EXHIBIT 13.1

Table Of Contents

|                                            |   
|------------------------------------------- | --
|Chairman's
      Message                    | 3 
|Financial
      Highlights                  | 4 
|Management's
      Discussion & Analysis    | 6 
|Market
      for the Company's Common Stock | 16
|Independent
      Auditors' Report          | 17
|Consolidated
      Financial Statements     | 18
|Corporate
      Information                 | 54

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Chairmans
  Message

Dear Stockholder:

Rome Savings Bank remained a strong
competitor among our areas financial institutions at the end of 2004, continuously
dedicated to proving high quality, personal service to our customers and increasing value
to our stockholders.

Our employees collective
commitment to our customers and the Banks fundamental business strength are largely
responsible for our success in a challenging local economy and a very competitive national
market. We have proven our resilience, our commitment to our community, and remain strong,
secure, and profitable.

We take our responsibilities to you,
our stockholders, and our customers very seriously; as evidenced by doubling our quarterly
dividend from .073 cents to .15 cents. Our Board of Directors strives to provide the
leadership and support needed to guide our organization to a higher measure of achievement
each year.

The ongoing marketing of the
Banks checking program netted us over 1,100 new checking accounts in 2004. This
program, coupled with the Banks innovative internal sales culture, focused our goals
on relationship-building and cross-selling, thereby increasing our overall net income.

We enjoyed significant lending
increases in the commercial and residential lending areas. An expanded lending territory
and increased sales calling activities contributed substantially to this growth. Our
continued participation in many community events also added to our visibility and positive
public image in both the business and retail environments.

We are pleased with the result of
operations for 2004. Our net interest margin, the core of the Companys earnings,
remained strong; as did our asset quality. We firmly believe we have a solid foundation
for the challenges and opportunities that await us in 2005.

The coming year promises to be an
exciting one for the Bank. We sincerely appreciate your loyal and continued support of our
efforts and accomplishments.

Sincerely,

Charles M. Sprock
Chairman of the Board
President
CEO

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The summary information presented
below at or for each of the five years in the period ended December 31, 2004 is derived in
part from and should be read in conjunction with the consolidated financial statements and
notes thereto included with this Annual Report.

SELECTED
  FINANCIAL AND OTHER DATA
  (in thousands)

|                                   | At December 31,
|---------------------------------- | ---------------
|
|Selected Financial Condition Data: |                
|Total assets                       |                
|Loans, net                         |                
|Securities                         |                
|Total cash and cash equivalents    |                
|Total deposits                     |                
|Borrowings                         |                
|Total equity                       |                
|Allowance for loan losses          |                
|Non-performing loans               |                
|Non-performing assets              |                



|                                             | 2004 | 2003 | 2002 | 2001   | 2000
|-------------------------------------------- | ---- | ---- | ---- | ------ | ----
|Selected Operating Data:                     |      |      |      |        |     
|Interest income                              |      |      | $    | 14,498 |     
|Interest expense                             |      |      |      | 3,042  |     
|                                             |      |      |      |        |     
|Net interest  income                         |      |      |      | 11,456 |     
|Provision for loan losses                    |      |      |      | 390    |     
|                                             |      |      |      |        |     
|Net interest income after provision for loan |      |      |      | 11,066 |     
|losses                                       |      |     
|Non-interest income:                         |      |     
|Service charges and other income             |      |      |      | 1,596  |     
|Net  gain (loss) on securities transactions  |      |      |      | 176    |     
|                                             |      |      |      |        |     
|Total non-interest income                    |      |      |      | 1,772  |     
|Total non-interest expense                   |      |      |      | 9,102  |     
|                                             |      |      |      |        |     
|Income before income taxes                   |      |      |      | 3,736  |     
|Income taxes                                 |      |      |      | 1,336  |     
|                                             |      |      |      |        |     
|Net income                                   |      |      | $    | 2 ,400 |     
|                                             |      |      |      |        |     

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|                                                 | At or for the
Year Ended December 31,
|------------------------------------------------ | -------------------------------------
|
|Selected Financial Ratios and Other Data         |                                      
|Performance Ratios:                             
|Basic earnings per share                         | $0.59                                
|Diluted earnings per share                       | $0.57                                
|Return on average assets                         | 0.91%                                
|Return on average equity                         | 6.67%                                
|Net interest rate spread (tax equivalent)        | 4.41%                                
|Net interest margin (tax equivalent)             | 4.73%                                
|Non-interest expense to average assets           | 3.45%                                
|Efficiency Ratio (1)                             | 68.72%                               
|Average interest earning assets to              
|average interest-bearing liabilities             | 125.61%                              
|                                                
|Capital Ratios:                                 
|Average equity to average assets                 | 13.63%                               
|Equity to total assets at end of period          | 13.52%                               
|Book value per share                             | $8.57                                
|                                                
|Regulatory Capital Ratios: (2)                  
|Core capital (Tier 1 capital)                    | 11.03%                               
|Total Risk-based capital                         | 15.36%                               
|                                                
|Asset Quality Ratios:                           
|Nonperforming loans as percent of loans          | 0.36%                                
|Nonperforming assets as percent of total ;assets | 0.31%                                
|Allowance for loan losses as a percent of loans  | 0.86%                                
|Allowance for loan losses as a percent of       
|non-performing loans                             | 241.3%                               
|                                                
|Other Data:                                     
|Number of:                                      
|Deposit accounts                                 | 35,136                               
|Full service offices                             | 4                                    

Note:  All per share  amounts  have
 been  adjusted  to  reflect  the  Company's three-for-two stock split effective June 16,
2003.

|(1) | Non-interest expense divided by the sum of net interest income, the tax
          equivalent adjustment on tax-exempt municipal securities and other non-interest
          income.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The regulatory capital ratios for the year ended December 31, 2004 are for Rome
          Savings only; the regulatory capital ratios for all other periods are for Rome
          Savings and Rome Bancorp on a consolidated basis. Due to Rome Savings
          conversion to a Federal savings bank on April 27, 2004, Rome Bancorp is no
          longer subject to formula based capital requirements at a holding Company Level.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Managements
  Discussion and Analysis

Forward-Looking Statements

Statements included in this
discussion and in future filings by Rome Bancorp, Inc. with the Securities and Exchange
Commission, in Rome Bancorp, Inc. press releases, and in oral statements made with the
approval of an authorized executive officer, which are not historical or current facts,
are forward-looking statements made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995, and are subject to certain risks and
uncertainties that could cause actual results to differ materially from historical
earnings and those presently anticipated or projected. Rome Bancorp, Inc. wishes to
caution readers not to place undue reliance on such forward-looking statements, which
speak only as of the date made. The following important factors, among others, in some
cases have affected and in the future could affect Rome Bancorp, Inc. actual results, and
could cause Rome Bancorp, Inc. actual financial performance to differ materially from that
expressed in any forward-looking statement: (1) competitive pressures among depository and
other financial institutions may increase significantly; (2) revenues may be lower than
expected; (3) changes in the interest rate environment may reduce interest margins; (4)
general economic conditions, either nationally or regionally, may be less favorable than
expected, resulting in, among other things, a deterioration in credit quality and/or a
reduced demand for credit; (5) legislative or regulatory changes, including changes in
accounting standards, may adversely affect the business in which the Company is engaged;
(6) competitors may have greater financial resources and developed products that enable
such competitors to compete more successfully than the Company; and (7) adverse changes
may occur in the securities markets or with respect to inflation. The foregoing list
should not be construed as exhaustive, and Rome Bancorp, Inc. disclaims any obligation to
subsequently revise any forward-looking statements to reflect events or circumstances
after the date of such statements, or to reflect the occurrence of anticipated or
unanticipated events.

General

Rome Bancorp, Inc. (the
Company) commenced operations on October 6, 1999, when The Rome Savings Bank
(the Bankor Rome Savings ) converted from a New York mutual
savings bank to a New York mutual holding company structure whereby the Bank became a
wholly-owned subsidiary of the Company, a majority owned subsidiary of Rome, MHC. In
connection with the reorganization, the Company sold 2,397,548 shares of common stock to
the public and issued 102,023 shares to The Rome Savings Bank Foundation and 2,601,594
shares to Rome, MHC, its mutual holding company parent.

On October 15, 2003, the Board of
Directors of the Company and the Bank adopted a Plan of Charter Conversion pursuant to
which the Bank converted from a New York-chartered savings bank regulated by the New York
State Banking Department and the Federal Deposit Insurance Corporation to a federal
savings bank regulated by the Office of Thrift Supervision (OTS). The Company remains a
Delaware-chartered holding company but is now regulated as a savings and loan holding
company by the OTS. The Charter Conversion was completed on April 27, 2004.

On November 11, 2004, the Boards of
Directors of Rome, MHC (the Mutual Holding Company), the Company and The Rome
Savings Bank (the Bank) (collectively, Rome) unanimously adopted a
Plan of Conversion and Agreement and Plan of Reorganization (the Plan of
Conversion), under the terms of which Rome will undertake a second-step
conversion, and the Bank will reorganize from the two-tier mutual holding company
structure to the stock holding company structure.

The Company is a Delaware corporation
whose sole business is conducted by its wholly-owned subsidiary, the Bank. The Banks
principal business is accepting deposits from the general public and using those deposits
to make residential and commercial real estate loans, as well as commercial and consumer
loans to individuals and small businesses primarily in Oneida County and also

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elsewhere in
New York State. The Bank also invests in long and short-term marketable securities and
other liquid investments.

Overview

The following discussion focuses on
the factors affecting the consolidated financial condition and the results of operations
of Rome Bancorp, Inc. for the two years ended December 31, 2004. The consolidated
financial statements and related notes as of December 31, 2004 and 2003 should be read in
conjunction with this review.

The preparation of consolidated
financial statements requires management to make estimates and assumptions. Changes in
these estimates and assumptions affect the reported amounts of certain assets,
liabilities, revenue and expenses. Different amounts could be reported under different
conditions, or if different assumptions were used in the application of these accounting
policies.

The Banks results of operations
depend primarily on its net interest income, which is the difference between the interest
income it earns on its loans and investments and the interest it pays on its deposits and
other interest-bearing liabilities. Net interest income is affected by the relative
amounts of interest-bearing assets and interest-bearing liabilities and the interest rates
earned or paid on these balances. The Banks operations are also affected by
non-interest income, such as service fees and gains and losses on sales of securities, the
provision for loan losses and non-interest expense such as salaries and employee benefits,
occupancy costs, and other general and administrative expenses. Financial institutions in
general, including the Bank, are significantly affected by economic conditions,
competition and the monetary and fiscal policies of the federal government. Lending
activities are influenced by the demand for and supply of housing, competition among
lenders, interest rate conditions and funds availability. The Banks operations and
lending are principally concentrated in the Central New York area, therefore its
operations and earnings are influenced by the economics of the area it operates in.
Deposit balances and cost of funds are influenced by prevailing market rates on competing
investments, customer preferences and levels of personal income and savings in the
Banks primary market area.

Net income for 2004 was $2.4 million
as compared to $1.5 million in the prior year. The significant factors and trends
impacting 2004, which are discussed in greater depth below, were as follows:

| |  | Non-interest income increased $259,000 in 2004 (exclusive of the 2003 $1.0 million
(pre-tax) impairment charge discussed below) primarily due to increased fee revenue from
the introduction of a comprehensive personal checking program in late 2003. Gains on
securities sales were $176,000 in 2004, down from $348,000 in 2003, as the Company sold
fewer securities. In the third quarter of 2003, the Company as part of its continual
review of long lived asset values recorded an other than temporary impairment charge
against its holding in a blue chip mutual fund. The resulting impairment charge of $1.0
million (pre-tax) was recorded to lower the carrying value of this security to the then
current fair market value of $5.1 million. This charge reduced 2003 net earnings by
$636,000, or $0.15 per diluted share.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 2004 net interest income increased by $260,000 or 2.3% over the prior year. This
improvement is principally due to a lower cost of funds in 2004. The Companys ratio
of interest earning assets to interest bearing liabilities decreased from 128.15% in 2003
to 125.61% in the current year, while net interest margin increased slightly from 4.70% in
2003 to 4.73% in 2004.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Non-interest expense was $9.1 million in 2004, up from $8.8 million in the prior year.
Much of this increase is attributable to administrative costs incurred related to new
product offerings and operating costs necessitated by the upgrade of the Banks core
processing system in mid-2003.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Companys provision for loan losses was $390,000 in 2004, a decrease of $120,000
from $510,000 in the prior year, primarily due to improvements in the Companys asset
quality.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Critical Accounting
Policies

It is managements opinion that
accounting estimates covering certain aspects of the business have more significance than
others due to the relative importance of those areas to overall performance, or the level
of subjectivity required in making these estimates. Management of the Company considers
the accounting policy relating to the allowance for loan losses to be a critical
accounting policy given the uncertainty in evaluating the level of the allowance required
for probable credit losses and the material effect that such judgments can have on the
results of operations. Managements quarterly evaluation of the adequacy of the
allowance considers the Companys historical loan loss experience, review of specific
loans, current economic conditions and such other factors considered appropriate to
estimate losses. Management uses presently available information to estimate probable
losses on loans; however, future additions to the allowance may be necessary based on
changes in estimates, assumptions or economic conditions. Significant factors that could
give rise to changes in these estimates include, but are not limited to, changes in
economic conditions in the local area, concentrations of risk and declines of local
property values.

Management also considers the
accounting policy relating to the impairment of long lived assets to be a critical
accounting policy due to the subjectivity and judgment involved and the material effect an
impairment loss could have on the results of operations. A decline in the fair value of
long lived asset below cost that is deemed to be other than temporary is charged to
earnings resulting in the establishment of a new cost basis for the asset. Management
continually reviews the current value of its long lived assets for evidence of other than
temporary impairment.

These critical policies and their
application are reviewed periodically by the Audit Committee and the Board of Directors.
All accounting policies are important, and as such, we encourage the reader to review each
of the policies included in Note 2 to the Consolidated Financial Statements to obtain a
better understanding of how our financial performance is reported.

Management of Interest
Rate Risk

Interest rate risk is the most
significant market risk affecting Rome Bancorp. Other types of market risk, such as
movements in foreign currency exchange rates and commodity prices, do not arise in the
normal course of Rome Bancorps business operations. Interest rate risk can be
defined as an exposure to a movement in interest rates that could have an adverse effect
on Rome Bancorps net interest income. Interest rate risk arises naturally from the
imbalance in the repricing, maturity, and/or cash flow characteristics of assets and
liabilities. In periods of falling interest rates, prepayments of loans typically
increase, which would lead to reduced net interest income if such proceeds could not be
reinvested at a comparable spread. Also in a falling rate environment, certain categories
of deposits may reach a point where market forces prevent further reduction in the
interest rate paid on those instruments. Generally, during extended periods when
short-term and long-term interest rates are relatively close, a flat yield curve may lead
to smaller net interest margins thereby reducing net interest income. The net effect of
these circumstances is reduced interest income, offset only by a nominal decrease in
interest expense, thereby narrowing the net interest margin.

Managing interest rate risk is of
primary importance to Rome Bancorp. The responsibility for interest rate risk management
is the function of Rome Bancorps Asset/Liability Committee (ALCO), which
includes the President and Chief Executive Officer, Treasurer and Chief Financial Officer,
and certain members of Rome Bancorps Board of Directors. Rome Bancorps ALCO
meets at least monthly to review Rome Bancorps asset/liability policies and identify
and measure potential risks to earnings due to changes in interest rates. The primary goal
of Rome Bancorps interest rate risk management is to minimize the potential loss in
net interest income that could arise from changes in interest rates.

A simulation model is the primary
tool used to assess the impact of changes in interest rates on net interest income. Key
assumptions used in the model include prepayment speeds on loans and mortgage-backed
securities, loan volumes and pricing and customer preferences, and sensitivity to

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changing
rates. These assumptions are compared to actual results and revised as necessary. Rome
Bancorps analysis compares net interest income under a scenario of no change from
current interest rates with one of a 100, 200 and 300, respectively, basis point increase
in interest rates and one of a 100 basis point decrease in rates. The change in interest
rates is assumed to occur in the first twelve months following the current financial
statement date. Net interest income is measured for each of the three twelve-month periods
following the balance sheet date. Rome Bancorps policy is that net interest income
should not vary by more than 20% for each of the three forecasted twelve-month periods. At
December 31, 2004, based on simulation model results, Rome Bancorp was within these
guidelines.

The following table sets forth at
December 31, 2004 the estimated percentage and dollar change in Rome Bancorps net
interest income over a one year period and the market value of portfolio equity based on
the indicated changes in interest rates. Certain assumptions have been made in preparing
the table below. Although management believes these assumptions to be reasonable, the
interest rate sensitivity of assets and liabilities and the estimated effects of changes
in interest rates on net interest income and the market value of portfolio equity
indicated in the following table could vary substantially if different assumptions were
used or if actual experience differs from such assumptions.

|     | Net Interest Income | Market Value of Portfolio Equity
Based on December 31, 2004
|---- | ------------------- | -----------------------------------------------------------
|
|
|+300 |                     |                                                            
|+200 |                     |                                                            
|+100 |                     |                                                            
|Base |                     |                                                            
|-100 |                     |                                                            

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(1)    
          Assumes an instantaneous uniform change in interest rates. Basis point equals
          0.01%



Analysis of Net Interest
Income.Average Balances, Interest and
Average Yields The following table sets forth certain information relating to the
Companys average balance sheets and reflects the average yield on interest-earnings
assets and average cost of interest-bearing liabilities, interest earned and interest paid
for the periods indicated. Such yields and costs are derived by dividing income or expense
by the average balance of interest-earning assets or interest-bearing liabilities,
respectively, for the periods presented. Average balances are derived from daily balances
over the periods indicated. The average balances for loans are net of allowance for loan
losses, but include non-accrual loans. Interest income on securities include a tax
equivalent adjustment for bank qualified municipals.

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|                                                | Average Balances, Interest and Average Yields
|----------------------------------------------- | ---------------------------------------------
|
|
|
|Assets:                                        
|Interest-earning assets:                        |                                              
|Loans                                           |                                              
|Securities                                      |                                              
|Federal funds sold & other                      |                                              
|interest bearing deposits                       |                                              
|                                                |                                              
|Total interest-earnings assets                  |                                              
|Noninterest-earning assets                      |                                              
|                                                |                                              
|Total assets                                    |                                              
|                                                |                                              
|**Liabilities
      and Shareholders' Equity:** |                                              
|Interest-bearing liabilities:                   |                                              
|Savings accounts                                |                                              
|Time deposits                                   |                                              
|Money market accounts                           |                                              
|Other interest bearing deposits                 |                                              
|                                                |                                              
|Total interest-bearing deposits                 |                                              
|Borrowings                                      |                                              
|                                                |                                              
|Total interest-bearing liabilities              |                                              
|                                                |                                              
|Noninterest-earning deposits                    |                                              
|Other liabilities                               |                                              
|                                                |                                              
|Total liabilities                               |                                              
|Shareholders' equity                            |                                              
|                                                |                                              
|Total liabilities and shareholders' equity      |                                              
|                                                |                                              
|Net interest income                             |                                              
|Tax equivalent adjustment on securities         |                                              
|                                                |                                              
|Net interest income per consolidated            |                                              
|financial statements                            |                                              
|                                                |                                              
|Net interest rate spread                        |                                              
|Net interest margin                             |                                              
|Ratio of interest-earning assets to             |                                              
|interest-bearing liabilities                    |                                              

Rate Volume Analysisanalyzes the
dollar amount of changes in interest income and interest expense for major components of
interest-earning assets and interest-bearing liabilities. It shows the amount of the
change in interest income or expense caused by either changes in outstanding balances
(volume) or changes in interest rates. The effect of a change in volume is measured by
applying the average rate during the first period to the volume change between the two
periods. The effect of changes in rate is measured by applying the change in rate between
the two periods to the average volume during the first period. Changes attributable to
both rate and volume, which cannot be segregated, have been allocated proportionately to
the absolute value of the change due to volume and the change due to rate.

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Rate Volume Analysis
Year Ended December 31,
2004Compared to Year Ended
December 31, 2003

|                                   | Increases (decreases) due to
|---------------------------------- | ----------------------------
|
|
|Assets:                            |                             
|Interest-earning assets:           |                             
|Loans                              |                             
|Securities                         |                             
|Federal funds sold & other         |                             
|Interest bearing deposits          |                             
|                                   |                             
|Total interest-earnings assets     |                             
|Interest-bearing liabilities:      |                             
|Savings accounts                   |                             
|Time deposits                      |                             
|Money market accounts              |                             
|Other interest bearing deposits    |                             
|                                   |                             
|Total interest-bearing deposits    |                             
|Borrowings                         |                             
|                                   |                             
|Total interest-bearing liabilities |                             
|Net change in interest income      |                             
|                                   |                             

Comparison of Financial Condition at
December 31, 2004 and December 31, 2003:

The Companys total assets at
December 31, 2004 were $268.2 million, an increase of $6.3 million or 2.4% from $261.9
million at December 31, 2003. Cash and cash equivalents decreased to $6.9 million at
December 31, 2004, from $14.1 million at December 31, 2003 as management has chosen to
utilize a portion of those funds to fund loan originations.

Securities available for sale were
$17.5 million at December 31, 2004, a decrease of $8.8 million or 33.5% from $26.3 million
at December 31, 2003. This decrease is due to maturities, principal reductions and
securities sales. Proceeds from the maturities and sale of investment securities were used
to fund loan originations. During the third quarter of 2003, Rome Bancorp recorded an
impairment charge of $1.0 million (pre-tax) to lower the carrying value of a mutual fund
that purchases blue chip common stock to the then current fair market value of $5.1
million. This charge reduced 2003 net earnings by $636,000, or $0.15 per diluted share.
During the fourth quarter of 2003 and throughout 2004, Rome Bancorp has sold approximately
sixty percent of its investment in this fund, realizing book gains of $268,000 over the
revised carrying value of the shares sold. As a condition of the approval of Rome
Savings charter conversion on April 27, 2004, the OTS required that Rome Savings
liquidate its holdings in this mutual fund within two years of that date.

Total loans increased $23.8 million
or 11.4% to $233.3 million at December 31, 2004 from $209.5 million at December 31, 2003.
During the year ended December 31, 2004, Rome Bancorp originated approximately $66.5
million of loans. The majority of the loan growth was in the residential mortgage and
construction loan portfolio, which grew by 19.4%, reflecting a strategic management
decision to grow Rome Savings presence in that market as well as the continued low
mortgage rates. Asset quality improved over the same period as non-performing loans as a
percentage of total loans declined to 0.36% at December 31, 2004 from 0.67% at December
31, 2003. In addition the allowance for loan losses as a percent of non-performing loans
increased to 241.3% at December 31, 2004, as compared to 128.7% at December 31, 2003.

Total deposits increased by 2.8% from
$203.2 million at the 2003 year-end to $208.8 million at December 31, 2004. The overall
increase in deposits is primarily attributable to increases in savings

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and other
interest-bearing accounts partially offset by decreases in time deposits, money market
accounts and non interest-bearing deposits. Savings deposits increased $4.2 million or
4.6% from $91.7 million at December 31, 2003 to $95.9 million at December 31, 2004. Other
interest-bearing deposits increased $4.4 million or 75.9% from $5.8 million at December
31, 2003, to $10.2 million at December 31, 2004. This increase is primarily due to the
successful introduction of several new consumer demand deposit offerings. Non
interest-bearing deposits declined by $665,000 or 2.5% from year-end to year-end, as some
consumers shifted their demand deposits to the newly introduced interest-bearing
offerings. Money market account balances decreased by $517,000 or 6.5% during the past
year. Time deposits decreased $1.8 million or 2.6% as consumers remained hesitant to
commit to the current low rates available in the marketplace.

Comparison of Results of Operations
for the Years Ended December 31, 2004 and December 31, 2003:

General.
Net income for the year ended
December 31, 2004 was $2.4 million, an increase of $863,000 from $1.5 million for the year
ended December 31, 2003. The increase in net income is attributable to increases in
non-interest income of $431,000, the absence of securities writedowns in 2004, which
negatively impacted pre-tax 2003 income by $1.0 million, an increase in net interest
income before loan loss provision of $260,000 and a decrease in loan loss provision of
$120,000, partially offset by a decrease in gains on securities sales of $172,000,
increases in non-interest expense of $267,000 and income tax expense of $550,000.

Net Interest Income.
Net interest income was $11.5 million
in 2004, an increase of $260,000 or 2.3% from $11.2 million in 2003. This increase is
principally due to a decrease in interest expense, resulting in net interest margin on a
tax equivalent basis of 4.73% in 2004 versus 4.70% for the year ended 2003.

Interest Income.
Interest income decreased by $312,000
for the year ended December 31, 2004, from $14.8 million for the year ended December 31,
2003. Interest income earned on the loan portfolio increased to $13.4 million in 2004 from
$13.1 million in 2003. The average loan balances increased to $217.6 million in 2004 from
$193.2 million in 2003, primarily due to growth in residential lending. The yield on loans
in 2004 was 6.17% compared to 6.78% in 2003, due to the influx of new loans at lower
prevailing market rates over the past two years. Interest and dividend income on
securities decreased in 2004 primarily due to a decline in volume. As securities matured
and were sold, management utilized the proceeds to fund the aforementioned growth in the
loan portfolio, thereby enhancing the yield on those available funds. Average securities
decreased to $23.7 million in 2004 from $38.5 million in 2003 while their yields increased
to 5.10% from 4.75% over the same period. Interest income of other short-term investments,
including federal funds sold, dropped from $111,000 in 2003 to $44,000 in 2004, as a
result of a decrease in average federal funds sold from $11.3 million in 2003 to $5.1
million in 2004, as the yields on these federal funds dropped from 0.98% to 0.85% over the
same period.

Interest Expense.
Interest expense declined in 2004
primarily due to a decrease in the rate paid on deposit accounts, consistent with current
market trends. The average rate paid on interest bearing deposits in 2004 was 1.39%
compared to 1.76% in 2003. The average balance of these deposits increased to $179.7
million in 2004 from $173.0 million in the prior year. Interest expense on borrowings
decreased from $577,000 in 2003 to $548,000 in 2004 primarily due to a decrease in the
average rate paid on this debt from 3.45% in 2003 to 3.32% in 2004.

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Provision for Loan Losses
The provision for loan losses was
$390,000 in 2004 compared to $510,000 in 2003. The allowance for loan losses was $2.0
million or 0.86% of total loans at December 31, 2004 compared to $1.8 million and 0.86% of
total loans at December 31, 2003. The allowance for loan losses as a percent of
non-performing loans was 241% at December 31, 2004 compared to 129% at December 31, 2003.
Non-performing loans, consisting of non-accrual loans and loans 90 days past due and still
accruing, decreased to $829,000 or 0.36% of total loans at December 31, 2004 compared to
$1.4 million or 0.67% at December 31, 2003. Despite strong asset quality, management
determined that the current years provision was necessary due to the continued
growth of the loan portfolio and to cover routine charge-offs of non-performing loans.

In determining the level of the
provision for loan losses necessary to absorb probable incurred credit losses, management
considers the level of and trend in non-performing loans, the level of and trend in net
loan charge-offs, the dollar amount and mix of the loan portfolio, as well as general
economic conditions and real estate trends in Rome Bancorps market area, which can
impact the inherent risk of loss in Rome Bancorps loan portfolio. As a result of
these factors, management determined that a provision of $390,000 was necessary in 2004.

Non-interest Income
The following table summarizes
changes in the major components of non-interest income:

|                             | 2004 | 2003 | $ Change | % Change
|---------------------------- | ---- | ---- | -------- | --------
|Securities impairment charge |      |      | $        |        
|Gain on securities sold      |      |      |          | 176     
|Gain on sale of loans        |      |      |          |        
|Service charges              |      |      |          | 1,377   
|Other income                 |      |      |          | 219     
|                             |      |      |          |         
|Total non-interest income    |      |      | $        | 1,772   
|                             |      |      |          |         

Non-interest income increased by $1.3
million to $1.8 million in 2004 as compared to $472,000 in 2003, primarily due to the
investment impairment charge of $1.0 million taken in the third quarter of 2003, as
discussed above. Rome Bancorp recorded net securities sales gains of $176,000 in 2004
versus a net loss on securities of $693,000 in 2003. The remaining increase in other
non-interest income is principally due to an increase in customer fee income, much of
which was the result of a high performance checking program initiated in the fourth
quarter of 2003.

Non-interest Expense
The following table summarizes
changes in the major components of non-interest expense:

|                                | 2004 | 2003 | $ Change | % Change
|------------------------------- | ---- | ---- | -------- | --------
|Salaries and employee benefits  |      |      | $        | 5,137   
|Occupancy and equipment expense |      |      |          | 1,568   
|Marketing expense               |      |      |          | 311     
|Outside consulting              |      |      |          | 132     
|Other expense                   |      |      |          | 1,954   
|                                |      |      |          |         
|Total non-interest expense      |      |      | $        | 9,102   
|                                |      |      |          |         

Non-interest expense was $9.1 million
for the year ended December 31, 2004 compared to $8.8 million for the year ended December
31, 2003. The increase in non-interest expense was primarily the result of operating costs
related to the mid-2003 systems conversion and expenses related to our new product
offerings.

---

Income Tax Expense
Income tax expense was $1.3 million
for 2004, an increase of $550,000 from 2003 income tax expense of $786,000. The increase
is directly attributable to higher pre-tax earnings and an increase in permanent tax
differences related to Rome Bancorps benefit plans.

Liquidity and Capital
Resources

Liquidity describes our ability to
meet the financial obligations that arise during the ordinary course of business.
Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of
our customers and to fund current and planned expenditures. The Companys primary
sources of funds consist of deposits, scheduled amortization and prepayments of loans and
mortgage-backed securities, maturities and sales of investments, interest bearing deposits
at other financial institutions and funds provided from operations. The Bank also has a
written agreement with the Federal Home Loan Bank of New York that allows it to borrow up
to $26.2 million on a line of credit. At December 31, 2004, the Bank had outstanding
borrowings of $4.0 million on this line of credit, as well as outstanding advances and
amortizing notes totaling $14.8 million.

Loan repayments and maturing
investment securities are a relatively predictable source of funds. However, deposit
flows, calls of investment securities, and prepayments of loans and mortgage-backed
securities are strongly influenced by interest rates, general and local economic
conditions, and competition in the marketplace. These factors reduce the predictability of
the timing of these sources of funds.

The Companys primary investing
activities include the origination of loans and to a lesser extent the purchase of
investment securities. In 2004 the Company originated approximately $66.5 million in loans
compared to approximately $73.0 million in 2003. Purchases of investment securities
totaled $298,000 in 2004 and $375,000 in 2003.

At December 31, 2004, the Company had
loan commitments to borrowers of approximately $7.3 million, and customer available
letters and lines of credit of approximately $11.3 million. Total deposits were $208.8
million at December 31, 2004, an increase of 2.8% from $203.2 million at December 31,
2003.

Time deposit accounts scheduled to
mature within one year were $45.9 million at December 31, 2004. Based on our deposit
retention experience and current pricing strategy, we anticipate that a significant
portion of these time deposits will remain with the Company. We are committed to
maintaining a strong liquidity position, therefore, the Company monitors its liquidity
position on a daily basis. The Company anticipates that it will have sufficient funds to
meet its current funding commitments. The marginal cost of new funding however, whether
from deposits or borrowings from the Federal Home Loan Bank, will be carefully considered
as the Company monitors its liquidity needs. Therefore, in order to minimize its cost of
funds, the Company may consider additional borrowings from the Federal Home Loan Bank in
the future.

At December 31, 2004 and 2003, the
Company and the Bank exceeded each of the applicable regulatory capital requirements. The
Company converted to a savings and loan holding company from a bank holding company on
April 27, 2004, at which time it was no longer subject to formula based capital
requirements at the holding company level. The Banks leverage (Tier 1) capital at
December 31, 2004 was $29.5 million or 11.0% of adjusted assets. At December 31, 2003, the
Companys and the Banks leverage (Tier 1) capital was $35.8 million and $32.4
million, respectively or 13.7% and 12.1 of average assets, respectively. In order to be
classified as well-capitalized by the OTS and FDIC, at December 31, 2004 and
2003, the Bank is required to have leverage (Tier 1) capital of $13.4 million and $13.4
million, respectively, or 5.0% of adjusted and average assets respectively. To be
classified as a well-capitalized bank by the OTS and FDIC, the Bank must also
have a risk-based total capital ratio of 10.0%. At December 31, 2004 and 2003, the Bank
had a risk-based total capital ratio of 15.4% and 17.5%, respectively.

---

On May 28, 2003, the Companys
Board of Directors announced a three-for-two stock split of Rome Bancorps common
shares. The additional shares were distributed to shareholders of record as of May 29,
2003 on June 16, 2003. All share and per share data presented have been adjusted to
reflect this split. The Company also retired 101,164 common shares held in treasury in the
second quarter of 2003. This retirement had no net effect on the Companys earnings,
statement of condition or cash flow.

The Company paid cash dividends of
$0.52 per share and repurchased 62,352 shares of common stock in 2004, requiring cash
outlays of $2.0 million and $1.0 million, respectively.

The Company does not anticipate any
material capital expenditures, nor does it have any balloon or other payments due on any
long-term obligations or any off-balance sheet items other than debt as described in Note
7 of Notes to the Consolidated Financial Statements and the commitments and unused lines
and letters of credit noted above.

The Company is contractually
obligated to make payments as follows:

|                                  |  | Payments due by Period:
|--------------------------------- |  | -----------------------
|
|
|Time Deposits                     |  |                        
|Federal Home Loan Bank Borrowings |  |                        
|Software Maintenance Contracts    |  |                        
|                                  |  |                        
|Total Contractual Obligations     |  |                        
|                                  |  |                        

Off-Balance Sheet
Arrangements

The company does not have any
off-balance sheet arrangements that have or are reasonably likely to have a current or
future effect on the Companys financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is material to
investors.

Recent Accounting
Pronouncements

In December 2003, the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (the Act) became
law in the United States. The Act introduces a prescription drug benefit under Medicare as
well as a federal subsidy to sponsors of retiree health care benefit plans that provide a
benefit that is at least actuarially equivalent to the Medicare benefit. We maintain a
postretirement benefit plan that may be impacted by the Act. In May 2004, the Financial
Accounting Standards Board (FASB) issued FASB Staff Position (FSP)
No. FAS 106-2, Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003. This FSP provides
authoritative guidance on the accounting for the effects of the Act and supersedes FSP FAS
106-1. FSP No. 106-2 is effective for the first interim or annual period beginning after
June 15, 2004 which, for the Company, is July 1, 2004. However, if the effects of the Act
are not a significant event as defined in FSP No. 106-2, or if benefits under the
Companys plan are not actuarially equivalent to the Medicare benefit, then effects
of the Act will be measured at the next measurement date for the plan. The next
measurement date for the Companys postretirement benefit plan is December 31, 2005.

Net periodic benefit costs for
postretirement benefits in footnote nine do not reflect any amount associated with the
subsidy provided by the Act because the Company was unable to conclude whether the
benefits provided by its plan are actuarially equivalent to Medicare Part D under the Act.

---

In December 2004, the FASB issued
SFAS No. 123(R), Share-Based Payment. SFAS No. 123(R) establishes accounting standards for
transactions in which a company exchanges its equity instruments for goods or services. In
particular, this Statement will require companies to record compensation expense for all
share-based payments, such as employee stock options, at fair market value. This Statement
is effective as of the beginning of the first interim or annual reporting period that
begins after June 15, 2005 (the Companys fiscal period beginning July 1, 2005). The
Company is currently reviewing the effect of this Statement on its consolidated financial
statements.

MARKET FOR THE
COMPANYS COMMON STOCK

The Companys common stock is
traded on the Nasdaq National Market under the symbol ROME.

The Companys common stock began
trading on October 6, 1999, the date of the reorganization and initial public offering. At
December 31, 2004, the last trading date in the Companys fiscal year, the common
stock of the Company closed at $29.00 per share. At March 4, 2005, there were 4,229,546
shares of the Companys common stock outstanding, which were held of record by
approximately 782 registered shareholders.

The table below shows the high and
low sales price of the Company common stock during the periods indicated. The Company paid
cash dividends of $0.52 per share in 2004. The Company also paid a quarterly cash dividend
of $0.15 per share to shareholders of record as of February 9, 2004. Our ability to pay
dividends depends on a number of factors including:

| | investment opportunities available to the Bank or
      the Company;
|- | --------------------------------------------------------------------

| | the Bank's capital requirements;
|- | --------------------------------

| | our financial results;
|- | ----------------------

| | tax considerations; and
|- | -----------------------

| | general economic conditions.
|- | ----------------------------

We do
not guarantee that we will pay dividends, or that we will not reduce or eliminate
dividends in the future.

|                                 | Price Range |  |  
|-------------------------------- | ----------- |  | -
|
|Year ended December 31, 2004     |             |  |  
|                                
|Quarter ended March 31, 2004     |             |  | $
|Quarter ended June 30, 2004      |             |  |  
|Quarter ended September 30, 2004 |             |  |  
|Quarter ended December 31, 2004  |             |  |  
|                                
|Year ended December 31, 2003     |             | 
|                                
|Quarter ended March 31, 2003     |             |  | $
|Quarter ended June 30, 2003      |             |  |  
|Quarter ended September 30, 2003 |             |  |  
|Quarter ended December 31, 2003  |             |  |  

All per share amounts are adjusted to
reflect the three for two stock split that occurred June 16, 2003.

---

CHANGES AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
        Effective
February 25, 2004, the Audit Committee of the Board of Directors of the Company terminated
the engagement of its principal accountant, KPMG LLP (KPMG) as the
Companys independent accountant, effective upon the completion of KPMGs audit
of the Companys consolidated financial statements for the year ended December 31,
2003.
        The
audit reports of KPMG on the consolidated financial statements of the Company as of and
for the years ended December 31, 2002 and 2001 did not contain an adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or
accounting principles.
        During
2002 and 2001 and any subsequent interim periods through February 25, 2004, there were no
disagreements with KPMG on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which disagreements, if not
resolved to KPMGs satisfaction, would have caused it to make reference in connection
with its report to the subject matter of the disagreement.

On
February 25, 2004, the Audit Committee of the Board of Directors of the Company
recommended, approved and appointed Crowe Chizek and Company LLC as the Companys
independent accountant to audit the Companys consolidated financial statements for
the fiscal year ending December 31, 2004. Effective as of that date, the Audit Committee
formally engaged Crowe Chizek and Company LLC as the Companys independent accountant
for the fiscal year ending December 31, 2004.
        The
Company has not consulted the newly engaged accountant regarding either the application of
accounting principles to a specified transaction either completed or proposed, the type of
audit opinion that might be rendered on the Companys financial statements or any
matter that was either the subject of a disagreement or a reportable event as described in
Item 304(a)(1) of Regulation S-B.

---

Report
  of Independent Registered Public Accounting Firm

The Board of Directors
Rome Bancorp, Inc.
Rome, New York

We have audited the accompanying
consolidated balance sheet of Rome Bancorp, Inc. and subsidiary as of December 31, 2004
and the related consolidated statements of income, shareholders equity and
comprehensive income, and cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Corporations management. Our responsibility
is to express an opinion on these consolidated financial statements based on our audit.
The financial statements of Rome Bancorp, Inc. as of December 31, 2003 were audited by
other auditors whose report dated February 17, 2004 expressed an unqualified opinion on
those statements.

We conducted our audit in accordance
with auditing standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the
financial position of Rome Bancorp, Inc. and subsidiary at December 31, 2004 and the
results of its operations and its cash flows for the year then ended, in conformity with
U.S. generally accepted accounting principles.

/s/ Crowe Chizek and Company LLC

Cleveland, Ohio
February 4, 2005

---

ROME BANCORP, INC.
  AND SUBSIDIARY

Consolidated Balance
Sheets

December 31, 2004 and
2003

(in thousands, except
share data)

|                                                                 | 2004 | 2003
|---------------------------------------------------------------- | ---- | ----
|Assets                                                          
|Cash and due from banks                                          |      |     
|Federal funds sold and other short-term investments              |      |     
|                                                                 |      |     
|Total cash and cash equivalents                                  |      |     
|Securities available for sale, at fair value                     |      |     
|Securities held to maturity (fair value of $1,624 and $2,844     |      |     
|at December 31, 2004 and 2003, respectively)                     |      |     
|Loans                                                            |      |     
|Less:  Allowance for loan losses                                 |      |     
|                                                                 |      |     
|Net loans                                                        |      |     
|Premises and equipment, net                                      |      |     
|Accrued interest receivable                                      |      |     
|Other assets                                                     |      |     
|                                                                 |      |     
|Total assets                                                     |      |     
|                                                                 |      |     
|Liabilities and Shareholders' Equity                             |      |     
|Liabilities:                                                     |      |     
|Deposits:                                                        |      |     
|Non-interest bearing                                             |      |     
|Savings                                                          |      |     
|Money market                                                     |      |     
|Time                                                             |      |     
|Other interest bearing                                           |      |     
|                                                                 |      |     
|Total deposits                                                   |      |     
|Borrowings                                                       |      |     
|Other liabilities                                                |      |     
|                                                                 |      |     
|Total liabilities                                                |      |     
|                                                                 |      |     
|Commitments and contingencies (Note 14)                          |      |     
|Shareholders' equity:                                            |      |     
|Common stock, $.0067 par value; authorized:10,000,000 shares;    |      |     
|issued: 5,000,000 shares; outstanding: 4,229,546 shares at       |      |     
|December 31, 2004 and 4,285,338  shares at December 31, 2003     |      |     
|Additional paid-in capital                                       |      |     
|Retained earnings                                                |      |     
|Treasury stock, at cost; 770,454 shares at December 31, 2004 and |      |     
|714,662 shares at December 31, 2003                              |      |     
|Accumulated other comprehensive income                           |      |     
|Unallocated shares of employee stock ownership plan (ESOP)       |      |     
|119,982 shares at December 31, 2004; 133,313 shares at           |      |     
|December 31, 2003                                                |      |     
|Unearned compensation                                            |      |     
|                                                                 |      |     
|Total shareholders' equity                                       |      |     
|                                                                 |      |     
|Total liabilities and shareholders' equity                       |      |     
|                                                                 |      |     

See accompanying notes to
consolidated financial statements.

---

ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Income

Years ended December 31, 2004 and 2003

(in thousands, except share data)

|                                                    | 2004 | 2003
|--------------------------------------------------- | ---- | ----
|Interest income:                                    |      |     
|Loans                                               |      |     
|Securities                                          |      |     
|Other short-term investments                        |      |     
|                                                    |      |     
|Total interest income                               |      |     
|Interest expense:                                   |      |     
|Deposits                                            |      |     
|Borrowings                                          |      |     
|                                                    |      |     
|Total interest expense                              |      |     
|                                                    |      |     
|Net interest income                                 |      |     
|Provision for loan losses                           |      |     
|                                                    |      |     
|Net interest income after provision for loan losses |      |     
|                                                    |      |     
|Non-interest income:                                |      |     
|Service charges                                     |      |     
|Net gain (loss) on securities                       |      |     
|Other income                                        |      |     
|                                                    |      |     
|Total non-interest income                           |      |     
|                                                    |      |     
|Non-interest expense:                               |      |     
|Salaries and employee benefits                      |      |     
|Building, occupancy and equipment                   |      |     
|Directors' fees                                     |      |     
|Marketing                                           |      |     
|Outside consulting                                  |      |     
|ATM service fees                                    |      |     
|Supplies                                            |      |     
|Other                                               |      |     
|                                                    |      |     
|Total non-interest expense                          |      |     
|                                                    |      |     
|Income before income tax expense                    |      |     
|Income tax expense                                  |      |     
|                                                    |      |     
|Net income                                          |      |     
|                                                    |      |     
|Basic earnings per share                            |      |     
|                                                    |      |     
|Diluted earnings per share                          |      |     
|                                                    |      |     

See accompanying notes to
consolidated financial statements.

---

ROME BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Shareholders' Equity and Comprehensive Income
Years ended December 31, 2004 and 2003

(in thousands, except share data)

|                                                                            | Commonstock | Additionalpaid-incapital | Retainedearnings | TreasuryStock | Accumulatedothercomprehensiveincome
|--------------------------------------------------------------------------- | ----------- | ------------------------ | ---------------- | ------------- | -----------------------------------
|                                                                           
|Balances at December 31, 2002                                               |             |                          | $                | 34            |                                    
|Comprehensive income:                                                       |             |                         
|Net income                                                                  |             |                          |                  | -             |                                    
|Other comprehensive income                                                  |             |                          |                  | -             |                                    
|Total comprehensive income                                                  |             |                         
|Retirement of 101,164 treasury shares                                       |             |                          |                  | (1            | )                                  
|Purchase of treasury stock (43,748 shares)                                  |             |                          |                  | -             |                                    
|Exercise of stock options and related tax benefit
     (22,986 shares, net) |             |                          |                  | -             |                                    
|Amortization and tax benefits of unearned compensation                      |             |                          |                  | -             |                                    
|Dividends paid ($0.29 per share)                                            |             |                          |                  | -             |                                    
|ESOP shares released for allocation (13,330 shares)                         |             |                          |                  | -             |                                    
|                                                                            |             |                          |                  |               |                                    
|Balances at December 31, 2003                                               |             |                          |                  | 33            |                                    
|Comprehensive income:                                                       |             |                         
|Net income                                                                  |             |                          |                  | -             |                                    
|Other comprehensive loss                                                    |             |                          |                  | -             |                                    
|Total comprehensive income                                                  |             |                         
|Purchase of treasury stock (62,352 shares)                                  |             |                          |                  | -             |                                    
|Exercise of stock options and related tax benefit (6,560 shares, net)       |             |                          |                  | -             |                                    
|Amortization and tax benefits of unearned compensation                      |             |                          |                  | -             |                                    
|Dividends paid ($0.52 per share)                                            |             |                          |                  | -             |                                    
|ESOP shares released for allocation (13,330 shares)                         |             |                          |                  | -             |                                    
|                                                                            |             |                          |                  |               |                                    
|Balances at December 31, 2004                                               |             |                          | $                | 33            |                                    
|                                                                            |             |                          |                  |               |                                    



|                                                                                    | UnallocatedESOPshares | Unearnedcompensation | Total
|----------------------------------------------------------------------------------- | --------------------- | -------------------- | -----
|                                                                                   
|Balances at December 31, 2002                                                       |                       |                      | $    
|Comprehensive income:                                                               |                       |                     
|Net income                                                                          |                       |                      |      
|Other comprehensive income                                                          |                       |                      |      
|Total comprehensive income                                                          |                       |                      |      
|Retirement of 101,164 treasury shares                                               |                       |                      |      
|Purchase of treasury stock (43,748 shares)                                          |                       |                      |      
|Exercise of stock options and related tax benefit
             (22,986 shares, net) |                       |                      |      
|Amortization and tax benefits of unearned compensation                              |                       |                      |      
|Dividends paid ($0.29 per share)                                                    |                       |                      |      
|ESOP shares released for allocation (13,330 shares)                                 |                       |                      |      
|                                                                                    |                       |                      |      
|Balances at December 31, 2003                                                       |                       |                      |      
|Comprehensive income:                                                               |                       |                     
|Net income                                                                          |                       |                      |      
|Other comprehensive loss                                                            |                       |                      |      
|                                                                                    |                       |                      |      
|Total comprehensive income                                                          |                       |                     
|Purchase of treasury stock (62,352 shares)                                          |                       |                      |      
|Exercise of stock options and related tax benefit (6,560 shares, net)               |                       |                      |      
|Amortization and tax benefits of unearned compensation                              |                       |                      |      
|Dividends paid ($0.52 per share)                                                    |                       |                      |      
|ESOP shares released for allocation (13,330 shares)                                 |                       |                      |      
|                                                                                    |                       |                      |      
|Balances at December 31, 2004                                                       |                       |                      | $    
|                                                                                    |                       |                      |      

See accompanying notes to consolidated
financial statements.

---

ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

Years ended December 31, 2004 and 2003

(in thousands)

|                                                     | 2004 | 2003
|---------------------------------------------------- | ---- | ----
|                                                    
|Cash flows from operating activities:                |      |     
|Net income                                           |      |     
|Adjustments to reconcile net income to net cash      |      |     
|provided by operating activities:                    |      |     
|Depreciation and amortization                        |      |     
|Decrease in accrued interest receivable              |      |     
|Provision for loan losses                            |      |     
|Securities impairment charge                         |      |     
|Net gain on securities transactions                  |      |     
|Gain on sales of student loans                       |      |     
|Net premium amortization on securities               |      |     
|Loss (gain) on sale of other real estate             |      |     
|Gain on sale of fixed assets                         |      |     
|Increase (decrease) in other liabilities             |      |     
|Deferred income tax expense                          |      |     
|Decrease in other assets                             |      |     
|Allocation of ESOP shares                            |      |     
|Amortization of unearned compensation                |      |     
|Tax benefit from exercise of stock options           |      |     
|                                                     |      |     
|Net cash provided by operating activities            |      |     
|                                                     |      |     
|Cash flows from investing activities:                |      |     
|Net increase in loans                                |      |     
|Proceeds from sale of student loans                  |      |     
|Proceeds from sales of securities available for sale |      |     
|Proceeds from maturities and principal reductions of |      |     
|securities available for sale                        |      |     
|Purchases of securities available for sale           |      |     
|Purchases of securities held to maturity             |      |     
|Proceeds from maturities and principal reductions of |      |     
|securities held to maturity                          |      |     
|Proceeds from sale of real estate owned              |      |     
|Purchases of premises and equipment, net             |      |     
|                                                     |      |     
|Net cash used in investing activities                |      |     
|                                                     |      |     
|Cash flows from financing activities:                |      |     
|Decrease in time deposits                            |      |     
|Increase in other deposits                           |      |     
|Repayments of borrowings                             |      |     
|Advances on borrowings                               |      |     
|Purchase of treasury stock                           |      |     
|Dividends                                            |      |     
|Exercise of stock options                            |      |     
|                                                     |      |     
|Net cash provided by financing activities            |      |     
|                                                     |      |     
|Net decrease in cash and cash equivalents            |      |     
|Cash and cash equivalents at beginning of year       |      |     
|                                                     |      |     
|Cash and cash equivalents at end of year             |      |     
|                                                     |      |     
|Supplemental disclosure of cash flow information:    |      |     
|Non-cash investing activities:                       |      |     
|Additions to real estate owned                       |      |     
|Cash paid during the period for:                     |      |     
|Interest                                             |      |     
|Income taxes                                         |      |     

See accompanying notes to
consolidated financial statements.

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|(1) | Business                                                                                                                                                                                                                                                                                                                                                                              
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Rome Bancorp, Inc. (the Company) is a registered bank holding company, organized
under the laws of Delaware and is the parent company of The Rome Savings Bank and
subsidiaries (the Bank). The Company provides traditional community banking
services for individuals and small-to medium-sized businesses, through the Banks
four branches in Oneida County of New York State.

| | On October 15, 2003, the Board of Directors of the Company and the Bank adopted a Plan of
Charter Conversion pursuant to which the Bank converted from a New York-chartered savings
bank regulated by the New York State Banking Department and the Federal Deposit Insurance
Corporation to a federal savings bank regulated by the Office of Thrift Supervision (OTS).
The Company remains a Delaware-chartered holding company but is now regulated as a savings
and loan holding company by the OTS. The Charter Conversion was completed on April 27,
2004. Prior to the Charter Conversion, the Bank was regulation by the New York State
Banking Department and the Federal Deposit Insurance Corporation (FDIC).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Summary of Significant Accounting Policies
|--- | ------------------------------------------

| | (a) | Basis of Presentation
| | --- | ---------------------

| |  | The consolidated financial statements have been prepared in conformity with accounting
principles generally accepted in the United States of America. Amounts in the prior
years consolidated financial statements are reclassified when necessary to conform
with the current years presentation. A description of the significant accounting
policies is presented below. To prepare financial statements in conformity with accounting
principles generally accepted in the United States of America, management makes estimates
and assumptions based on the available information. 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 disclosures of contingent assets and liabilities and the
reported amounts of revenues and expenses for the period. Significant estimates include
the allowance for loan losses, valuation of securities, deferred tax assets and employee
benefit obligations. Actual results could differ from those estimates.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiary. All significant intercompany accounts and transactions are eliminated in
consolidation.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Securities
| | --- | ----------

| |  | The Company classifies its debt securities as either available-for-sale or held-to-maturity as
the Company does not hold any securities considered to be trading. Held-to-maturity
securities are those debt securities the Company has the ability and intent to hold until
maturity. All other debt securities are classified as available for sale.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Held-to-maturity
securities are recorded at amortized cost. Available-for-sale securities are recorded at
fair value. Unrealized holding gains and losses, net of the related tax
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| |  | effect, on available-for-sale securities are usually excluded from earnings and reported as
accumulated other comprehensive income, a component of shareholders equity, until
realized.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A decline in the fair value of an available-for-sale or held-to-maturity security below cost
that is deemed to be other than temporary is charged to earnings resulting in the
establishment of a new cost basis for the security.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Premiums and discounts are amortized or accreted over the life of the related security as an
adjustment to yield using the interest method. Dividend and interest income are recognized
when earned. Purchases and sales are recorded on a trade date basis with settlement
occurring shortly thereafter. Realized gains and losses on securities sold are derived
using the specific identification method for determining the cost of securities sold.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Loans
| | --- | -----

| |  | Loans are reported at the principal amount outstanding. Origination fees and certain direct
origination costs related to lending activities are deferred and amortized over the life
of the related loans. The Company has the ability and intent to hold its loans to
maturity.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Interest on loans is accrued and included in income at contractual rates applied to principal
outstanding. The accrual of interest on loans (including impaired loans) is generally
discontinued, and previously accrued interest is reversed, when loan payments are 90 days
or more past due, or when, by the judgment of management, collectibility becomes
uncertain. Subsequent recognition of income occurs only to the extent that payment is
received. Loans are generally returned to an accrual status when both principal and
interest become current and the loan is determined to be performing in accordance with the
applicable loan terms. When the future collectibility of the recorded loan balance is
expected, interest income may be recognized on a cash basis.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | (d) | Allowance for Loan Losses
| | --- | -------------------------

| |  | The
allowance for loan losses is a valuation allowance for probable incurred credit losses.
The allowance for loan losses is increased by the provision for loan losses charged to
operations and is decreased by the charge-off of loans, net of recoveries. Loans are
charged off when management determines that ultimate success of the loans
collectibility is remote.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Managements
evaluation of the adequacy of the allowance considers the Companys historical loan
loss experience, review of specific loans, current economic conditions and such other
factors considered appropriate to estimate losses. Management uses presently available
information to estimate probable losses on loans; however, future additions to the
allowance may be necessary based on changes in estimates, assumptions or economic
conditions. In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Companys allowance for loan losses and
may require the Company to recognize additions to the allowance based on their judgment of
information available to them at the time of their examination.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
allowance consists of specific and general components. The specific component relates to
loans that are individually classified as impaired or loans otherwise classified as
substandard or doubtful. The general component covers non-classified loans and is based on
historical loss experience adjusted for current factors.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
allowance for loan losses is evaluated on a quarterly basis by management in order to
maintain the allowance at a level sufficient to absorb probable incurred loan losses based
upon known and inherent risks in the loan portfolio.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
Company estimates losses on impaired loans based on the present value of expected future
cash flows (discounted at the loans effective interest rate) or the fair value of
the underlying collateral if the loan is collateral dependent. An impairment loss exists
if the recorded investment in a loan exceeds the value of the loan as measured by the
aforementioned methods. Impairment losses are included as a component of the allowance for
loan losses. A loan is considered impaired when it is probable that the Company will be
unable to collect all amounts due according to the contractual terms of the loan
agreement. Generally, all commercial mortgage loans and commercial loans greater than
$250,000 in a non-accrual status are considered impaired. Commercial mortgage loans and
commercial loans less than $250,000 and all residential mortgage loans, consumer loans and
education loans are evaluated collectively by portfolio since they are homogeneous and
generally carry smaller individual balances. The Company recognizes interest income on
impaired loans using the cash basis of income recognition. Cash receipts on impaired loans
are generally applied according to the terms of the loan agreement, or as a reduction of
principal, based upon managements judgement and the related factors discussed above.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | (e) | Real Estate Owned
| | --- | -----------------

| |  | Real estate acquired through foreclosure or deed in lieu of foreclosure is recorded at the
lower of the unpaid loan balance on the property at the date of transfer, or fair value
less estimated costs to sell. Write-downs from cost to fair value which are required at
the time of foreclosure are charged to the allowance for loan losses. Adjustments to the
carrying value of such properties that result from subsequent declines in value are
charged to operations in the period in which the declines occur. Operating costs
associated with the properties are charged to expense as incurred.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f) | Premises and Equipment
| | --- | ----------------------

| |  | Land is carried at cost and buildings and improvements and furniture and equipment are carried
at cost less accumulated depreciation and amortization. Depreciation is computed on the
straight-line method over the estimated useful lives of the assets (7 to 40 years for
buildings and 3 to 10 years for furniture and equipment). Amortization of leasehold
improvements is computed on the straight-line method over the shorter of the lease term or
the estimated useful life of the improvements.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (g) | Employee Benefit Plans
| | --- | ----------------------

| |  | The Company maintains a non-contributory defined benefit pension plan that covers
approximately 60% of all current full time employees. The Companys Board of
Directors amended the plan in December of 2002 to cease the accrual of any further
benefits. The benefits under the pension plan are based on the employees years of
service and compensation. The projected unit credit method is utilized for measuring net
periodic pension costs over the employees service lives. The Companys funding
policy is to contribute annually at least the minimum required to meet the funding
standards set forth under provisions of the Employee Retirement Income Security Act of
1974.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company provides health care and life insurance benefits to certain retired full time
employees. The estimated costs of providing benefits are accrued over the years the
employees render services necessary to earn those benefits.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
Company has a defined contribution 401(k) Savings Plan for all full time salaried
employees. Employees are permitted to contribute up to 15% of base pay to the Savings
Plan, subject to certain limitations. The Company matches 50% of each employees
contributions up to a limit of 3% of the employees base pay.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
Company also sponsors a non-contributory Employee Stock Ownership Plan (ESOP) covering
substantially all full time employees. The number of shares allocable to Plan participants
is determined by the Board of Directors. Allocations to individual participant accounts
are based on participant compensation. As shares are committed to be released to
participants, the Company reports compensation expense equal to the current market price
of the shares and the shares become outstanding for earnings per share computations.
Dividends on allocated shares reduce retained earnings; dividends on unallocated ESOP
shares reduce debt and accrued interest.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | (h) | Income Taxes
| | --- | ------------

| |  | The
Company and its subsidiary file a consolidated tax return. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to temporary
differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in the period
that includes the enactment date.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i) | Stock Option Plan
| | --- | -----------------

| |  | The
Company applies APB Opinion No. 25 and related Interpretations in accounting for its Stock
Option Plan. Accordingly, compensation expense is recognized only if the exercise price of
the option is less than the fair value of the underlying stock at the grant date.
Statement of Financial Accounting Standards (SFAS) No. 123 requires companies not using a
fair value based method of accounting for stock options or similar plans, to provide pro
forma disclosure of net income and earnings per share as if that method of accounting had
been applied.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Pro forma disclosures for the Company for the years ended December 31, 2004 and 2003 utilizing
the estimated fair value of the options granted and an assumed 5% forfeiture rate are as
follows:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                   | 2004                                 | 2003
|-------------------------------------------------- | ------------------------------------ | ----
|                                                   | (in thousands, except pershare data) |     
|Net income:                                        |                                      |     
|As reported                                        |                                      |     
|Add:  Stock based compensation expense included in |                                      |     
|net income, net of related tax expense             |                                      |     
|Deduct: Total stock based compensation expense     |                                      |     
|determined under fair value method, net of related |                                      |     
|tax expense                                        |                                      |     
|                                                   |                                      |     
|Pro forma                                          |                                      |     
|                                                   |                                      |     
|Basic earnings per share:                          |                                      |     
|As reported                                        |                                      |     
|Pro forma                                          |                                      |     
|Diluted earnings per share:                        |                                      |     
|As reported                                        |                                      |     
|Pro forma                                          |                                      |     

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| |  | Because
the Companys stock options have characteristics significantly different from those
of traded options for which the Black-Scholes model was developed, and because changes in
the subjective input assumptions can materially affect the fair value estimate, the
existing models, in managements opinion, do not necessarily provide a reliable
single measure of the fair value of its stock options. In addition, the effect on reported
net income and earnings per share for the years ended December 31, 2004 and 2003 may not
be representative of the effects on reported net income or earnings per share for future
years.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (j) | Cash and Cash Equivalents
| | --- | -------------------------

| |  | For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts
due from banks, and federal funds sold which represents short-term highly liquid
investments.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (k) | Financial Instruments With Off-Balance Sheet Risk
| | --- | -------------------------------------------------

| |  | The
Companys off-balance sheet financial instruments are limited to commitments to
extend credit and standby letters of credit. The Companys policy is to record such
instruments when funded.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (l) | Earnings Per Share
| | --- | ------------------

| |  | Basic
earnings per share is calculated by dividing net income by the weighted average number of
common shares outstanding during the year. Unallocated shares held by the Companys
ESOP and unvested RRP shares are not included in the weighted average number of shares
outstanding. Stock options and unvested stock grants are regarded as common stock
equivalents and are considered in earnings per share calculations if dilutive.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (m) | Segment Reporting
| | --- | -----------------

| |  | The
Companys operations are solely in the financial services industry providing
traditional community banking services in the geographical region of Oneida County and
surrounding areas in New York State. The Company has determined that it has no reportable
segments as defined by SFAS No. 131, Disclosures about Segments of an Enterprise and
Related Information.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (n) | Recent Accounting Pronouncements
| | --- | --------------------------------

| |  | In
December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003
(the Act) became law in the United States. The Act introduces a prescription
drug benefit under Medicare as well as a federal subsidy to sponsors of retiree health
care benefit plans that provide a benefit that is at least actuarially equivalent to the
Medicare benefit. We maintain a postretirement benefit plan that may be impacted by the
Act. In
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| |  | May 2004, the Financial Accounting Standards Board (FASB) issued FASB
Staff Position (FSP) No. FAS 106-2, Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act
of 2003. This FSP provides authoritative guidance on the accounting for the effects
of the Act and supersedes FSP FAS 106-1. FSP No. 106-2 is effective for the first interim
or annual period beginning after June 15, 2004 which, for the Company, is July 1, 2004.
However, if the effects of the Act are not a significant event as defined in FSP No.
106-2, or if benefits under the Companys plan are not actuarially equivalent to the
Medicare benefit, then effects of the Act will be measured at the next measurement date
for the plan. The next measurement date for the Companys postretirement benefit plan
is December 31, 2005.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Net
periodic benefit costs for postretirement benefits in footnote nine do not reflect any
amount associated with the subsidy provided by the Act because the Company was unable to
conclude whether the benefits provided by its plan are actuarially equivalent to Medicare
Part D under the Act.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Statement of
      Financial Accounting Standards (SFAS) No. 153 modifies an exception from
      fair value measurement of non-monetary exchanges. Exchanges that are not
      expected to result in significant changes in cash flows of the reporting
      entity are not measured at fair value. This supercedes the prior exemption
      from fair value measurement for exchanges of similar productive assets,
      and applies for fiscal years beginning after June 15, 2005. The effect of
      this new standard on the Companys financial position and results of
      operations is not expected to be material upon and after adoption.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | In
December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment. SFAS No. 123(R)
establishes accounting standards for transactions in which a company exchanges its equity
instruments for goods or services. In particular, this Statement will require companies to
record compensation expense for all share-based payments, such as employee stock options,
at fair market value. This Statement is effective as of the beginning of the first interim
or annual reporting period that begins after June 15, 2005 (the Companys fiscal
period beginning July 1, 2005). The Company is currently reviewing the effect of this
Statement on its consolidated financial statements.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|(3) | Securities                                          
|--- | ----------------------------------------------------
|    | Securities are summarized as follows (in thousands):

|                                | December 31, 2004
|------------------------------- | -----------------
|
|
|Available-for-sale:             |                  
|U.S. Government agencies        |                  
|State and Municipal obligations |                  
|Mortgage-backed securities      |                  
|FNMA                            |                  
|FHLMC                           |                  
|Corporate bonds                 |                  
|                                |                  
|Total debt securities           |                  
|FHLB stock                      |                  
|Equity and other securities     |                  
|                                |                  
|                                |                  
|                                |                  
|Held-to-maturity:               |                  
|U.S. Government securities      |                  
|Mortgage-backed securities      | -                
|GNMA                            |                  
|FHLMC                           |                  
|Other bonds                     |                  
|                                |                  
|                                |                  
|                                |                  

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|                                | December 31, 2003
|------------------------------- | -----------------
|
|
|Available-for-sale:             |                  
|U.S. Government agencies        |                  
|                                |                  
|State and Municipal obligations |                  
|Mortgage-backed securities      |                  
|FNMA                            |                  
|FHLMC                           |                  
|Corporate bonds                 |                  
|                                |                  
|Total debt securities           |                  
|FHLB stock                      |                  
|Equity and other securities     |                  
|                                |                  
|                                |                  
|                                |                  
|Held-to-maturity:               |                  
|U.S. Government securities      |                  
|Mortgage-backed securities      |                  
|GNMA                            |                  
|FHLMC                           |                  
|Other bonds                     |                  
|                                |                  
|                                |                  
|                                |                  

FHLB stock is carried at cost since
fair values are not readily determinable.

| | At
December 31, 2004, four agency investments had a combined unrealized loss of $7,000. These
investments were in an unrealized loss position for four consecutive months at December
31, 2004. The unrealized loss represents aggregate depreciation of 0.5% of the
Companys amortized cost basis in these securities. At December 31, 2003, one agency
investment had a combined unrealized loss of $8,000. The investment was not valued below
cost basis in the month prior to that. The unrealized loss represents aggregate
depreciation of 3.2% of the Companys amortized cost basis in these securities.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table presents the amortized cost and fair value of debt securities based on the
contractual maturity date (in thousands). Expected maturities will differ from contractual
maturities because issuers may have the right to call or prepay obligations without call
or prepayment penalties.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|                             | December 31, 2004
|---------------------------- | -----------------
|
|Available-for-sale:          |                  
|Due within one year          |                  
|Due after one year through   |                  
|five years                   |                  
|Due after five years through |                  
|ten years                    |                  
|Due after ten years          |                  
|                             |                  
|                             |                  
|                             |                  
|Held-to-maturity:            |                  
|Due within one year          |                  
|Due after one year through   |                  
|five years                   |                  
|Due after five years through |                  
|ten years                    |                  
|Due after ten years          |                  
|                             |                  
|                             |                  
|                             |                  

| | Gross
gains of $176,000 and $348,000 were realized on sales of securities in 2004 and 2003,
respectively.
| | ---------------------------------------------------------------------------------------------------------

| | The
majority of the Companys equity holding represent investments in a mutual fund which
purchases blue chip common stocks. The downturn in the equity markets during 2002 and 2003
caused a decrease in the market value of the fund. During the third quarter of 2003, in
connection with its ongoing review of long term asset values, the Company determined that
this investment had been other than temporarily impaired, as defined by generally accepted
accounting principles. Accordingly, an impairment charge of $1.0 million (pre-tax) was
recorded to lower the carrying value of this security to the current fair market value of
$5.1 million. This charge reduced 2003 net earnings by $636,000, or $0.15 per diluted
share. As this investment is classified as an available for sale security, stockholders
equity had already been reduced by the amount of the unrealized loss, net of taxes. The
other than temporary write-down does not necessarily mean that the value has
been permanently lost. The fair market value of the security may increase or decrease on a
going forward basis. During the fourth quarter of 2003, the Company sold approximately
one-third of its investment in this fund, realizing book gains of $101,000 over the
revised carrying value of the shares sold. Throughout 2004, the Company sold approximately
thirty percent of the original investment, realizing book gains of $167,000. As a
condition of the approval of the Companys Charter Conversion on April 27, 2004, the
OTS has required that the Company liquidate its holdings in this mutual fund within two
years of that date.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | Securities
pledged at year end 2004 and 2003 had a carrying amount of $1.2 million and $2.4 million.
These securities collateralize state and Treasury department programs. At year end 2004
and 2003, there were no holdings of securities of any one issuer, other than the U.S.
Government and its agencies, in an amount greater than 10% of shareholders equity.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Loans                                                         
|--- | --------------------------------------------------------------
|    | Loans
are summarized as follows (in thousands) at December 31:

|                               | 2004 | 2003
|------------------------------ | ---- | ----
|Mortgage
      loans:          |      |     
|Residential
      (1-4 family) |      |     
|Commercial                     |      |     
|Construction
      and land    |      |     
|                               |      |     
|Total
      Mortgage loans     |      |     
|                               |      |     
|Other
      loans:             |      |     
|Commercial                     |      |     
|Automobile
      loans         |      |     
|Property
      improvement     |      |     
|and
      equipment            |      |     
|Other
      consumer           |      |     
|                               |      |     
|Total
      Other loans        |      |     
|                               |      |     
|Total
      Loans              |      |     
|                               |      |     

| | The
Company serviced loans for third parties totaling $3,977,000 and $4,327,000 at December
31, 2004 and 2003 respectively.
| | ---------------------------------------------------------------------------------------------------------------------------

| | Changes
in the allowance for loan losses are summarized as follows (in thousands):
| | ----------------------------------------------------------------------------------

|                                | Years ended
December 31, | 
|------------------------------- | ------------------------ | 
|
|Balance at beginning of period  |                          | 
|Provision charged to operations |                          | 
|Loans charged off               |                          | 
|Recoveries                      |                          | 
|                                |                          | 
|Balance at end of period        |                          | 
|                                |                          | 

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | The
Companys recorded investment in loans that are considered impaired totaled $268,000
and $284,000 at December 31, 2004 and 2003, respectively. These impaired loans carried
allowances of $94,000 at December 31, 2004 and $85,000 as of year-end 2003. The average
recorded investment in impaired loans was $272,000 and $320,000 in 2004 and 2003,
respectively. The Company recognized no interest on impaired loans during the years ended
December 31, 2004 and 2003.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
principal balances of loans not accruing interest amounted to $743,000 and $1,340,000 at
December 31, 2004 and 2003, respectively. Loans 90 days past due and accruing
interest amounted to $86,000 and $66,000 at December 31, 2004 and 2003, respectively. The
differences between the amount of interest income that would have been recorded if
non-accrual loans had been paid in accordance with their original terms and the amount of
interest income that was recorded during the years ended December 31, 2004 and 2003 was
$53,300 and $83,800, respectively. There are no commitments to extend further credit on
non-accruing loans.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
substantial portion of the Companys loans are mortgage and consumer loans in Oneida
County. Accordingly, the ultimate collectibility of a substantial portion of the
Companys loan portfolio is susceptible to changes in market conditions in this area.
A majority of the Companys loan portfolio is secured by real estate. Other than
general economic risks, management is not aware of any material concentrations of credit
risk to any industry or individual borrower.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Premises and Equipment                                                         
|--- | -------------------------------------------------------------------------------
|    | Premises
and equipment at December 31 are summarized as follows (in thousands):

|                                  | 2004 | 2003
|--------------------------------- | ---- | ----
|Land                              |      |     
|Buildings and improvements        |      |     
|Furniture and equipment           |      |     
|                                  |      |     
|                                  |      |     
|Less accumulated depreciation and |      |     
|amortization                      |      |     
|                                  |      |     
|                                  |      |     
|                                  |      |     

| | Depreciation
and amortization expense included in building, occupancy and equipment expense amounted to
$496,000 and $435,000 during the years ended December 31, 2004 and 2003, respectively.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|(6) | Deposits                                                                                        
|--- | ------------------------------------------------------------------------------------------------
|    | Contractual
maturities of time deposits at December 31 are summarized as follows (in thousands):

|                         | 2004
|------------------------ | ----
|Within one year          |     
|One through two years    |     
|Two through three years  |     
|Three through four years |     
|Four through five years  |     
|                         |     
|Total time deposits      |     
|                         |     

| | At
December 31, 2004 and 2003, time deposits with balances of $100,000 or more totaled
approximately $10,995,000 and $10,418,000, respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------

| | Interest
expense on deposits for the years ended December 31 is summarized as follows (in
thousands):
| | -----------------------------------------------------------------------------------------------------

|                       | 2004 | 2003
|---------------------- | ---- | ----
|Savings                |      |     
|Money market           |      |     
|Time                   |      |     
|Other interest bearing |      |     
|                       |      |     
|                       |      |     
|                       |      |     

|(7) | Borrowings                                                                                                                                                                                                                                                                                
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The Company is a
member of the Federal Home Loan Bank of New York (FHLB). As a member, the
Company is required to own capital stock in the FHLB and is authorized to apply for
advances from the FHLB. The following is a summary of advances from the FHLB at December
31 (in thousands):

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|                                                         | 2004 | 2003
|-------------------------------------------------------- | ---- | ----
|Bearing interest at 2.30% fixed, due 12/15/04            |      |     
|Bearing interest at 2.62% fixed, due 3/15/05             |      |     
|FHLB Overnight Line of Credit, bearing interest at 2.38% |      |     

| | The Company is
indebted to the FHLB under the following amortizing notes. The Company has a
blanket pledge on their one-to-four family mortgage loans as collateral for these
borrowings.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                              | 2004 | 2003
|--------------------------------------------- | ---- | ----
|Bearing interest at 6.79% fixed, due 9/15/04  |      |     
|Bearing interest at 3.67% fixed, due 7/3/15   |      |     
|Bearing interest at 3.36% fixed, due 7/3/13   |      |     
|Bearing interest at 3.59% fixed, due 11/26/08 |      |     

| | The following
table summarizes the combined aggregate amount of maturities for the above
advances and notes for each of the five years after December 31, 2004, as well as
remaining maturities beyond five years:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             | 
|---------------------------- | 
|Due in one year              | 
|Due one through two years    | 
|Due two through three years  | 
|Due three through four years | 
|Due four through five years  | 
|Due past five years          | 
|                             | 
|Total                        | 
|                             | 

| | At December 31,
2004, the Company had additional availability on its FHLB line of credit of
$22.2 million. This line of credit is subject to periodic review and renewal.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Income Taxes                                                                                                                          
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|    | The components
of income tax expense attributable to income from operations for the years
ended December 31 consist of (in thousands):

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|          | 2004 | 2003
|--------- | ---- | ----
|Current:  |      |     
|Federal   |      |     
|State     |      |     
|          |      |     
|          |      |     
|          |      |     
|Deferred: |      |     
|Federal   |      |     
|State     |      |     
|          |      |     
|          |      |     
|          |      |     
|          |      |     
|          |      |     

| | Actual tax
expense differs from expected tax expense, computed by applying the U.S.
Federal statutory tax rate of 34% to income before income taxes for the years ended
December 31, as follows (in thousands):
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                        | 2004 | 2003
|--------------------------------------- | ---- | ----
|Computed "expected" tax expense         |      |     
|Increases (decreases) in income taxes   |      |     
|resulting from:                         |      |     
|State taxes, net of Federal tax benefit |      |     
|Tax exempt interest                     |      |     
|Non-deductible ESOP expense             |      |     
|Other, net                              |      |     
|                                        |      |     
|                                        |      |     
|                                        |      |     
|                                        |      |     
|                                        |      |     

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | The tax effects
of temporary differences that give rise to significant portions of the
deferred tax assets and deferred tax liabilities for December 31 are (in thousands):
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                     | 2004 | 2003
|------------------------------------ | ---- | ----
|Deferred tax assets:                 |      |     
|Allowance for loan losses            |      |     
|Accrued postretirement benefits      |      |     
|Deferred compensation                |      |     
|Capital loss carry-forward           |      |     
|State tax credit carry-forward       |      |     
|Other                                |      |     
|                                     |      |     
|Total gross deferred tax assets      |      |     
|                                     |      |     
|Deferred tax liabilities:            |      |     
|Depreciation                         |      |     
|Prepaid pension cost                 |      |     
|Undistributed income of subsidiary   |      |     
|Unrealized gains on available-       |      |     
|for sale securities                  |      |     
|Deferred loan costs                  |      |     
|Other                                |      |     
|                                     |      |     
|Total gross deferred tax liabilities |      |     
|                                     |      |     
|Net deferred tax assets              |      |     
|                                     |      |     

| | Realization of
 deferred tax assets is dependent upon the generation of future taxable income or the
existence of sufficient taxable income within the carryback period. A valuation allowance
is provided when it is more likely than not that some portion of the deferred tax assets
will not be realized. In assessing the need for a valuation allowance, management
considers the scheduled reversal of the deferred tax liabilities, the level of historical
taxable income and projected future taxable income over the periods in which the temporary
differences comprising the deferred tax assets will be deductible. Management believes
that no valuation allowance is necessary.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In accordance
with SFAS No. 109, the Company has not recognized deferred tax liabilities with
respect to the Banks Federal and state base-year reserves of approximately $3.4
million at December 31, 2004, since the Company does not expect that these amounts
will become taxable in the foreseeable future. Under the tax laws, as amended, events that
would result in taxation of these reserves include redemptions of the Banks stock or
certain excess distributions to the Holding Company. The unrecognized deferred tax
liability at December 31, 2004 with respect to the base-year reserve was approximately
$1.3 million.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|(9) | Pension and
Postretirement Benefits                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The following
table sets forth the changes in the Companys pension and postretirement
plans accumulated benefit obligations, fair value of assets and funded status and
amounts recognized in the consolidated balance sheets at December 31, 2004 and 2003:

|                                             | Pension benefits | Postretirement benefits
|-------------------------------------------- | ---------------- | -----------------------
|
|Change in benefit obligation:                |                  |                        
|Benefit obligation at beginning of year      |                  |                        
|Service cost                                 |                  |                        
|Interest cost                                |                  |                        
|Amendments and settlements                   |                  |                        
|Actuarial loss                               |                  |                        
|Curtailment                                  |                  |                        
|Benefits paid                                |                  |                        
|Participant contributions                    |                  |                        
|                                             |                  |                        
|Benefit obligation at end of year            |                  |                        
|                                             |                  |                        
|Change in plan assets:                       |                  |                        
|Fair value of plan assets                    |                  |                        
|at beginning of year                         |                  |                        
|Actual return on plan assets                 |                  |                        
|Employer contributions                       |                  |                        
|Settlements                                  |                  |                        
|Participant contributions                    |                  |                        
|Benefits paid                                |                  |                        
|                                             |                  |                        
|Fair value of plan assets at end of year     |                  |                        
|                                             |                  |                        
|Funded status                                |                  |                        
|Unrecognized net actuarial loss (gain)       |                  |                        
|Unrecognized prior service cost              |                  |                        
|                                             |                  |                        
|Prepaid (accrued) benefit cost               |                  |                        
|                                             |                  |                        
|Assumptions as of measurement dates: Pension |                  |                        
|September 30; Postretirement December 31:    |                  |                        
|Discount rate                                |                  |                        
|Expected return on plan assets               |                  |                        
|Rate of compensation increase                |                  |                        

| | The long term
rate of return on plan assets assumption was set based on historical returns
earned by equities and fixed income securities, adjusted to reflect expectations of future
returns as applied to the plans target allocation of asset classes. Equities and
fixed income securities were assumed to earn real rates of return in the ranges of 5-9%
and 2-6%, respectively. The long term
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | inflation rate
was estimated to be 3%. When these
overall return expectations are applied to the plans target allocation, the expected
rate of return is determined to be 9%, which is roughly the midpoint of the range of
expected return.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys pension plan weighted average allocations at September 30, 2004 and 2003,
by asset category are summarized in the following table:
| | ------------------------------------------------------------------------------------------------------------------------------------------------

|                  | Plan assets at September 30,
|----------------- | ----------------------------
|
|Equity Securities |                             
|Debt Securities   |                             
|                  |                             
|Total             |                             
|                  |                             

| | The
Companys long-term investment objective is to be invested 65% in equity securities
and 35% in debt securities. Plan assets are invested in six diversified investment funds
of the RSI Retirement Trust (the Trust), a no load series open-ended mutual
fund. The Trust has been given discretion by the Plan Sponsor to determine the appropriate
strategic asset allocation versus plan liabilities as governed by the Trusts
Statement of Investment Objectives and Guidelines (the Guidelines). If the
plan is underfunded under the Guidelines, the bond fund will be temporarily increased to
50% in order to lessen asset volatility. When the plan is no longer underfunded, the bond
fund portion will be decreased back to 35%. Asset rebalancing is performed at least
annually, with interim adjustments made when the investment mix varies more than 5% from
the target.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | This
investment goal is to achieve investment results that will contribute to the proper
funding of the pension plan by exceeding the rate of inflation over the long term. In
addition, investment managers for the Trust are expected to provide above average
performance when compared to their peer managers. Performance volatility is also
monitored. Risk volatility is further managed by the distinct investment objectives of
each of the Trust funds and the diversification within each fund.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | For the fiscal
year ended December 31, 2005, the Company expects to make no contributions to
the pension plan. The following estimated future benefit payments, which reflect expected
future service, as appropriate, are expected to be paid (in thousands):
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Asset Category   | Pension
Benefits | Postretirement
Benefits
|---------------- | ---------------- | -----------------------
|Fiscal 2005      |                  |                        
|Fiscal 2006      |                  |                        
|Fiscal 2007      |                  |                        
|Fiscal 2008      |                  |                        
|Fiscal 2009      |                  |                        
|Fiscal 2010-2014 |                  |                        

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | The
components of net periodic benefit cost include the following:
| | ------------------------------------------------------------------

|                            | Pension benefits | Postretirement benefits
|--------------------------- | ---------------- | -----------------------
|
|Service cost                |                  |                        
|Interest cost               |                  |                        
|Expected return on assets   |                  |                        
|Curtailment charge          |                  |                        
|Amortization                |                  |                        
|                            |                  |                        
|Net periodic (benefit) cost |                  |                        
|                            |                  |                        

| | In December of
2002, the Companys Board of Directors amended the defined benefit
pension plan to cease the accrual of further benefits.
| | ----------------------------------------------------------------------------------------------------------------------------------------

| | There is no
assumed increase in the per capita cost of current health care benefits since the
employer contributions are fixed with the retiree paying for any cost increases. In
December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003
(Medicare Act) was signed into law. The Medicare Act introduced both a
Medicare prescription-drug benefit and a federal subsidy to sponsors of retiree
health-care plans that provide a benefit at least actuarially equivalent to
the Medicare benefit. These provisions of the Medicare Act will affect accounting
measurements under SFAS No. 106. Accordingly, the FASB staff has issued guidance allowing
companies to recognize or defer recognizing the effects of the Medicare Act in annual
financial statements for fiscal years ending after enactment of the Medicare Act. The
Company has elected to defer recognizing the effects of the Medicare Act in its December
31, 2004 consolidated financial statements. Accordingly, the reported measures of the
accumulated postretirement benefit obligation and net periodic postretirement benefit cost
do not include the effects of the Medicare Act. When issued, the specific authoritative
literature on accounting for the federal subsidy could require the Company to revise its
previously reported information.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Stock Option Plan                                                                                                                                                                                                                                                                                                                 
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | On May 3, 2000,
the Companys shareholders approved the Rome Bancorp, Inc. 2000 Stock
Option Plan (the Stock Option Plan). The primary objective of the Stock Option
Plan is to provide officers and directors with a proprietary interest in the Company and
an incentive to encourage such persons to remain with the Company.

| | Under the Stock
Option Plan, 249,957 shares of authorized but unissued common stock are reserved
for issuance upon option exercises. The Company also has the alternative to fund the Stock
Option Plan with treasury stock. Options under the plan may be either non-qualified stock
options or incentive stock options. Each option entitles the holder to purchase one share
of common stock at an exercise price equal to the fair market value on the date of grant.
On June 28, 2000, 168,600 options were awarded at an exercise price of $4.96 per share.
These options have a ten-year term and vest at a rate of 20% per year from the grant date.
At December 31,
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | 2004 and 2003 the remaining
      contractual life of these options was 5.5 years and 6.5 years, respectively.                   
| | ---------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                  
| | The following
      table presents the stock option activity for the years ended December 31,
      2004 and 2003 (in thousands):

|                                 | 2004 | 2003
|-------------------------------- | ---- | ----
|
|Outstanding at beginning of year |      |     
|Exercised                        |      |     
|                                 |      |     
|Outstanding at end of year       |      |     
|                                 |      |     
|Exercisable at end of year       |      |     
|                                 |      |     

|(11) | Recognition and
Retention Plan                                                                                                                                                                                                                                                                                        
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | The
Companys shareholders approved the Rome Bancorp, Inc. 2000 Recognition and Retention
Plan (RRP) on May 3, 2000. The purpose of the plan is to promote the long-term
interests of the Company and its shareholders by providing a stock-based compensation program to attract and retain officers and directors.

| | During
2000, 52,800 shares were awarded under the RRP. The shares vest at a rate of 20% per year
from the grant date. The fair market value of the shares awarded under the plan was
$262,000 at the grant date, and is being amortized to compensation expense on a
straight-line basis over the vesting periods of the underlying shares. Compensation
expense of $52,000 was recorded in both 2004 and 2003. The remaining unearned compensation
cost is shown as a reduction of shareholders equity. The shares awarded under the
RRP were transferred from treasury stock at cost with the difference between the fair
market value on the grant date and the cost of the shares recorded as additional paid-in
capital.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(12) | Other Employee
Benefits                                                                                                                                                                                                                                                                                                   
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | The
Company has a defined contribution 401(k) Savings Plan for all full time salaried
employees. Employees are permitted to contribute up to 15% of base pay to the Savings
Plan, subject to certain limitations. The Company matches 50% of each employees
contributions up to a limit of 3% of the employees base pay.

| | Contributions
to the defined contribution 401(k) Savings Plan were $72,000 and $63,000 during the years
ended December 31, 2004 and 2003, respectively.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | In
connection with establishing the ESOP in 1999, the ESOP borrowed $933,000 from the Company
to purchase 199,965 shares of the Companys common stock. The loan bears interest at
8% and is payable in fifteen annual installments. At December 31, 2004, 79,983 shares had
been released or committed to be released and 119,982 remained as unallocated shares. The
fair value of the unallocated shares on December 31, 2004 was $3,479,000. The Company
recognized compensation expense of $403,000 and $300,000 in 2004 and 2003, respectively in
connection with the ESOP.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) | Comprehensive Income (Loss)                                                                                                                                                                                                                                                    
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | Comprehensive
income represents net income and other comprehensive income which is the net change in the
unrealized gains or losses on securities available-for-sale net of taxes. The following
summarizes the components of other comprehensive income (loss) (in thousands):

|                                              | Years ended December 31,
|--------------------------------------------- | ------------------------
|
|Unrealized holding gains (losses)             |                         
|arising during the period                     |                         
|Other than temporary write-down of securities |                         
|Reclassification adjustment for net realized  |                         
|gain included in net income                   |                         
|                                              |                         
|Other comprehensive income (loss), before tax |                         
|Deferred  tax expense (benefit)               |                         
|                                              |                         
|Other comprehensive                           |                         
|income (loss), net of tax                     |                         
|                                              |                         

|(14) | Commitments and
Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | The
Company is a party to financial instruments with off-balance sheet risk in the normal
course of business to meet the financing needs of its customers. These financial
instruments consist of commitments to extend credit and involve, to varying degrees,
elements of credit, market and interest rate risk in excess of the amounts recognized in
the consolidated balance sheet. Credit risk represents the accounting loss that would be
recognized at the reporting date if obligated counterparties failed completely to perform
as contracted. Market risk represents risk that future changes in market prices make
financial instruments less valuable.

| | Commitments
to extend credit are agreements to lend to a customer as long as there is no violation of
any condition established in the contract. Commitments generally have fixed expiration
dates or other termination clauses and may require payment of a fee. Since some of the
commitments are expected to expire without being drawn upon, the total commitment
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | amounts
do not necessarily represent future cash requirements. The Company evaluates each
customers creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Company upon extension of credit, is based on
managements evaluation of the customers financial position. Collateral held
varies, but may include real estate, accounts receivable, inventory, property, plant and
equipment and income-producing commercial properties. Substantially all commitments to
extend credit, if exercised, will represent loans secured by real estate.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
December 31, 2004 and 2003 the Company was committed to originate mortgage and other loans
of approximately $7,254,000 and $9,519,000, respectively. At December 31, 2004 and
December 31, 2003, the Companys fixed rate loan commitments totaled $1,611,000 and
$2,894,000, respectively. The range of interest rates on these fixed rate commitments was
5.0% to 7.75% at December 31, 2004 and 4.75% to 5.875% at December 31, 2003. 

Commitments under unused lines of credit and letters of credit were approximately
 $11,267,000 and $9,074,000 at December 31, 2004 and 2003, respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
November 2002, the FASB issued FASB Interpretation No. 45 (FIN No. 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others; An Interpretation of FASB Statements No. 5,
57 and 107 and recission of FASB Interpretation No. 34. FIN No. 45 requires certain
new disclosures and potential liability recognition for the fair value at issuance of
guarantees that fall within its scope. Under FIN No. 45, the Company does not issue any
guarantees that would require liability recognition or disclosure, other than its standby
letters of credit.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys exposure to credit loss in the event of nonperformance by the other party
to the financial instrument for loan commitments is represented by the contractual or
notional amount of these instruments. The Company uses the same credit policies in making
commitments as it does for on-balance sheet instruments. The Company controls its credit
risk through credit approvals, limits, and monitoring procedures.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In the normal course of business, there are various outstanding legal proceedings. In the
opinion of management, the aggregate amount involved in such proceedings is not material
to the financial condition or results of operations of the Company.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|(15) | Earnings Per Share                                                                                                                  
|---- | ------------------------------------------------------------------------------------------------------------------------------------
|     | The
following summarizes the computation of earnings per share for the years ended December 31
(in thousands except per share data):

|                                            | 2004 | 2003
|------------------------------------------- | ---- | ----
|Basic earnings per share:                   |      |     
|Net Income available to common shareholders |      |     
|                                            |      |     
|Weighted average basic shares outstanding   |      |     
|                                            |      |     
|Basic earnings per share                    |      |     
|                                            |      |     
|Diluted earnings per share:                 |      |     
|Net Income available to common shareholders |      |     
|                                            |      |     
|Weighted average basic shares outstanding   |      |     
|Effect of dilutive securities:              |      |     
|Stock options                               |      |     
|Unearned compensation                       |      |     
|                                            |      |     
|Weighted average diluted shares outstanding |      |     
|                                            |      |     
|Diluted earnings per share                  |      |     
|                                            |      |     

|(16) | Shareholders
Equity and Regulatory Matters                                                                                                                                                                                   
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | The
Bank is required to maintain certain reserves of vault cash and/or deposits with the
Federal Reserve Bank of New York. The amount of this reserve requirement, included in cash
on hand, is $764,000 at December 31, 2004.

| | The
Companys ability to pay dividends is primarily dependent upon the ability of its
subsidiary bank to pay dividends to the Company. The payment of dividends by the Bank is
subject to continued compliance with minimum regulatory capital requirements. In addition,
regulatory approval is generally required prior to the Bank declaring dividends in an
amount in excess of net income for that year plus net income retained in the preceding two
years.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company and the Bank are subject to various regulatory requirements administered by the
federal banking agencies and the Bank is a federal savings bank regulated by the Office of
Thrift Supervision (OTS). The Company is a Delaware corporation and is regulated as a
savings and loan holding company by the OTS. Prior to conversion to a federal charter on
April 27, 2004, the Bank was a New York-chartered savings bank regulated by the New York
State Banking Department and the Federal Deposit Insurance Corporation.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | Under
capital adequacy guidelines and the regulatory framework for prompt corrective action, the
Company and Bank must meet specific guidelines that involve quantitative measures of
assets, liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices. Capital amounts are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors. Failure to meet minimum
capital requirements can initiate certain mandatory, and possibly additional
discretionary, actions by the regulators that, if undertaken, could have a direct material
effect on the Companys and Banks financial statements.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), established
capital levels for which insured institutions are categorized as well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized, or critically
undercapitalized.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of August 23, 2004, the most recent notification from the OTS categorized the Bank as well
capitalized under the regulatory framework for prompt corrective actions. To be
categorized as well capitalized, the Bank must meet the minimum ratios as set forth in the
table. There have been no conditions or events since that notification that management
believes have changed the Banks category. Management believes, as of December 31,
2004, that the Company and Bank meet all capital adequacy requirements to which they are
subject.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Board of Directors of Rome, MHC determines whether the MHC will waive or receive cash
dividends declared by the Company each time the Company declares a cash dividend, which is
expected to be on a quarterly basis. The MHC may elect to receive dividends and utilize
such funds to pay expenses or for other allowable purposes. The OTS has indicated that it
does not object to the waiver of cash dividends by the MHC subject to the following: (i)
the MHC must restrict the Companys retained earnings by the dollar amount of
dividends waived by the MHC; (ii) the Bank notifies the OTS prior to paying any cash
dividends to the Company if such a capital distribution becomes necessary; (iii) the Board
of Directors of the MHC must ratify the determination that the dividend waiver is
consistent with the directors fiduciary duties to the members of the federally
chartered mutual holding company. As of December 31, 2004 and 2003, the retained earnings
of the Company that were restricted due to the dividend waiver by the MHC were $1.2
million and $0, respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company converted to a savings and loan holding company from a bank holding company on
April 27, 2004, at which time it was no longer subject to formula based capital
requirements at the holding company level. However, the Company is required by OTS
regulation to maintain adequate capital to support its business activities.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | The
following is a summary of the Companys and Banks actual capital amounts and
ratios compared to the regulatory minimum capital adequacy requirements and the OTS and
FDIC requirements for classification as a well capitalized institution under prompt
corrective action provisions (dollars in thousands):
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         | Actual | Minimum capital
adequacy
requirements | To be classified as
well-capitalized
under prompt
corrective action
provisions
|------------------------ | ------ | ------------------------------------- | ------------------------------------------------------------------------------
|
|As of December 31, 2004: |        |                                       |                                                                               
|Total capital (to risk   |        |                                      
|weighted assets):        |        |                                      
|Bank                     |        |                                       | $                                                                             
|Tier 1 Capital (to risk  |        |                                      
|weighted assets):        |        |                                      
|Bank                     |        |                                       |                                                                               
|Tier 1 Capital (to       |        |                                      
|adjusted assets):        |        |                                      
|Bank                     |        |                                       |                                                                               
|As of December 31, 2003: |        |                                      
|Total capital (to risk   |        |                                      
|weighted assets):        |        |                                      
|Company                  |        |                                       | $                                                                             
|Bank                     |        |                                       | $                                                                             
|Tier 1 Capital (to risk  |        |                                      
|weighted assets):        |        |                                      
|Company                  |        |                                       |                                                                               
|Bank                     |        |                                       |                                                                               
|Tier 1 Capital (to       |        |                                      
|average assets):         |        |                                      
|Company                  |        |                                       |                                                                               
|Bank                     |        |                                       |                                                                               

---

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | Following
is a reconciliation of Rome Bancorps Consolidated generally accepted accounting
principles (GAAP) capital to regulatory Tier 1 capital at December 31, 2003
and a reconciliation of Rome Savings GAAP capital to regulatory Tier 1 capital at
December 31, 2004.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                 | December 31,
2004 | December 31,
2003
|---------------------------------------------------------------- | ----------------- | -----------------
|GAAP Capital                                                     |                   |                  
|Less: Unrealized gains on available-for-sale  securities, net of |                   |                  
|tax                                                              |                   |                  
|Tier 1 Capital                                                   |                   |                  
|                                                                 |                   |                  
|Plus: Allowance for loan losses                                  |                   |                  
|Allowed unrealized gain on available-for-sale securities         |                   |                  
|Less: Real estate held for investment                            |                   |                  
|Other investments required to be deducted                        |                   |                  
|                                                                 |                   |                  
|Total Regulatory Capital                                         |                   |                  
|                                                                 |                   |                  

|(17) | Fair
Value of Financial Instruments
|---- | -----------------------------------

| | The
following methods and assumptions were used by the Bank in estimating fair values of
financial instruments:
| | ---------------------------------------------------------------------------------------------------------------

| | Cash
and cash equivalents:For these short-term instruments that generally mature in ninety
days or less. The carrying value approximates fair value.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | Securities:Fair values of securities are based on exchange quoted market prices, where available. If
quoted market prices are not available, fair values are based on quoted market prices of
similar instruments.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Loans:The fair values for all loans are estimated using discounted cash flow analyses, using
interest rates currently being offered for loans with similar terms to borrowers of
similar credit rating. The carrying amount of accrued interest receivable approximates its
fair value.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Deposits:The fair values of demand deposits (interest and non-interest checking) savings accounts
and money market accounts are, by definition, equal to the amount payable on demand at the
reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of
deposits, are estimated using a discounted cash flow calculation that applies interest
rates currently being offered on these products to a schedule of aggregated expected
monthly maturities on time deposits.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Borrowings:Fair values of long-term borrowings are estimated using a discounted cash flow approach,
based on current market rates for similar borrowings. The fair value of accrued interest
approximates carrying value.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | Off-balance-sheet
instruments:Fair values for the Companys off-balance-sheet instruments (lines of
credit and commitments to fund loans) are based on fees currently charged to enter into
similar agreements, taking into account the remaining terms of the agreements and the
counterparties credit standing. The fair value of these financial instruments is
immaterial and has therefore been excluded from the table below.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
estimated carrying values and fair values of the Companys financial instruments for
December 31 are as follows (in thousands):
| | -----------------------------------------------------------------------------------------------------------------------------------

|                              | 2004 | 2003
|----------------------------- | ---- | ----
|
|
|Financial assets:             |      |     
|Cash and cash equivalents     |      |     
|Securities available for sale |      |     
|Securities held to maturity   |      |     
|Loans, net                    |      |     
|Accrued interest receivable   |      |     
|Financial liabilities:        |      |     
|Non-interest bearing deposits |      |     
|Interest bearing deposits     |      |     
|Borrowings                    |      |     
|Accrued interest payable      |      |     

| | Fair
value estimates are made at a specific point in time, based on relevant market information
and information about the financial instrument. These estimates are subjective in nature
and involve uncertainties and matters of significant judgment and, therefore, cannot be
determined with precision. Changes in assumptions could significantly affect the
estimates.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|(18) | Parent
Company Only Financial Statements
|---- | ----------------------------------------

| | Presented
below is the condensed balance sheet of the Parent Company as of December 31, 2004 and
2003 and statement of income and statement of cash flows for the years ended December 31,
2004 and 2003 (in thousands):
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Condensed Balance Sheet                     | 2004 | 2003
|------------------------------------------- | ---- | ----
|
|Assets:                                     |      |     
|Cash and due from banks                     |      |     
|Investment in subsidiary bank               |      |     
|Loan receivable from ESOP                   |      |     
|Other assets                                |      |     
|                                            |      |     
|Total assets                                |      |     
|                                            |      |     
|Total liabilities                           |      |     
|Total shareholders' equity                  |      |     
|                                            |      |     
|Total liabilities and shareholders' equity  |      |     
|                                            |      |     
|                                           
|Condensed Statement of Income               |      |     
|Interest income                             |      |     
|Dividends from subsidiary bank              |      |     
|                                            |      |     
|Total operating income                      |      |     
|                                            |      |     
|Other operating expenses                    |      |     
|                                            |      |     
|Income before income taxes and dividends in |      |     
|excess of net income                        |      |     
|Dividends in excess of net income           |      |     
|                                            |      |     
|Net income                                  |      |     
|                                            |      |     

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ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|Condensed Statement of Cash Flows                     | 2004 | 2003
|----------------------------------------------------- | ---- | ----
|
|Operating activities:                                 |      |     
|Net income                                            |      |     
|Adjustments to reconcile net income to cash           |      |     
|provided by operating activities:                     |      |     
|Dividends in excess of net income  of subsidiary bank |      |     
|Increase in other assets                              |      |     
|Decrease in other liabilities                         |      |     
|Tax benefit from exercise of stock options            |      |     
|                                                      |      |     
|Net cash provided by operating activities             |      |     
|                                                      |      |     
|Investing activities:                                 |      |     
|Decrease in loan to ESOP                              |      |     
|                                                      |      |     
|Net cash provided  by investing activities            |      |     
|                                                      |      |     
|Financing activities:                                 |      |     
|Purchase of treasury stock                            |      |     
|Dividends                                             |      |     
|Exercise of stock options                             |      |     
|                                                      |      |     
|Net cash used in financing activities                 |      |     
|                                                      |      |     
|Net increase  in cash and cash equivalents            |      |     
|Cash and cash equivalents at beginning of year        |      |     
|                                                      |      |     
|Cash and cash equivalents at end of year              |      |     
|                                                      |      |     

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ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|(19) | Plan
of Conversion and Reorganization
|---- | -------------------------------------

| | On
November 11, 2004, the Boards of Directors of Rome, MHC (the Mutual Holding Company),
the Company and The Rome Savings Bank (the Bank) (collectively, Rome)
unanimously adopted a Plan of Conversion and Agreement and Plan of Reorganization (the
Plan of Conversion), under the terms of which Rome will undertake a second-step conversion,
and the Bank will reorganize from the two-tier mutual holding company structure to the
stock holding company structure. The MHC owns approximately 61.5% of the common stock of
the Company.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Pursuant
to the Plan of Conversion: (i) the Bank will become a wholly owned subsidiary of a
to-be-formed Delaware corporation (New Holding Company), (ii) the shares of
common stock of the Company held by persons other than the Mutual Holding Company (whose
shares will be canceled) will be converted into shares of common stock of the New Holding
Company pursuant to an exchange ratio designed to preserve the percentage ownership
interests of such persons, and (iii) the New Holding Company will offer and sell shares
of its common stock to members of the Mutual Holding Company, shareholders of the Bank
and others in the manner and subject to the priorities set forth in the Plan of
Conversion. The highest priority will be depositors with qualifying deposits as of
September 30, 2003.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
conversion will be accounted for as a change in corporate form with no resulting change
in the historical basis of the Companys assets, liabilities and equity. Direct
offering costs are being deferred and will be deducted from the proceeds of the shares
sold in the offering. If the conversion is not completed, all costs will be charged to
expense. As of December 31, 2004 $418,000 of costs had been deferred.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Also
pursuant to the Plan of Conversion, the Bank will terminate the liquidation account it
established in connection with its mutual holding company reorganization and minority
stock issuance and such account shall be replaced by a new liquidation account created by
the Bank as of the closing date of the second-step conversion. The new liquidation
account will be for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders (as those terms are defined in the plan of conversion) in an
amount equal to the greater of (i) Rome, MHC ownership interest in the retained earnings
of the Company as of the date of its latest balance sheet contained in this prospectus,
or (ii) the retained earnings of the Bank at the time that the Bank reorganized into the
Mutual Holding Company in 1999. Each Eligible Account Holder and Supplemental Eligible
Account Holder that continues to maintain his or her deposit account at the Bank would be
entitled, in the event of a complete liquidation of the Bank after the conversion, to a
pro rata interest in the liquidation account prior to any payment to the stockholders of
the new holding company. The liquidation account will be reduced annually on December 31
to the extent that Eligible Account Holders and Supplemental Eligible Account Holders
have reduced their qualifying deposits as of each anniversary date. Subsequent increases
in deposits will not restore such account holders interest in the liquidation
account. Subsequent to the conversion, the Bank may not pay cash dividends or make other
capital distributions if the effect thereof would be to reduce its stockholders equity
below the amount of the liquidation account.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
transactions contemplated by the Plan of Conversion are subject to approval of the Companys
shareholders, the members of the Mutual Holding Company and regulatory agencies. The
Company anticipates that the transactions will be completed in March of the 2005 calendar
year. After the conversion, the Banks deposits will continue to be insured by the
Federal Deposit Insurance Corporation and the Bank and the New Holding Company will be
regulated by the Office of Thrift
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



| | Supervision.
Depositors will continue to hold accounts in the Bank identical as to dollar amount, rate
of return and general terms (other than voting and liquidation rights). Borrowers loans
will be unaffected by the conversion and will remain contractually fixed as they existed
prior to the conversion. The normal business of the Bank is accepting deposits and making
loans and will continue without interruption in its existing offices.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Upon
completion of the conversion and stock offering, the Companys ability to pay
dividends will continue to be dependent upon the ability of the Bank to pay dividends to
the Company. The payment of dividends by the Bank is subject to continued compliance with
minimum regulatory capital requirements and maintaining the required amount in the
liquidation account. In addition, regulatory approval is generally required prior to the
Bank declaring dividends in an amount in excess of net income for that year plus net
income retained in the preceding two years. Further, under the OTS conversion
regulations, the Company may not return any capital, other than ordinary dividends, to
its stockholders during the three years following the conversion and stock offering.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2004 and 2003



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Directors of Rome Bancorp, Inc. & The Rome Savings Bank
Charles M. Sprock Chairman of the Board, President and Chief Executive Officer
                                                              
Bruce R. EngelbertRetired, Former Owner and President, Engelbert's Jewelers, Inc.
                                                              
David C. Grow Partner, law firm of McMahon & Grow
Kirk B. Hinman President, Rome Strip Steel Company, Inc.
                                                              
T. Richard Leidig Business Consultant
Richard H. McMahon Partner, law firm of McMahon & Grow
                                                              
Marion C. Scoville Retired, Former Corporate Secretary and Executive Assistant 
to the President, The Rome Savings Bank
Michael J. Valentine President, Mele Manufacturing Company, Inc.
                                                              Executive Officers of The Rome Savings Bank
Charles M. SprockPresident and Chief Executive Officer
                                                              
David C. Nolan Treasurer and Chief Financial Officer
                                                              
James F. Sullivan Vice President, Senior Loan Officer
                                                              
D. Bruce Fraser Vice President, IT, Human Resources and Security
                                                              
C. Francis Thalmann Vice President, Operations and Branch Administration
                                                              
George L. Barzee Vice President, Sales and Residential Lending
                                                              
Sandra L. Smith Vice President, Consumer Loans | Corporate InformationTransfer Agent and Registrar
Inquiries regarding stockholder administration
and services should be directed to:
  Registrar and Transfer Company
  10 Commerce Drive
  Cranford, NJ 07016-3572
  (800) 368-5948Independent Auditors
Crowe Chizek and Company LLC
354 Eisenhower Pkwy., Suite 2050
Livingston, NJ 07039
(973) 422-2420Special Legal Counsel
Thacher Proffitt & Wood LLP
1700 Pennsylvania Avenue, NW
Suite 800
Washington, DC 20006
(202) 347-8400Stock Information
Rome Bancorp's common stock trades on the
Nasdaq National Market System under the
symbol "ROME".Investor Relations
Inquiries regarding The Rome Savings Bank
and Rome Bancorp, Inc. should be directed to:
       Charles M. Sprock
       The Rome Savings Bank
       100 W. Dominick Street
       Rome, NY 13440-5810
       (315) 336-7300Annual Meeting of Stockholders
Rome Bancorp's Annual Meeting of Stockholders
will be held at 6:00 p.m. local time, on
Wednesday, June 1, 2005, at the main office of
The Rome Savings Bank, 100 W. Dominick
Street, Rome, New York, 13440-5810. Holders
of common stock as of March 11, 2005 will
be eligible to vote.

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