |   |   |   |   | 2,841 |   |
|                                                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                before income tax expense**                    |   |                                                  | 1,201     |   |   |   |   |   | 939 |   |   |   |   |   | 388 |   |
|                                                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                tax expense**                                  |   |                                                  | 452       |   |   |   |   |   | 367 |   |   |   |   |   | 147 |   |
| **Net                income**                                          |   | $                                                     | 749       |   |   |   |   | $ | 572 |   |   |   |   | $ | 241 |   |
|                                                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                income per share                                  |   | $                                                     | 0.63      |   |   |   |   | $ | 0.49 |   |   |   |   | $ | 0.21 |   |
| Diluted                income per share                                |   |                                                  | 0.60      |   |   |   |   |   | 0.47 |   |   |   |   |   | 0.21 |   |
| Weighted-average                shares outstanding - basic             |   |                                                  | 1,184,930 |   |   |   |   |   | 1,178,639 |   |   |   |   |   | 1,147,561 |   |
| Weighted-average                shares outstanding - diluted           |   |                                                  | 1,239,000 |   |   |   |   |   | 1,207,895 |   |   |   |   |   | 1,159,855 |   |
|                                                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**Consolidated          Statements of Changes in Stockholders’ Equity**

|                                              |   | Common                Stock                                                           |   | Additional                Paid-in Capital  |   |   |   | Retained                Earnings (deficit)  |   | Accumulated                Other                Comprehensive Income (Loss)  |   | Total                Stockholders' Equity  |   |
|---------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|--------|--------|--------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                              |   |    *(in                thousands)*       |   |
|                                              |   |                                                                                  |   |                                       |   |   |   |                                        |   |                                                                         |   |                                       |   |
| **Balance                at December 31, 2002**   |   | $                                                                                     | 725    |                                            | $      | 6,413  |   |                                             |   | $                                                                                 | (508   | )                                               | $      | 89 |   | $ | 6,719 |   |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| Net                income                         |   |                                                                                  | -      |                                            |   | -      |   |                                             |   |                                                                              | 241    |                                            |   | - |   |   | 241 |   |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| Shares                issued under stock          |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| compensation                plan                  |   |                                                                                  | 4      |                                            |   | 46     |   |                                             |   |                                                                              | -      |                                            |   | - |   |   | 50 |   |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| Shares                issued under secondary      |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| stock                offering                     |   |                                                                                  | 155    |                                            |   | 1,631  |   |                                             |   |                                                                              | -      |                                            |   | - |   |   | 1,786 |   |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| Unrealized                gains (losses) on       |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| available-for-sale                securities, net |   |                                                                                  | -      |                                            |   | -      |   |                                             |   |                                                                              | -      |                                            |   | (151 | ) |   | (151 | ) |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| **Balance                at December 31, 2003**   |   | $                                                                                     | 884    |                                            | $      | 8,090  |   |                                             |   | $                                                                                 | (267   | )                                               | $      | (62 | ) | $ | 8,645 |   |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| Net                income                         |   |                                                                                  | -      |                                            |   | -      |   |                                             |   |                                                                              | 572    |                                            |   | - |   |   | 572 |   |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| Shares                issued under stock          |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| compensation                plan                  |   |                                                                                  | 3      |                                            |   | 36     |   |                                             |   |                                                                              | -      |                                            |   | - |   |   | 39 |   |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| Unrealized                gains (losses) on       |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| available-for-sale                securities, net |   |                                                                                  | -      |                                            |   | -      |   |                                             |   |                                                                              | -      |                                            |   | (97 | ) |   | (97 | ) |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| **Balance                at December 31, 2004**   |   | $                                                                                     | 887    |                                            | $      | 8,126  |   |                                             |   | $                                                                                 | 305    |                                            | $      | (159 | ) | $ | 9,159 |   |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| Net                income                         |   |                                                                                  | -      |                                            |   | -      |   |                                             |   |                                                                              | 749    |                                            |   | - |   |   | 749 |   |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| Shares                issued under stock          |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| compensation                plan                  |   |                                                                                  | 5      |                                            |   | 68     |   |                                             |   |                                                                              | -      |                                            |   | - |   |   | 73 |   |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| Unrealized                gains (losses) on       |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| available-for-sale                securities, net |   |                                                                                  | -      |                                            |   | -      |   |                                             |   |                                                                              | -      |                                            |   | (281 | ) |   | (281 | ) |
|                                              |   |                                                                                  |   |                                            |   |   |   |                                             |   |                                                                              |   |                                            |   |   |   |   |   |   |
| **Balance                at December 31, 2005**   |   | $                                                                                     | 892    |                                            | $      | 8,194  |   |                                             |   | $                                                                                 | 1,054  |                                            | $      | (440 | ) | $ | 9,700 |   |

----

**Consolidated        Statements of Cash Flows**

|                                                                    |   |  For                  the Years Ended December 31, |    |
|-------------------------------------------------------------------------|--------|---------------------------------------------------------|---------|
|                                                                    |   | 2005                                                    |    |   |   | 2004 |   |   |   | 2003 |   |
|                                                                    |   | *(in                  thousands)*                       |    |
| **Cash                  flows from operating activities**               |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                             |   | $                                                       | 749     |   |   |   |   | $ | 572 |   |   |   |   | $ | 241 |   |
| Adjustments                  to reconcile net income to cash            |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| provided                  by operating activities:                      |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision                  for loan losses                              |   |                                                    | 348     |   |   |   |   |   | 353 |   |   |   |   |   | 278 |   |
| Depreciation                                                            |   |                                                    | 232     |   |   |   |   |   | 218 |   |   |   |   |   | 178 |   |
| Provision                  for deferred taxes                           |   |                                                    | (92     | ) |   |   |   |   | (110 | ) |   |   |   |   | (57 | ) |
| Realized                  gain on investments                           |   |                                                    | -       |   |   |   |   |   | (6 | ) |   |   |   |   | (42 | ) |
| Amortization                  (accretion) of premiums (discounts), net  |   |                                                    | 171     |   |   |   |   |   | 209 |   |   |   |   |   | 258 |   |
| Amortization                  of debt issuance costs                    |   |                                                    | 2       |   |   |   |   |   | - |   |   |   |   |   | - |   |
| Common                  stock issued as compensation                    |   |                                                    | 73      |   |   |   |   |   | 39 |   |   |   |   |   | 50 |   |
| Net                  change in:                                         |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred                  loan fees                                     |   |                                                    | 20      |   |   |   |   |   | 49 |   |   |   |   |   | 29 |   |
| Accrued                  income receivable                              |   |                                                    | (120    | ) |   |   |   |   | (159 | ) |   |   |   |   | (93 | ) |
| Other                  assets                                           |   |                                                    | (518    | ) |   |   |   |   | (14 | ) |   |   |   |   | 22 |   |
| Other                  liabilities                                      |   |                                                    | 1,527   |   |   |   |   |   | 320 |   |   |   |   |   | 241 |   |
| **Net                  cash provided by operating activities**          |   |                                                    | 2,392   |   |   |   |   |   | 1,471 |   |   |   |   |   | 1,105 |   |
|                                                                    |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Cash                  flows from investing activities**               |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds                  from maturities, calls and                    |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| paydowns                  of available-for-sale securities              |   |                                                    | 24,081  |   |   |   |   |   | 17,472 |   |   |   |   |   | 11,966 |   |
| Proceeds                  from sales of available-for-sale securities   |   |                                                    | -       |   |   |   |   |   | 509 |   |   |   |   |   | 7,563 |   |
| Purchase                  of available-for-sale securities              |   |                                                    | (19,072 | ) |   |   |   |   | (23,651 | ) |   |   |   |   | (29,880 | ) |
| Loan                  originations net of principal payments            |   |                                                    | (32,412 | ) |   |   |   |   | (18,762 | ) |   |   |   |   | (18,562 | ) |
| Purchase                  of FHLB stock                                 |   |                                                    | (128    | ) |   |   |   |   | (108 | ) |   |   |   |   | (460 | ) |
| Purchase                  of premises and equipment                     |   |                                                    | (143    | ) |   |   |   |   | (762 | ) |   |   |   |   | (422 | ) |
| **Net                  cash used by investing activities**              |   |                                                    | (27,674 | ) |   |   |   |   | (25,302 | ) |   |   |   |   | (29,795 | ) |
|                                                                    |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Cash                  flows from financing activities**               |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change                  in DDA, NOW, money market, and savings accounts |   |                                                    | 6,763   |   |   |   |   |   | 12,068 |   |   |   |   |   | 10,368 |   |
| Change                  in time deposit accounts                        |   |                                                    | 14,691  |   |   |   |   |   | 14,413 |   |   |   |   |   | 7,450 |   |
| Proceeds                  from borrowed funds                           |   |                                                    | 16,046  |   |   |   |   |   | 8,875 |   |   |   |   |   | 11,400 |   |
| Repayments                  of borrowed funds                           |   |                                                    | (9,610  | ) |   |   |   |   | (8,576 | ) |   |   |   |   | (159 | ) |
| Change                  in mortgagors' escrow accounts                  |   |                                                    | 26      |   |   |   |   |   | 10 |   |   |   |   |   | 41 |   |
| Proceeds                  from issuance of common stock                 |   |                                                    | -       |   |   |   |   |   | - |   |   |   |   |   | 1,786 |   |
| **Net                  cash provided by financing activities**          |   |                                                    | 27,916  |   |   |   |   |   | 26,790 |   |   |   |   |   | 30,886 |   |
|                                                                    |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  change in cash and cash equivalents                |   |                                                    | 2,634   |   |   |   |   |   | 2,959 |   |   |   |   |   | 2,196 |   |
| Cash                  and cash equivalents at beginning of year         |   |                                                    | 10,033  |   |   |   |   |   | 7,074 |   |   |   |   |   | 4,878 |   |
|                                                                    |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Cash                  and cash equivalents at end of year**           |   | $                                                       | 12,667  |   |   |   |   | $ | 10,033 |   |   |   |   | $ | 7,074 |   |
|                                                                    |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ***Supplemental                  disclosures***                         |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  paid during the year for:                         |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                |   | $                                                       | 2,542   |   |   |   |   | $ | 1,621 |   |   |   |   | $ | 1,284 |   |
| Income                  Taxes                                           |   | $                                                       | 604     |   |   |   |   | $ | 397 |   |   |   |   | $ | 190 |   |
|                                                                    |   |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**Notes        to Consolidated Financial Statements**

**1. Summary of Significant Accounting      Policies**

| *Business*First                Valley Bancorp, Inc. (the Company) is a state chartered holding company                formed in 2005 for the purpose of acquiring all of the common stock                of                Valley Bank. Existing shares in Valley Bank common stock were exchanged                for an equal and proportionate amount of shares of Company                stock.Valley                Bank (the Bank) is a state chartered commercial bank which commenced                operations on November 15, 1999. The Bank is engaged principally                in the                business of attracting deposits from the general public and investing                those deposits in small business, real estate, residential and consumer                loans. The Bank is subject to competition from other financial                institutions throughout the region.Both                the Company and the Bank are subject to the regulations of certain                state                and federal agencies and undergoes periodic examinations by those                regulatory authorities. *Basis                of presentation and principles of consolidation*The                consolidated financial statements include the accounts of First Valley                Bancorp, Inc. and its wholly-owned subsidiary, Valley Bank. Significant                intercompany accounts and transactions have been eliminated in                consolidation. Prior to the formation of the Company the amounts                reflected                are those of the Bank.The                accounting and reporting policies of the Company conform to generally                accepted accounting principles in the United States of America and                to                general practices within the banking industry. Such policies have                been                followed on a consistent basis.          |   |    In                preparing the consolidated financial statements, management is required                to                make estimates and assumptions that affect the reported amounts of                assets                and liabilities as of the date of the balance sheet, and income and                expenses for the period. Actual results could differ from those                estimates.Material                estimates that are particularly susceptible to significant change                in the                near-term relate to the determination of the allowance for losses                on                loans. While management uses available information to recognize losses                on                loans, future additions to the allowance may be necessary based on                changes                in economic conditions, particularly in Connecticut. *Cash                and cash equivalents*For                purposes of reporting cash flows, cash and cash equivalents include                cash                and amounts due from depository institutions, federal funds sold,                and                money market accounts. *Investment                securities*The                Company=s                investments are categorized as available-for-sale. Available-for-sale                securities are securities that are held for indefinite periods of                time and                are carried at fair value with unrealized gains and losses reported                as a                separate component of capital, net of estimated income taxes.Mortgage-backed                securities, which include collateralized mortgaged obligations                (ACMO's@),                are either U.S. Government Agency securities or are rated in one                of the                top two ratings categories by at least one of the major rating agencies                at                the time of purchase. One of the risks inherent when investing in                mortgage-backed securities and CMO's is the ability of such instruments                to                incur prepayments of principal prior to maturity. Because of prepayments,                the weighted-average yield of these securities may also change, which                could affect earnings. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Notes      to Consolidated Financial Statements**

|      Gains                  or losses on the sales of securities are recognized at trade date                  utilizing the specific identification method.  *Loans                  receivable and allowance for loan losses*Loans                  receivable are stated at unpaid principal balance less deferred                  loan fees,                  and the allowance for loan losses.Uncollected                  interest on loans receivable is accrued as earned based on rates                  applied                  to principal amounts outstanding. Recognition of income on the                  accrual                  basis is generally discontinued after 90 days past due. Payments                  ultimately collected are allocated to reduce principal and accrued                  interest unless there are doubts concerning collectibility. If                  there are                  any doubts regarding collectibility all payments are used to reduce                  principal and any accrued interest is reversed to reduce interest                  income.Loan                  origination fees and certain direct loan origination costs are                  being                  deferred and the net amount amortized on a level-yield basis as                  an                  adjustment to the related loan yield over its contractual life.                  Unamortized net fees are recognized upon early repayment of the                  loans.The                  allowance for loan losses is established by a provision charged                  to                  earnings and is maintained at a level considered adequate to provide                  for                  potential loan losses based on management's evaluation of known                  and                  inherent risks in the loan portfolio. When a loan or portion of                  a loan is                  considered uncollectible, it is charged against the allowance for                  loan                  losses. Recoveries of loans previously charged-off are credited                  to the                  allowance when collected.Management                  makes regular evaluations of the loan portfolio to determine the                  adequacy                  of the level of the allowance for loan losses. Numerous factors                  are                  considered in the evaluation, including a review of certain borrowers'                  current |   |   financial                  status and credit standing, available collateral, loss experience                  in                  relation to outstanding   loans,   the                   overall   loan   portfolio  quality,                    management's  judgment regarding prevailing and anticipated economic                  conditions, and other relevant factors. In                  addition, various regulatory agencies, as an integral part of their                  examination process, periodically review the Bank's allowance for                  loan                  losses. Such agencies may require the Bank to recognize additions                  to the                  allowance based on their judgments about information available                  to them at                  the time of their examination. *Premises                  and equipment*Premises                  and equipment are stated at cost less accumulated depreciation                  computed on                  the straight-line method at rates based on estimated useful lives.                  Estimated lives are 39 years for buildings and 3 to 10 years for                  furniture, fixtures and equipment. Expenditures for replacements                  or major                  improvements are capitalized. Expenditures for normal maintenance                  and                  repairs are charged to expense as incurred. Upon the sale or retirement                  of                  premises and equipment, the cost and accumulated depreciation are                  removed                  from the respective accounts and any gain or loss is included in                  income.                   *Computation                  of fair values*The                  calculation of fair value estimates of financial instruments is                  dependent                  upon certain subjective assumptions and involves significant                  uncertainties. Changes in assumptions could significantly affect                  the                  estimates. These estimates do not reflect any possible tax ramifications,                  estimated transaction costs or any premium or discount that could                  result                  from offering the Company’s entire holdings of a particular financial                  instrument. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Notes      to Consolidated Financial Statements**

**1.      Summary of Significant Accounting Policies **
*-      (Continued)*

|                The                following methods and assumptions were utilized by the Company in                estimating the fair values of its on-balance sheet financial                instruments:Cash                and cash equivalents - The carrying amounts reported in the statement                of                financial condition approximate these assets' fair value.Investment                securities - Fair values for investment securities are based on quoted                market prices.Loans                receivable - For variable rate loans that reprice frequently and                without                significant change in credit risk, fair values are based on carrying                values. The fair value of other loans is estimated by discounted                cash flow                analyses using interest rates currently being offered for loans with                similar terms to borrowers of similar credit quality. Accrued                income receivable - The carrying value of accrued income receivable                approximates fair value.Deposits                - For the present value calculation of non-maturity deposits, an                assumption is required as to the maturity, or life, of these deposits.                The                Company is currently using the FDICIA 305 proposal recommended for                this                purpose. On non-maturity deposits, fair value is based on using a                discounted cash flow technique that uses current interest rates and                applies interest expense into the future compared to Federal Home                Loan                Bank current loan interest rates. Fair values for time certificates                of                deposit are estimated using a discounted cash flow technique that                applies                interest rates currently being offered to a schedule of aggregated                expected monthly maturities on time deposits.FHLB                Advances - Fair values are estimated using discounted cash flow analyses                based on the Bank=s                current incremental borrowing rates for similar types of borrowing                arrangements. |   |                Subordinated                debts - Fair value is determined using quoted market prices.Mortgagors'                escrow accounts - The carrying value of escrow accounts approximates                fair                value. *Income                taxes*The                Bank accounts for certain income and expense items differently for                financial reporting purposes than for income tax purposes. Provisions                for                deferred taxes are being made in recognition of these temporary                differences. *Earnings                per share*Basic                earnings per share is computed by dividing income available to common                stockholders by the weighted average number of common shares outstanding                for the period. Diluted earnings per share reflect the potential                dilution                that could occur if securities or other contracts to issue common                stock                were exercised or converted into common stock or resulted in the                issuance                of common stock that then shared in the earnings of the entity.                 *Related                party transactions*Directors                and officers of the Company and their affiliates have been customers                of                and have had transactions with the Bank, and it is expected that                such                persons will continue to have such transactions in the future. Management                believes that all deposit accounts, loans, services and commitments                comprising such transactions, were made in the ordinary course of                business, on substantially the same terms, including interest rates                and                collateral, as those prevailing at the time for comparable transactions                with other customers who are not directors or officers. In the opinion                of                management, the transactions with related parties did not involve                more                than normal risks of collectibility or favored treatment or terms,                or                present other unfavorable features. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Notes      to Consolidated Financial Statements**

|                *Stock                Based Compensation*As                more fully described in Note 12, the Bank has a long-term incentive                plan                authorizing various types of market and performance based incentive                awards                that may be granted to directors, officers and employees. In December                2004, the Financial Accounting Standards Board revised Statement                of                Financial Accounting Standards No. 123, *“Accounting                for Stock-Based Compensation”*(“SFAS                123R”). This Statement eliminated the alternative intrinsic value method                of accounting, in accordance with the Accounting Principles Board                Opinion                No. 25, *“Accounting                for Stock Issued to Employees”*for                recognizing the cost of employee services received in share-based                payment                transactions, thereby reflecting the economic consequences of those                transactions in the financial statements. SFAS 123R requires all                entities                to follow the |   |                same                accounting standard and account for such transactions using the                fair-value-based method. On March 29, 2005, the SEC staff issued                Staff                Accounting Bulletin No. 107 (“SAB 107”). SAB 107 expresses the views of                the SEC staff regarding SFAS 123R and certain rules and regulations                and                provides the SEC’s views regarding the valuation of share-based payment                arrangements for public companies. On April 14, 2005, the Securities                and                Exchange Commission (the “SEC”) delayed the effective date for SFAS 123R,                which allows companies to implement the statement at the beginning                of                their first fiscal year beginning after June 15, 2005, which would                be                January 1, 2006 for the Company. Previously, the Company applied                APB                Opinion 25, “Accounting for Stock Issued to Employees,” and related                interpretations in accounting for its long-term incentive                plan. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(in                  thousands, except share data)*     |   |   | 2005                    |   | 2004                    |   | 2003                    |
|----------------------------------------------------------|--------|--------|-------------------------|--------|-------------------------|--------|-------------------------|
|                                                     |   |   |                    |   |                    |   |                    |
| Net                  income, as reported                 |   |   | $                  749  |   | $                  572  |   | $                  241  |
| Stock-based                  employee compensation       |   |   |                    |   |                    |   |                    |
| included                  in net income                  |   |   | -                       |   | -                       |   | -                       |
| Total                  stock-based employee compensation |   |   |                    |   |                    |   |                    |
| expense                  determined under the fair value |   |   |                    |   |                    |   |                    |
| based                  method for all awards             |   |   | -                       |   | (20)                    |   | (148)                   |
| Pro                  forma net income                    |   |   | $                  749  |   | $                  552  |   | $                  93   |
|                                                     |   |   |                    |   |                    |   |                    |
| Earnings                  per share:                     |   |   |                    |   |                    |   |                    |
| Basic,                  as reported                      |   |   | $                  0.63 |   | $                  0.49 |   | $                  0.21 |
| Diluted,                  as reported                    |   |   | $                  0.60 |   | $                  0.47 |   | $                  0.21 |
| Basic,                  pro forma                        |   |   | $                  0.63 |   | $                  0.47 |   | $                  0.08 |
| Diluted,                  pro forma                      |   |   | $                  0.60 |   | $                  0.45 |   | $                  0.08 |
|                                                     |   |   |                    |   |                    |   |                    |

----

**Notes        to Consolidated Financial        Statements**

**1.        Summary of Significant Accounting Policies - **
*(Continued)*

|                  *Recent                  Accounting Pronouncements* On                  March 9, 2004, the United States Securities and Exchange Commission                  (SEC)                  issued Staff Accounting Bulletin (SAB) No. 105, “Application of Accounting                  Principles to Loan Commitments”. The bulletin sets forth the views of the                  accounting staff of the SEC as it pertains to loan commitments                  recognized                  for loans originated for sale. The bulletin concludes that expected                  future                  cash flows related to the servicing of the loan should not be considered                  until the loan has been contractually separated from the servicing.                  The                  provisions of SAB 105 were effective for commitments entered into                  after                  March 31, 2004. The adoption of SAB 105 did not have any effect                  on the                  Company as no commitments have been recognized due to the immateriality                  of                  the amount.In                  May 2005, the Financial Accounting Standards Board issued Statement                  of                  Financial Accounting Standard No. 154, "Accounting Changes and                  Error                  Corrections" ("SFAS 154"). This Statement replaces Accounting Principles                  Board Opinion No. 20 ("APB 20"), "Accounting Changes" and Statement                  of                  Financial Accounting Standard No. 3, "Reporting Accounting Changes                  in                  Interim Financial Statements," and changes the requirements                  for |   |                  the                  accounting for and reporting of a change in accounting principle.                  In                  accordance with the prior guidance of APB 20, most voluntary changes                  in an                  accounting principle required recognizing the cumulative effect                  of a                  change in accounting principle in net income in the period of change.                  SFAS                  154 requires retrospective application to prior periods' financial                  statements for the direct effects of a change in accounting principle,                  unless it is impracticable to determine either the period-specific                  effects                  of the cumulative effect of the change. Indirect effects of a change                  in                  accounting principle should be recognized in the period of accounting                  change. SFAS 154 carries forward the guidance of APB 20 relating                  to the                  reporting for correction of an error in previously issued financial                  statements, change in accounting estimate and the justification                  requirement for a change in accounting principle on the basis of                  preferability. Provisions of this statement are effective for accounting                  changes made in the fiscal years beginning after December 15, 2005.                  At                  this time, the Company is uncertain how the application of SFAS                  154 will                  impact prior period financial statements for the implementation                  of future                  accounting pronouncements. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Notes        to Consolidated Financial        Statements**
**2.      Investment Securities**

|                                                       |   | December                    31, 2005      |   |
|------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                       |   | Amortized                                 |   | Gross                    Unrealized |   | Fair |   |
|                                                       |   | Cost                    Basis             |   | Gains |   | Losses |   | Value |   |
|                                                       |   |  *(in                    thousands)* |   |
| **Available-for-sale                    securities:**      |   |                                 |   |    |   |    |   |    |   |
| Debt                    securities:                        |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                    government and agency obligations: |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Due                    in less than one year               |   | $                                         | 1,509  |   | $ | - |   | $ | (23 | ) | $ | 1,486 |   |
| Due                    from one through five years         |   |                                      | 7,499  |   |   | - |   |   | (168 | ) |   | 7,331 |   |
|                                                       |   |                                      | 9,008  |   |   | - |   |   | (191 | ) |   | 8,817 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Corporate                    bonds:                        |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Due                    from one through five years         |   |                                      | 2,095  |   |   | - |   |   | (75 | ) |   | 2,020 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Municipal                    bonds:                        |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Due                    after ten years                     |   |                                      | 2,564  |   |   | - |   |   | (15 | ) |   | 2,549 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed                    securities              |   |                                      | 20,456 |   |   | 1 |   |   | (436 | ) |   | 20,021 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total                    debt securities                   |   |                                      | 34,123 |   |   | 1 |   |   | (717 | ) |   | 33,407 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Equity                    securities:                      |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Variable                    rate preferred securities:     |   |                                      | 500    |   |   | - |   |   | - |   |   | 500 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total                    available-for-sale securities     |   | $                                         | 34,623 |   | $ | 1 |   | $ | (717 | ) |   | 33,907 |   |

----

**Notes        to Consolidated Financial Statements**

**2.        Investment Securities **
*(Continued)*

|                                                       |   | December                    31, 2004      |   |
|------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                       |   | Amortized                                 |   | Gross                    Unrealized |   | Fair |   |
|                                                       |   | Cost                    Basis             |   | Gains |   | Losses |   | Value |   |
|                                                       |   |  *(in                    thousands)* |   |
| **Available-for-sale                    securities:**      |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Debt                    securities:                        |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                    government and agency obligations: |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Due                    in less than one year               |   | $                                         | 500    |   | $ | 3 |   | $ | - |   | $ | 503 |   |
| Due                    from one through five years         |   |                                      | 8,518  |   |   | 2 |   |   | (86 | ) |   | 8,434 |   |
|                                                       |   |                                      | 9,018  |   |   | 5 |   |   | (86 | ) |   | 8,937 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Corporate                    bonds:                        |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Due                    from one through five years         |   |                                      | 2,129  |   |   | - |   |   | (27 | ) |   | 2,102 |   |
| Due                    after ten years                     |   |                                      | 100    |   |   | 3 |   |   | - |   |   | 103 |   |
|                                                       |   |                                      | 2,229  |   |   | 3 |   |   | (27 | ) |   | 2,205 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed                    securities              |   |                                      | 26,557 |   |   | 23 |   |   | (174 | ) |   | 26,406 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total                    debt securities                   |   |                                      | 37,804 |   |   | 31 |   |   | (287 | ) |   | 37,548 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Equity                    securities:                      |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Variable                    rate preferred securities:     |   |                                      | 2,000  |   |   | - |   |   | - |   |   | 2,000 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total                    available-for-sale securities     |   | $                                         | 39,804 |   | $ | 31 |   | $ | (287 | ) |   | 39,548 |   |

----

**Notes        to Consolidated Financial Statements**

|                                                 |   | **Length                      of Time in Continuous Unrealized Loss Position** |   |                                   |   |   |   |
|------------------------------------------------------|--------|--------------------------------------------------------------------------------|--------|----------------------------------------|--------|--------|--------|
|                                                 |   | Less                      than 12 months                                       |   | 12                      months or more |   | Total  |   |
|                                                 |   | Market                                                                         |   | Unrealized                             |   | Market |   | Unrealized |   | Market |   | Unrealized |   |
| *(in                      thousands)*                |   | Value                                                                          |   | Losses                                 |   | Value  |   | Losses |   | Value |   | Losses |   |
|                                                 |   |                                                                           |   |                                   |   |   |   |   |   |   |   |   |   |
| U.S.                      agency obligations         |   | $                                                                              | 2,960  |                                   | $      | (39    | )      | $ | 5,857 |   | $ | (152 | ) | $ | 8,817 |   | $ | (191 | ) |
| Corporate                      bonds                 |   |                                                                           | -      |                                   |   | -      |   |   | 2,020 |   |   | (75 | ) |   | 2,020 |   |   | (75 | ) |
| Municipal                      bonds                 |   |                                                                           | 2,549  |                                   |   | (15    | )      |   | - |   |   | - |   |   | 2,549 |   |   | (15 | ) |
| Mortgage-backed                      securities      |   |                                                                           | 7,365  |                                   |   | (120   | )      |   | 12,591 |   |   | (316 | ) |   | 19,956 |   |   | (436 | ) |
|                                                 |   |                                                                           |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                      investment securities** |   | $                                                                              | 12,874 |                                   | $      | (174   | )      | $ | 20,468 |   | $ | (543 | ) | $ | 33,342 |   | $ | (717 | ) |

**3.          Loans**

|                                                |   | 2005                                          |    | 2004   |   |
|-----------------------------------------------------|--------|-----------------------------------------------|---------|--------|--------|
|                                                |   | *(dollars                      in thousands)* |    |
| Commercial                      mortgages           |   | $                                             | 54,653  |   | $      | 38,186 |   |
| Commercial                      loans               |   |                                          | 22,726  |   |   | 19,227 |   |
| Residential                      mortgages          |   |                                          | 22,848  |   |   | 12,407 |   |
| Consumer                      and home equity loans |   |                                          | 11,317  |   |   | 9,409 |   |
|                                                |   |                                          | 111,544 |   |   | 79,229 |   |
| Less:                                               |   |                                          |    |   |   |   |   |
| Deferred                      loan origination fees |   |                                          | 225     |   |   | 205 |   |
| Allowance                      for loan losses      |   |                                          | 1,546   |   |   | 1,295 |   |
|                                                |   |                                          |    |   |   |   |   |
| **Loans                      receivable, net**      |   | $                                             | 109,773 |   | $      | 77,729 |   |
|                                                |   |                                          |    |   |   |   |   |
| **Weighted                      average yield**     |   |                                          | 6.66    | %      |   | 6.20 | % |

----

**Notes        to Consolidated Financial        Statements**

**3.        Loans**
*-        (Continued)*

|                                        |   | 2005                                |    | 2004   |   |
|---------------------------------------------|--------|-------------------------------------|---------|--------|--------|
|                                        |   | *(in                    thousands)* |    |
| Fixed                    rate:              |   |                                |    |   |   |   |   |
| Term                    to maturity         |   |                                |    |   |   |   |   |
| 1                    month through 1 year   |   | $                                   | 4,064   |   | $      | 6,134 |   |
| 1                    year through 3 years   |   |                                | 4,643   |   |   | 3,681 |   |
| 3                    years through 5 years  |   |                                | 10,192  |   |   | 8,630 |   |
| 5                    years through 10 years |   |                                | 12,691  |   |   | 8,456 |   |
| Over                    10 years            |   |                                | 4,724   |   |   | 3,978 |   |
|                                        |   |                                | 36,314  |   |   | 30,879 |   |
| Adjustable                    rate:         |   |                                |    |   |   |   |   |
| Rate                    adjustment          |   |                                |    |   |   |   |   |
| 1                    month through 1 year   |   |                                | 22,409  |   |   | 20,343 |   |
| 1                    year through 3 years   |   |                                | 15,594  |   |   | 7,577 |   |
| 3                    years through 5 years  |   |                                | 29,948  |   |   | 19,931 |   |
| 5                    years through 10 years |   |                                | 7,279   |   |   | 499 |   |
|                                        |   |                                | 75,230  |   |   | 48,350 |   |
| **Total                    loans**          |   | $                                   | 111,544 |   | $      | 79,229 |   |

|                                            |   | 2005                              |   | 2004   |   |
|-------------------------------------------------|--------|-----------------------------------|--------|--------|--------|
|                                            |   | *(in                  thousands)* |   |
| Balance                  at beginning of period |   | $                                 | 1,295  |   | $      | 988 |   |
| Provision                  for loan losses      |   |                              | 348    |   |   | 353 |   |
| Charge                  offs                    |   |                              | (114   | )      |   | (49 | ) |
| Recoveries                                      |   |                              | 17     |   |   | 3 |   |
|                                            |   |                              |   |   |   |   |   |
| **Balance                  at end of period**   |   | $                                 | 1,546  |   | $      | 1,295 |   |

----

**Notes      to Consolidated Financial Statements**
**4.        Premises and Equipment**

|                                                 |   | 2005                                |   | 2004   |   |
|------------------------------------------------------|--------|-------------------------------------|--------|--------|--------|
|                                                 |   | *(in                    thousands)* |   |
| Office                    building                   |   | $                                   | 660    |   | $      | 624 |   |
| Leasehold                    improvements            |   |                                | 757    |   |   | 751 |   |
| Furniture,                    fixtures and equipment |   |                                | 767    |   |   | 687 |   |
|                                                 |   |                                | 2,184  |   |   | 2,062 |   |
| Accumulated                    depreciation          |   |                                | 749    |   |   | 538 |   |
|                                                 |   |                                |   |   |   |   |   |
| **Premises                    and equipment, net**   |   | $                                   | 1,435  |   | $      | 1,524 |   |

|       |   |                                    |   |
|------------|--------|-----------------------------------------|--------|
|       |   | *(in                  thousands)*  |   |
|       |   |                                    |   |
| 2006       |   | $                                       | 193    |   |
| 2007       |   |                                    | 202    |   |
| 2008       |   |                                    | 207    |   |
| 2009       |   |                                    | 211    |   |
| 2010       |   |                                    | 223    |   |
| Thereafter |   |                                    | 811    |   |
| **Total**  |   | $                                       | 1,847  |   |

----

**Notes        to Consolidated Financial        Statements**

**5.        Deposits**

|                                                 |   | 2005                                                    |    |                                                            |  2004 |                |         |
|------------------------------------------------------|--------|---------------------------------------------------------|---------|-----------------------------------------------------------------|------------|---------------------|--------------|
|                                                 |   | *(dollars                    in thousands)*   |    |                                                            |
|                                                 |   | Amount                                                  |    | Weighted                      Average                      Rate |       |                |  Amount |   | Weighted                    Average                    Rate  |   |   |
| Non-interest                    checking             |   | $                                                       | 17,166  |                                                            |       | -    |  %      |   | $ | 12,300 |   |   | - |  % |   |
| Regular                    savings                   |   |                                                    | 22,575  |                                                            |       | 0.77                |         |   |   | 23,782 |   |   | 0.81 |   |   |
| Money                    market savings              |   |                                                    | 23,154  |                                                            |       | 2.23                |         |   |   | 21,326 |   |   | 1.40 |   |   |
| NOW                    accounts                      |   |                                                    | 4,707   |                                                            |       | 0.47                |         |   |   | 3,431 |   |   | 0.34 |   |   |
|                                                 |   |                                                    | 67,602  |                                                            |       | 1.05                |         |   |   | 60,839 |   |   | 0.83 |   |   |
|                                                 |   |                                                    |    |                                                            |       |                |         |   |   |   |   |   |   |   |   |
| Certificate                    accounts maturing in: |   |                                                    |    |                                                            |       |                |         |   |   |   |   |   |   |   |   |
| Under                    12 months                   |   |                                                    | 34,187  |                                                            |       | 3.42                |         |   |   | 35,117 |   |   | 2.53 |   |   |
| 12                    to 24 months                   |   |                                                    | 21,003  |                                                            |       | 3.52                |         |   |   | 5,629 |   |   | 2.90 |   |   |
| 24                    to 36 months                   |   |                                                    | 4,000   |                                                            |       | 3.68                |         |   |   | 3,171 |   |   | 3.48 |   |   |
| 36                    to 48 months                   |   |                                                    | 852     |                                                            |       | 4.43                |         |   |   | 2,990 |   |   | 3.88 |   |   |
| 48                    to 60 months                   |   |                                                    | 1,556   |                                                            |       | 4.89                |         |   |   | - |   |   | - |   |   |
|                                                 |   |                                                    | 61,598  |                                                            |       | 3.52                |         |   |   | 46,907 |   |   | 2.73 |   |   |
|                                                 |   |                                                    |    |                                                            |       |                |         |   |   |   |   |   |   |   |   |
| **Total                    deposits**                |   | $                                                       | 129,200 |                                                            |       | 2.23                |  %      |   | $ | 107,746 |   |   | 1.65 |  % |   |

----

**Notes        to Consolidated Financial Statements**

**6.      Borrowed Funds**

|                                      |   | 2005                                                    |   | 2004                    |   |
|-------------------------------------------|--------|-------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                      |   | Weighted                  Average                  Rate           |   |  Amount                  Due |   | Weighted                  Average                  Rate |   |  Amount                  Due |   |
| Year                  of Maturity:        |   |                                                              |   |                         |   |   |   |    |   |
|                                      |   | *(dollars                  in thousands)*     |   |
|                                      |   |                                                              |   |                         |   |   |   |    |   |
| *FHLB                  Advances:*         |   |                                                              |   |                              |   |   |   |   |   |   |   |   |   |
| 2006                                      |   |                                                              | 4.35   | %                                 | $      | 9,875 |   |   | 2.56 | % | $ | 9,400 |   |
| 2007                                      |   |                                                              | 4.49   |                              |   | 2,653 |   |   | 3.13 |   |   | 1,250 |   |
| 2008                                      |   |                                                              | 2.95   |                              |   | 872 |   |   | 3.81 |   |   | 460 |   |
| 2012                                      |   |                                                              | 4.72   |                              |   | 569 |   |   | 2.95 |   |   | 929 |   |
| 2016                                      |   |                                                              | 4.77   |                              |   | 1,050 |   |   | 4.72 |   |   | 640 |   |
| Subtotal                  - FHLB Advances |   |                                                              | 4.34   |                              |   | 15,019 |   |   | 2.80 |   |   | 12,679 |   |
|                                      |   |                                                              |   |                              |   |   |   |   |   |   |   |   |   |
| *Subordinated                  Debt:*     |   |                                                              |   |                              |   |   |   |   |   |   |   |   |   |
| 2035                                      |   |                                                              | 6.42   |                              |   | 4,098 |   |   | - |   |   | - |   |
|                                      |   |                                                              |   |                              |   |   |   |   |   |   |   |   |   |
| **Total                  borrowed funds** |   |                                                              | 4.79   | %                                 | $      | 19,117 |   |   | 2.80 | % | $ | 12,679 |   |

----

**Notes        to Consolidated Financial        Statements**

**7.        Income Taxes**

|                                      |   | 2005                                |   | 2004   |   | 2003   |   |
|-------------------------------------------|--------|-------------------------------------|--------|--------|--------|--------|--------|
|                                      |   | *(in                    thousands)* |   |
| Current:                                  |   |                                |   |   |   |   |   |   |   |   |
| Federal                                   |   | $                                   | 431    |   | $      | 385    |   | $ | 177 |   |
| State                                     |   |                                | 113    |   |   | 92     |   |   | 27 |   |
| Total                    current          |   |                                | 544    |   |   | 477    |   |   | 204 |   |
| Deferred:                                 |   |                                |   |   |   |   |   |   |   |   |
| Federal                                   |   |                                | (73    | )      |   | (99    | )      |   | (52 | ) |
| State                                     |   |                                | (19    | )      |   | (11    | )      |   | (5 | ) |
| Total                    deferred         |   |                                | (92    | )      |   | (110   | )      |   | (57 | ) |
|                                      |   |                                |   |   |   |   |   |   |   |   |
|                                      |   |                                |   |   |   |   |   |   |   |   |
| **Income                    tax expense** |   | $                                   | 452    |   | $      | 367    |   | $ | 147 |   |

|                                                   |   | 2005                              |   | 2004   |   | 2003   |   |
|--------------------------------------------------------|--------|-----------------------------------|--------|--------|--------|--------|--------|
|                                                   |   | *(in                  thousands)* |   |
| Tax                  on income at statutory rates      |   | $                                 | 408    |   | $      | 319    |   | $ | 132 |   |
| Increase                  (decrease) resulting from:   |   |                              |   |   |   |   |   |   |   |   |
| State                  tax, net of federal tax benefit |   |                              | 61     |   |   | 53     |   |   | 15 |   |
| Other                  items, net                      |   |                              | (17    | )      |   | (5     | )      |   | - |   |
|                                                   |   |                              |   |   |   |   |   |   |   |   |
| **Income                  tax expense**                |   | $                                 | 452    |   | $      | 367    |   | $ | 147 |   |
|                                                   |   |                              |   |   |   |   |   |   |   |   |

|                                                        |   | 2005                              |   | 2004   |   |
|-------------------------------------------------------------|--------|-----------------------------------|--------|--------|--------|
|                                                        |   | *(in                  thousands)* |   |
| Deferred                  tax receivable:                   |   |                              |   |   |   |   |   |
| Reserve                  for loan losses                    |   | $                                 | 579    |   | $      | 496 |   |
| Deferred                  income for books previously taxed |   |                              | 88     |   |   | 80 |   |
| Available-for-sale                  securities              |   |                              | 277    |   |   | 97 |   |
|                                                        |   |                              | 944    |   |   | 673 |   |
| Deferred                  tax payable:                      |   |                              |   |   |   |   |   |
| Depreciation                                                |   |                              | (40    | )      |   | (41 | ) |
|                                                        |   |                              | (40    | )      |   | (41 | ) |
|                                                        |   |                              |   |   |   |   |   |
| **Net                  deferred tax receivable**            |   | $                                 | 904    |   | $      | 632 |   |

----

**Notes        to Consolidated Financial        Statements**

**8.        Regulatory Matters**

*Regulatory        Capital*

|                                                |   | 2005                                                     |   | 2004  |   |
|-----------------------------------------------------|--------|---------------------------------------------------------------|--------|------------|--------|
| ***First                    Valley Bancorp, Inc.*** |   | Amount                                                   |   | Ratio      |   | Amount  |   | Ratio |   |
|                                                |   |  *(dollars                    in thousands)*   |   |
| Tier                    1 leverage                  |   | $                                                             | 13,340 |       |   | 8.80 | % |   | n/a |   |   | n/a |   |
|                                                |   |                                                          |   |       |   |   |   |   |   |   |   |   |   |
| Tier                    1 risk-based capital        |   |                                                          | 13,340 |       |   | 11.58 |   |   | n/a |   |   | n/a |   |
|                                                |   |                                                          |   |       |   |   |   |   |   |   |   |   |   |
| Total                    risk-based capital         |   |                                                          | 14,780 |       |   | 12.83 |   |   | n/a |   |   | n/a |   |

----

**Notes        to Consolidated Financial        Statements**

**8.        Regulatory Matters - **
*(Continued)*

|                                         |   | 2005                                                     |   | 2004  |   |
|----------------------------------------------|--------|---------------------------------------------------------------|--------|------------|--------|
| ***Valley                    Bank***         |   | Amount                                                   |   | Ratio      |   | Amount  |   | Ratio |   |
|                                         |   |  *(dollars                    in thousands)*   |   |
| Tier                    1 leverage           |   | $                                                             | 13,355 |       |   | 8.81 | % | $ | 9,318 |   |   | 7.24 | % |
|                                         |   |                                                          |   |       |   |   |   |   |   |   |   |   |   |
| Tier                    1 risk-based capital |   |                                                          | 13,355 |       |   | 11.60 |   |   | 9,318 |   |   | 10.50 |   |
|                                         |   |                                                          |   |       |   |   |   |   |   |   |   |   |   |
| Total                    risk-based capital  |   |                                                          | 14,795 |       |   | 12.86 |   |   | 10,429 |   |   | 11.75 |   |

**9.        Employee Benefits**

**10.        Comprehensive Income**

|                                                                                  |   | 2005                                |   | 2004                     |   | 2003                     |   |
|---------------------------------------------------------------------------------------|--------|-------------------------------------|--------|--------------------------|--------|--------------------------|--------|
|                                                                                  |   | *(in                    thousands)* |   |
| **Net                    income**                                                     |   | $                    749            |   | $                    572 |   | $                    241 |   |
|                                                                                  |   |                                |   |                     |   |                     |   |
| **Other                    comprehensive income (loss):**                             |   |                                |   |                     |   |                     |   |   |   |   |
| Unrealized                    holding gains (losses) on securities available-for-sale |   |                                | (461   | )                        |   | (149                     | )      |   | (204 | ) |
| Reclassification                    adjustment for gain recognized in net income      |   |                                | -      |                     |   | (6                       | )      |   | (42 | ) |
|                                                                                  |   |                                |   |                     |   |                     |   |   |   |   |
| **Other                    comprehensive income (loss) before tax expense**           |   |                                | (461   | )                        |   | (155                     | )      |   | (246 | ) |
| Income                    tax expense related to items of other                       |   |                                |   |                     |   |                     |   |   |   |   |
| comprehensive                    income (loss)                                        |   |                                | 180    |                     |   | 58                       |   |   | 95 |   |
| **Other                    comprehensive income (loss) net of tax**                   |   |                                | (281   | )                        |   | (97                      | )      |   | (151 | ) |
|                                                                                  |   |                                |   |                     |   |                     |   |   |   |   |
| **Total                    comprehensive income**                                     |   | $                                   | 468    |                     | $      | 475                      |   | $ | 90 |   |

----

**Notes        to Consolidated Financial        Statements**

**11.        Financial Instruments**
** **

|                                             |   | 2005                                |   | 2004   |   |
|--------------------------------------------------|--------|-------------------------------------|--------|--------|--------|
|                                             |   | *(in                    thousands)* |   |
| Commitments                    to extend credit: |   |                                |   |   |   |   |   |
| Loan                    commitments              |   | $                                   | 11,684 |   | $      | 2,987 |   |
| Unadvanced                    lines of credit    |   |                                | 21,931 |   |   | 16,572 |   |
| Standby                    letters of credit     |   |                                | 1,089  |   |   | 504 |   |
|                                             |   |                                |   |   |   |   |   |
| **Outstanding                    commitments**   |   | $                                   | 34,704 |   | $      | 20,063 |   |

----

**Notes          to Consolidated Financial          Statements**
**11.        Financial Instruments -**
*(Continued)*

|                                           |   | 2005                                                       |    | 2004                                                  |   |
|------------------------------------------------|--------|------------------------------------------------------------|---------|-------------------------------------------------------|--------|
|                                           |   |                    Carrying                    Amount |    |                    Fair                    Value |   |                    Carrying Amount |   |                    Fair                    Value |   |
|                                           |   | *(in                    thousands)*                        |    |
| Financial                    assets            |   |                                                       |    |                                                  |   |   |   |   |   |   |   |   |   |
| Cash                    and cash equivalents   |   | $                                                          | 12,667  |                                                  | $      | 12,667 |   | $ | 10,033 |   | $ | 10,033 |   |
| Investment                    securities       |   |                                                       | 33,907  |                                                  |   | 33,907 |   |   | 39,548 |   |   | 39,548 |   |
| Loans                    receivable            |   |                                                       | 109,773 |                                                  |   | 109,466 |   |   | 77,729 |   |   | 76,785 |   |
| Accrued                    income receivable   |   |                                                       | 680     |                                                  |   | 680 |   |   | 560 |   |   | 560 |   |
|                                           |   |                                                       |    |                                                  |   |   |   |   |   |   |   |   |   |
| Financial                    liabilities       |   |                                                       |    |                                                  |   |   |   |   |   |   |   |   |   |
| Deposits                                       |   |                                                       | 129,200 |                                                  |   | 123,759 |   |   | 107,746 |   |   | 103,481 |   |
| Borrowed                    funds              |   |                                                       | 19,117  |                                                  |   | 18,963 |   |   | 12,679 |   |   | 12,510 |   |
| Mortgagors'                    escrow accounts |   |                                                       | 176     |                                                  |   | 176 |   |   | 150 |   |   | 150 |   |

**12.          Employee and Director Benefit Plan**

----

**Notes          to Consolidated Financial Statements**

|                                                    |   | **2005**                                                   |    | **2004**                                             |   | **2003**                                                   |   |
|---------------------------------------------------------|--------|------------------------------------------------------------|---------|------------------------------------------------------|--------|------------------------------------------------------------|--------|
|                                                    |   | Number                      of                      shares |    | Weighted                      Average Exercise Price |   | Number                      of                      shares |   | Weighted                      Average Exercise Price |   | Number                      of                      shares |   | Weighted                      Average Exercise Price |   |
|                                                    |   |                                                       |    |                                                 |   |                                                       |   |   |   |   |   |   |   |
| Outstanding                      at beginning of year   |   |                                                       | 124,050 |                                                 | $      | 8.21                                                       |   |   | 118,000 |   | $ | 8.14 |   |   | 70,810 |   | $ | 7.51 |   |
| Granted                                                 |   |                                                       | -       |                                                 |   | -                                                          |   |   | 6,050 |   |   | 9.50 |   |   | 47,190 |   |   | 9.09 |   |
| Exercised                                               |   |                                                       | -       |                                                 |   | -                                                          |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Forfeited                                               |   |                                                       | -       |                                                 |   | -                                                          |   |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                    |   |                                                       |    |                                                 |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding                      at end of year         |   |                                                       | 124,050 |                                                 | $      | 8.21                                                       |   |   | 124,050 |   | $ | 8.21 |   |   | 118,000 |   | $ | 8.14 |   |
|                                                    |   |                                                       |    |                                                 |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options                      exercisable at end of year |   |                                                       | 124,050 |                                                 | $      | 8.21                                                       |   |   | 124,050 |   | $ | 8.21 |   |   | 112,454 |   | $ | 8.17 |   |

**13.            Stock Split**

----

**Notes              to Consolidated Financial Statements**

**14.            Parent Company Only Financial Statements**

**Statement            of Financial Condition**

|                                                                  |   |                                    |   |
|-----------------------------------------------------------------------|--------|-----------------------------------------|--------|
| **As                        of December 31, 2005**                    |   |
|                                                                  |   | *(in                        thousands)* |   |
| **ASSETS**                                                            |   |                                    |   |
| Cash                        and due from depository institutions      |   | $                                       | 714    |   |
| Accrued                        income receivable                      |   |                                    | 1      |   |
| Investment                        in Valley Bank                      |   |                                    | 13,040 |   |
| Other                        assets                                   |   |                                    | 196    |   |
|                                                                  |   |                                    |   |   |
| **Total                        assets**                               |   | $                                       | 13,951 |   |
|                                                                  |   |                                    |   |   |
|                                                                  |   |                                    |   |   |
|                                                                  |   |                                    |   |   |
| **LIABILITIES                        AND STOCKHOLDERS' EQUITY**       |   |                                    |   |   |
| Liabilities                                                           |   |                                    |   |   |
| Subordinated                        debentures, net                   |   | $                                       | 4,098  |   |
| Other                        liabilities                              |   |                                    | 28     |   |
| Total                        liabilities                              |   |                                    | 4,126  |   |
|                                                                  |   |                                    |   |   |
|                                                                  |   |                                    |   |   |
| Stockholders'                        Equity                           |   |                                    | 9,825  |   |
|                                                                  |   |                                    |   |   |
| **Total                        liabilities and stockholders' equity** |   | $                                       | 13,951 |   |

----

**Notes        to Consolidated Financial Statements**

**Statements          of Income**

| **For                    the year ended December 31, 2005**             |   |
|-------------------------------------------------------------------------|--------|
|                                                                    |   | *(in                    thousands)* |   |
| **Interest                    income and expense**                      |   |   |   |   |
| Dividend                    from subsidiary                             |   | $ | 125 |   |
| Interest                    and dividend income on investments          |   |   | 3 |   |
| Interest                    expense on borrowed funds                   |   |   | 115 |   |
| Net                    interest income                                  |   |   | 13 |   |
|                                                                    |   |   |   |   |
| **Noninterest                    expense**                              |   |   |   |   |
| Organizational                    expenses                              |   |   | 98 |   |
| Other                    noninterest expense                            |   |   | 2 |   |
| Total                    noninterest expense                            |   |   | 100 |   |
|                                                                    |   |   |   |   |
| **Loss                    before income tax benefit and equity**        |   |   |   |   |
|  **in                    undistributed net income of subsidiary**  |   |   | (88 | ) |
|                                                                    |   |   |   |   |
| **Income                    tax benefit**                               |   |   | (72 | ) |
|                                                                    |   |   |   |   |
| **Loss                    before equity in undistributed net**          |   |   |   |   |
|  **income                    of subsidiary**                       |   |   | (16 | ) |
|                                                                    |   |   |   |   |
| **Equity                    in undistributed net income of subsidiary** |   |   | 765 |   |
|                                                                    |   |   |   |   |
| **Net                    income**                                       |   | $ | 749 |   |

----

**Notes        to Consolidated Financial        Statements**

**14.        Parent Company Only Financial Statements -**
*(Continued)*

**Statement        of Cash flows**

| **For                    the year ended December 31, 2005**         |   |
|---------------------------------------------------------------------|--------|
|                                                                |   | *(in                    thousands)* |   |
| **Cash                    flows from operating activities**         |   |   |   |
| Net                    income                                       |   | $                    749 |   |
| Adjustments                    to reconcile net income to cash      |   |   |   |   |
| provided                    by operating activities:                |   |   |   |   |
| Equity                    in undistributed net income of subsidiary |   |   | (765 | ) |
| Amortization                    of debt issuance costs              |   |   | 2 |   |
| Net                    change in:                                   |   |   |   |   |
| Accrued                    interest receivable                      |   |   | (1 | ) |
| Accrued                    interest payable                         |   |   | 29 |   |
| Change                    in other assets                           |   |   | (196 | ) |
|                                                                |   |   |   |   |
| **Net                    cash provided by operating activities**    |   |   | (182 | ) |
|                                                                |   |   |   |   |
| **Cash                    flows from investing activities**         |   |   |   |   |
| Payments                    for investments in and advances         |   |   |   |   |
| to                    subsidiaries                                  |   |   | (3,200 | ) |
| **Net                    cash used by investing activities**        |   |   | (3,200 | ) |
|                                                                |   |   |   |   |
| **Cash                    flows from financing activities**         |   |   |   |   |
| Proceeds                    from borrowed funds                     |   |   | 4,096 |   |
| Proceeds                    from advances from subsidiaries         |   |   | - |   |
| **Net                    cash provided by financing activities**    |   |   | 4,096 |   |
| Increase                    in cash and cash equivalents            |   |   | 714 |   |
| Cash                    and cash equivalents at beginning of year   |   |   | - |   |
| **Cash                    and cash equivalents at end of year**     |   | $ | 714 |   |

----