Exhibit
13.1

The summary
information presented below at or for each of the five years in the period
ended December 31, 2006 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,                                    |        
|                                   |  |                                                    |        
|                                   |  | 2006                                               |         | 2005 |   | 2004    |  | 2003 |         | 2002 |  
|                                   |  |                                                    |         |      |   |         |  |      |         |      |  
|Selected Financial Condition Data: |  |                                                    |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Total assets                       |  | $                                                  | 298,759 |      | $ | 308,853 |  | $    | 268,152 |      | $ | 261,939 |  | $ | 250,075 | 
|Loans, net                         |  |                                                    | 262,572 |      |   | 251,918 |  |      | 231,272 |      |   | 207,656 |  |   | 181,564 | 
|Securities                         |  |                                                    | 6,841   |      |   | 11,882  |  |      | 19,117  |      |   | 29,118  |  |   | 43,207  | 
|Total cash and cash equivalents    |  |                                                    | 7,858   |      |   | 34,235  |  |      | 6,929   |      |   | 14,055  |  |   | 15,698  | 
|Total deposits                     |  |                                                    | 196,005 |      |   | 201,468 |  |      | 208,787 |      |   | 203,190 |  |   | 194,924 | 
|Borrowings                         |  |                                                    | 20,172  |      |   | 9,374   |  |      | 18,843  |      |   | 18,090  |  |   | 14,920  | 
|Total equity                       |  |                                                    | 77,031  |      |   | 93,478  |  |      | 36,258  |      |   | 36,639  |  |   | 36,193  | 
|Allowance for loan losses          |  |                                                    | 1,965   |      |   | 1,960   |  |      | 2,000   |      |   | 1,809   |  |   | 1,730   | 
|Non-performing loans               |  |                                                    | 1,104   |      |   | 947     |  |      | 829     |      |   | 1,406   |  |   | 1,516   | 
|Non-performing assets              |  |                                                    | 1,149   |      |   | 947     |  |      | 829     |      |   | 1,608   |  |   | 1,571   | 

|                                                      |  |      |        |      |   |        |  |      |        |      |   |        |   |   |        | 
|----------------------------------------------------- |  | ---- | ------ | ---- | - | ------ |  | ---- | ------ | ---- | - | ------ | - | - | ------ | 
|                                                      |  | 2006 |        | 2005 |   | 2004   |  | 2003 |        | 2002 |  
|                                                      |  |      |        |      |   |        |  |      |        |      |  
|Selected
  Operating Data:                            |  |      |        |      |   |        |  |      |        |      |   |        |   |   |        | 
|Interest income                                       |  | $    | 17,457 |      | $ | 16,535 |  | $    | 14,498 |      | $ | 14,810 |   | $ | 15,509 | 
|Interest expense                                      |  |      | 3,521  |      |   | 3,036  |  |      | 3,042  |      |   | 3,614  |   |   | 4,981  | 
|                                                      |  |      |        |      |   |        |  |      |        |      |   |        |   |   |        | 
|Net interest income                                   |  |      | 13,936 |      |   | 13,499 |  |      | 11,456 |      |   | 11,196 |   |   | 10,528 | 
|Provision for loan losses                             |  |      | 147    |      |   | 115    |  |      | 390    |      |   | 510    |   |   | 330    | 
|                                                      |  |      |        |      |   |        |  |      |        |      |   |        |   |   |        | 
|Net interest income after
  provision for loan losses |  |      | 13,789 |      |   | 13,384 |  |      | 11,066 |      |   | 10,686 |   |   | 10,198 | 
|Non-interest income:                                  |  |      |        |      |   |        |  |      |        |      |   |        |   |   |        | 
|Service charges and other
  income                    |  |      | 1,885  |      |   | 1,921  |  |      | 1,596  |      |   | 1,165  |   |   | 1,130  | 
|Net gain (loss) on securities
  transactions          |  |      | 11     |      |   | 105    |  |      | 176    |      |   | (693   | ) |   | 132    | 
|                                                      |  |      |        |      |   |        |  |      |        |      |   |        |   |   |        | 
|Total non-interest income                             |  |      | 1,896  |      |   | 2,026  |  |      | 1,772  |      |   | 472    |   |   | 1,262  | 
|Total non-interest expense                            |  |      | 11,859 |      |   | 9,977  |  |      | 9,102  |      |   | 8,835  |   |   | 7,707  | 
|                                                      |  |      |        |      |   |        |  |      |        |      |   |        |   |   |        | 
|Income before income taxes                            |  |      | 3,826  |      |   | 5,433  |  |      | 3,736  |      |   | 2,323  |   |   | 3,753  | 
|Income taxes                                          |  |      | 1,338  |      |   | 2,031  |  |      | 1,336  |      |   | 786    |   |   | 1,268  | 
|                                                      |  |      |        |      |   |        |  |      |        |      |   |        |   |   |        | 
|Net income                                            |  | $    | 2,488  |      | $ | 3,402  |  | $    | 2,400  |      | $ | 1,537  |   | $ | 2,485  | 
|                                                      |  |      |        |      |   |        |  |      |        |      |   |        |   |   |        | 

---



|                                                                          |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|------------------------------------------------------------------------- |  | --------------------------------------- | ------ | ---- | - | ------ | - | ---- | ------ | ---- | - | ------ | - | - | ------ | -
|                                                                          |  | At or for the
  Year Ended December 31, |       
|                                                                          |  |                                         |       
|                                                                          |  | 2006                                    |        | 2005 |   | 2004   |   | 2003 |        | 2002 |  
|                                                                          |  |                                         |        |      |   |        |   |      |        |      |  
|                                                                          |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Selected Financial Ratios and Other Data                                  |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Performance Ratios:                                                       |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Basic earnings per share                                                  |  | $                                       | 0.29   |      | $ | 0.37   |   | $    | 0.26   |      | $ | 0.16   |   | $ | 0.27   |  
|Diluted earnings per share                                                |  | $                                       | 0.29   |      | $ | 0.36   |   | $    | 0.25   |      | $ | 0.16   |   | $ | 0.26   |  
|Return on average assets                                                  |  |                                         | 0.83   | %    |   | 1.13   | % |      | 0.91   | %    |   | 0.59   | % |   | 1.00   | %
|Return on average equity                                                  |  |                                         | 2.91   | %    |   | 4.29   | % |      | 6.67   | %    |   | 4.16   | % |   | 6.86   | %
|Net interest rate spread (tax equivalent)                                 |  |                                         | 4.37   | %    |   | 4.27   | % |      | 4.41   | %    |   | 4.27   | % |   | 3.95   | %
|Net interest margin (tax equivalent)                                      |  |                                         | 5.04   | %    |   | 4.80   | % |      | 4.73   | %    |   | 4.70   | % |   | 4.56   | %
|Non-interest expense to average assets                                    |  |                                         | 3.94   | %    |   | 3.31   | % |      | 3.45   | %    |   | 3.42   | % |   | 3.09   | %
|Efficiency ratio (1)                                                      |  |                                         | 74.59  | %    |   | 64.09  | % |      | 68.72  | %    |   | 70.22  | % |   | 64.85  | %
|Average interest earning assets to average interest-bearing
  liabilities |  |                                         | 152.72 | %    |   | 149.44 | % |      | 125.61 | %    |   | 128.15 | % |   | 128.68 | %
|                                                                          |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Capital Ratios:                                                           |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Average equity to average assets                                          |  |                                         | 28.46  | %    |   | 26.27  | % |      | 13.63  | %    |   | 14.29  | % |   | 14.52  | %
|Equity to total assets at end of period                                   |  |                                         | 25.78  | %    |   | 30.27  | % |      | 13.52  | %    |   | 13.99  | % |   | 14.47  | %
|Book value per share                                                      |  | $                                       | 9.10   |      | $ | 9.66   |   | $    | 8.57   |      | $ | 8.55   |   | $ | 8.41   |  
|                                                                          |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Regulatory Capital Ratios: (2)                                            |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Core capital (Tier 1 capital)                                             |  |                                         | 21.27  | %    |   | 18.96  | % |      | 11.03  | %    |   | 13.68  | % |   | 14.90  | %
|Total risk-based capital                                                  |  |                                         | 28.90  | %    |   | 28.04  | % |      | 15.36  | %    |   | 19.19  | % |   | 21.24  | %
|                                                                          |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Asset Quality Ratios:                                                     |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Nonperforming loans as percent of loans                                   |  |                                         | 0.42   | %    |   | 0.37   | % |      | 0.36   | %    |   | 0.67   | % |   | 0.83   | %
|Nonperforming assets as percent of total assets                           |  |                                         | 0.38   | %    |   | 0.31   | % |      | 0.31   | %    |   | 0.61   | % |   | 0.63   | %
|Allowance for loan losses as a percent of loans                           |  |                                         | 0.74   | %    |   | 0.77   | % |      | 0.86   | %    |   | 0.86   | % |   | 0.94   | %
|Allowance for loan losses as a percent of non-performing
loans            |  |                                         | 178.0  | %    |   | 207.0  | % |      | 241.3  | %    |   | 128.7  | % |   | 114.1  | %
|                                                                          |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Other Data:                                                               |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Number of:                                                                |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Deposit accounts                                                          |  |                                         | 34,881 |      |   | 34,864 |   |      | 35,136 |      |   | 34,443 |   |   | 32,776 |  
|Full service offices                                                      |  |                                         | 4      |      |   | 4      |   |      | 4      |      |   | 4      |   |   | 4      |  

|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note: | All per share amounts have
  been adjusted to reflect Rome Bancorp, Inc.s second step stock conversion
  effective March 30, 2005 as well as a 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, 2006, 2005 and 2004 are for Rome
  Savings Bank only; the regulatory capital ratios for all other periods are
  for Rome Savings Bank and Rome Bancorp, Inc. on a consolidated basis. Due to
  Rome Savings Banks conversion to a federal savings bank on April 27, 2004,
  Rome Bancorp, Inc. is no longer subject to formula based capital requirements
  at a holding company level.

---



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Annual Report on Form
10-K contains forward-looking statements which may be identified by the use of
such words as believe, expect, anticipate, should, planned,
estimated, and potential. Examples of forward-looking statements include,
but are not limited to, estimates with respect to our financial condition and
results of operation and business that are subject to various factors which
could cause actual results to differ materially from these estimates including,
but not limited to, changes in the real estate market or local economy, changes
in interest rates, changes in laws and regulations to which we are subject, and
competition in our primary market area.

Any or all of our
forward-looking statements in this Annual Report on Form 10-K and in any other
public statements we make may turn out to be wrong. They can be affected by
inaccurate assumptions we might make or unknown risks and uncertainties.
Consequently, no forward-looking statements can be guaranteed. We disclaim 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 March 30, 2005, Rome, MHC
converted from mutual to stock form (the Conversion). In connection with the
Conversion, the 61.5% of outstanding shares of Rome Bancorp common stock owned
by Rome MHC were sold to depositors of the Bank and the public (the
Offering). Completion of the Conversion and Offering resulted in the issuance
of 9.6 million shares of common stock. A total of 5.9 million shares were sold
in subscription, community and syndicated offerings, at $10.00 per share, and
an additional 3.7 million shares were issued to the former public stockholders
of the Company based upon an exchange ratio of 2.26784 new shares for each
share of Rome Bancorp common stock held as of the close of business on March
30, 2005. Following the completion of the Conversion and Offering, the Company
was succeeded by a new, fully public, Delaware corporation with the same name
and Rome MHC ceased to exist.

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

---



2006 Highlights and Overview

The following discussion
focuses on the factors affecting the consolidated financial condition of the
Company as of the two years ended December 31, 2006 and 2005 and the Companys
results of operations for the three years ended December 31, 2006. The
consolidated financial statements and related notes for the three years ended
December 31, 2006 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, and
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 2006 was $2.5
million compared to $3.4 million in the prior year. The significant factors and
trends impacting 2006, which are discussed in greater depth below, were as
follows:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net interest income before
  loan loss in 2006 increased by $437,000 or 3.2% to $13.9 million from $13.5
  million for the prior year. This increase was principally due to an increase
  in the yields earned on average earning assets to 6.30% from 5.87% in 2005.
  The Companys ratio of interest earning assets to interest bearing
  liabilities increased to 152.72% in 2006 from 149.44% in the prior year,
  while net interest margin increased to 5.04% in 2006 from 4.80% in 2005.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | The Companys provision
  for loan losses was $147,000 in 2006, an increase of $32,000 from $115,000 in
  the prior year, primarily due to 2006 growth in the loan portfolio.                                                                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Non-interest income
  decreased $130,000 in 2006 primarily due to the inclusion in 2005 of a large
  recovery of costs incurred that were related to a prior year loan charge off.
  Partially offsetting this was the 2006 increase in cash surrender value of
  Bank-owned life insurance in the amount of $215,000. Gains on securities
  sales were $11,000 in 2006, down from $105,000 in 2005, because the Company
  sold fewer securities.                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Non-interest expense was
  $11.9 million in 2006, up from $10.0 million in the prior year. The majority
  of this increase is related to the expensing of the Companys 2006
  stock-based compensation grants in accordance with the provisions of FASB
  No.123(R).                                                                                                                                                                                                                           

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.

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, Executive
Vice President and Chief Financial Officer, Vice President and Controller,
other members of Senior Management 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 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 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, 2006, based on simulation
model results, Rome Bancorp was within these guidelines.

The following table sets
forth at December 31, 2006 and 2005 the estimated percentage and dollar change
in Rome Bancorps net interest income resulting from changes in interest rates
over a one year period. 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 indicated in the

---



following table could vary
substantially if different assumptions were used or if actual experience
differs from such assumptions.

|                                                  |  |                                   |   |                                   |  |                                   |   |                 |   |                             |       |                                   |  |   |        |  |  |   |       |   |  |       |   | 
|------------------------------------------------- |  | --------------------------------- | - | --------------------------------- |  | --------------------------------- | - | --------------- | - | --------------------------- | ----- | --------------------------------- |  | - | ------ |  |  | - | ----- | - |  | ----- | - | 
|                                                  |  | 2006
  Annual Net Interest Income |   | 2005
  Annual Net Interest Income | 
|                                                  |  |                                   |   |                                   | 
|Change in
  Interest Rates
  in
  Basis Points(1) |  | Dollar
  Amount                   |   | Dollar
  Change
  From Base       |  | Percentage
  Change
  From
  Base |   | Dollar
  Amount |   | Dollar
  Change
  From Base |       | Percentage
  Change
  From
  Base | 
|                                                  |  |                                   |   |                                   |  |                                   |   |                 |   |                             |       |                                   | 
|                                                  |  | (Dollars in thousands)            |  
|                                                  |  |                                   |   |                                   |  |                                   |   |                 |   |                             |       |                                   |  |   |        |  |  |   |       |  
|+300                                              |  |                                   | $ | 13,390                            |  |                                   | $ | 22              |   |                             | 0.16  | %                                 |  | $ | 16,114 |  |  | $ | 1,691 |   |  | 11.72 | % | 
|+200                                              |  |                                   |   | 13,445                            |  |                                   |   | 77              |   |                             | 0.58  |                                   |  |   | 15,586 |  |  |   | 1,163 |   |  | 8.06  |   | 
|+100                                              |  |                                   |   | 13,429                            |  |                                   |   | 61              |   |                             | 0.46  |                                   |  |   | 15,033 |  |  |   | 610   |   |  | 4.23  |   | 
|Base                                              |  |                                   |   | 13,368                            |  |                                   |   |                |   |                             |      |                                   |  |   | 14,423 |  |  |   |      |   |  |      |   | 
|-100                                              |  |                                   |   | 13,327                            |  |                                   |   | (41             | ) |                             | (0.31 | )                                 |  |   | 13,844 |  |  |   | (579  | ) |  | (4.01 | ) | 

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

The above table reflects
that as of December 31, 2006, Rome Bancorp had a lower risk of volatility in
net interest income due to interest rate fluctuations than it had in the
previous year. This can primarily be attributed to the large decrease in
federal funds sold and increase in short-term borrowings as of December 31,
2006. Federal funds sold, which in 2005 included the short term investment of
the proceeds of our stock conversion and offering, have yields that are modeled
to move in direct proportion to changes in interest rates. Short-term
borrowings represent overnight borrowings that are also modeled to reprice
directly with changes in prevailing interest rates. Federal funds sold decreased
to $1.1 million at December 31, 2006 from $26.8 million a year earlier, while
short-term borrowings increased by $11.8 million over the same period.

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 includes a
tax equivalent adjustment for bank qualified municipals.

---



|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|---------------------------------------------------------------- |  | ------------------------------------------------------------------- | ------- | ---------------------------- | - | ----------------------- | - | ----------------- | ---- | ---------------------------- | - | ----------------------- |  | ----------------- | ------ | ---------------------------- |  | ----------------------- | - | - | ------- |  | - | ------ | - |  | ---- | -
|                                                                 |  | Average Balances, Interest and Average Yields for the years
  ended |        
|                                                                 |  |                                                                     |        
|                                                                 |  | December 31, 2006                                                   |         | December 31, 2005            |   | December 31, 2004       |  
|                                                                 |  |                                                                     |         |                              |   |                         |  
|                                                                 |  | Average
  Balance                                                   |         | Interest
  Income/
  Expense |   | Average
  Yield/
  Cost |   | Average
  Balance |      | Interest
  Income/
  Expense |   | Average
  Yield/
  Cost |  | Average
  Balance |        | Interest
  Income/
  Expense |  | Average
  Yield/
  Cost |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |  
|                                                                 |  | (Dollars in thousands)                                              |        
|Assets:                                                          |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Interest-earning assets:                                         |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Loans                                                            |  | $                                                                   | 255,201 |                              | $ | 16,330                  |   |                   | 6.40 | %                            | $ | 242,464                 |  | $                 | 14,993 |                              |  | 6.18                    | % | $ | 217,622 |  | $ | 13,437 |   |  | 6.17 | %
|Securities                                                       |  |                                                                     | 8,447   |                              |   | 541                     |   |                   | 6.40 |                              |   | 15,712                  |  |                   | 864    |                              |  | 5.50                    |   |   | 23,747  |  |   | 1,212  |   |  | 5.10 |  
|Federal funds sold & other interest bearing
deposits             |  |                                                                     | 14,546  |                              |   | 664                     |   |                   | 4.57 |                              |   | 26,182                  |  |                   | 826    |                              |  | 3.15                    |   |   | 5,117   |  |   | 43     |   |  | 0.85 |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Total interest-earnings assets                                   |  |                                                                     | 278,194 |                              |   | 17,535                  |   |                   | 6.30 |                              |   | 284,358                 |  |                   | 16,683 |                              |  | 5.87                    |   |   | 246,486 |  |   | 14,692 |   |  | 5.96 |  
|Noninterest-earning assets                                       |  |                                                                     | 22,474  |                              |   |                         |   |                   |      |                              |   | 17,396                  |  |                   |        |                              |  |                         |   |   | 17,464  |  |   |        |   |  |      |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Total assets                                                     |  | $                                                                   | 300,668 |                              |   |                         |   |                   |      |                              | $ | 301,754                 |  |                   |        |                              |  |                         |   | $ | 263,950 |  |   |        |   |  |      |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Liabilities and ShareholdersEquity:                             |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Interest-bearing liabilities:                                    |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Savings accounts                                                 |  | $                                                                   | 87,560  |                              | $ | 657                     |   |                   | 0.75 |                              | $ | 95,061                  |  | $                 | 703    |                              |  | 0.74                    |   | $ | 94,544  |  | $ | 732    |   |  | 0.77 |  
|Time deposits                                                    |  |                                                                     | 66,822  |                              |   | 2,276                   |   |                   | 3.41 |                              |   | 67,214                  |  |                   | 1,820  |                              |  | 2.71                    |   |   | 68,573  |  |   | 1,630  |   |  | 2.38 |  
|Money market accounts                                            |  |                                                                     | 5,382   |                              |   | 88                      |   |                   | 1.62 |                              |   | 6,145                   |  |                   | 55     |                              |  | 0.90                    |   |   | 8,827   |  |   | 74     |   |  | 0.84 |  
|Other interest bearing deposits                                  |  |                                                                     | 11,321  |                              |   | 69                      |   |                   | 0.61 |                              |   | 10,170                  |  |                   | 65     |                              |  | 0.64                    |   |   | 7,783   |  |   | 58     |   |  | 0.75 |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Total interest-bearing deposits                                  |  |                                                                     | 171,085 |                              |   | 3,090                   |   |                   | 1.81 |                              |   | 178,590                 |  |                   | 2,643  |                              |  | 1.48                    |   |   | 179,727 |  |   | 2,494  |   |  | 1.39 |  
|Borrowings                                                       |  |                                                                     | 11,069  |                              |   | 431                     |   |                   | 3.90 |                              |   | 11,693                  |  |                   | 393    |                              |  | 3.36                    |   |   | 16,511  |  |   | 548    |   |  | 3.32 |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Total interest-bearing liabilities                               |  |                                                                     | 182,154 |                              |   | 3,521                   |   |                   | 1.93 |                              |   | 190,283                 |  |                   | 3,036  |                              |  | 1.60                    |   |   | 196,238 |  |   | 3,042  |   |  | 1.55 |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Noninterest-bearing deposits                                     |  |                                                                     | 28,232  |                              |   |                         |   |                   |      |                              |   | 27,647                  |  |                   |        |                              |  |                         |   |   | 27,162  |  |   |        |   |  |      |  
|Other liabilities                                                |  |                                                                     | 4,712   |                              |   |                         |   |                   |      |                              |   | 4,558                   |  |                   |        |                              |  |                         |   |   | 4,582   |  |   |        |   |  |      |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Total liabilities                                                |  |                                                                     | 215,098 |                              |   |                         |   |                   |      |                              |   | 222,488                 |  |                   |        |                              |  |                         |   |   | 227,982 |  |   |        |   |  |      |  
|Shareholdersequity                                              |  |                                                                     | 85,570  |                              |   |                         |   |                   |      |                              |   | 79,266                  |  |                   |        |                              |  |                         |   |   | 35,968  |  |   |        |   |  |      |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Total liabilities and shareholdersequity                        |  | $                                                                   | 300,668 |                              |   |                         |   |                   |      |                              | $ | 301,754                 |  |                   |        |                              |  |                         |   | $ | 263,950 |  |   |        |   |  |      |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Net interest income                                              |  |                                                                     |         |                              |   | 14,014                  |   |                   |      |                              |   |                         |  |                   | 13,647 |                              |  |                         |   |   |         |  |   | 11,650 |   |  |      |  
|Tax equivalent adjustment on securities                          |  |                                                                     |         |                              |   | (78                     | ) |                   |      |                              |   |                         |  |                   | (148   | )                            |  |                         |   |   |         |  |   | (194   | ) |  |      |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Net interest income per consolidated financial statements        |  |                                                                     |         |                              | $ | 13,936                  |   |                   |      |                              |   |                         |  | $                 | 13,499 |                              |  |                         |   |   |         |  | $ | 11,456 |   |  |      |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|                                                                 |  |                                                                     |         |                              |   |                         |   |                   |      |                              |   |                         |  |                   |        |                              |  |                         |   |   |         |  |   |        |   |  |      |  
|Net interest rate spread                                         |  |                                                                     |         |                              |   |                         |   |                   | 4.37 | %                            |   |                         |  |                   |        |                              |  | 4.27                    | % |   |         |  |   |        |   |  | 4.41 | %
|Net interest margin                                              |  |                                                                     |         |                              |   |                         |   |                   | 5.04 | %                            |   |                         |  |                   |        |                              |  | 4.80                    | % |   |         |  |   |        |   |  | 4.73 | %
|Ratio of interest-earning assets to interest-bearing
liabilities |  |                                                                     |         |                              |   |                         |   |                   | 1.53 | x                            |   |                         |  |                   |        |                              |  | 1.49                    | x |   |         |  |   |        |   |  | 1.26 | x

---



Rate Volume Analysis.The following table analyzes 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.

|                                     |  |                                                                             |     |                                                                             |   |      |   |      |       |        |   |     |   |   |       |   |   |       |  
|------------------------------------ |  | --------------------------------------------------------------------------- | --- | --------------------------------------------------------------------------- | - | ---- | - | ---- | ----- | ------ | - | --- | - | - | ----- | - | - | ----- | -
|                                     |  | Rate Volume Analysis                                                        |    
|                                     |  |                                                                             |    
|                                     |  | Year Ended December 31,
  2006
  Compared to Year Ended
  December 31, 2005 |     | Year Ended December 31,
  2005
  Compared to Year Ended
  December 31, 2004 |  
|                                     |  |                                                                             |     |                                                                             |  
|                                     |  | Increases (decreases) due to                                                |     | Increases (decreases) due to                                                |  
|                                     |  |                                                                             |     |                                                                             |  
|                                     |  | Rate                                                                        |     | Volume                                                                      |   | Net  |   | Rate |       | Volume |   | Net |  
|                                     |  |                                                                             |    
|                                     |  | (thousands)                                                                 |    
|                                     |  |                                                                             |    
|Assets:                              |  |                                                                             |     |                                                                             |   |      |   |      |       |        |   |     |   |   |       |   |   |       |  
|Interest-earning assets:             |  |                                                                             |     |                                                                             |   |      |   |      |       |        |   |     |   |   |       |   |   |       |  
|Loans                                |  | $                                                                           | 573 |                                                                             | $ | 764  |   | $    | 1,337 |        | $ | 52  |   | $ | 1,504 |   | $ | 1,556 |  
|Securities                           |  |                                                                             | 76  |                                                                             |   | (399 | ) |      | (323  | )      |   | 62  |   |   | (410  | ) |   | (348  | )
|Federal funds sold & other           |  |                                                                             |     |                                                                             |   |      |   |      |       |        |   |     |   |   |       |   |   |       |  
|Interest bearing deposits            |  |                                                                             | 205 |                                                                             |   | (367 | ) |      | (162  | )      |   | 602 |   |   | 181   |   |   | 783   |  
|                                     |  |                                                                             |     |                                                                             |   |      |   |      |       |        |   |     |   |   |       |   |   |       |  
|Total interest-earnings assets       |  |                                                                             | 854 |                                                                             |   | (2   | ) |      | 852   |        |   | 716 |   |   | 1,275 |   |   | 1,991 |  
|                                     |  |                                                                             |     |                                                                             |   |      |   |      |       |        |   |     |   |   |       |   |   |       |  
|Interest-bearing liabilities:        |  |                                                                             |     |                                                                             |   |      |   |      |       |        |   |     |   |   |       |   |   |       |  
|Savings accounts                     |  |                                                                             | 10  |                                                                             |   | (56  | ) |      | (46   | )      |   | (33 | ) |   | 4     |   |   | (29   | )
|Time deposits                        |  |                                                                             | 467 |                                                                             |   | (11  | ) |      | 456   |        |   | 222 |   |   | (32   | ) |   | 190   |  
|Money market accounts                |  |                                                                             | 39  |                                                                             |   | (6   | ) |      | 33    |        |   | 4   |   |   | (23   | ) |   | (19   | )
|Other interest bearing deposits      |  |                                                                             | (3  | )                                                                           |   | 7    |   |      | 4     |        |   | (12 | ) |   | 19    |   |   | 7     |  
|                                     |  |                                                                             |     |                                                                             |   |      |   |      |       |        |   |     |   |   |       |   |   |       |  
|Total interest-bearing deposits      |  |                                                                             | 513 |                                                                             |   | (66  | ) |      | 447   |        |   | 181 |   |   | (32   | ) |   | 149   |  
|                                     |  |                                                                             |     |                                                                             |   |      |   |      |       |        |   |     |   |   |       |   |   |       |  
|Borrowings                           |  |                                                                             | 59  |                                                                             |   | (21  | ) |      | 38    |        |   | 5   |   |   | (160  | ) |   | (155  | )
|                                     |  |                                                                             |     |                                                                             |   |      |   |      |       |        |   |     |   |   |       |   |   |       |  
|Total interest-bearing
  liabilities |  |                                                                             | 572 |                                                                             |   | (87  | ) |      | 485   |        |   | 186 |   |   | (192  | ) |   | (6    | )
|                                     |  |                                                                             |     |                                                                             |   |      |   |      |       |        |   |     |   |   |       |   |   |       |  
|Net change in interest income        |  | $                                                                           | 282 |                                                                             | $ | 85   |   | $    | 367   |        | $ | 530 |   | $ | 1,467 |   | $ | 1,997 |  
|                                     |  |                                                                             |     |                                                                             |   |      |   |      |       |        |   |     |   |   |       |   |   |       |  

Comparison of
Financial Condition at December 31, 2006 and December 31, 2005

The Companys total assets
at December 31, 2006 were $298.8 million, a decrease of $10.1 million or 3.3%
from $308.9 million at December 31, 2005. Cash and cash equivalents decreased
to $7.9 million at December 31, 2006, from $34.2 million at December 31, 2005,
primarily as a result of treasury stock repurchases and an investment in
Bank-owned life insurance.

Securities available for
sale were $4.3 million at December 31, 2006, a decrease of $5.3 million or
55.2% from $9.6 million at December 31, 2005. This decrease is due to
maturities, principal reductions and securities sales. Throughout 2006, the
proceeds from the maturities and sale of investment securities were used to
fund growth in the Companys loan portfolio, which currently is producing a
higher yield than securities opportunities.

Total loans increased $10.6
million or 4.2% to $264.5 million at December 31, 2006 from $253.9 million at
December 31, 2005. During the year ended December 31, 2006, Rome Bancorp
originated approximately $51.7 million of loans. The majority of the loan
growth was in the residential mortgage loan portfolio, which grew by $8.6
million, or 6.7%. Asset quality has

---



remained favorable over the
same period as non-performing loans as a percentage of total loans were 0.42%
at December 31, 2006 as compared to 0.37% at December 31, 2005. The allowance
for loan losses as a percent of non-performing loans was 178.0% at December 31,
2006, as compared to 207.0% at December 31, 2005. These ratios are
considered appropriate due to the growth in the Companys residential mortgage
portfolio in 2006. Due to stringent underwriting standards, the history of
losses on this portfolio is significantly lower than on the remaining loans.

Total deposits decreased by
$5.5 million or 2.7% from $201.5 million at December 31, 2005 to $196.0 million
at December 31, 2006. The overall decrease in deposits is primarily
attributable to decreases in savings and non-interest bearing deposit accounts
partially offset by increases in other interest bearing deposits, money market
accounts and time deposits. Savings deposits decreased $5.0 million or 5.6%
from $89.1 million at December 31, 2005 to $84.1 million at December 31, 2006.
Non-interest bearing deposit balances decreased by $2.0 million or 6.7% over
the past year. The decline in these deposit categories is attributed to
customers seeking higher returns in other investment vehicles, consistent with
trends among financial institutions. Other interest bearing deposits increased
$1.3 million or 11.6% during 2006. Money market deposits and time deposits
increased slightly by $194,000, or 3.9%, and $103,000 or 0.2%, respectively,
during the year ended December 31, 2006.

Comparison of Results
of Operations for the Years Ended December 31, 2006 and December 31, 2005

General.Net income for the year ended December 31,
2006 was $2.5 million, a decrease of $914,000 from $3.4 million for the year
ended December 31, 2005. The decrease in net income was attributable to
increases in non-interest expense of $1.9 million, a decrease in gains on
securities sales of $94,000, a decrease in non-interest income of $36,000 and
an increase in loan loss provision of $32,000, partially offset by an increase
in net interest income before loan loss provision of $437,000 and a decrease in
income tax expense of $693,000.

Net Interest Income.Net interest income was $13.9 million in
2006, an increase of $437,000 or 3.2% from $13.5 million in 2005. This increase
is principally due to an increase in interest income, resulting in net interest
margin on a tax equivalent basis of 5.04% in 2006 compared to 4.80% for the
year ended 2005.

Interest Income.Interest income increased by $922,000 for the
year ended December 31, 2006, from $16.5 million for the year ended December
31, 2005. Interest income earned on the loan portfolio increased to $16.3
million in 2006 from $15.0 million in 2005. Average loan balances increased to
$255.2 million in 2006 from $242.5 million in 2005, primarily due to growth in
the residential mortgage portfolio. The yield on loans in 2006 was 6.40%
compared to 6.18% in 2005, due to increases in underlying market rates over the
past two years. Interest and dividend income on securities decreased in 2006
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 $8.4 million in 2006 from $15.7 million in 2005 while
their yields increased to 6.40% from 5.50% over the same period. Interest
income of other short-term investments, including federal funds sold, dropped
from $826,000 in 2005 to $664,000 in 2006, as a result of a decrease in average
federal funds sold from $26.2 million in 2005 to $14.5 million in 2006.
Partially offsetting the average balance decrease was an increase in the yields
on these federal funds to 4.57% from 3.15% over the same period.

Interest Expense.Interest expense increased to $3.5 million in
2006 from $3.0 million in 2005 primarily due to an increase in the rate paid on
deposit accounts, consistent with current market trends. The average rate paid
on interest bearing deposits in 2006 was 1.81% compared to 1.48% in 2005. The
average balance of these deposits decreased to $171.1 million in 2006 from
$178.6 million in the prior year. Interest expense on borrowings increased from
$393,000 in 2005 to $431,000 in 2006 due to an increase in the average rate
paid on this debt from 3.36% in 2005 to 3.90% in 2006.

---



Provision for Loan
Losses.The provision for loan losses was $147,000 in
2006 compared to $115,000 in 2005. The 2005 provision for loan losses was lower
than normal as the Company received a large recovery on a commercial loan that
had been charged off in fiscal 2000. The allowance for loan losses was $2.0
million or 0.74% of total loans at December 31, 2006 compared to $2.0 million
and 0.77% of total loans at December 31, 2005. The allowance for loan losses as
a percent of non-performing loans was 178% at December 31, 2005 compared to
207% at December 31, 2005. Non-performing loans, consisting of non-accrual
loans and loans 90 days past due and still accruing, was $1.1 million or 0.42%
of total loans at December 31, 2006 compared to $947,000 or 0.37% at December
31, 2005. These ratios are considered appropriate due to the net growth in the
Companys residential mortgage portfolio of $8.6 million in 2006. Due to
stringent underwriting standards, the history of losses on the residential
mortgage loan portfolio is significantly lower than on the other types of
loans. 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 $147,000 was
necessary in 2006.

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

|                          |  |      |       |      |   |          |  |          |      |   |  |        |   
|------------------------- |  | ---- | ----- | ---- | - | -------- |  | -------- | ---- | - |  | ------ | --
|                          |  | 2006 |       | 2005 |   | $ Change |  | % Change |     
|                          |  |      |       |      |   |          |  |          |     
|Gain on
  securities sold |  | $    | 11    |      | $ | 105      |  | $        | (94  | ) |  | (89.52 | )%
|Gain on sale
  of loans   |  |      | 15    |      |   | 20       |  |          | (5   | ) |  | (25.00 | )%
|Service
  charges         |  |      | 1,559 |      |   | 1,585    |  |          | (26  | ) |  | (1.64  | )%
|Other income              |  |      | 311   |      |   | 316      |  |          | (5   | ) |  | (1.58  | )%
|                          |  |      |       |      |   |          |  |          |      |   |  |        |   
|Total non-interest income |  | $    | 1,896 |      | $ | 2,026    |  | $        | (130 | ) |  | (6.42  | )%
|                          |  |      |       |      |   |          |  |          |      |   |  |        |   

Non-interest income
decreased by $130,000 to $1.9 million in 2006 as compared to $2.0 million in
2005, principally due to lower gains on securities sales. The Company recorded
net securities sales gains of $11,000 in 2006 versus $105,000 in 2005, due to a
lower volume of sales activity.

In mid-2006, the Company
made an $8.0 million investment in Bank-owned life insurance policies on key
officers, resulting in $215,000 of increased cash surrender value being
recognized through the balance of 2006. During 2005, the Company recovered
$167,000 in costs related to the aforementioned fiscal 2000 loan write-off.

Non Interest Expense.Non-interest expense was $11.9 million for
the year ended December 31, 2006 compared to $10.0 million for the year ended
December 31, 2005. The following table summarizes changes in the major
components of non-interest expense:

|                                           |  |      |        |      |   |          |  |          |       |   |  |        |   
|------------------------------------------ |  | ---- | ------ | ---- | - | -------- |  | -------- | ----- | - |  | ------ | --
|                                           |  | 2006 |        | 2005 |   | $ Change |  | % Change |      
|                                           |  |      |        |      |   |          |  |          |      
|Salaries and
  employee benefits           |  | $    | 6,986  |      | $ | 5,359    |  | $        | 1,627 |   |  | 30.36  | % 
|Occupancy
  and equipment expense          |  |      | 1,824  |      |   | 1,670    |  |          | 154   |   |  | 9.22   | % 
|Marketing
  expense                        |  |      | 247    |      |   | 312      |  |          | (65   | ) |  | (20.83 | )%
|Outside
  consulting and professional fees |  |      | 792    |      |   | 640      |  |          | 152   |   |  | 23.75  | % 
|Other expense                              |  |      | 2,010  |      |   | 1,996    |  |          | 14    |   |  | 0.70   | % 
|                                           |  |      |        |      |   |          |  |          |       |   |  |        |   
|Total non-interest expense                 |  | $    | 11,859 |      | $ | 9,977    |  | $        | 1,882 |   |  | 18.86  | % 
|                                           |  |      |        |      |   |          |  |          |       |   |  |        |   

The increase in salaries and
employee benefits is related to the 2006 adoption of SFAS No. 123(R), Share-based
Payments, and its requirement to record stock-based compensation cost using the
fair value method. For 2006, adopting this standard resulted in additional
non-cash compensation expense of $1.6 million. Under the provisions of SFAS No.
123(R), in addition to expensing the fair

---



value of options and
restricted share awards over the underlying requisite service period of those
awards, grants made to individuals eligible for retirement or early retirement
as defined in the Companys defined benefit pension plan were required to be
expensed at the point when the individuals met the retirement eligibility
criteria. This resulted in accelerating $1.3 million of stock-Based
compensation amortization expense into 2006 that otherwise would have been
recorded in subsequent years. Increases in occupancy costs and professional
fees are primarily attributable to additional costs related to information
technology infrastructure and continued Sarbanes-Oxley Act compliance
activities.

Income Tax Expense.
Income tax expense was $1.3 million for 2006, a decrease of $693,000 from 2005
income tax expense of $2.0 million. The decrease is directly attributable to
lower pre-tax earnings and an increase in permanent tax benefits.

Comparison of Results
of Operations for the Years Ended December 31, 2005 and December 31, 2004

General.Net income for the year ended December 31,
2005 was $3.4 million, an increase of $1.0 million from $2.4 million for the
year ended December 31, 2004. The increase in net income was attributable to an
increase in net interest income before loan loss provision of $2.0 million, a
decrease in loan loss provision of $275,000, and an increase in non-interest
income of $325,000, partially offset by a decrease in gains on securities sales
of $71,000, increases in non-interest expense of $876,000 and income tax
expense of $695,000.

Net Interest Income.Net interest income was $13.5 million in
2005, an increase of $2.0 million or 17.8% from $11.5 million in 2004. This
increase is principally due to the increase in the average balance of interest
earning assets to $284 million in 2005, from $246 million in 2004. The growth
in earning assets is directly related to receipt of the proceeds of the
Companys stock offering and conversion in March of 2005. Those proceeds were
also utilized to pay down outstanding borrowings, bringing the average balances
of these interest bearing liabilities to $11.7 million in 2005 versus $16.5
million in 2004. The Companys ratio of interest earning assets to interest
bearing liabilities increased to 149.44% in 2005 from 125.61% in 2004, while
net interest margin increased to 4.80% in 2005 from 4.73% in 2004.

Interest Income.Interest income increased by $2.0 million for
the year ended December 31, 2005, to $16.5 million as compared to $14.5 million
in the year ended December 31, 2004. Interest income earned on the loan
portfolio increased to $14.9 million in 2005 from $13.4 million in 2004. The
average loan balances increased to $242.5 million in 2005 from $217.6 million
in 2004, primarily due to growth in residential lending. The yield on loans in
2005 increased slightly to 6.18% from 6.17% in 2004, due to the effect of prime
rate increases throughout 2005 on certain variable rate instruments. Interest
and dividend income on securities decreased in 2005 primarily due to a decline
in volume. As securities matured, 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 $15.7 million in 2005
from $23.7 million in 2004 while their yields increased to 5.50% from 5.10%
over the same period. Interest income of other short-term investments,
including federal funds sold, increased to $826,000 in 2005 from $44,000 in
2004, primarily as a result of an increase in volume as well as an increase in
the yield of these funds to 3.15% in 2005 from 0.85% in 2004. Average federal
funds sold increased to $26.2 million in 2005 from $5.1 million in 2004, as the
Company held a portion of the stock offering proceeds in these deposits until
more long term investments were analyzed.

Interest Expense.Interest
expense for the year 2005 remained basically constant compared to interest
expense for 2004. Interest expense on deposit accounts increased by $149,000 to
$2.6 million in 2005 due to increases in the average rate paid on interest
bearing deposits increasing to 1.48% in 2005 compared to 1.39% in 2004. Interest
expense on borrowings decreased from $548,000 in 2004 to $393,000 in 2005
primarily due to a decrease in the average balance of outstanding borrowings
from $16.5 million in 2004 to $ 11.7 million in 2005. The Company utilized

---



$9.0 million
of the proceeds of the March 2005 stock offering and conversion to pay down
FHLB borrowings.

Provision for Loan
Losses. The provision for loan losses was $115,000 in
2005 compared to $390,000 in 2004. During 2005, the Company received a large recovery
on a commercial loan that had been charged off in fiscal 2000. Because of this
recovery and the continued stable asset quality of the loan portfolio, a lower
provision was deemed necessary in 2005. The allowance for loan losses was $2.0
million or 0.77% of total loans at December 31, 2005 compared to $2.0 million
and 0.86% of total loans at December 31, 2004. The allowance for loan losses as
a percent of non-performing loans was 207% at December 31, 2005 compared to
241% at December 31, 2004. These ratios are considered appropriate due to the
growth in the Companys residential mortgage portfolio of $12.3 million in
2005. Due to stringent underwriting standards, the history of losses on the
residential mortgage loan portfolio is significantly lower than on the other
types of loans. Non-performing loans, consisting of non-accrual loans and loans
90 days past due and still accruing, increased slightly to $947,000 or 0.37% of
total loans at December 31, 2005 compared to $829,000 or 0.36% at December 31,
2004.

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 $115,000 was
necessary in 2005.

Non Interest Income.
Non-interest income increased to $2.0
million in 2005 as compared to $1.8 million in 2004. The following table
summarizes changes in the major components of non-interest income:

|                            |  |      |       |      |   |          |  |          |     |   |  |        |   
|--------------------------- |  | ---- | ----- | ---- | - | -------- |  | -------- | --- | - |  | ------ | --
|                            |  | 2005 |       | 2004 |   | $ Change |  | % Change |    
|                            |  |      |       |      |   |          |  |          |    
|Gain on
  securities sold   |  | $    | 105   |      | $ | 176      |  | $        | (71 | ) |  | (40.34 | )%
|Gain on sale
  of loans     |  |      | 20    |      |   |         |  |          | 20  |   |  |       |   
|Service
  charges           |  |      | 1,585 |      |   | 1,451    |  |          | 134 |   |  | 9.24   | % 
|Other income                |  |      | 316   |      |   | 145      |  |          | 171 |   |  | 117.93 | % 
|                            |  |      |       |      |   |          |  |          |     |   |  |        |   
|Total
  non-interest income |  | $    | 2,026 |      | $ | 1,772    |  | $        | 254 |   |  | 14.33  | % 
|                            |  |      |       |      |   |          |  |          |     |   |  |        |   

The Company
recorded net securities sales gains of $105,000 in 2005 versus gains of
$176,000 in 2004. Gains on securities decreased due to a less securities being
sold in 2005. In 2005, the Company began selling residential mortgages,
resulting in a gain of $20,000. Service fee income increased by 9.24% over 2004
levels, due to increased transaction volume. During 2005, the Company recovered
$167,000 in costs related to the aforementioned fiscal 2000 loan write-off.
This recovery comprises the majority of the increase in other income over 2004
levels.

Non Interest Expense. Non-interest expense was $10.0 million
for the year ended December 31, 2005 compared to $9.1 million for the year
ended December 31, 2004. The following table summarizes changes in the major
components of non-interest expense:

|                                           |  |      |       |      |   |          |  |          |     |  |  |       |  
|------------------------------------------ |  | ---- | ----- | ---- | - | -------- |  | -------- | --- |  |  | ----- | -
|                                           |  | 2005 |       | 2004 |   | $ Change |  | % Change |    
|                                           |  |      |       |      |   |          |  |          |    
|Salaries and
  employee benefits           |  | $    | 5,359 |      | $ | 5,137    |  | $        | 222 |  |  | 4.32  | %
|Occupancy
  and equipment expense          |  |      | 1,670 |      |   | 1,568    |  |          | 102 |  |  | 6.51  | %
|Marketing
  expense                        |  |      | 312   |      |   | 311      |  |          | 1   |  |  | 0.32  | %
|Outside
  consulting and professional fees |  |      | 640   |      |   | 341      |  |          | 299 |  |  | 87.68 | %
|Other
  expense                            |  |      | 1,996 |      |   | 1,745    |  |          | 251 |  |  | 14.38 | %
|                                           |  |      |       |      |   |          |  |          |     |  |  |       |  
|Total non-interest expense                 |  | $    | 9,977 |      | $ | 9,102    |  | $        | 875 |  |  | 9.61  | %
|                                           |  |      |       |      |   |          |  |          |     |  |  |       |  

In 2005, the
Company spent approximately $279,000 on expenses, primarily in the consulting
and professional service area, necessitated by Sarbanes-Oxley Act compliance
activities. Salaries and

---



benefits
increased over 2004 levels due to an increase in ESOP expense of $78,000 and
normal inflationary increases. The majority of the increase in 2005 occupancy
expense is attributable to higher equipment operating costs and depreciation.

Income Tax Expense. Income tax expense increased to $2.0 million
in 2005, compared to $1.3 million in 2004. The increase is directly
attributable to higher pre-tax earnings and an increase in permanent tax
differences.

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 $62.7 million on a line of
credit. At December 31, 2006, the Bank had outstanding borrowings of $11.8 million
against this line of credit, in addition to amortizing notes totaling $8.4
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 2006, the Company originated
approximately $51.7 million in loans compared to approximately $65.3 million in
2005. Purchases of investment securities were $1.6 million in 2006 and $55,000
in 2005. During the second quarter of 2006, the Company invested in life
insurance policies on certain key officers and employees totaling $8.0 million.
At December 31, 2006, the Company had loan commitments to borrowers of
approximately $12.1 million, and customer available letters and lines of credit
of approximately $17.2 million.

Total deposits
were $196.0 million at December 31, 2006, a decrease of 2.7% from $201.5
million at December 31, 2005. Time deposit accounts scheduled to mature within
one year were $43.9 million at December 31, 2006. 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 from 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.

During 2006,
the Company repurchased 1,383,000 outstanding shares of its common stock at a
total cost of $17.8 million. The Company paid cash dividends of $0.30 per share
in 2006, requiring a cash outlay of $2.6 million.

At December
31, 2006 and 2005, the Bank exceeded each of the applicable regulatory capital
requirements. The Banks leverage (Tier 1) capital at December 31, 2006 and
2005 was $63.2 million and $58.6 million or 21.27% and 18.96% of adjusted
assets, respectively. In order to be classified as well-capitalized by the
Office of Thrift Supervision (OTS) and the Federal Deposit Insurance
Corporation (FDIC), at December 31, 2006 and 2005, the Bank is required to
have leverage (Tier 1) capital of $14.9 million and $15.5 million,
respectively, or 5.0% of adjusted 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, 2006 and 2005, the
Bank had a risk-based total capital ratio of 28.9% and 28.2%, respectively.

On March 30,
2005, the Company reorganized from the two-tier mutual holding company
structure to the stock holding company structure (the Conversion). The
Conversion was accounted for as a change in corporate form with no resulting
change in the historical basis of the Companys assets, liabilities and equity.
Costs related to the offering that was conducted in connection with the
Conversion were $3.1 million and accordingly, net proceeds were $55.9 million.
In addition, the Bank received $1.9 million of cash previously held by Rome
MHC, the Companys former mutual holding company.

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: |       
|                                  |  |                         |       
|                                  |  | Total                   |        | Less than
  1 year |   | 1-3 years |  | 3-5 years |        | More than
  5 years |  
|                                  |  |                         |        |                    |   |           |  |           |        |                     |  
|Time deposits                     |  | $                       | 66,401 |                    | $ | 43,856    |  | $         | 15,934 |                     | $ | 6,611 |  |   |      | 
|Federal Home Loan Bank borrowings |  |                         | 20,172 |                    |   | 12,838    |  |           | 3,518  |                     |   | 1,705 |  | $ | 2,111 | 
|Software maintenance contracts    |  |                         | 341    |                    |   | 258       |  |           | 83     |                     |   |      |  |   |      | 
|                                  |  |                         |        |                    |   |           |  |           |        |                     |  
|Total contractual obligations     |  | $                       | 86,914 |                    | $ | 56,952    |  | $         | 19,535 |                     | $ | 8,316 |  | $ | 2,111 | 
|                                  |  |                         |        |                    |   |           |  |           |        |                     |  

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

Effective
January 1, 2006, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 123(R), Share-based Payment. See the discussion above
under Comparison of Results of Operations for the Years Ended December 31,
2006 and December 31, 2005 - Non-Interest Expense, for further discussion of
the effect of adopting this standard.

In September
2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 158,
Employers Accounting for Defined Benefit Pension and Other Postretirement
Plans  an amendment of FASB Statements No. 87, 88, 106 and 132(R). This
Statement requires an employer to recognize the overfunded or underfunded
status of a defined benefit postretirement plan (other than a multiemployer
plan) as an asset or liability in its balance sheet, beginning with year end
2006, and to recognize changes in the funded status in the year in which the
changes occur through comprehensive income beginning in 2007. Additionally,
defined benefit plan assets and obligations are to be measured as of the date
of the employers fiscal year-end, starting in 2008. Adoption had the following
effect on individual line items in the 2006 balance sheet (in thousands of
dollars):

---



| |                                                 |  |                                        |         |             |   |                                       |   |   |         |  
| | ----------------------------------------------- |  | -------------------------------------- | ------- | ----------- | - | ------------------------------------- | - | - | ------- | -
| |                                                 |  | Before
  Application of
  SFAS No. 158 |         | Adjustments |   | After
  Application of
  SFAS No. 158 |  
| |                                                 |  |                                        |         |             |   |                                       |  
| |                                                 |  | (in thousands of dollars)              |        
| |                                                 |  |                                        |        
| | Prepaid
  pension benefits                      |  | $                                      | 2,345   |             | $ | (1,211                                | ) | $ | 1,134   |  
| | Deferred
  income taxes                         |  |                                        | 1,459   |             |   | 450                                   |   |   | 1,909   |  
| | Total assets                                    |  |                                        | 299,520 |             |   | (761                                  | ) |   | 298,759 |  
| | Postretirement
  benefit liability              |  |                                        | 2,439   |             |   | (85                                   | ) |   | 2,354   |  
| | Total
  liabilities                             |  |                                        | 221,813 |             |   | (85                                   | ) |   | 221,728 |  
| | Accumulated
  other comprehensive income (loss) |  |                                        | 43      |             |   | (676                                  | ) |   | (633    | )
| | Total stockholders equity                      |  |                                        | 77,707  |             |   | (676                                  | ) |   | 77,031  |  

In September 2006, the Securities and Exchange Commission (the SEC)
released Staff Accounting Bulletin No. 108, Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements (SAB 108),which is effective for fiscal years
ending on or after November 15, 2006. SAB 108 provides guidance on how the
effects of prior-year uncorrected financial statement misstatements should be
considered in quantifying a current year misstatement. SAB 108 requires public
companies to quantify misstatements using both an income statement (rollover)
and balance sheet (iron curtain) approach and evaluate whether either approach
results in a misstatement that, when all relevant quantitative and qualitative
factors are considered, is material. If prior year errors that had been
previously considered immaterial now are considered material based on either
approach, no restatement is required so long as management properly applied its
previous approach and all relevant facts and circumstances were considered.
Adjustments considered immaterial in prior years under the method previously
used, but now considered material under the dual approach required by SAB 108,
are to be recorded upon initial adoption of SAB 108. The amount so recorded is
shown as a cumulative effect adjustment and is recorded in opening retained
earnings as of January 1, 2006. The Company recorded a cumulative effect
adjustment that decreased retained earnings in the amount of $206,000, which
was comprised of a reduction of reserves for income and franchise taxes in the
amount of $204,000, offset by corrections to increase prior year payroll and
benefit accruals in the amount of $410,000, net of taxes.

In July 2006, the
FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109 (FIN 48), which
prescribes a recognition threshold and measurement attribute for a tax position
taken or expected to be taken in a tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after December 15, 2006. The Company has determined that the adoption
of FIN 48 will not have a material effect on the financial statements.

Other new
accounting standards have been issued that the Company does not expect will
have a material effect on the financial statements when adopted in future years
or for which the Company has not yet completed its evaluation of the potential
effect upon adoption. In general, these standards revise the accounting for
derivatives embedded in other financial instruments for 2007, revise the
recognition and accounting for servicing of financial assets for 2007,
establish a hierarchy about the assumptions used to measure fair value for
2008, revise the accrual of post-retirement benefits associated with providing
life insurance for 2008, and revise the accounting for cash surrender value for
2007.

Additionally, a new accounting
standard will require the company to record servicing assets at fair value
instead of at allocated cost, and thereafter will allow the Company to carry
new and existing classes of servicing assets at either fair value or amortized
original basis, beginning in 2007. Adoption of this standard may increase
servicing assets to the extent the Company elects to apply it

---



to existing
classes of servicing assets and to the extent fair value of servicing exceeds
amortized cost.

MARKET FOR THE COMPANYS COMMON STOCK

The Companys
common stock is traded on the Nasdaq Global 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, 2006, the last trading date in the
Companys fiscal year, the common stock of the Company closed at $12.75 per
share. At March 2, 2006, there were 8,531,983 shares of the Companys common
stock outstanding, which were held of record by approximately 2,692 registered
shareholders.

The table
below shows the high and low sales price of the Companys common stock during
the periods indicated. The Company paid cash dividends of $0.30 per share in
2006. The Company also paid a quarterly cash dividend of $0.08 per share to
shareholders of record as of February 5, 2007. 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;                              
| |   |                                                                 
| |  | federal laws
  and regulations;                                 
| |   |                                                                 
| |  | 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 |      
|                                   |  |             |      
|Date                               |  | High        |       | Low |   | Dividends | 
|                                   |  |             |       |     |   |           | 
|Year ended December 31, 2006       |  |             |       |     |   |           | 
|                                   |  |             |       |     |   |           | 
|Quarter
  ended March 31, 2006     |  | $           | 12.10 |     | $ | 10.75     |  | $ | 0.075 | 
|Quarter
  ended June 30, 2006      |  |             | 12.95 |     |   | 11.71     |  |   | 0.075 | 
|Quarter
  ended September 30, 2006 |  |             | 13.00 |     |   | 12.11     |  |   | 0.075 | 
|Quarter
  ended December 31, 2006  |  |             | 12.96 |     |   | 12.46     |  |   | 0.075 | 
|                                   |  |             |       |     |   |           |  |   |       | 
|Year ended December 31, 2005       |  |             |       |     |   |           |  |   |       | 
|                                   |  |             |       |     |   |           |  |   |       | 
|Quarter
  ended March 31, 2005     |  | $           | 13.14 |     | $ | 9.48      |  | $ | 0.066 | 
|Quarter
  ended June 30, 2005      |  |             | 10.28 |     |   | 9.27      |  |   | 0.066 | 
|Quarter
  ended September 30, 2005 |  |             | 10.87 |     |   | 9.92      |  |   | 0.066 | 
|Quarter
  ended December 31, 2005  |  |             | 11.14 |     |   | 10.00     |  |   | 0.066 | 

All per share
amounts are adjusted to reflect the Companys stock offering and conversion
which occurred on March 30, 2005.

---



Performance Graph. The graph below compares the
Companys total cumulative shareholder return, including reinvestment of
dividends and adjusted for stock splits, by an investor who invested $100.00 on
December 31, 2001, to December 31, 2006, to the total return by an investor who
invested $100.00 in each of the Nasdaq Composite Index (U.S. Companies) and the
Nasdaq Bank Composite Index (banks and bank holding companies, over 99% of
which are based in the United States).

COMPARISON OF 5 YEAR
CUMULATIVE TOTAL RETURN*Among Rome Bancorp, The NASDAQ Composite Index 
And The NASDAQ Bank Index

(LINE GRAPH)

|                 |  |  |        |  |  |        |  |  |        |  |  |        |  |  |        |  |  |        | 
|---------------- |  |  | ------ |  |  | ------ |  |  | ------ |  |  | ------ |  |  | ------ |  |  | ------ | 
|                 |  |  | 12/01  |  |  | 12/02  |  |  | 12/03  |  |  | 12/04  |  |  | 12/05  |  |  | 12/06  | 
|                 |  |  |        |  |  |        |  |  |        |  |  |        |  |  |        |  |  |        | 
|                 |  |  |        |  |  |        |  |  |        |  |  |        |  |  |        |  |  |        | 
|Rome Bancorp     |  |  | 100.00 |  |  | 150.18 |  |  | 282.63 |  |  | 268.56 |  |  | 233.33 |  |  | 281.19 | 
|NASDAQ Composite |  |  | 100.00 |  |  | 71.97  |  |  | 107.18 |  |  | 117.07 |  |  | 120.50 |  |  | 137.02 | 
|NASDAQ Bank      |  |  | 100.00 |  |  | 59.14  |  |  | 89.11  |  |  | 103.85 |  |  | 130.57 |  |  | 166.05 | 

---



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING

The management
of Rome Bancorp, Inc. is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rules 13a-15(f) under
the Securities Exchange Act of 1934. Rome Bancorp, Inc.s internal control over
financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. Rome Bancorp, Inc.s internal control over financial reporting
includes those policies and procedures that : (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of assets of Rome Bancorp, Inc. (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of Rome Bancorp, Inc.
are being made only in accordance with authorizations of management and
directors of Rome Bancorp, Inc. and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or
disposition of Rome Bancorp, Inc.s assets that could have a material effect on
the financial statements.

Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. Management assessed the effectiveness
of Rome Bancorp, Inc.s internal control over financial reporting as of
December 31, 2006. In making this assessment, management used the criteria set
forth by the Committee for Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control-Integrated Framework. Based on our assessment and
those criteria, management concluded that Rome Bancorp, Inc. maintained
effective internal control over financial reporting as of December 31, 2006.

Rome Bancorp,
Inc.s independent registered public accounting firm has issued their report on
managements assessment of Rome Bancorp, Inc.s internal control over financial
reporting. That report follows under the heading, Report of Independent
Registered Public Accounting Firm on Internal Control Over Financial Reporting.

|                                                              
|--------------------------------------------------------------
|/s/ Charles
  M. Sprock                                       
|                                                              
|Charles M.
  Sprock                                           
|Chairman of
  the Board, President and Chief Executive Officer
|                                                              
|/s/ David C.
  Nolan                                          
|                                                              
|David C.
  Nolan                                              
|Executive
  Vice President and Chief Financial Officer        

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
INTERNAL CONTROL OVER FINANCIAL REPORTING

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

We have audited managements
assessment, included in the accompanying Managements Report on Internal
Control Over Financial Reporting, that Rome Bancorp, Inc. maintained effective
internal control over financial reporting as of December 31, 2006 based on
criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Rome Bancorp,
Inc.s management is responsible for maintaining effective control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion
on managements assessment and an opinion on the effectiveness of the Companys
internal control over financial reporting based on our audit.

We conducted our audit in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). These standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial reporting,
evaluating managements assessment, testing and evaluating the design and
operating effectiveness of internal control, and performing such other
procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.

A companys internal control
over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal control over financial
reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly
represent the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that the receipts and expenditures of the
company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the companys assets that could have a material effect on the financial
statements.

Because of its inherent
limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

In our opinion, managements
assessment that Rome Bancorp, Inc. maintained effective internal control over
financial reporting as of December 31, 2006, is fairly stated, in all material
respects, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Also, in our opinion, Rome Bancorp, Inc. maintained, in all
material respects, effective control over financial reporting as of December
31, 2006, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission.

We have also audited, in
accordance with the standards of the Public Company Oversight Board (United
States), the consolidated balance sheets of Rome Bancorp Inc. as of December
31, 2006 and 2005, and the related consolidated statements of income,
shareholders equity and comprehensive income, and cash flows for the years
ended December 31, 2006, 2005 and 2004 and our report dated March 12, 2007
expressed an unqualified opinion on those consolidated financial statements.

|                                                 
|-------------------------------------------------
|/s/ Crowe
  Chizek and Company LLC               
|                                                 
|Crowe Chizek and Company
  LLC 
  Cleveland, Ohio
|                                                 
|March 12, 2007                                   

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

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

We have
audited the accompanying consolidated balance sheets of Rome Bancorp, Inc. and
subsidiary as of December 31, 2006 and 2005 and the related consolidated
statements of income, shareholders equity and comprehensive income, and cash
flows for the three years in the period ended December 31, 2006. 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 audits.

We conducted
our audits 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
audits provide 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, 2006 and 2005 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2006, in
conformity with U.S. generally accepted accounting principles.

As discussed
in Note 2 to the consolidated financial statements, the Company changed its
accounting for defined benefit pension and other postretirement plans to comply
with newly issued accounting standards.

As discussed
in Note 2 to the consolidated financial statements, the Company adopted Staff
Accounting Bulletin 108, Considering the Effects of Prior Year Misstatements
when Quantifying Misstatement in the Current Year Financial Statements and
accordingly, adjusted assets and liabilities at the beginning of 2006 with
off-setting adjustment to the opening balance of retained earnings.

We have also
audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the effectiveness of Rome Bancorp, Inc.s
internal control over financial reporting as of December 31, 2006, based on
criteria in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and our report dated
March 12, 2007 expressed an unqualified opinion thereon.

|                                                                   
|-------------------------------------------------------------------
|/s/ Crowe
  Chizek and Company LLC                                 
|                                                                   
|Crowe Chizek
  and Company LLC 
  Cleveland, Ohio 
  March 12, 2007

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets

December 31, 2006 and 2005

|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | -
|(in
  thousands, except share data)                                                                                                                                                                                                         
|                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                             |  | 2006 |         | 2005 |  
|Assets                                                                                                                                                                                                                                       |  |      |         |      |  
|Cash and due from banks                                                                                                                                                                                                                      |  | $    | 6,769   |      | $ | 7,457   |  
|Federal funds sold and other short-term investments                                                                                                                                                                                          |  |      | 1,089   |      |   | 26,778  |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Total cash and cash equivalents                                                                                                                                                                                                              |  |      | 7,858   |      |   | 34,235  |  
|Securities available for sale, at fair value                                                                                                                                                                                                 |  |      | 4,319   |      |   | 9,666   |  
|Securities held to maturity (fair value of $1,175 and $1,428 at
  December 31, 2006 and 2005, respectively)                                                                                                                                  |  |      | 1,178   |      |   | 1,440   |  
|Federal Home Loan Bank stock                                                                                                                                                                                                                 |  |      | 1,344   |      |   | 776     |  
|Loans                                                                                                                                                                                                                                        |  |      | 264,537 |      |   | 253,878 |  
|Less: Allowance for loan losses                                                                                                                                                                                                              |  |      | (1,965  | )    |   | (1,960  | )
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Net loans                                                                                                                                                                                                                                    |  |      | 262,572 |      |   | 251,918 |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Premises and equipment, net                                                                                                                                                                                                                  |  |      | 6,072   |      |   | 4,503   |  
|Accrued interest receivable                                                                                                                                                                                                                  |  |      | 1,094   |      |   | 1,053   |  
|Bank-owned life insurance                                                                                                                                                                                                                    |  |      | 8,215   |      |   |        |  
|Other assets                                                                                                                                                                                                                                 |  |      | 6,107   |      |   | 5,262   |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Total assets                                                                                                                                                                                                                                 |  | $    | 298,759 |      | $ | 308,853 |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Liabilities and Shareholders Equity                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Liabilities:                                                                                                                                                                                                                                 |  |      |         |      |   |         |  
|Deposits:                                                                                                                                                                                                                                    |  |      |         |      |   |         |  
|Non-interest bearing                                                                                                                                                                                                                         |  | $    | 28,042  |      | $ | 30,039  |  
|Savings                                                                                                                                                                                                                                      |  |      | 84,089  |      |   | 89,138  |  
|Money market                                                                                                                                                                                                                                 |  |      | 5,123   |      |   | 4,929   |  
|Time                                                                                                                                                                                                                                         |  |      | 66,401  |      |   | 66,298  |  
|Other interest bearing                                                                                                                                                                                                                       |  |      | 12,350  |      |   | 11,064  |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Total deposits                                                                                                                                                                                                                               |  |      | 196,005 |      |   | 201,468 |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Borrowings                                                                                                                                                                                                                                   |  |      | 20,172  |      |   | 9,374   |  
|Other liabilities                                                                                                                                                                                                                            |  |      | 5,551   |      |   | 4,533   |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Total liabilities                                                                                                                                                                                                                            |  |      | 221,728 |      |   | 215,375 |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Commitments and contingencies (Note 14)                                                                                                                                                                                                      |  |      |        |      |   |        |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Shareholders equity:                                                                                                                                                                                                                        |  |      |         |      |   |         |  
|Common stock, $.01 par value; authorized:
30,000,000 shares; issued:
  9,726,572 shares; outstanding: 8,461,572 shares at December 31, 2006;
  authorized: 30,000,000; issued 9,678,128: outstanding 9,678,128 shares at
  December 31, 2005 |  |      | 97      |      |   | 97      |  
|Additional paid-in capital                                                                                                                                                                                                                   |  |      | 60,712  |      |   | 60,013  |  
|Retained earnings                                                                                                                                                                                                                            |  |      | 35,643  |      |   | 35,983  |  
|Treasury stock, at cost; 1,265,000 shares at
December 31, 2006 and 0
  shares at December 31, 2005                                                                                                                                           |  |      | (16,307 | )    |   |        |  
|Accumulated other comprehensive income
(loss)                                                                                                                                                                                                |  |      | (633    | )    |   | 85      |  
|Unallocated shares of employee stock ownership plan
(ESOP) 416,171
  shares at December 31, 2006; 462,135 shares at December 31, 2005                                                                                                        |  |      | (2,481  | )    |   | (2,700  | )
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Total shareholders equity                                                                                                                                                                                                                   |  |      | 77,031  |      |   | 93,478  |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Total liabilities and shareholders
equity                                                                                                                                                                                                   |  | $    | 298,759 |      | $ | 308,853 |  
|                                                                                                                                                                                                                                             |  |      |         |      |   |         |  

See accompanying notes to consolidated
financial statements.

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Income

Years ended December 31, 2006, 2005 and 2004

(in thousands, except share data)

|                                                    |  |   |        |  |   |        |  |   |        | 
|--------------------------------------------------- |  | - | ------ |  | - | ------ |  | - | ------ | 
|                                                    |  |   | 2006   |  |   | 2005   |  |   | 2004   | 
|Interest income:                                    |  |   |        |  |   |        |  |   |        | 
|Loans                                               |  | $ | 16,330 |  | $ | 14,993 |  | $ | 13,437 | 
|Securities                                          |  |   | 463    |  |   | 716    |  |   | 1,018  | 
|Other short-term investments                        |  |   | 664    |  |   | 826    |  |   | 43     | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Total interest income                               |  |   | 17,457 |  |   | 16,535 |  |   | 14,498 | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Interest expense:                                   |  |   |        |  |   |        |  |   |        | 
|Deposits                                            |  |   | 3,090  |  |   | 2,643  |  |   | 2,494  | 
|Borrowings                                          |  |   | 431    |  |   | 393    |  |   | 548    | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Total interest expense                              |  |   | 3,521  |  |   | 3,036  |  |   | 3,042  | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Net interest income                                 |  |   | 13,936 |  |   | 13,499 |  |   | 11,456 | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Provision for loan losses                           |  |   | 147    |  |   | 115    |  |   | 390    | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Net interest income after provision for loan
losses |  |   | 13,789 |  |   | 13,384 |  |   | 11,066 | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Non-interest income:                                |  |   |        |  |   |        |  |   |        | 
|Service charges                                     |  |   | 1,559  |  |   | 1,585  |  |   | 1,451  | 
|Net gain on securities                              |  |   | 11     |  |   | 105    |  |   | 176    | 
|Other income                                        |  |   | 326    |  |   | 336    |  |   | 145    | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Total non-interest income                           |  |   | 1,896  |  |   | 2,026  |  |   | 1,772  | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Non-interest expense:                               |  |   |        |  |   |        |  |   |        | 
|Salaries and employee benefits                      |  |   | 6,986  |  |   | 5,359  |  |   | 5,137  | 
|Building, occupancy and equipment                   |  |   | 1,824  |  |   | 1,670  |  |   | 1,568  | 
|Directors fees                                     |  |   | 219    |  |   | 228    |  |   | 214    | 
|Marketing                                           |  |   | 247    |  |   | 312    |  |   | 311    | 
|Outside consulting and professional fees            |  |   | 792    |  |   | 640    |  |   | 341    | 
|ATM service fees                                    |  |   | 210    |  |   | 251    |  |   | 186    | 
|Supplies                                            |  |   | 172    |  |   | 160    |  |   | 155    | 
|Other                                               |  |   | 1,409  |  |   | 1,357  |  |   | 1,190  | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Total non-interest expense                          |  |   | 11,859 |  |   | 9,977  |  |   | 9,102  | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Income before income tax expense                    |  |   | 3,826  |  |   | 5,433  |  |   | 3,736  | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Income tax expense                                  |  |   | 1,338  |  |   | 2,031  |  |   | 1,336  | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Net income                                          |  | $ | 2,488  |  | $ | 3,402  |  | $ | 2,400  | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Basic earnings per share                            |  | $ | 0.29   |  | $ | 0.37   |  | $ | 0.26   | 
|                                                    |  |   |        |  |   |        |  |   |        | 
|Diluted earnings per share                          |  | $ | 0.29   |  | $ | 0.36   |  | $ | 0.25   | 
|                                                    |  |   |        |  |   |        |  |   |        | 

See accompanying notes to
consolidated financial statements.

---



ROME BANCORP, INC. AND SUBSIDIARYConsolidated Statements
of Shareholders Equity and
Comprehensive Income
Years ended December 31, 2006, 2005 and 2004

(in thousands, except share data)

|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|-------------------------------------------------------------------------------------- |  | -------------- | -- | ------------------------------ | - | ------------------- | - | ---------------- | ------ | ------------------------------------------ | - | --------------------------- | - | ----------------------- | ---- | ----- | - | ------ | - | - | --- | - | - | ------- | -
|                                                                                       |  | Common
  stock |    | Additional
  paid-in
  capital |   | Retained
  earnings |   | Treasury
  Stock |        | Accumulated
  other
  comprehensive Income |   | Unallocated
  ESOP
  shares |   | Unearned
  compensation |      | Total |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |  
|Balances at December 31, 2003                                                          |  | $              | 33 |                                | $ | 10,250              |   | $                | 33,255 |                                            | $ | (6,992                      | ) | $                       | 793  |       | $ | (622   | ) | $ | (78 | ) | $ | 36,639  |  
|                                                                                      
|Comprehensive income:                                                                  |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Net income                                                                             |  |                |   |                                |   |                    |   |                  | 2,400  |                                            |   |                            |   |                         |     |       |   |       |   |   |    |   |   | 2,400   |  
|Other comprehensive loss                                                               |  |                |   |                                |   |                    |   |                  |       |                                            |   |                             |   |                         | (402 | )     |   |       |   |   |    |   |   | (402    | )
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Total comprehensive income                                                             |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 1,998   |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Purchase of treasury stock (141,404 shares)                                            |  |                |   |                                |   |                    |   |                  |       |                                            |   | (2,045                      | ) |                         |     |       |   |       |   |   |    |   |   | (2,045  | )
|Exercise of stock options and related tax
  benefit (14,877 shares, net)               |  |                |   |                                |   | 59                  |   |                  | (41    | )                                          |   | 74                          |   |                         |     |       |   |       |   |   |    |   |   | 92      |  
|Amortization and tax benefits of unearned
  compensation                               |  |                |   |                                |   | 107                 |   |                  |       |                                            |   |                            |   |                         |     |       |   |       |   |   | 52  |   |   | 159     |  
|Dividends paid ($0.229 per share)                                                      |  |                |   |                                |   |                    |   |                  | (987   | )                                          |   |                            |   |                         |     |       |   |       |   |   |    |   |   | (987    | )
|ESOP shares released for allocation (30,230
  shares)                                  |  |                |   |                                |   | 340                 |   |                  |       |                                            |   |                            |   |                         |     |       |   | 62     |   |   |    |   |   | 402     |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Balances at December 31, 2004                                                          |  |                | 33 |                                |   | 10,756              |   |                  | 34,627 |                                            |   | (8,963                      | ) |                         | 391  |       |   | (560   | ) |   | (26 | ) |   | 36,258  |  
|Comprehensive income:                                                                  |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Net income                                                                             |  |                |   |                                |   |                    |   |                  | 3,402  |                                            |   |                            |   |                         |     |       |   |       |   |   |    |   |   | 3,402   |  
|Other comprehensive loss                                                               |  |                |   |                                |   |                    |   |                  |       |                                            |   |                            |   |                         | (306 | )     |   |       |   |   |    |   |   | (306    | )
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Total comprehensive income                                                             |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 3,096   |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Proceeds of common stock offering and
  conversion of existing shares, net of expenses |  |                | 64 |                                |   | 57,758              |   |                  |       |                                            |   |                            |   |                         |     |       |   | (2,360 | ) |   |    |   |   | 55,462  |  
|Retirement of 1,747,266 treasury shares                                                |  |                |   |                                |   | (8,963              | ) |                  |       |                                            |   | 8,963                       |   |                         |     |       |   |       |   |   |    |   |   |        |  
|Exercise of stock options and related tax
  benefit (35,882 shares, net)               |  |                |   |                                |   | 130                 |   |                  |       |                                            |   |                            |   |                         |     |       |   |       |   |   |    |   |   | 130     |  
|Amortization and tax benefits of unearned
  compensation                               |  |                |   |                                |   | 73                  |   |                  |       |                                            |   |                            |   |                         |     |       |   |       |   |   | 26  |   |   | 99      |  
|Dividends paid ($0.265 per share)                                                      |  |                |   |                                |   |                    |   |                  | (2,046 | )                                          |   |                            |   |                         |     |       |   |       |   |   |    |   |   | (2,046  | )
|ESOP shares released for allocation (45,965
  shares)                                  |  |                |   |                                |   | 259                 |   |                  |       |                                            |   |                            |   |                         |     |       |   | 220    |   |   |    |   |   | 479     |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Balances at December 31, 2005                                                          |  |                | 97 |                                |   | 60,013              |   |                  | 35,983 |                                            |   |                            |   |                         | 85   |       |   | (2,700 | ) |   |    |   |   | 93,478  |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Comprehensive income:                                                                  |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Net income                                                                             |  |                |    |                                |   |                     |   |                  | 2,488  |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 2,488   |  
|Other comprehensive loss                                                               |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         | (42  | )     |   |        |   |   |     |   |   | (42     | )
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Total comprehensive income                                                             |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 2,446   |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Adjustment to initially apply SFAS No. 158, net
  of tax (Note 1)                      |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         | (676 | )     |   |        |   |   |     |   |   | (676    | )
|Purchase of 1,383,000 treasury shares                                                  |  |                |    |                                |   |                     |   |                  |        |                                            |   | (17,818                     | ) |                         |      |       |   |        |   |   |     |   |   | (17,818 | )
|Exercise of stock options and related tax
  benefit (48,444 shares, net)               |  |                |    |                                |   | 245                 |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 245     |  
|Grant of restricted shares                                                             |  |                |    |                                |   | (1,511              | ) |                  |        |                                            |   | 1,511                       |   |                         |      |       |   |        |   |   |     |   |   |        |  
|Amortization of stock option and restricted
  share grants                             |  |                |    |                                |   | 1,616               |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 1,616   |  
|Dividends paid ($0.30 per share)                                                       |  |                |    |                                |   |                     |   |                  | (2,622 | )                                          |   |                             |   |                         |      |       |   |        |   |   |     |   |   | (2,622  | )
|ESOP shares released for allocation (45,965
  shares)                                  |  |                |    |                                |   | 349                 |   |                  |        |                                            |   |                             |   |                         |      |       |   | 219    |   |   |     |   |   | 568     |  
|Adjustment to initially apply SAB No. 108 (Note
  1)                                   |  |                |    |                                |   |                     |   |                  | (206   | )                                          |   |                             |   |                         |      |       |   |        |   |   |     |   |   | (206    | )
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Balances at December 31, 2006                                                          |  | $              | 97 |                                | $ | 60,712              |   | $                | 35,643 |                                            | $ | (16,307                     | ) | $                       | (633 | )     | $ | (2,481 | ) | $ |    |   | $ | 77,031  |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                            |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  

See accompanying notes to consolidated financial
statements.

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated
Statements of Cash Flows

Years
ended December 31, 2006, 2005 and 2004

(in
thousands)

|                                                                                     |  |      |         |      |   |         |   |   |         |  
|------------------------------------------------------------------------------------ |  | ---- | ------- | ---- | - | ------- | - | - | ------- | -
|                                                                                     |  | 2006 |         | 2005 |   | 2004    |  
|Cash flows from operating activities:                                                |  |      |         |      |   |         |  
|Net income                                                                           |  | $    | 2,488   |      | $ | 3,402   |   | $ | 2,400   |  
|Adjustments to reconcile net income to net cash
provided by operating
  activities:  |  |      |         |      |   |         |   |   |         |  
|Depreciation                                                                         |  |      | 548     |      |   | 515     |   |   | 496     |  
|(Increase) decrease in accrued interest
receivable                                   |  |      | (41     | )    |   | (51     | ) |   | 203     |  
|Provision for loan losses                                                            |  |      | 147     |      |   | 115     |   |   | 390     |  
|Net gain on securities transactions                                                  |  |      | (11     | )    |   | (105    | ) |   | (176    | )
|Gain on sales of loans                                                               |  |      | (15     | )    |   | (20     | ) |   |        |  
|Proceeds from sale of loans                                                          |  |      | 1,114   |      |   | 1,715   |   |   |        |  
|Origination of loans for sale                                                        |  |      | (1,099  | )    |   | (1,695  | ) |   |        |  
|Net premium amortization on securities                                               |  |      | (9      | )    |   | (7      | ) |   | 11      |  
|Increase in cash surrender value of Bank-owned
life insurance                        |  |      | (215    | )    |   |        |   |   |        |  
|(Gain) loss on sale of other real estate                                             |  |      | 13      |      |   | (15     | ) |   | 42      |  
|Loss (gain) on sale of fixed assets                                                  |  |      | 3       |      |   |        |   |   | (16     | )
|Increase in other liabilities                                                        |  |      | 436     |      |   | 269     |   |   | 244     |  
|Deferred income tax (benefit) expense                                                |  |      | (762    | )    |   | 282     |   |   | 29      |  
|(Increase) decrease in other assets                                                  |  |      | (512    | )    |   | (112    | ) |   | 13      |  
|Allocation of ESOP shares                                                            |  |      | 568     |      |   | 479     |   |   | 402     |  
|Amortization of stock-based compensation                                             |  |      | 1,616   |      |   | 26      |   |   | 52      |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Net
  cash provided by operating activities                                          |  |      | 4,269   |      |   | 4,798   |   |   | 4,090   |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Cash flows from investing activities:                                                |  |      |         |      |   |         |   |   |         |  
|Net increase in loans                                                                |  |      | (10,702 | )    |   | (20,678 | ) |   | (24,093 | )
|Proceeds from sales of securities available for
sale                                 |  |      | 365     |      |   | 1,754   |   |   | 2,093   |  
|Purchase of bank-owned life insurance                                                |  |      | (8,000  | )    |   |        |   |   |        |  
|Proceeds from maturities and principal reductions
of securities
  available for sale |  |      | 4,938   |      |   | 4,967   |   |   | 6,451   |  
|Purchases of securities available for
sale                                           |  |      | (568    | )    |   | (55     | ) |   | (198    | )
|Purchases of securities held to maturity                                             |  |      | (1,000  | )    |   |        |   |   | (100    | )
|Proceeds from maturities and principal reductions
of securities held
  to maturity   |  |      | 1,254   |      |   | 171     |   |   | 1,250   |  
|Proceeds from sale of real estate owned                                              |  |      | 41      |      |   | 98      |   |   | 247     |  
|Purchases of premises and equipment, net                                             |  |      | (2,114  | )    |   | (507    | ) |   | (276    | )
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Net cash used in investing activities                                                |  |      | (15,786 | )    |   | (14,250 | ) |   | (14,626 | )
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Cash flows from financing activities:                                                |  |      |         |      |   |         |   |   |         |  
|Increase (decrease) in time deposits                                                 |  |      | 103     |      |   | (2,656  | ) |   | (3,408  | )
|(Decrease) increase in other deposits                                                |  |      | (5,566  | )    |   | (4,663  | ) |   | 9,005   |  
|Stock offering and conversion                                                        |  |      |        |      |   | 55,462  |   |   |        |  
|Repayments of borrowings                                                             |  |      | (2,402  | )    |   | (12,469 | ) |   | (9,247  | )
|Advances on borrowings                                                               |  |      | 13,200  |      |   | 3,000   |   |   | 10,000  |  
|Purchase of treasury stock                                                           |  |      | (17,818 | )    |   |        |   |   | (2,045  | )
|Dividends                                                                            |  |      | (2,622  | )    |   | (2,046  | ) |   | (987    | )
|Exercise of stock options and related tax
benefits                                   |  |      | 245     |      |   | 130     |   |   | 92      |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Net cash provided by financing
activities                                            |  |      | (14,860 | )    |   | 36,758  |   |   | 3,410   |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|                                                                                    
|Net (decrease) increase in cash and cash equivalents                                 |  |      | (26,377 | )    |   | 27,306  |   |   | (7,126  | )
|Cash and cash equivalents at beginning of year                                       |  |      | 34,235  |      |   | 6,929   |   |   | 14,055  |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Cash and cash equivalents at end of year                                             |  | $    | 7,858   |      | $ | 34,235  |   | $ | 6,929   |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  

See accompanying notes to consolidated
financial statements.

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated
Statements of Cash Flows (continued)

Years
ended December 31, 2006, 2005 and 2004

(in
thousands)

|                                          |  |      |       |      |   |       |  |   |       | 
|----------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|                                          |  | 2006 |       | 2005 |   | 2004  | 
|Other non-cash activities:                |  |      |       |      |   |       |  |   |       | 
|Retirement of 1,747,266 treasury shares   |  | $    |      |      | $ | 8,963 |  | $ |      | 
|Transfers from loans to real estate owned |  |      | 99    |      |   | 83    |  |   | 87    | 
|Cash paid during the period
  for:        |  |      |       |      |   |       |  |   |       | 
|Interest                                  |  |      | 3,517 |      |   | 3,044 |  |   | 3,070 | 
|Income taxes                              |  |      | 1,940 |      |   | 1,850 |  |   | 549   | 

See accompanying notes to
consolidated financial statements.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

|    |                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.
|    |                                                                                                                                                                                                                                                                                                                                                                                                 
|(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, (U.S. generally accepted
  accounting principles) 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 inter-company 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 effect, on available-for-sale securities are 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) | Federal Home loan Bank (FHLB) Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Bank is a member of
  the FHLB system. Members are required to own a certain amount of stock based
  on the level of borrowings and other factors, and may invest in additional
  amounts. FHLB stock is carried at cost, classified as a restricted security,
  and periodically evaluated for impairment based on ultimate recovery of par
  value. Both cash and stock dividends are reported as income.                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (d) | 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 for the foreseeable future or until maturity or
  payoff.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | 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.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (e) | 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                                                                                                                                                                                                                                                                                                                                                                                                                                    

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | 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.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (f) | 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.                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (g) | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (h) | 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. Pension expense is the net of
  service cost and interest cost, return on plan assets and amortization of
  gains and loses not immediately recognized. 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 employees. Employees
  are permitted to contribute up to 75% 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | 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.                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (i) | 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.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (j) | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Effective
  January 1, 2006, the Company adopted Statement of Financial Accounting
  Standards (SFAS) No. 123(R), Share-Based Payment, using the modified
  prospective transition method. Accordingly, the Company has recorded
  stock-based compensation cost using the fair value method starting in 2006.
  For 2006, adopting this standard resulted in a reduction of income before
  income taxes of $379,000, a reduction in net income of $283,000 and a
  reduction in both basic and diluted earnings per share of $0.03 per share.                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Prior to
  January 1, 2006, employee compensation expense under stock options was
  reported using the intrinsic value method; therefore no stock-based
  compensation cost is reflected in net income for the years ended December 31,
  2005 and 2004, as all options granted had an exercise price equal to or
  greater than the market price of the underlying common stock at date of
  grant. The following table illustrates the effect on net income and earnings
  per share if expense was measured using the fair value recognition provisions
  of FASB Statement No. 123, Accounting for Stock-Based compensation for the years
  ending December 31.           

|                                                                                                                  |  |                                       |       |      |   |       |  
|----------------------------------------------------------------------------------------------------------------- |  | ------------------------------------- | ----- | ---- | - | ----- | -
|                                                                                                                  |  | 2005                                  |       | 2004 |  
|                                                                                                                  |  |                                       |       |      |  
|                                                                                                                  |  | (in thousands, except per share data) |      
|Net income:                                                                                                       |  |                                       |       |      |   |       |  
|As reported                                                                                                       |  | $                                     | 3,402 |      | $ | 2,400 |  
|Add: Stock based compensation
  expense included in net income, net of related tax expense                        |  |                                       | 17    |      |   | 35    |  
|Deduct: Total stock based
  compensation expense determined under fair value method, net of related tax
  expense |  |                                       | (35   | )    |   | (69   | )
|                                                                                                                  |  |                                       |       |      |   |       |  
|Pro forma                                                                                                         |  | $                                     | 3,384 |      | $ | 2,366 |  
|                                                                                                                  |  |                                       |       |      |   |       |  
|                                                                                                                  |  |                                       |       |      |   |       |  
|Basic earnings per share:                                                                                         |  |                                       |       |      |   |       |  
|As reported                                                                                                       |  | $                                     | 0.37  |      | $ | 0.26  |  
|Pro forma                                                                                                         |  | $                                     | 0.37  |      | $ | 0.26  |  
|                                                                                                                  |  |                                       |       |      |   |       |  
|Diluted earnings per share:                                                                                       |  |                                       |       |      |   |       |  
|As reported                                                                                                       |  | $                                     | 0.36  |      | $ | 0.25  |  
|Pro forma                                                                                                         |  | $                                     | 0.36  |      | $ | 0.25  |  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (k) | 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. Net cash flows are reported for customer loan and
  deposit transactions, interest bearing deposits in other financial
  institutions, and federal funds purchased agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (l) | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (m) | 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 using the treasury stock method.                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (n) | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (o) | Bank Owned Life Insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The Company
  has purchased life insurance policies on certain key officers and employees.
  Bank-owned life insurance is recorded at its cash surrender value (or the
  amount that can be realized.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (p) | Recently Adopted Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Effective January 1, 2006,
  the Company adopted Statement of Financial Accounting Standards (SFAS) No.
  123(R), Share-Based Payment. See the discussion above under Non-Interest
  Expense for further discussion of the effect of adopting this standard.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | In September
  2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 158,
  Employers Accounting for Defined Benefit Pension and Other Postretirement
  Plans  an amendment of FASB Statements No. 87, 88, 106 and 132(R). This
  Statement requires an employer to recognize the overfunded or underfunded
  status of a defined benefit postretirement plan (other than a multiemployer
  plan) as an asset or liability in its balance sheet, beginning with year end
  2006, and to recognize changes in the funded status in the year in which the
  changes occur through comprehensive income beginning in 2007. Additionally,
  defined benefit plan assets and obligations are to be measured as of the date
  of the employers fiscal year-end, starting in 2008. Adoption had the
  following effect on individual line items in the 2006 balance sheet:

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

|                                               |  |                                        |   |             |  |                                       |  |   |        |   |  |  |   |         |   | 
|---------------------------------------------- |  | -------------------------------------- | - | ----------- |  | ------------------------------------- |  | - | ------ | - |  |  | - | ------- | - | 
|                                               |  | Before
  Application of
  SFAS No. 158 |   | Adjustments |  | After
  Application of
  SFAS No. 158 | 
|                                               |  |                                        |   |             |  |                                       | 
|                                               |  | (in thousands of dollars)              |  
|                                               |  |                                        |  
|Prepaid pension benefits                       |  |                                        | $ | 2,345       |  |                                       |  | $ | (1,211 | ) |  |  | $ | 1,134   |   | 
|Deferred income taxes                          |  |                                        |   | 1,459       |  |                                       |  |   | 450    |   |  |  |   | 1,909   |   | 
|Total assets                                   |  |                                        |   | 299,520     |  |                                       |  |   | (761   | ) |  |  |   | 298,759 |   | 
|Postretirement benefit
  liability             |  |                                        |   | 2,439       |  |                                       |  |   | (85    | ) |  |  |   | 2,354   |   | 
|Total liabilities                              |  |                                        |   | 221,813     |  |                                       |  |   | (85    | ) |  |  |   | 221,728 |   | 
|Accumulated other
  comprehensive income(loss) |  |                                        |   | 43          |  |                                       |  |   | (676   | ) |  |  |   | (633    | ) | 
|Total stockholders equity                     |  |                                        |   | 77,707      |  |                                       |  |   | (676   | ) |  |  |   | 77,031  |   | 

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | In September
  2006, the Securities and Exchange Commission (SEC) released Staff Accounting
  Bulletin No. 108, Considering the Effects of Prior Year Misstatements when
  Quantifying Misstatements in Current Year Financial Statements (SAB 108),which is effective for fiscal years
  ending on or after November 15, 2006. SAB 108 provides guidance on how the
  effects of prior-year uncorrected financial statement misstatements should be
  considered in quantifying a current year misstatement. SAB 108 requires
  public companies to quantify misstatements using both an income statement
  (rollover) and balance sheet (iron curtain) approach and evaluate whether
  either approach results in a misstatement that, when all relevant
  quantitative and qualitative factors are considered, is material. If prior
  year errors that had been previously considered immaterial now are considered
  material based on either approach, no restatement is required so long as
  management properly applied its previous approach and all relevant facts and
  circumstances were considered. Adjustments considered immaterial in prior years
  under the method previously used, but now considered material under the dual
  approach required by SAB 108, are to be recorded upon initial adoption of SAB
  108. The amount so recorded is shown as a cumulative effect adjustment and is
  recorded in opening retained earnings as of January 1, 2006. The Company
  recorded a cumulative effect adjustment that decreased retained earnings in
  the amount of $206,000, which was comprised of a reduction of reserves for
  income and franchise taxes in the amount of $204,000, offset by corrections
  to increase payroll and benefit accruals in the amount of $410,000, net of
  taxes.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (q) | Newly Issued But Not Yet Effective
  Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | In July
  2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty
  in Income Taxes  an interpretation of FASB Statement No. 109 (FIN 48), which
  prescribes a recognition threshold and measurement attribute for a tax
  position taken or expected to be taken in a tax return. FIN 48 also provides
  guidance on derecognition, classification, interest and penalties, accounting
  in interim periods, disclosure and transition. FIN 48 is effective for fiscal
  years beginning after December 15, 2006. The Company has determined that the
  adoption of FIN 48 will not have a material effect on the financial
  statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Other new
  accounting standards have been issued that the Company does not expect will
  have a material effect on the financial statements when adopted in future
  years or for which the Company has not yet completed its evaluation of the
  potential effect upon adoption. In general, these standards revise the
  accounting for derivatives embedded in other financial instruments for 2007,
  revise the recognition and accounting for servicing of financial assets for
  2007, establish a hierarchy about the assumptions used to measure fair value
  for 2008, revise the accrual of post-retirement benefits associated with
  providing life insurance for 2008, and revise the accounting for cash
  surrender value for 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

|    |                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                        | Additionally,
  a new accounting standard will require the company to record servicing assets
  at fair value instead of at allocated cost, and thereafter will allow the
  Company to carry new and existing classes of servicing assets at either fair
  value or amortized original basis, beginning in 2007. Adoption of this
  standard may increase servicing assets to the extent the Company elects to
  apply it to existing classes of servicing assets and to the extent fair value
  of servicing exceeds amortized cost.
|    |                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(3) | Securities                                            
|    |                                                       
|    | Securities
  are summarized as follows (in thousands):

|                                |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
|------------------------------- |  | ----------------- | ----- | -------------------------- | - | --------------------------- |  | ------------ | - |  | - | ----- | 
|                                |  |                   |      
|                                |  | December 31, 2006 |      
|                                |  |                   |      
|                                |  | Amortized
  Cost  |       | Gross
  unrealized
  gains |   | Gross
  unrealized
  losses |  | Fair
  value |  
|                                |  |                   |       |                            |   |                             |  |              |  
|Available-for-sale:             |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
|U.S. Government agencies        |  | $                 | 441   |                            | $ | 14                          |  | $            |  |  | $ | 455   | 
|State and municipal obligations |  |                   | 2,335 |                            |   | 42                          |  |              |  |  |   | 2,377 | 
|Mortgage-backed securities      |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
|FHLMC                           |  |                   | 336   |                            |   | 3                           |  |              |  |  |   | 339   | 
|                                |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
|                                |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
|Total debt securities           |  |                   | 3,112 |                            |   | 59                          |  |              |  |  |   | 3,171 | 
|                                |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
|Equity and other securities     |  |                   | 1,137 |                            |   | 11                          |  |              |  |  |   | 1,148 | 
|                                |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
|                                |  | $                 | 4,249 |                            | $ | 70                          |  | $            |  |  | $ | 4,319 | 
|                                |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
|                                |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
|Held-to-maturity:               |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
|U.S. Government securities      |  | $                 | 1,001 |                            | $ |                            |  | $            | 4 |  | $ | 997   | 
|Mortgage-backed securities      |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
|GNMA                            |  |                   | 28    |                            |   | 1                           |  |              |  |  |   | 29    | 
|FHLMC                           |  |                   | 2     |                            |   |                            |  |              |  |  |   | 2     | 
|Other bonds                     |  |                   | 147   |                            |   |                            |  |              |  |  |   | 147   | 
|                                |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
|                                |  | $                 | 1,178 |                            | $ | 1                           |  | $            | 4 |  | $ | 1,175 | 
|                                |  |                   |       |                            |   |                             |  |              |   |  |   |       | 

|                                |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
|------------------------------- |  | ----------------- | ----- | -------------------------- | - | --------------------------- |  | ------------ | -- |  | - | ----- | 
|                                |  |                   |      
|                                |  | December 31, 2005 |      
|                                |  |                   |      
|                                |  | Amortized
  Cost  |       | Gross
  unrealized
  gains |   | Gross
  Unrealized
  Losses |  | Fair
  value |   
|                                |  |                   |       |                            |   |                             |  |              |   
|Available-for-sale:             |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
|U.S. Government agencies        |  | $                 | 949   |                            | $ | 36                          |  | $            |   |  | $ | 985   | 
|State and municipal obligations |  |                   | 4,506 |                            |   | 89                          |  |              |   |  |   | 4,595 | 
|Mortgage-backed securities      |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
|FHLMC                           |  |                   | 570   |                            |   | 13                          |  |              |   |  |   | 583   | 
|Corporate bonds                 |  |                   | 2,008 |                            |   | 9                           |  |              |   |  |   | 2,017 | 
|                                |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
|Total debt securities           |  |                   | 8,033 |                            |   | 147                         |  |              |   |  |   | 8,180 | 
|                                |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
|Equity and other securities     |  |                   | 1,491 |                            |   | 6                           |  |              | 11 |  |   | 1,486 | 
|                                |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
|                                |  | $                 | 9,524 |                            | $ | 153                         |  | $            | 11 |  | $ | 9,666 | 
|                                |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
|Held-to-maturity:               |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
|U.S. Government securities      |  | $                 | 1,208 |                            | $ |                            |  | $            | 15 |  | $ | 1,193 | 
|Mortgage-backed securities      |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
|GNMA                            |  |                   | 48    |                            |   | 3                           |  |              |   |  |   | 51    | 
|FHLMC                           |  |                   | 3     |                            |   |                            |  |              |   |  |   | 3     | 
|Other bonds                     |  |                   | 181   |                            |   |                            |  |              |   |  |   | 181   | 
|                                |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
|                                |  | $                 | 1,440 |                            | $ | 3                           |  | $            | 15 |  | $ | 1,428 | 
|                                |  |                   |       |                            |   |                             |  |              |    |  |   |       | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At December
  31, 2006, one agency investment had an unrealized loss of $4,000. This
  investment was in an unrealized loss position for two consecutive months at
  December 31, 2006. The unrealized loss represents aggregate depreciation of
  0.4% of the Companys amortized cost basis in the security. The unrealized
  loss on this bond has not been recognized into income because the bond is of
  high credit quality, management has the intent and ability to hold for the
  foreseeable future, and the decline in fair value is largely due to changes
  in interest rates. The fair value is expected to recover as the bond reaches
  maturity.                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | At December
  31, 2005, three agency investments had a combined unrealized loss of $15,000.
  These investments were in an unrealized loss position for sixteen consecutive
  months at December 31, 2005. The unrealized loss represented aggregate
  depreciation of 1.3% of the Companys amortized cost basis in these securities
  at that date. In addition, at December 31, 2005, one of the Companys equity
  investments had an unrealized loss position of $11,000. This investment was
  in an unrealized loss position for one month at December 31, 2005. The
  unrealized loss represented aggregate depreciation of 0.7% of the Companys
  cost basis in this security at year end 2005.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | 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.                                                                                                                                                                                                                                                                                                                                                                                      

|                                       |  |                   |       |              |   |       | 
|-------------------------------------- |  | ----------------- | ----- | ------------ | - | ----- | 
|                                       |  | December 31, 2006 |      
|                                       |  |                   |      
|                                       |  | Amortized
  cost  |       | Fair
  Value |  
|                                       |  |                   |       |              |  
|Available-for-sale:                    |  |                   |       |              |   |       | 
|Due within one year                    |  | $                 | 1,080 |              | $ | 1,086 | 
|Due after one year through five years  |  |                   | 1,363 |              |   | 1,388 | 
|Due after five years through ten years |  |                   | 383   |              |   | 397   | 
|Due after ten years                    |  |                   | 286   |              |   | 300   | 
|                                       |  |                   |       |              |   |       | 
|                                       |  | $                 | 3,112 |              | $ | 3,171 | 
|                                       |  |                   |       |              |   |       | 
|Held-to-maturity:                      |  |                   |       |              |   |       | 
|Due within one year                    |  | $                 |      |              | $ |      | 
|Due after one year through five years  |  |                   | 1,031 |              |   | 1,028 | 
|Due after five years through ten years |  |                   |      |              |   |      | 
|Due after ten years                    |  |                   | 147   |              |   | 147   | 
|                                       |  |                   |       |              |   |       | 
|                                       |  | $                 | 1,178 |              | $ | 1,175 | 
|                                       |  |                   |       |              |   |       | 

| |                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Gross gains
  of $11,000, $105,000 and $176,000 were realized on sales of securities in
  2006, 2005 and 2004, respectively.                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                               
| | Securities
  pledged at year end 2006 and 2005 had a carrying amount of $1.0 million and
  $1.1 million, respectively. These securities collateralize state and Treasury
  department programs. At year end 2006 and 2005, 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.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

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

|                                   |  |      |         |      |   |         | 
|---------------------------------- |  | ---- | ------- | ---- | - | ------- | 
|                                   |  | 2006 |         | 2005 |  
|                                   |  |      |         |      |  
|Mortgage loans:                    |  |      |         |      |   |         | 
|Residential (1-4 family)           |  | $    | 135,078 |      | $ | 126,422 | 
|Commercial                         |  |      | 54,493  |      |   | 52,748  | 
|Construction and land              |  |      | 2,562   |      |   | 3,317   | 
|                                   |  |      |         |      |   |         | 
|Total Mortgage loans               |  |      | 192,133 |      |   | 182,487 | 
|                                   |  |      |         |      |   |         | 
|                                   |  |      |         |      |   |         | 
|Other loans:                       |  |      |         |      |   |         | 
|Commercial                         |  |      | 24,189  |      |   | 23,832  | 
|Automobile loans                   |  |      | 17,779  |      |   | 18,321  | 
|Property improvement and equipment |  |      | 15,536  |      |   | 15,434  | 
|Other consumer                     |  |      | 14,900  |      |   | 13,804  | 
|                                   |  |      |         |      |   |         | 
|Total Other loans                  |  |      | 72,404  |      |   | 71,391  | 
|                                   |  |      |         |      |   |         | 
|Total Loans                        |  | $    | 264,537 |      | $ | 253,878 | 
|                                   |  |      |         |      |   |         | 

| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | The Company
  serviced loans for third parties totaling $4,830,000 and $3,922,000 at
  December 31, 2006 and 2005 respectively.
| |                                                                                                                                
| | Changes in
  the allowance for loan losses are summarized as follows (in thousands):                                           

|                                  |  |                            |       |      |   |       |   |   |       |  
|--------------------------------- |  | -------------------------- | ----- | ---- | - | ----- | - | - | ----- | -
|                                  |  | Years ended
  December 31, |      
|                                  |  |                            |      
|                                  |  | 2006                       |       | 2005 |   | 2004  |  
|                                  |  |                            |       |      |   |       |  
|                                  |  |                            |       |      |   |       |   |   |       |  
|Balance at beginning of
  period  |  | $                          | 1,960 |      | $ | 2,000 |   | $ | 1,809 |  
|Provision charged to
  operations |  |                            | 147   |      |   | 115   |   |   | 390   |  
|Loans charged off                 |  |                            | (372  | )    |   | (687  | ) |   | (384  | )
|Recoveries                        |  |                            | 230   |      |   | 532   |   |   | 185   |  
|                                  |  |                            |       |      |   |       |   |   |       |  
|                                  |  |                            |       |      |   |       |   |   |       |  
|Balance at end of period          |  | $                          | 1,965 |      | $ | 1,960 |   | $ | 2,000 |  
|                                  |  |                            |       |      |   |       |   |   |       |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
  Companys recorded investment in loans that are considered impaired totaled
  $318,000 and $211,000 at December 31, 2006 and 2005, respectively. These
  impaired loans carried allowances of $177,000 and $127,000, at December 31,
  2006 and 2005, respectively. The average recorded investment in impaired
  loans was $228,000, $247,000 and $272,000 in 2006, 2005 and 2004,
  respectively. The Company recognized no interest on impaired loans during the
  three years ended December 31, 2006.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | The
  principal balances of loans not accruing interest amounted to $1.1 million
  and $871,000 at December 31, 2006 and 2005, respectively. Loans 90 days past
  due and accruing interest amounted to $8,000 and $75,000 at December 31, 2006
  and 2005, 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                       

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | recorded
  during the years ended December 31, 2006, 2005 and 2004 was $75,800, $62,500
  and $53,300, 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):                                                                                                                                                                                                                                                                                                                                                                                                                 

|                                               |  |      |        |      |   |        | 
|---------------------------------------------- |  | ---- | ------ | ---- | - | ------ | 
|                                               |  | 2006 |        | 2005 |  
|                                               |  |      |        |      |  
|                                              
|Land                                           |  | $    | 2,547  |      | $ | 1,404  | 
|Buildings and improvements                     |  |      | 5,713  |      |   | 5,133  | 
|Furniture and equipment                        |  |      | 7,324  |      |   | 7,030  | 
|                                               |  |      |        |      |   |        | 
|                                               |  |      | 15,584 |      |   | 13,567 | 
|Less accumulated depreciation and amortization |  |      | 9,512  |      |   | 9,064  | 
|                                               |  |      |        |      |   |        | 
|                                               |  | $    | 6,072  |      | $ | 4,503  | 
|                                               |  |      |        |      |   |        | 

|    |                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Depreciation
  and amortization expense included in building, occupancy and equipment
  expense amounted to $548,000, $515,000 and $496,000 during the years ended
  December 31, 2006, 2005 and 2004, respectively.
|    |                                                                                                                                                                                                                     
|(6) | Deposits                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                     
|    | Contractual
  maturities of time deposits at December 31 are summarized as follows (in
  thousands):                                                                                                                

|                         |  |      |        | 
|------------------------ |  | ---- | ------ | 
|                         |  | 2006 |       
|                         |  |      |       
|                        
|Within one year          |  | $    | 43,856 | 
|One through two years    |  |      | 9,932  | 
|Two through three years  |  |      | 6,002  | 
|Three through four years |  |      | 4,222  | 
|Four through five years  |  |      | 2,389  | 
|                         |  |      |        | 
|                        
|Total time deposits      |  | $    | 66,401 | 
|                         |  |      |        | 

| |                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | At December
  31, 2006 and 2005, time deposits with balances of $100,000 or more totaled
  approximately $13,110,000 and $11,624,000, respectively.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

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

|                       |  |      |       |      |   |       |  |   |       | 
|---------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|                       |  | 2006 |       | 2005 |   | 2004  | 
|                       |  |      |       |      |   |       | 
|                      
|Savings                |  | $    | 657   |      | $ | 703   |  | $ | 732   | 
|Money market           |  |      | 88    |      |   | 55    |  |   | 74    | 
|Time                   |  |      | 2,276 |      |   | 1,820 |  |   | 1,630 | 
|Other interest bearing |  |      | 69    |      |   | 65    |  |   | 58    | 
|                       |  |      |       |      |   |       |  |   |       | 
|                       |  | $    | 3,090 |      | $ | 2,643 |  | $ | 2,494 | 
|                       |  |      |       |      |   |       |  |   |       | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 Company has a blanket pledge on their
  one-to-four family mortgage loans as collateral for these borrowings. The
  following is a summary of advances and amortizing notes from the FHLB at
  December 31 (in thousands):

| |                                                          |  |      |        |      |   |       | 
| | -------------------------------------------------------- |  | ---- | ------ | ---- | - | ----- | 
| |                                                          |  | 2006 |        | 2005 |  
| |                                                          |  |      |        |      |  
| | Bearing interest at 3.67% fixed, due 7/3/15              |  | $    | 2,294  |      | $ | 2,515 | 
| | Bearing interest at 3.36% fixed, due 7/3/13              |  |      | 3,868  |      |   | 4,376 | 
| | Bearing interest at 3.59% fixed, due 11/26/08            |  |      | 2,210  |      |   | 2,483 | 
| | FHLB Overnight Line of Credit, bearing interest at 5.41% |  |      | 11,800 |      |   |      | 
| |                                                          |  |      |        |      |   |       | 
| |                                                          |  | $    | 20,172 |      | $ | 9,374 | 
| |                                                          |  |      |        |      |   |       | 

| |                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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,
  2006, as well as remaining maturities beyond five years:

|                             |  |   |        | 
|---------------------------- |  | - | ------ | 
|Due in one year              |  | $ | 12,838 | 
|Due one through two years    |  |   | 2,709  | 
|Due two through three years  |  |   | 809    | 
|Due three through four years |  |   | 838    | 
|Due four through five years  |  |   | 867    | 
|Due past five years          |  |   | 2,111  | 
|                             |  |   |        | 
|Total                        |  | $ | 20,172 | 
|                             |  |   |        | 

| |                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At December
  31, 2006, the Company had additional availability on its FHLB line of credit
  of $50.9 million. This line of credit is subject to periodic review and
  renewal.

---



Rome Bancorp, Inc
and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

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

|                         |  |      |       |      |   |       |  |   |       |  
|------------------------ |  | ---- | ----- | ---- | - | ----- |  | - | ----- | -
|                         |  | 2006 |       | 2005 |   | 2004  | 
|                         |  |      |       |      |   |       | 
|Current:                 |  |      |       |      |   |       |  |   |       |  
|Federal                  |  | $    | 1,959 |      | $ | 1,661 |  | $ | 1,141 |  
|State                    |  |      | 141   |      |   | 88    |  |   | 166   |  
|                         |  |      |       |      |   |       |  |   |       |  
|                         |  |      | 2,100 |      |   | 1,749 |  |   | 1,307 |  
|                         |  |      |       |      |   |       |  |   |       |  
|Deferred:                |  |      |       |      |   |       |  |   |       |  
|Federal                  |  |      | (598  | )    |   | 155   |  |   | 72    |  
|State                    |  |      | (164  | )    |   | 127   |  |   | (43   | )
|                         |  |      |       |      |   |       |  |   |       |  
|                         |  |      | (762  | )    |   | 282   |  |   | 29    |  
|                         |  |      |       |      |   |       |  |   |       |  
|                         |  |      |       |      |   |       |  |   |       |  
|Total income tax expense |  | $    | 1,338 |      | $ | 2,031 |  | $ | 1,336 |  
|                         |  |      |       |      |   |       |  |   |       |  

| |                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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):

|                                                              |  |      |       |      |   |       |   |   |       |  
|------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | - | - | ----- | -
|                                                              |  | 2006 |       | 2005 |   | 2004  |  
|                                                              |  |      |       |      |   |       |  
|Computed expected tax expense                               |  | $    | 1,301 |      | $ | 1,847 |   | $ | 1,270 |  
|Increases (decreases) in income taxes resulting from:         |  |      |       |      |   |       |   |   |       |  
|State taxes, net of Federal tax benefit                       |  |      | (16   | )    |   | 126   |   |   | 82    |  
|Tax exempt interest                                           |  |      | (47   | )    |   | (98   | ) |   | (138  | )
|Tax exempt increase in cash surrender value of life
insurance |  |      | (73   | )    |   |      |   |   |      |  
|Non-deductible ESOP expense                                   |  |      | 119   |      |   | 87    |   |   | 116   |  
|Non-deductible stock option expense                           |  |      | 45    |      |   |      |   |   |      |  
|Other, net                                                    |  |      | 9     |      |   | 69    |   |   | 6     |  
|                                                              |  |      |       |      |   |       |   |   |       |  
|                                                              |  |      |       |      |   |       |   |   |       |  
|                                                              |  | $    | 1,338 |      | $ | 2,031 |   | $ | 1,336 |  
|                                                              |  |      |       |      |   |       |   |   |       |  
|                                                              |  |      |       |      |   |       |   |   |       |  
|Effective tax rate                                            |  |      | 35.0  | %    |   | 37.4  | % |   | 35.8  | %
|                                                              |  |      |       |      |   |       |   |   |       |  

---



Rome Bancorp, Inc
and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

| |                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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):

|                                                    |  |      |       |      |   |       | 
|--------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | 
|                                                    |  | 2006 |       | 2005 |  
|                                                    |  |      |       |      |  
|Deferred tax assets:                                |  |      |       |      |   |       | 
|Allowance for loan losses                           |  | $    | 671   |      | $ | 577   | 
|Accrued postretirement
  benefits                   |  |      | 920   |      |   | 901   | 
|Deferred compensation                               |  |      | 704   |      |   | 423   | 
|Stock-based compensation and
  benefits             |  |      | 642   |      |   |      | 
|Other                                               |  |      | 39    |      |   | 31    | 
|                                                    |  |      |       |      |   |       | 
|                                                    |  |      |       |      |   |       | 
|Total gross deferred tax
  assets                   |  |      | 2,976 |      |   | 1,932 | 
|                                                    |  |      |       |      |   |       | 
|                                                    |  |      |       |      |   |       | 
|Deferred tax liabilities:                           |  |      |       |      |   |       | 
|Depreciation                                        |  |      | 202   |      |   | 203   | 
|Prepaid pension cost                                |  |      | 429   |      |   | 826   | 
|Undistributed income of
  subsidiary                |  |      | 69    |      |   | 54    | 
|Unrealized gains on
  available-for-sale securities |  |      | 28    |      |   | 57    | 
|Deferred loan costs                                 |  |      | 72    |      |   | 97    | 
|Other                                               |  |      | 14    |      |   |      | 
|                                                    |  |      |       |      |   |       | 
|                                                    |  |      |       |      |   |       | 
|Total gross deferred tax
  liabilities              |  |      | 814   |      |   | 1,237 | 
|                                                    |  |      |       |      |   |       | 
|Net deferred tax assets                             |  | $    | 2,162 |      | $ | 695   | 
|                                                    |  |      |       |      |   |       | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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,
  2006, 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, 2006 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, 2006, 2005 and 2004

|(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, 2006 and 2005:

| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| | ---------------------------------------------------------------------------------------- |  | ------------------ | ----- | ----------------------- | - | ----- | - | ---- | ------ | - | - | ------ | -
| |                                                                                          |  | Pension
  benefits |       | Postretirement benefits |  
| |                                                                                          |  |                    |       |                         |  
| | (in thousands)                                                                           |  | 2006               |       | 2005                    |   | 2006  |   | 2005 |       
| |                                                                                          |  |                    |       |                         |   |       |   |      |       
| | Change in benefit obligation:                                                            |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| | Benefit obligation at beginning of year                                                  |  | $                  | 7,381 |                         | $ | 6,974 |   | $    | 2,353  |   | $ | 2,490  |  
| | Service cost                                                                             |  |                    |      |                         |   |      |   |      | 25     |   |   | 31     |  
| | Interest cost                                                                            |  |                    | 424   |                         |   | 417   |   |      | 135    |   |   | 148    |  
| | Amendments and settlements                                                               |  |                    | (38   | )                       |   | (24   | ) |      |       |   |   | (76    | )
| | Actuarial(gain)/ loss                                                                    |  |                    | (239  | )                       |   | 353   |   |      | (134   | ) |   | (126   | )
| | Benefits paid                                                                            |  |                    | (336  | )                       |   | (339  | ) |      | (70    | ) |   | (190   | )
| | Participant contributions                                                                |  |                    |      |                         |   |      |   |      | 45     |   |   | 76     |  
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| | Benefit obligation at end of year                                                        |  |                    | 7,192 |                         |   | 7,381 |   |      | 2,354  |   |   | 2,353  |  
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| | Change in plan assets:                                                                   |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| | Fair value of plan assets at beginning of
year                                           |  |                    | 8,058 |                         |   | 7,451 |   |      |       |   |   |       |  
| | Actual return on plan assets                                                             |  |                    | 642   |                         |   | 871   |   |      |       |   |   |       |  
| | Employer contributions                                                                   |  |                    |      |                         |   | 100   |   |      | 25     |   |   | 114    |  
| | Settlements                                                                              |  |                    | (38   | )                       |   | (25   | ) |      |       |   |   |       |  
| | Participant contributions                                                                |  |                    |      |                         |   |      |   |      | 45     |   |   | 76     |  
| | Benefits paid                                                                            |  |                    | (336  | )                       |   | (339  | ) |      | (70    | ) |   | (190   | )
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| | Fair value of plan assets at end of year                                                 |  |                    | 8,326 |                         |   | 8,058 |   |      |       |   |   |       |  
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| | Funded status                                                                            |  |                    | 1,134 |                         |   | 677   |   |      | (2,354 | ) |   | (2,353 | )
| | Unrecognized net actuarial loss                                                          |  |                    |      |                         |   | 1,451 |   |      |       |   |   | 102    |  
| | Unrecognized prior service cost                                                          |  |                    |      |                         |   |      |   |      |       |   |   | (63    | )
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| | Net amount recognized                                                                    |  | $                  | 1,134 |                         | $ | 2,128 |   | $    | (2,354 | ) | $ | (2,314 | )
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| | Unrecognized net actuarial loss in accumulated other comprehensive
  income (net of tax) |  | $                  | (728  | )                       |   | N/A   |   | $    | 52     |   |   | N/A    |  
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| |                                                                                          |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| | Assumptions as of measurement dates:Pension September 30;                                |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| | Postretirement December 31:                                                              |  |                    |       |                         |   |       |   |      |        |   |   |        |  
| | Discount rate                                                                            |  |                    | 6.125 | %                       |   | 5.875 | % |      | 6.125  | % |   | 5.875  | %
| | Expected return on plan assets                                                           |  |                    | 9.00  | %                       |   | 9.00  | % |      |       |   |   |       |  
| | Rate of compensation increase                                                            |  |                    | N/A   |                         |   | N/A   |   |      |       |   |   |       |  

| |                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------
| | Prior to adoption of SFAS No. 158, amounts
  recognized on the balance sheet at December 31, 2005 consist of (in
  thousands):

| |                       |  |                    |       |                           |   |        |  
| | --------------------- |  | ------------------ | ----- | ------------------------- | - | ------ | -
| |                       |  | Pension
  Benefits |       | Postretirement
  Benefits |  
| |                       |  |                    |       |                           |  
| | Prepaid benefit cost  |  | $                  | 2,128 |                           | $ |       |  
| | Accrued benefit cost  |  |                    |      |                           |   | (2,314 | )
| | Net amount recognized |  | $                  | 2,128 |                           | $ | (2,314 | )
| |                       |  |                    |       |                           |   |        |  

| |                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 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, 2006 and
  2005, by asset category are summarized in the following table:                                                                                                                                                                                                                                                                                                          

| |                   |  |                                |     |      |  |     |  
| | ----------------- |  | ------------------------------ | --- | ---- |  | --- | -
| |                   |  | Plan
  assets at September 30, |    
| |                   |  |                                |    
| | Asset Category    |  | 2006                           |     | 2005 | 
| |                   |  |                                |     |      | 
| | Equity Securities |  |                                | 73  | %    |  | 72  | %
| | Debt Securities   |  |                                | 27  | %    |  | 28  | %
| |                   |  |                                |     |      |  |     |  
| | Total             |  |                                | 100 | %    |  | 100 | %
| |                   |  |                                |     |      |  |     |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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, 2007, 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 2007      |  |                    | $ | 454                       |  |  |  | $ | 125 |  | 
| | Fiscal 2008      |  |                    |   | 461                       |  |  |  |   | 132 |  | 
| | Fiscal 2009      |  |                    |   | 472                       |  |  |  |   | 139 |  | 
| | Fiscal 2010      |  |                    |   | 479                       |  |  |  |   | 144 |  | 
| | Fiscal 2011      |  |                    |   | 491                       |  |  |  |   | 149 |  | 
| | Fiscal 2012-2016 |  |                    |   | 2,628                     |  |  |  |   | 805 |  | 

The
components of net periodic benefit cost include the following:

| |                             |  |                  |      |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
| | --------------------------- |  | ---------------- | ---- | ----------------------- | - | ---- | - | ---- | ---- | ---- | - | ---- | - | - | --- | - | - | --- | -
| |                             |  | Pension benefits |      | Postretirement benefits |  
| |                             |  |                  |      |                         |  
| | (in thousands)              |  | 2006             |      | 2005                    |   | 2004 |   | 2006 |      | 2005 |   | 2004 |  
| |                             |  |                  |      |                         |   |      |   |      |      |      |   |      |  
| |                             |  |                  |      |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
| | Service cost                |  | $                |     |                         | $ |     |   | $    |     |      | $ | 25   |   | $ | 31  |   | $ | 33  |  
| | Interest cost               |  |                  | 424  |                         |   | 417  |   |      | 432  |      |   | 135  |   |   | 148 |   |   | 142 |  
| | Expected return on assets   |  |                  | (710 | )                       |   | (655 | ) |      | (642 | )    |   |     |   |   |    |   |   |    |  
| | Amortization                |  |                  | 69   |                         |   | 66   |   |      | 80   |      |   | (8   | ) |   | (1  | ) |   | (1  | )
| |                             |  |                  |      |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
|
| | Net periodic (benefit) cost |  | $                | (217 | )                       | $ | (172 | ) | $    | (130 | )    | $ | 152  |   | $ | 178 |   | $ | 174 |  
| |                             |  |                  |      |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(10) | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | On May 3, 2000, the
  Companys shareholders approved the Rome Bancorp, Inc. 2000 Stock Option Plan
  (the 2000 Stock Option Plan). The primary objective of the 2000 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
  2000 Stock Option Plan, 517,952 shares of authorized but unissued common
  stock are reserved for issuance upon option exercises. The Company also has
  the alternative to fund the 2000 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, 382,357 options were awarded at an exercise price
  of $2.19 per share. These options have a ten-year term and vested at a rate
  of 20% per year from the grant date. At December 31, 2006 and 2005 the
  remaining contractual life of these options was 3.5 years and 4.5 years,
  respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | On May 3, 2006, the
  Companys shareholders approved the Rome Bancorp, Inc. 2006 Stock Option Plan
  (the 2006 Stock Option Plan), which also has the primary objective of
  providing officers and directors with a proprietary interest in the Company
  and an incentive to encourage such persons to remain with the Company. Under
  the 2006 Stock Option Plan, 590,000 shares of authorized but unissued common
  stock are reserved for issuance upon option exercises. The Company also has
  the alternative to fund the 2006 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 May 24, 2006, 354,000 options were awarded at an exercise price
  of $12.84 per share. These options have a ten-year term and vest at a rate of
  20% per year from the grant date. The fair value of the 2006 options awarded
  was estimated on the date of grant using a closed form option valuation
  (Black-Scholes) model and the following assumptions: risk free interest rate
  4.60%, an expected term of 6.5 years, expected stock price volatility of
  8.25% and a dividend yield of 2.52%. At December 31, 2006 the remaining
  contractual life of these options was 9.4 years.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | Under the
  provisions of FASB No. 123(R), stock-based compensation expense of $1.69 per
  option granted under the 2006 Stock Option Plan is being recorded over the
  sooner of the vesting period of the options, or upon the date at which a
  recipient becomes eligible for normal or early retirement under the Companys
  defined benefit plan. At May 24, 2006, certain awardees met the retirement
  eligibility criteria and accordingly, stock-based compensation expense of
  $350,000 related to their options was expensed immediately. Total
  compensation cost related to the Companys stock option plans was $379,000,
  $0 and $0 for 2006, 2005 and 2004, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

Information
related to the stock option plans during each year follows:

|                                                 |  |      |         |      |   |         |  |   |         | 
|------------------------------------------------ |  | ---- | ------- | ---- | - | ------- |  | - | ------- | 
|                                                 |  | 2006 |         | 2005 |   | 2004    | 
|                                                 |  |      |         |      |   |         | 
|                                                
|Intrinsic value of options
  exercised           |  | $    | 487,000 |      | $ | 293,000 |  | $ | 151,000 | 
|Cash received from option
  exercises            |  |      | 101,000 |      |   | 73,000  |  |   | 33,000  | 
|Tax benefit realized from
  option exercises     |  |      | 144,000 |      |   | 57,000  |  |   | 59,000  | 
|Weighted average fair
  value of options granted |  |      | 1.69    |      |   | 0       |  |   | 0       | 

| |                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of December 31, 2006,
  there was $220,000 of total unrecognized compensation cost related to
  nonvested stock options granted under the Plan. The cost is expected to be
  recognized over a weighted-average period of 4.42 years. At December 31,
  2006, the intrinsic value of both all outstanding options and exercisable
  options was $1.8 million.
| |                                                                                                                                                                                                                                                                                                                                                                 
| | The
  following table presents the stock option activity for the years ended
  December 31, 2006, 2005 and 2004 (in thousands):                                                                                                                                                                                                                                 

|                                 |  |        |         |                                       |   |        |  |                                       |         |        |   |                                       |  |  |         |   |   |      | 
|-------------------------------- |  | ------ | ------- | ------------------------------------- | - | ------ |  | ------------------------------------- | ------- | ------ | - | ------------------------------------- |  |  | ------- | - | - | ---- | 
|                                 |  | 2006   |         | 2005                                  |   | 2004   | 
|                                 |  |        |         |                                       |   |        | 
|                                 |  | Shares |         | Weighted
  Average
  Exercise
  Price |   | Shares |  | Weighted
  Average
  Exercise
  Price |         | Shares |   | Weighted
  Average
  Exercise
  Price | 
|                                 |  |        |         |                                       |   |        |  |                                       |         |        |   |                                       | 
|Outstanding at beginning of year |  |        | 219,799 |                                       | $ | 2.19   |  |                                       | 256,253 |        | $ | 2.19                                  |  |  | 271,130 |   | $ | 2.19 | 
|Exercised                        |  |        | (48,910 | )                                     |   | 2.19   |  |                                       | (36,455 | )      |   | 2.19                                  |  |  | (14,877 | ) |   | 2.19 | 
|Granted                          |  |        | 354,000 |                                       |   | 12.84  |  |                                       |        |        |   |                                      |  |  |        |   |   |     | 
|                                 |  |        |         |                                       |   |        |  |                                       |         |        |   |                                       |  |  |         |   |   |      | 
|Outstanding at end of year       |  |        | 524,889 |                                       | $ | 9.37   |  |                                       | 219,799 |        | $ | 2.19                                  |  |  | 256,253 |   | $ | 2.19 | 
|                                 |  |        |         |                                       |   |        |  |                                       |         |        |   |                                       |  |  |         |   |   |      | 
|Exercisable at end of year       |  |        | 170,889 |                                       | $ | 2.19   |  |                                       | 219,799 |        | $ | 2.19                                  |  |  | 179,789 |   | $ | 2.19 | 
|                                 |  |        |         |                                       |   |        |  |                                       |         |        |   |                                       |  |  |         |   |   |      | 

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(11) | Recognition and Retention Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     | The Companys shareholders
  approved the Rome Bancorp, Inc. 2000 Recognition and Retention Plan (2000
  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, 119,742 shares were awarded under the 2000 RRP. The shares vested 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 was amortized to
  compensation expense on a straight-line basis over the vesting periods of the
  underlying shares.                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     | The
  Companys shareholders approved the Rome Bancorp, Inc. 2006 Recognition and
  Retention Plan (2006 RRP) on May 3, 2006 in order to further 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     | On May 24,
  2006, 168,300 shares were awarded under the 2006 RRP. These 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 $2.2 million at the grant date, and is being
  amortized over the sooner of the vesting period of the options, or upon the
  date at which a recipient becomes eligible for normal or early retirement under
  the Companys defined benefit plan. At May 24, 2006, certain awardees met the
  retirement eligibility criteria and accordingly, stock-based compensation
  expense of $1.1 million related to their 2006 RRP awards was expensed
  immediately. Stock-based compensation expense of $1.2 million, $26,000 and
  $52,000 related to RRP awards was recorded in 2006, 2005 and 2004,
  respectively. The remaining unearned compensation cost has been shown as a
  reduction of shareholders equity. The shares awarded under the RRP were

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

| |                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.
| |                                                                                                                                                                                     
| | A summary of changes in
  the Companys nonvested shares for the year follows:                                                                                                      

|                                 |  |        |         |                                          |   |       | 
|-------------------------------- |  | ------ | ------- | ---------------------------------------- | - | ----- | 
|                                 |  | Shares |         | Weighted-Average
  Grant-Date Fair Value |  
|                                 |  |        |         |                                          |  
|Nonvested at January 1,
  2006   |  |        |        |                                          |   |      | 
|Granted                          |  |        | 168,300 |                                          | $ | 12.84 | 
|Vested                           |  |        |        |                                          |   |      | 
|Forfeited                        |  |        |        |                                          |   |      | 
|                                 |  |        |         |                                          |   |       | 
|Nonvested at December 31,
  2006 |  |        | 168,300 |                                          | $ | 12.84 | 
|                                 |  |        |         |                                          |   |       | 

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | As of December 31, 2006,
  there was $925,000 of total unrecognized compensation cost related to
  nonvested shares granted under the Plan. The cost is expected to be
  recognized over a weighted-average period of 4.4 years. The total fair value
  of shares vested during the years ended December 31, 2006, 2005 and 2004 was
  $0, $241,000 and $327,000.                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(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 75% 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 $80,000, $78,000 and
  $72,000 during the years ended December 31, 2006, 2005 and 2004,
  respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | In
  connection with establishing an ESOP in 1999, the ESOP borrowed $933,000 from
  the Company to purchase 453,488 shares of the Companys common stock. The
  loan bears interest at 8% and is payable in fifteen annual installments. At
  December 31, 2006, 241,851 of the original ESOP shares had been released or
  committed to be released and 211,637 remained as unallocated shares.                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | On March 30,
  2005, in connection with the Companys second-step conversion and stock
  offering, the ESOP borrowed $2,360,000 from the Company to purchase an
  additional 236,000 shares of the Companys common stock. The loan bears
  interest at 5% and is payable in fifteen annual installments. At December 31,
  2006, 31,466 of these shares had been released or committed to be released
  and 204,534 remained as unallocated shares.                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | The fair
  value of the unallocated shares on December 31, 2006 was $5,306,000. The
  Company recognized compensation expense of $568,000, $478,000 and $403,000 in
  2006, 2005 and 2004, respectively in connection with the ESOP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | The Company has also adopted a Benefit Restoration Plan
  for the Companys CEO. This plan provides the beneficiary with the benefits
  that would otherwise be due to him as a participant in the 401(k) plan and
  the employee stock ownership plan if such benefits were not limited by
  certain provisions of the Internal Revenue Code. In addition, in the event
  the beneficiary retires prior to the end of the ESOP loan term, the plan will
  provide him a benefit equal to the value of the shares of Rome Bancorp that
  would have been allocated to his account under the ESOP had he remained
  employed through the end of the ESOP loan term. The liability associated with
  this plan was $683,000 at December 31, 2006.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

|     |                                                                                                                                                                                                                                                                                               
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(13) | Comprehensive Income (Loss)                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                               
|     | Comprehensive
  income represents net income and other comprehensive income (loss) 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, |    
|                                                                           |  |                          |    
|                                                                           |  | 2006                     |     | 2005 |   | 2004 |  
|                                                                           |  |                          |     |      |   |      |  
|Unrealized holding losses
  arising during the period                      |  | $                        | (59 | )    | $ | (405 | ) | $ | (494 | )
|Reclassification adjustment for
  net realized gain included in net income |  |                          | (11 | )    |   | (105 | ) |   | (176 | )
|                                                                           |  |                          |     |      |   |      |   |   |      |  
|                                                                           |  |                          |     |      |   |      |   |   |      |  
|Other comprehensive loss,
  before tax                                     |  |                          | (70 | )    |   | (510 | ) |   | (670 | )
|Deferred tax benefit                                                       |  |                          | (28 | )    |   | (204 | ) |   | (268 | )
|                                                                           |  |                          |     |      |   |      |   |   |      |  
|                                                                           |  |                          |     |      |   |      |   |   |      |  
|Other comprehensive loss, net
  of tax                                     |  | $                        | (42 | )    | $ | (306 | ) | $ | (402 | )
|                                                                           |  |                          |     |      |   |      |   |   |      |  

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 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, 2006 and 2005 the Company was committed to originate mortgage and other
  loans of approximately $12.1 million and $10.4 million, respectively. At
  December 31, 2006 and December 31, 2005, the Companys fixed rate loan
  commitments totaled $7.1 million and $1.6 million, respectively. The range of
  interest rates on these fixed rate commitments was 5.875% to 6.8% at December
  31, 2006 and 4.875% to 6.79% at December 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | Commitments
  under unused lines of credit and letters of credit were approximately $17.2
  million and $13.0 million at December 31, 2006 and 2005, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

|     |                                                                                                                                                                                                                                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 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.
|    
|(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):                                                                                                                      

|                                            |  |      |       |      |   |       |  |   |       | 
|------------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|                                            |  | 2006 |       | 2005 |   | 2004  | 
|                                            |  |      |       |      |   |       | 
|Basic earnings per
  share:                 |  |      |       |      |   |       |  |   |       | 
|Net Income available to common shareholders |  | $    | 2,488 |      | $ | 3,402 |  | $ | 2,400 | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Weighted average basic shares outstanding   |  |      | 8,527 |      |   | 9,205 |  |   | 9,283 | 
|                                            |  |      |       |      |   |       |  |   |       | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Basic earnings per share                    |  | $    | 0.29  |      | $ | 0.37  |  | $ | 0.26  | 
|                                            |  |      |       |      |   |       |  |   |       | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Diluted earnings
  per share:               |  |      |       |      |   |       |  |   |       | 
|Net Income available to common shareholders |  | $    | 2,488 |      | $ | 3,402 |  | $ | 2,400 | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Weighted average basic shares outstanding   |  |      | 8,527 |      |   | 9,205 |  |   | 9,283 | 
|Effect of dilutive securities:              |  |      |       |      |   |       |  |   |       | 
|Stock options                               |  |      | 142   |      |   | 195   |  |   | 221   | 
|Unearned RRP shares                         |  |      | 55    |      |   | 6     |  |   | 18    | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Weighted average diluted shares outstanding |  |      | 8,724 |      |   | 9,406 |  |   | 9,522 | 
|                                            |  |      |       |      |   |       |  |   |       | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Diluted earnings per share                  |  | $    | 0.29  |      | $ | 0.36  |  | $ | 0.25  | 
|                                            |  |      |       |      |   |       |  |   |       | 

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 $1.6 million at December 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | 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. 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 offering completed in March of 2005.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | 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.                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | Under
  capital adequacy guidelines and the regulatory framework for prompt
  corrective action, the 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                                                                                                                                                                                                              

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements 
Years ended December 31, 2006, 2005 and 2004

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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
  October 16, 2006, 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, 2006, that the
  Company and Bank meet all capital adequacy requirements to which they are
  subject.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | The
  following is a summary of the 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 |  
|                                          |  |        |        |                                           |  |                                                                                        |  
|                                          |  | Amount |        | Ratio                                     |  | Amount                                                                                 |   | Ratio |   | Amount |  | Ratio |     
|                                          |  |        |        |                                           |  |                                                                                        |   |       |   |        |  |       |     
|As of December 31, 2006:                  |  |        |        |                                           |  |                                                                                        |   |       |   |        |  |       |      |  |   |        |  |  |       | 
|Total capital (to risk weighted assets):  |  | $      | 64,834 |                                           |  | 28.9                                                                                   | % |       | $ | 17,957 |  |       | >=8% |  | $ | 22,447 |  |  | >=10% | 
|                                          |  |        |        |                                           |  |                                                                                        |   |       |   |        |  |       |      |  |   |        |  |  |       | 
|Tier 1 Capital (to risk weighted assets): |  |        | 63,201 |                                           |  | 28.16                                                                                  | % |       |   | 8,979  |  |       | >=4% |  |   | 13,468 |  |  | >=6%  | 
|                                          |  |        |        |                                           |  |                                                                                        |   |       |   |        |  |       |      |  |   |        |  |  |       | 
|Tier 1 Capital (to adjusted assets):      |  |        | 63,201 |                                           |  | 21.27                                                                                  | % |       |   | 8,915  |  |       | >=3% |  |   | 14,858 |  |  | >=5%  | 
|                                          |  |        |        |                                           |  |                                                                                        |   |       |   |        |  |       |      |  |   |        |  |  |       | 
|As of December 31, 2005:                  |  |        |        |                                           |  |                                                                                        |   |       |   |        |  |       |      |  |   |        |  |  |       | 
|Total capital (to risk weighted assets):  |  | $      | 59,174 |                                           |  | 28.2                                                                                   | % |       | $ | 16,789 |  |       | >=8% |  | $ | 20,986 |  |  | >=10% | 
|                                          |  |        |        |                                           |  |                                                                                        |   |       |   |        |  |       |      |  |   |        |  |  |       | 
|Tier 1 Capital (to risk weighted assets): |  |        | 58,643 |                                           |  | 27.9                                                                                   | % |       |   | 8,394  |  |       | >=4% |  |   | 12,592 |  |  | >=6%  | 
|                                          |  |        |        |                                           |  |                                                                                        |   |       |   |        |  |       |      |  |   |        |  |  |       | 
|Tier 1 Capital (to adjusted assets):      |  |        | 58,643 |                                           |  | 18.96                                                                                  | % |       |   | 9,280  |  |       | >=3% |  |   | 15,467 |  |  | >=5%  | 

---



Rome Bancorp, Inc and Subsidiary 
Notes to Consolidated Financial Statements 
Years ended December 31, 2006, 2005 and 2004

| |                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------
| | Following is
  a reconciliation of the Banks GAAP shareholders equity to regulatory Tier 1
  capital at December 31, 2006 and 2005.

|                          |                                                                                                     |                     |        |                     |   |        |        |  
|------------------------- | --------------------------------------------------------------------------------------------------- | ------------------- | ------ | ------------------- | - | ------ | ------ | -
|                          |                                                                                                     | December 31,
  2006 |        | December 31,
  2005 |  
|                          |                                                                                                     |                     |        |                     |   |       
|GAAP Shareholders Equity |                                                                                                     | $                   | 62,514 |                     | $ | 58,674 |       
|Plus:                     | Minority interest in consolidated subsidiary and other comprehensive
  loss related to SFAS No. 158 |                     |        | 745                 |   |        | 71     |  
|Less:                     | Disallowed assets and unrealized gains on available-for - sale
  securities, net of tax             |                     |        | (58                 | ) |        | (102   | )
|                          |                                                                                                     |                     |        |                     |   |        |        |  
|Tier 1 Capital            |                                                                                                     |                     | 63,201 |                     |   | 58,643 |       
|                          |                                                                                                     |                     |        |                     |   |        |       
|                          |                                                                                                     |                     |        |                     |   |        |        |  
|Plus:                     | Allowance for loan losses                                                                           |                     |        | 1,965               |   |        | 1,960  |  
|                          | Allowed unrealized gain on available-for-sale securities                                            |                     |        |                    |   |        |       |  
|Less:                     | Real estate held for investment                                                                     |                     |        | (332                | ) |        | (338   | )
|                          | Other investments required to be deducted                                                           |                     |        |                    |   |        | (1,091 | )
|                          |                                                                                                     |                     |        |                     |   |        |        |  
|                          |                                                                                                     |                     |        |                     |   |        |        |  
|Total Regulatory Capital  |                                                                                                     | $                   | 64,834 |                     | $ | 59,174 |       
|                          |                                                                                                     |                     |        |                     |   |        |       

|     |                                    
|---- | -----------------------------------
|(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.                                                                                                                                                                                                                                                                                       
| |                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                     | 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.                                                                     

---



Rome Bancorp, Inc and Subsidiary 
Notes to Consolidated Financial Statements 
Years ended December 31, 2006, 2005 and 2004

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

| |                               |  |                   |         |              |   |                   |  |              |         |  |   |         | 
| | ----------------------------- |  | ----------------- | ------- | ------------ | - | ----------------- |  | ------------ | ------- |  | - | ------- | 
| |                               |  | 2006              |         | 2005         |  
| |                               |  |                   |         |              |  
| |                               |  | Carrying
  amount |         | Fair
  value |   | Carrying
  amount |  | Fair
  value |        
| |                               |  |                   |         |              |   |                   |  |              |        
| | Financial assets:             |  |                   |         |              |   |                   |  |              |         |  |   |         | 
| | Cash and cash equivalents     |  | $                 | 7,858   |              | $ | 7,858             |  | $            | 34,235  |  | $ | 34,235  | 
| | Securities available for sale |  |                   | 4,319   |              |   | 4,319             |  |              | 9,666   |  |   | 9,666   | 
| | Securities held to maturity   |  |                   | 1,178   |              |   | 1,175             |  |              | 1,440   |  |   | 1,428   | 
| | Loans, net                    |  |                   | 262,572 |              |   | 259,388           |  |              | 251,918 |  |   | 248,073 | 
| | Federal Home Loan Bank Stock  |  |                   | 1,344   |              |   | 1,344             |  |              | 776     |  |   | 776     | 
| | Accrued interest receivable   |  |                   | 1,094   |              |   | 1,094             |  |              | 1,053   |  |   | 1,053   | 
| |                               |  |                   |         |              |   |                   |  |              |         |  |   |         | 
| | Financial liabilities:        |  |                   |         |              |   |                   |  |              |         |  |   |         | 
| | Non-interest bearing deposits |  |                   | 28,042  |              |   | 28,042            |  |              | 30,039  |  |   | 30,039  | 
| | Interest bearing deposits     |  |                   | 167,963 |              |   | 167,749           |  |              | 171,429 |  |   | 171,045 | 
| | Borrowings                    |  |                   | 20,172  |              |   | 19,778            |  |              | 9,374   |  |   | 8,918   | 
| | Accrued interest payable      |  |                   | 33      |              |   | 33                |  |              | 29      |  |   | 29      | 

|     |                                                                                                                                                                                                                                                                                                                                                                                       
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 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.
|     |                                                                                                                                                                                                                                                                                                                                                                                       
|(18) | Parent Company Only Financial Statements                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                       
|     | Presented
  below is the condensed balance sheet of the Parent Company as of December 31,
  2006 and 2005 and statement of income and statement of cash flows for the
  years ended December 31, 2006, 2005 and 2004 (in thousands):                                                                                                                                                  

|                                           |  |      |        |      |   |        | 
|------------------------------------------ |  | ---- | ------ | ---- | - | ------ | 
|Condensed
  Balance Sheet                  |  | 2006 |        | 2005 |  
|                                           |  |      |        |      |  
|Assets:                                    |  |      |        |      |   |        | 
|Cash and due from banks                    |  | $    | 10,097 |      | $ | 31,588 | 
|Investment in subsidiary bank              |  |      | 62,514 |      |   | 58,673 | 
|Loan receivable from ESOP                  |  |      | 2,646  |      |   | 2,815  | 
|Other assets                               |  |      | 1,916  |      |   | 1,308  | 
|                                           |  |      |        |      |   |        | 
|Total assets                               |  | $    | 77,173 |      | $ | 94,384 | 
|                                           |  |      |        |      |   |        | 
|                                           |  |      |        |      |   |        | 
|Total liabilities                          |  | $    | 142    |      | $ | 906    | 
|Total shareholders equity                 |  |      | 77,031 |      |   | 93,478 | 
|                                           |  |      |        |      |   |        | 
|Total liabilities and shareholders
equity |  | $    | 77,173 |      | $ | 94,384 | 
|                                           |  |      |        |      |   |        | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

|                                                                                                                                |  |      |        |      |   |       |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ----- |  | - | ------ | -
|Condensed Statement of Income                                                                                                   |  | 2006 |        | 2005 |   | 2004  | 
|                                                                                                                                |  |      |        |      |   |       | 
|Interest and investment income                                                                                                  |  | $    | 497    |      | $ | 466   |  | $ | 94     |  
|Dividends from subsidiary bank                                                                                                  |  |      |       |      |   |      |  |   | 6,000  |  
|                                                                                                                                |  |      |        |      |   |       |  |   |        |  
|                                                                                                                               
|Total operating income                                                                                                          |  |      | 497    |      |   | 466   |  |   | 6,094  |  
|                                                                                                                                |  |      |        |      |   |       |  |   |        |  
|                                                                                                                               
|Other operating expenses                                                                                                        |  |      | 2,072  |      |   | 369   |  |   | 269    |  
|                                                                                                                                |  |      |        |      |   |       |  |   |        |  
|Income (loss) before income
  taxes and dividends in excess of net income/(equity in undistributed income)
  of subsidiary bank |  |      | (1,575 | )    |   | 97    |  |   | 5,825  |  
|                                                                                                                                |  |      |        |      |   |       |  |   |        |  
|Equity in undistributed income/
  (Dividends in excess of net income)of subsidiary bank                                         |  |      | 4,063  |      |   | 3,305 |  |   | (3,425 | )
|                                                                                                                                |  |      |        |      |   |       |  |   |        |  
|                                                                                                                               
|Net income                                                                                                                      |  | $    | 2,488  |      | $ | 3,402 |  | $ | 2,400  |  
|                                                                                                                                |  |      |        |      |   |       |  |   |        |  

|                                                                                             |  |      |         |      |   |         |   |   |        |  
|-------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | - | - | ------ | -
|Condensed Statement of Cash Flows                                                            |  | 2006 |         | 2005 |   | 2004    |  
|                                                                                             |  |      |         |      |   |         |  
|Operating activities:                                                                        |  |      |         |      |   |         |   |   |        |  
|Net income                                                                                   |  | $    | 2,488   |      | $ | 3,402   |   | $ | 2,400  |  
|Adjustments to reconcile net
  income to cash provided by operating activities:              |  |      |         |      |   |         |   |   |        |  
|(Equity in undistributed
  earnings of)/dividends in excess of net income of subsidiary bank |  |      | (4,063  | )    |   | (3,305  | ) |   | 3,425  |  
|Amortization of stock-based
  compensation                                                   |  |      | 1,616   |      |   |         |   |   |        |  
|(Increase) decrease in other
  assets                                                        |  |      | (742    | )    |   | 483     |   |   | (449   | )
|(Decrease) increase in other
  liabilities                                                   |  |      | (764    | )    |   | 859     |   |   | (244   | )
|Tax benefit from exercise of
  stock options                                                 |  |      | 144     |      |   | 57      |   |   | 59     |  
|                                                                                             |  |      |         |      |   |         |   |   |        |  
|Net cash (used in) provided by operating
  activities                                        |  |      | (1,321  | )    |   | 1,496   |   |   | 5,191  |  
|                                                                                             |  |      |         |      |   |         |   |   |        |  
|Investing activities:                                                                        |  |      |         |      |   |         |   |   |        |  
|Investment in subsidiary bank                                                                |  |      |        |      |   | (25,653 | ) |   |       |  
|Decrease (increase) in loan to
  ESOP                                                        |  |      | 169     |      |   | (2,172  | ) |   | 47     |  
|                                                                                             |  |      |         |      |   |         |   |   |        |  
|Net cash provided by (used in) investing
  activities                                        |  |      | 169     |      |   | (27,825 | ) |   | 47     |  
|                                                                                             |  |      |         |      |   |         |   |   |        |  
|                                                                                             |  |      |         |      |   |         |   |   |        |  
|Financing activities:                                                                        |  |      |         |      |   |         |   |   |        |  
|Net proceeds of common stock
  offering and conversion                                       |  |      |        |      |   | 55,462  |   |   |       |  
|Purchase of treasury stock                                                                   |  |      | (17,818 | )    |   |        |   |   | (2,045 | )
|Dividends                                                                                    |  |      | (2,622  | )    |   | (2,046  | ) |   | (987   | )
|Exercise of stock options                                                                    |  |      | 101     |      |   | 73      |   |   | 33     |  
|                                                                                             |  |      |         |      |   |         |   |   |        |  
|Net cash (used in) provided by financing
  activities                                        |  |      | (20,339 | )    |   | 53,489  |   |   | (2,999 | )
|                                                                                             |  |      |         |      |   |         |   |   |        |  
|Net (decrease) increase in cash
  and cash equivalents                                       |  |      | (21,491 | )    |   | 27,160  |   |   | 2,239  |  
|                                                                                             |  |      |         |      |   |         |   |   |        |  
|Cash and cash equivalents at
  beginning of year                                             |  |      | 31,588  |      |   | 4,428   |   |   | 2,189  |  
|                                                                                             |  |      |         |      |   |         |   |   |        |  
|                                                                                            
|Cash and cash equivalents at
  end of year                                                   |  | $    | 10,097  |      | $ | 31,588  |   | $ | 4,428  |  
|                                                                                             |  |      |         |      |   |         |   |   |        |  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

|     |                                      
|---- | -------------------------------------
|(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 undertook a second-step
conversion (the Conversion), and the Bank reorganized from the two-tier
mutual holding company structure to the stock holding company structure. The
Conversion was consummated on March 30, 2005. Prior to the completion of the
Conversion, the MHC owned approximately 61.5% of the common stock of the
Company.

In connection with the
Conversion, the outstanding shares of Rome Bancorp owned by the MHC were sold
to the depositors of Rome Savings Bank and other public investors (the
Offering). Completion of the Conversion and Offering resulted in the issuance
of 9.6 million shares of common stock. A total of 5.9 million shares were sold
in the subscription, community and syndicated offerings, at $10.00 per share.
An additional 3.7 million shares were issued to the former public stockholders
of the Company based upon an exchange ratio of 2.26784 new shares for each
share of Rome Bancorp common stock held at the close of business on March 30,
2005. Options granted under the Companys 2000 Stock Option Plan and common
shares held by the Companys ESOP and Recognition and Retention Plan prior to
the conversion were also exchanged using the conversion ratio of 2.26784.

The Conversion was accounted
for as a change in corporate form with no resulting change in the historical
basis of the Companys assets, liabilities and equity. Costs related to the
Offering, primarily marketing fees paid to the companys investment banking
firm, professional fees, registration fees, printing and mailing costs were
$3.1 million and accordingly, net proceeds were $55.9 million. In addition, as
part of the conversion and dissolution of the MHC, the Bank received $1.9 million
of cash previously held by the MHC. As a result of the Conversion and Offering,
Rome Bancorp was succeeded by a new, fully public, Delaware corporation with
the same name and the MHC ceased to exist.

Also pursuant to the Plan of
Conversion, the Bank terminated the liquidation account it established in
connection with its mutual holding company reorganization and minority stock
issuance and such account was replaced by a new liquidation account created by
the Bank as of March 30, 2005. 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 the Conversion,
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.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2006, 2005 and 2004

|     |                                              
|---- | ---------------------------------------------
|(20) | Selected Quarterly Financial Data (Unaudited)

Selected
quarterly financial data for 2006 and 2005 are as follows:

|                                                      |  |                                          |       |          |   |               |   |              |   |       |  |  |  |   |       |  | 
|----------------------------------------------------- |  | ---------------------------------------- | ----- | -------- | - | ------------- | - | ------------ | - | ----- |  |  |  | - | ----- |  | 
|                                                      |  | 2006 Quarter Ending                      |      
|                                                      |  |                                          |      
|                                                      |  | March 31,                                |       | June 30, |   | September 30, |   | December 31, |  
|                                                      |  |                                          |       |          |   |               |   |              |  
|                                                      |  | (In thousands, except per share amounts) |      
|                                                      |  |                                          |      
|                                                      |  |                                          |       |          |   |               |   |              |   |       |  |  | 
|Net interest income                                   |  | $                                        | 3,622 |          | $ | 3,534         |   |              | $ | 3,408 |  |  |  | $ | 3,372 |  | 
|Net interest income after
  provision for loan losses |  |                                          | 3,507 |          |   | 3,534         |   |              |   | 3,383 |  |  |  |   | 3,365 |  | 
|Net income (loss) (1)                                 |  |                                          | 808   |          |   | (77           | ) |              |   | 919   |  |  |  |   | 838   |  | 
|Earnings (loss) per common
  share:                   |  |                                          |       |          |   |               |   |              |   |       |  |  |  |   |       |  | 
|Basic:                                                |  | $                                        | 0.09  |          | $ | (0.01         | ) |              | $ | 0.11  |  |  |  | $ | 0.11  |  | 
|Diluted                                               |  |                                          | 0.09  |          |   | (0.01         | ) |              |   | 0.11  |  |  |  |   | 0.10  |  | 

|                                                      |  |                                          |       |          |   |               |  |              |   |       |  |  |  |   |       |  | 
|----------------------------------------------------- |  | ---------------------------------------- | ----- | -------- | - | ------------- |  | ------------ | - | ----- |  |  |  | - | ----- |  | 
|                                                      |  | 2005 Quarter Ending                      |      
|                                                      |  |                                          |      
|                                                      |  | March 31,                                |       | June 30, |   | September 30, |  | December 31, |  
|                                                      |  |                                          |       |          |   |               |  |              |  
|                                                      |  | (In thousands, except per share amounts) |      
|                                                      |  |                                          |      
|                                                      |  |                                          |       |          |   |               |  |              |   |       |  |  | 
|Net interest income                                   |  | $                                        | 3,002 |          | $ | 3,379         |  |              | $ | 3,475 |  |  |  | $ | 3,643 |  | 
|Net interest income after
  provision for loan losses |  |                                          | 3,002 |          |   | 3,379         |  |              |   | 3,475 |  |  |  |   | 3,528 |  | 
|Net income                                            |  |                                          | 639   |          |   | 970           |  |              |   | 1,012 |  |  |  |   | 781   |  | 
|Earnings per common share:                            |  |                                          |       |          |   |               |  |              |   |       |  |  |  |   |       |  | 
|Basic:                                                |  | $                                        | 0.07  |          | $ | 0.10          |  |              | $ | 0.11  |  |  |  | $ | 0.09  |  | 
|Diluted                                               |  |                                          | 0.07  |          |   | 0.10          |  |              |   | 0.11  |  |  |  |   | 0.08  |  | 
|                                                      |  |                                          |       |          |   |               |  |              |   |       |  |  |  |   |       |  | 

|    |                                                                                                 
|--- | ------------------------------------------------------------------------------------------------
|(1) | Stock-based compensation
  of $972,000 net of tax, was recognized in the second quarter of 2006.

---



|                                                                 
|-----------------------------------------------------------------
|Directors
  of Rome Bancorp, Inc. & The Rome Savings Bank        
|                                                                 
|Charles M. Sprock                                                
|Chairman of the Board, President and Chief
  Executive Officer   
|                                                                 
|Bruce R. Engelbert                                               
|Retired, 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.                        
|                                                                 
|Dale A. Laval                                                    
|Chairman, Independent Audit Associates, Inc.                     
|                                                                 
|T. Richard Leidig                                                
|Business Consultant                                              
|                                                                 
|Michael J. Valentine                                             
|President, Mele Manufacturing Company, Inc.                      

|                                                       
|-------------------------------------------------------
|Executive
  Officers of The Rome Savings Bank          
|                                                       
|Charles M. Sprock                                      
|President and Chief Executive Officer                  
|                                                       
|David C. Nolan                                         
|Executive Vice President and Chief Financial
  Officer 
|                                                       
|D. Bruce Fraser                                        
|Vice President, Human Resources, Security,
  Compliance
|                                                       
|Mary Faith Messenger                                   
|Vice President and Controller                          
|                                                       
|Sandra L. Reader                                       
|Vice President, Consumer Loans                         
|                                                       
|Crystal M. Seymore                                     
|Corporate Secretary                                    
|                                                       
|James F. Sullivan                                      
|Vice President, Senior Loan Officer                    
|                                                       
|Francis C. Thalmann                                    
|Vice President, Operations and Branch Administration   

---