EXHIBIT 13.1

The summary information presented below at or for each of the
five years in the period ended December 31, 2005 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,                 |        
|                                   |  |                                   |        
|                                   |  | 2005                              |         | 2004 |   | 2003    |  | 2002 |         | 2001 |  
|                                   |  |                                   |         |      |   |         |  |      |         |      |  
|Selected Financial Condition
Data: |  |                                   |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Total assets                       |  | $                                 | 308,853 |      | $ | 268,152 |  | $    | 261,939 |      | $ | 250,075 |  | $ | 247,437 | 
|Loans, net                         |  |                                   | 251,918 |      |   | 231,272 |  |      | 207,656 |      |   | 181,564 |  |   | 167,607 | 
|Securities                         |  |                                   | 11,882  |      |   | 19,117  |  |      | 29,118  |      |   | 43,207  |  |   | 46,969  | 
|Total cash and cash
equivalents    |  |                                   | 34,235  |      |   | 6,929   |  |      | 14,055  |      |   | 15,698  |  |   | 23,922  | 
|Total deposits                     |  |                                   | 201,468 |      |   | 208,787 |  |      | 203,190 |      |   | 194,924 |  |   | 189,216 | 
|Borrowings                         |  |                                   | 9,374   |      |   | 18,843  |  |      | 18,090  |      |   | 14,920  |  |   | 16,857  | 
|Total equity                       |  |                                   | 93,478  |      |   | 36,258  |  |      | 36,639  |      |   | 36,193  |  |   | 36,364  | 
|Allowance for loan
losses          |  |                                   | 1,960   |      |   | 2,000   |  |      | 1,809   |      |   | 1,730   |  |   | 1,597   | 
|Non-performing loans               |  |                                   | 947     |      |   | 829     |  |      | 1,406   |      |   | 1,516   |  |   | 755     | 
|Non-performing assets              |  |                                   | 947     |      |   | 829     |  |      | 1,608   |      |   | 1,571   |  |   | 755     | 

|                                                    |  |      |        |      |   |        |  |      |        |      |   |        |  |   |        | 
|--------------------------------------------------- |  | ---- | ------ | ---- | - | ------ |  | ---- | ------ | ---- | - | ------ |  | - | ------ | 
|                                                    |  | 2005 |        | 2004 |   | 2003   |  | 2002 |        | 2001 |  
|                                                    |  |      |        |      |   |        |  |      |        |      |  
|                                                    |  |      |        |      |   |        |  |      |        |      |   |        |  |   |        | 
|Selected Operating Data:                            |  |      |        |      |   |        |  |      |        |      |   |        |  |   |        | 
|Interest income                                     |  | $    | 16,535 |      | $ | 14,498 |  | $    | 14,810 |      | $ | 15,509 |  | $ | 17,006 | 
|Interest expense                                    |  |      | 3,036  |      |   | 3,042  |  |      | 3,614  |      |   | 4,981  |  |   | 7,201  | 
|                                                    |  |      |        |      |   |        |  |      |        |      |   |        |  |   |        | 
|Net interest income                                 |  |      | 13,499 |      |   | 11,456 |  |      | 11,196 |      |   | 10,528 |  |   | 9,805  | 
|Provision for loan losses                           |  |      | 115    |      |   | 390    |  |      | 510    |      |   | 330    |  |   | 325    | 
|                                                    |  |      |        |      |   |        |  |      |        |      |   |        |  |   |        | 
|Net interest income after provision for loan
losses |  |      | 13,384 |      |   | 11,066 |  |      | 10,686 |      |   | 10,198 |  |   | 9,480  | 
|Non-interest income:                                |  |      |        |      |   |        |  |      |        |      |   |        |  |   |        | 
|Service charges and other
income                    |  |      | 1,921  |      |   | 1,596  |  |      | 1,165  |      |   | 1,130  |  |   | 1,039  | 
|Net gain (loss) on securities
transactions          |  |      | 105    |      |   | 176    |  |      | (693   | )    |   | 132    |  |   | 47     | 
|                                                    |  |      |        |      |   |        |  |      |        |      |   |        |  |   |        | 
|Total non-interest
income                           |  |      | 2,026  |      |   | 1,772  |  |      | 472    |      |   | 1,262  |  |   | 1,086  | 
|Total non-interest
expense                          |  |      | 9,977  |      |   | 9,102  |  |      | 8,835  |      |   | 7,707  |  |   | 7,201  | 
|                                                    |  |      |        |      |   |        |  |      |        |      |   |        |  |   |        | 
|Income before income taxes                          |  |      | 5,433  |      |   | 3,736  |  |      | 2,323  |      |   | 3,753  |  |   | 3,365  | 
|Income taxes                                        |  |      | 2,031  |      |   | 1,336  |  |      | 786    |      |   | 1,268  |  |   | 1,058  | 
|                                                    |  |      |        |      |   |        |  |      |        |      |   |        |  |   |        | 
|Net income                                          |  | $    | 3,402  |      | $ | 2,400  |  | $    | 1,537  |      | $ | 2,485  |  | $ | 2,307  | 
|                                                    |  |      |        |      |   |        |  |      |        |      |   |        |  |   |        | 

---

At or for
  the
  Year Ended December 31,2005

2004

2003

2002

2001Selected Financial Ratios and Other
DataPerformance Ratios:Basic earnings per
share

$
0.37

$
0.26

$
0.16

$
0.27

$
0.23Diluted earnings per
share

$
0.36

$
0.25

$
0.16

$
0.26

$
0.23Return on average
assets


1.13
%

0.91
%

0.59
%

1.00
%

0.94
%Return on average
equity


4.29
%

6.67
%

4.16
%

6.86
%

6.09
%Net interest rate spread (tax
equivalent)


4.27
%

4.41
%

4.27
%

3.95
%

3.42
%Net interest margin (tax
equivalent)


4.80
%

4.73
%

4.70
%

4.56
%

4.31
%Non-interest expense to average
assets


3.31
%

3.45
%

3.42
%

3.09
%

2.93
%Efficiency Ratio (1)


64.09
%

68.72
%

70.22
%

64.85
%

65.05
%Average interest earning assets
to average interest-bearing
  liabilities


149.44
%

125.61
%

128.15
%

128.68
%

129.02
%Capital Ratios:Average equity to average
assets


26.27
%

13.63
%

14.29
%

14.52
%

15.40
%Equity to total assets at end
of period


30.27
%

13.52
%

13.99
%

14.47
%

14.70
%Book value per share

$
9.66

$
8.57

$
8.55

$
8.41

$
8.22Regulatory Capital Ratios: (2)Core capital (Tier 1
capital)


18.96
%

11.03
%

13.68
%

14.90
%

14.54
%Total Risk-based
capital


28.04
%

15.36
%

19.19
%

21.24
%

21.75
%Asset Quality Ratios:Nonperforming loans as percent
of loans


0.37
%

0.36
%

0.67
%

0.83
%

0.45
%Nonperforming assets as percent
of total assets


0.31
%

0.31
%

0.61
%

0.63
%

0.31
%Allowance for loan losses as a
percent of loans


0.77
%

0.86
%

0.86
%

0.94
%

0.94
%Allowance for loan losses as a
percent of non-performing loans


207.0
%

241.3
%

128.7
%

114.1
%

211.5
%Other Data:Number of:Deposit accounts


34,864


35,136


34,443


32,776


32.446Full service offices


4


4


4


4


4Note:
All per share amounts have
  been adjusted to reflect the Company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, 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

Forward-Looking Statements

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

General

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

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

On 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.

2005 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, 2005 and 2004
and the Companys results of operations for the three years ended December 31,
2005. The consolidated financial statements and related notes for the three
years ended December 31, 2005 should be read in conjunction with this review.

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

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

Net income for
2005 was $3.4 million as compared to $2.4 million in the prior year. The
significant factors and trends impacting 2005, which are discussed in greater
depth below, were as follows:


2005 net interest income
  before loan loss increased by $2.0 million or 17.8% over the prior year. This
  improvement is principally due to an increase in average earning assets of
  $38 million, or 15.4%, that was the result of the Companys stock conversion
  and offering in March of 2005. The Companys ratio of interest earning assets
  to interest bearing liabilities increased to 149.44% in 2005 from 125.61% in
  the prior year, while net interest margin increased to 4.80% in 2005 from
  4.73% in 2004.
The Companys provision
  for loan losses was $115,000 in 2005, a decrease of $275,000 from $390,000 in
  the prior year, primarily due to a large recovery on a prior year charge off
  and continued improvement in the Companys asset quality.
Non-interest income
  increased $254,000 in 2005 primarily due to the recovery of costs incurred
  that were related to the above mentioned prior year charge off, as well as
  increases in fee revenue. Gains on securities sales were $105,000 in 2005,
  down from $176,000 in 2004, as the Company sold fewer securities.
Non-interest
  expense was $10.0 million in 2005, up from $9.1 million in the prior year.
  Much of this increase is attributable to administrative costs incurred
  related to professional services, wages and higher equipment maintenance
  costs.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, respectively, basis point increase in interest rates and one of a 100
basis point decrease in rates. The change in interest rates is assumed to occur
in the first twelve months following the current financial statement date. Net
interest income is measured for each of the three twelve-month periods following
the balance sheet date. Rome Bancorps policy is that net

interest income should not vary by more than 20% for each of the three
forecasted twelve-month periods. At December 31, 2005, based on simulation
model results, Rome Bancorp was within these guidelines.

The following
table sets forth at December 31, 2005 and 2004 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.

2005

2004Annual Net
  Interest Income

Annual Net
  Interest IncomeChange 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

$
16,114

$
1,691

11.72
%

$
11,857

$
214

1.84
%+200


15,586


1,163

8.06



11,808


165

1.42+100


15,033


610

4.23



11,756


113

0.97Base


14,423








11,643




-100


13,844


(579
)
(4.01
)


11,524


119

(1.02
)(1)
Assumes an instantaneous
  uniform change in interest rates. Basis point equals 0.01%The above table reflects
that as of December 31, 2005 Rome Bancorp had a higher 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 increase in
federal funds sold and decrease in federal funds purchased as of December 31,
2005. Federal funds sold, which include 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. Federal funds purchased
represent overnight borrowings that are also modeled to reprice directly with
changes in prevailing interest rates. Federal funds sold increased to $26.8
million at December 31, 2005 from $1.0 million a year earlier, while Federal
funds purchased decreased by $4.0 million over the same period. Federal funds
held are expected to decline with further long-term investment of the stock
proceeds.

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
  endedDecember 31, 2005

December 31, 2004

December 31, 2003Average

Interest
  Income/

Average
  Yield/

Average

Interest
  Income/

Average
  Yield/

Average

Interest
  Income/

Average
  Yield/Balance

Expense

Cost

Balance

Expense

Cost

Balance

Expense

Cost(Dollars in thousands)Assets:Interest-earning assets:Loans

$
242,464

$
14,993


6.18
%
$
217,622

$
13,437


6.17
%
$
193,240

$
13,092


6.78
%Securities


15,712


864


5.50


23,747


1,212


5.10


38,497


1,828


4.75Federal funds sold & other
  interest bearing deposits


26,182


826


3.15


5,117


43


0.85


11,343


111


0.98Total interest-earnings assets


284,358


16,683


5.87


246,486


14,692


5.96


243,080


15,031


6.18Noninterest-earning assets


17,396








17,464








15,399Total assets

$
301,754







$
263,950







$
258,479Liabilities and Shareholders Equity:Interest-bearing liabilities:Savings accounts

$
95,061

$
703


0.74

$
94,544

$
732


0.77

$
89,927

$
911


1.01Time deposits


67,214


1,820


2.71


68,573


1,630


2.38


72,187


2,001


2.77Money market accounts


6,145


55


0.90


8,827


74


0.84


8,164


89


1.09Other interest bearing deposits


10,170


65


0.64


7,783


58


0.75


2,684


36


1.36Total interest-bearing deposits


178,590


2,643


1.48


179,727


2,494


1.39


172,962


3,037


1.76Borrowings


11,693


393


3.36


16,511


548


3.32


16,717


577


3.45Total interest-bearing
  liabilities


190,283


3,036


1.60







3,042


1.55


189,679


3,614


1.91Noninterest-bearing deposits


27,647








27,162








27,503Other liabilities


4,558








4,582








4,361Total liabilities


222,488








227,982








221,543Shareholders equity


79,266








35,968








36,936Total liabilities and
  shareholders equity

$
301,754







$
263,950







$
258,479Net interest income





13,647








11,650









11,417Tax equivalent adjustment on
  securities





(148
)







(194
)







(221
)Net interest income per
  consolidated financial statements




$
13,499







$
11,456







$
11,196Net interest rate spread








4.27
%







4.41
%







4.27
%Net interest margin








4.80
%







4.73
%







4.70
%Ratio of interest-earning
  assets to interest-bearing liabilities








1.49
x







1.26
x







1.28
xRate Volume Analysis 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 AnalysisYear Ended December 31,
  2005

Year Ended December 31,
  2004Compared to Year Ended
  December 31, 2004

Compared to Year Ended
  December 31, 2003Increases (decreases) due to

Increases (decreases) due toRate

Volume

Net

Rate

Volume

Net(thousands)Assets:Interest-earning assets:Loans

$
52

$
1,504

$
1,556

$
(1,178
)
$
1,523

$
345Securities


62


(410
)

(348
)

84


(701
)

(617
)Federal funds sold & other
  Interest bearing deposits


602


181


783


(6
)

(61
)

(67
)Total interest-earnings assets


716


1,275


1,991


(1,100
)

761


(339
)Interest-bearing liabilities:Savings accounts


(33
)

4


(29
)

(226
)

47


(179
)Time deposits


222


(32
)

190


(271
)

(100
)

(371
)Money market accounts


4


(23
)

(19
)

(22
)

7


(15
)Other interest bearing deposits


(12
)

19


7


(47
)

69


22Total interest-bearing deposits


181


(32
)

149


(566
)

23


(543
)Borrowings


5


(160
)

(155
)

(22
)

(7
)

(29
)Total interest-bearing
  liabilities


186


(192
)

(6
)

(588
)

16


(572
)Net change in interest income

$
530

$
1,467

$
1,997

$
(512
)
$
745

$
233Comparison of
Financial Condition at December 31, 2005 and December 31, 2004:

The Companys total assets
at December 31, 2005 were $308.9 million, an increase of $40.7 million or 15.2%
from $268.2 million at December 31, 2004. The growth in assets during 2005 is
primarily attributable to the Companys successful stock offering and
conversion in March of 2005. Cash and cash equivalents increased to $34.2
million at December 31, 2005, from $6.9 million at December 31, 2004,
representing stock proceeds that have not yet been deployed to pay down debt or
invest in other assets.

Securities available for sale
were $10.4 million at December 31, 2005, a decrease of $7.1 million or 40.6%
from $17.5 million at December 31, 2004.This decrease is due to maturities,
principal

reductions and
securities sales. 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.

Total loans
increased $20.6 million or 8.8% to $253.9 million at December 31, 2005 from
$233.3 million at December 31, 2004. During the year ended December 31, 2004,
Rome Bancorp originated approximately $65.3 million of loans. The majority of
the loan growth was in the residential mortgage loan portfolio, which grew by
$12.3 million, or 10.8%. Asset quality has remained favorable over the same
period as non-performing loans as a percentage of total loans increased
slightly from 0.36% at December 31, 2004 from 0.37% at December 31, 2005. The
allowance for loan losses as a percent of non-performing loans was 207.0% at
December 31, 2005, as compared to 241.3% at December 31, 2004. These ratios are
considered appropriate due to the growth in the Companys residential mortgage
portfolio in 2005. Due to stringent underwriting standards, the history of
losses on this portfolio is significantly lower than on the remaining loans.

Total deposits
decreased by $7.3 million or 3.5% from $208.8 million at the 2004 year-end to
$201.5 million at December 31, 2005. The overall decrease in deposits is
primarily attributable to decreases in savings, money market and time deposit
accounts partially offset by increases in other interest bearing and non
interest-bearing deposits. Savings deposits decreased $6.7 million or 7.0% from
$95.8 million at December 31, 2004 to $89.1 million at December 31, 2005. Money
market account balances decreased by $2.5 million or 33.8% during the past
year. Time deposits decreased $2.7 million or 3.9% during 2005. The decline in
these deposit categories is attributed to customers seeking higher returns in
other investment vehicles as well as an outflow of these deposits to fund
purchases of Company stock in the March 2005 stock offering. Non-interest
bearing deposits and other interest-bearing deposits increased by $3.6 million,
or 13.6%, and $866,000, or 8.5%, respectively, during the year ended December
31, 2005. Growth in these deposits is primarily due to continued growth in
consumer checking accounts and the introduction of new business checking products
and services in 2005.

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 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 the prior year, while net interest margin increased to 4.80% in 2005
from 4.73% in 2004.

Interest Income.

Interest
income increased by $2 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 has held a portion of
the stock offering proceeds in these deposits until more long term investments
are analyzed.

Interest Expense.

Interest
expense for the year 2005 remained basically constant with 2004 expense.
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 to1.48% 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


% ChangeGain 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


% ChangeSalaries 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 section 404
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, as compared to $1.3 million in 2004.
The increase is directly attributable to higher pre-tax earnings and an
increase in permanent tax differences.

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

General.

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

Net Interest Income.

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

Interest Income.

Interest income decreased by
$312,000 for the year ended December 31, 2004, from $14.8 million for the year
ended December 31, 2003. Interest income earned on the loan portfolio increased
to $13.4 million in 2004 from $13.1 million in 2003. The average loan balances
increased to $217.6 million in 2004 from $193.2 million in 2003, primarily due
to growth in residential lending. The yield on loans in 2004 was 6.17% compared
to 6.78% in 2003, due to the influx of new loans at lower prevailing market
rates over the past two years. Interest and dividend income on securities

decreased in 2004 primarily due to a decline in
volume. As securities matured and were sold, management utilized the proceeds
to fund the aforementioned growth in the loan portfolio, thereby enhancing the
yield on those available funds. Average securities decreased to $23.7 million
in 2004 from $38.5 million in 2003 while their yields increased to 5.10% from
4.75% over the same period. Interest income of other short-term investments,
including federal funds sold, dropped from $111,000 in 2003 to $44,000 in 2004,
as a result of a decrease in average federal funds sold from $11.3 million in
2003 to $5.1 million in 2004, as the yields on these federal funds dropped from
0.98% to 0.85% over the same period.

Interest Expense.

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

Provision for Loan Losses

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

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

Non-interest
Income

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

2004
  
  2003
  
  $ Change
  
  % ChangeSecurities impairment charge
  
  $
  
  
  $
  (1,041
  )
  $
  1,041
  
  
  Gain on securities sold
  
  
  176
  
  
  348
  
  
  (172
  )
  
  (49.43
  )%Gain on sale of loans
  
  
  
  
  
  39
  
  
  (39
  )
  
  Service charges
  
  
  1,451
  
  
  927
  
  
  524
  
  
  56.53
  %Other income
  
  
  145
  
  
  199
  
  
  (54
  )
  
  (27.14
  )%Total
  non-interest income
  
  $
  1,772
  
  $
  472
  
  $
  1,300
  
  
  275.42
  %Non-interest income increased by $1.3 million to $1.8
million in 2004 as compared to $472,000 in 2003, primarily due to the
investment impairment charge of $1.0 million taken in the third quarter of
2003. Rome Bancorp recorded net securities sales gains of $176,000 in 2004
versus a net loss on securities of $693,000 in 2003. The remaining increase in
other non-interest income is principally due to an increase in customer fee
income, much of which was the result of a high performance checking program
initiated in the fourth quarter of 2003.

Non-interest Expense

Non-interest expense was $9.1 million for the year
ended December 31, 2004 compared to $8.8 million for the year ended December
31, 2003. The following table summarizes changes in the major components of
non-interest expense:

2004
  
  2003
  
  $ Change
  
  % ChangeSalaries and employee benefits
  
  $
  5,137
  
  $
  5,044
  
  $
  93
  
  
  1.84
  %Occupancy and equipment expense
  
  
  1,568
  
  
  1,409
  
  
  159
  
  
  11.28
  %Marketing expense
  
  
  311
  
  
  279
  
  
  32
  
  
  11.47
  %Outside consulting and professional fees
  
  
  341
  
  
  513
  
  
  (172
  )
  
  (33.53
  )%Other expense
  
  
  1,745
  
  
  1,590
  
  
  155
  
  
  9.75
  %Total
  non-interest expense
  
  $
  9,102
  
  $
  8,835
  
  $
  267
  
  
  3.02
  %The increase in non-interest expense was primarily the
result of operating costs related to the mid-2003 systems conversion and
expenses related to our new product offerings.

Income
Tax Expense

Income tax expense was $1.3 million for 2004, an
increase of $550,000 from 2003 income tax expense of $786,000. The increase is
directly attributable to higher pre-tax earnings and an increase in permanent
tax differences.

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 $31.6 million
on a line of credit. At December 31, 2005, the Bank had no outstanding
borrowings against this line of credit, but did have amortizing notes totaling
$9.4 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 2005 the Company originated approximately $65.3 million in loans
compared to approximately $66.5 million in 2004. Purchases of investment
securities were minimal, totaling $55,000 in 2005 and $298,000 in 2004.

At December 31, 2005, the Company had loan commitments
to borrowers of approximately $10.4 million, and customer available letters and
lines of credit of approximately $13.0 million. Total deposits were $201.5
million at December 31, 2005, a decrease of 3.5% from $208.8 million at
December 31, 2004.

Time deposit accounts scheduled to mature within one
year were $43.5 million at December 31, 2005. Based on our deposit retention
experience and current pricing strategy, we anticipate that a significant
portion of these time deposits will remain with the Company. We are committed
to maintaining a strong liquidity position, therefore, the Company monitors its
liquidity position on a daily basis. The Company anticipates that it will have
sufficient funds to meet its current funding commitments. The marginal cost of
new funding however, whether from deposits or borrowings from the Federal Home
Loan Bank, will be carefully considered as the Company monitors its

liquidity needs. Therefore, in order to minimize its
cost of funds, the Company may consider additional borrowings from the Federal
Home Loan Bank in the future.

At December 31, 2005 and 2004, the Bank exceeded each
of the applicable regulatory capital requirements. The Company converted to a
savings and loan holding company from a bank holding company on April 27, 2004,
at which time it was no longer subject to formula based capital requirements at
the holding company level. The Banks leverage (Tier 1) capital at December 31,
2005 and 2004 was $58.6 million and $29.5 million or 19.0% and 11.0% of
adjusted assets, respectively. In order to be classified as well-capitalized
by the OTS and FDIC, at December 31, 2005 and 2004, the Bank is required to
have leverage (Tier 1) capital of $15.5 million and $13.4 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, 2005 and 2004, the Bank had a
risk-based total capital ratio of 28.2% and 15.4%, respectively.

On March 30, 2005, the Company completed a
second-step conversion (the Conversion), and reorganized from the two-tier
mutual holding company structure to the stock holding company structure. Prior
to the completion of the Conversion, Rome MHC had owned approximately 61.5% of
the common stock of the Company. In connection with the Conversion, the
outstanding shares of Rome Bancorp owned by Rome 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.

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 were
$3.1 million and accordingly, net proceeds were $55.9 million. In addition, as
part of the conversion and dissolution of Rome MHC, the Bank received $1.9
million of cash previously held by Rome MHC.

The Company paid cash dividends of $0.265 per share in
2005, requiring a cash outlay of $2.0 million.

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:Less than
  
  
  
  
  
  
  
  More thanTotal
  
  1 year
  
  1-3 years
  
  3-5 years
  
  5 yearsTime Deposits
  
  $
  66,298
  
  $
  43,492
  
  $
  15,060
  
  $
  7,746
  
  
  Federal Home Loan Bank
  Borrowings
  
  
  9,374
  
  
  1,003
  
  
  3,747
  
  
  1,647
  
  $
  2,977Software Maintenance Contracts
  
  
  535
  
  
  233
  
  
  302
  
  
  
  
  
  Total Contractual Obligations
  
  $
  76,207
  
  $
  44,728
  
  $
  19,109
  
  $
  9,393
  
  $
  2,977Off-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

FASB Staff Position on FAS No. 115-1 and FAS
No. 124-1 (the FSP), The Meaning of Other-Than-Temporary Impairment and
Its Application to Certain Investments, was issued in November 2005 and
addresses the determination of when an investment is considered impaired;
whether the impairment is other-than-temporary; and how to measure an
impairment loss. The FSP also addresses accounting considerations subsequent to
the recognition of an other-than-temporary impairment on a debt security, and
requires certain disclosures about unrealized losses that have not been
recognized as other-than-temporary impairments. The FSP replaces the impairment
guidance on Emerging issues Task Force (EITF) Issue No. 03-1 with
references to existing authoritative literature concerning other-than-temporary
determinations. Under the FSP, losses arising from impairment deemed to be
other-than-temporary, must be recognized in earnings at an amount equal to the
entire difference between the securities cost and its fair value at the
financial statement date, without considering partial recoveries subsequent to
that date. The FSP also required that an investor recognize an
other-than-temporary impairment loss when a decision to sell a security has
been made and the investor does not expect the fair value of the security to
fully recover prior to the expected time of sale. The FSP is effective for
reporting periods beginning after December 15, 2005. The initial adoption
of this statement is not expected to have a material impact on the Companys
consolidated financial statements.

In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment. SFAS No. 123(R)
requires companies to record compensation cost for stock options provided to
employees in return for employment service. The cost is measured at the fair
value of the options when granted, and this cost is expensed over the
employment service period, which is normally the vesting period of the options.
This will apply to awards granted or modified in fiscal years beginning in
2006. Compensation cost will also be recorded for prior option grants that vest
after the date of adoption. As of December 31, 2005, the Company had no
unvested stock options. The effect on results of operations will depend on the
level of future option grants and the calculation of the fair value of the
options granted at such future date, as well as the vesting periods provided,
and so cannot be currently predicted.

MARKET FOR THE COMPANYS COMMON
STOCK

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

The Companys common stock began trading on October 6,
1999, the date of the reorganization and initial public offering. At December
31, 2005, the last trading date in the Companys fiscal year, the common stock
of the Company closed at $10.84 per share. At March 4, 2006, there were
9,688,128 shares of the Companys common stock outstanding, which were held of
record by approximately 3,070 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 $0.265 per share in 2005. The Company also paid a quarterly cash
dividend of $0.075 per share to shareholders of record as of February 6, 2006.
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 RangeDate

High

Low

DividendsYear ended December 31, 2005Quarter ended March 31, 2005

$
13.14

$
9.48

$
0.066Quarter ended June 30, 2005


10.28


9.27


0.066Quarter ended September 30,
  2005


10.87


9.92


0.066Quarter ended December 31,
  2005


11.14


10.00


0.066Year ended December 31, 2004Quarter ended March 31, 2004

$
15.87

$
12.13

$
0.032Quarter ended June 30, 2004


15.43


12.57


0.066Quarter ended September 30,
  2004


13.67


12.08


0.066Quarter ended December 31,
  2004


15.09


11.09


0.066All per share amounts are adjusted to reflect the
Companys stock offering and conversion which occurred on March 30, 2005.

CHANGES AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Effective
February 25, 2004, the Audit Committee of the Board of Directors of the Company
terminated the engagement of its principal accountant, KPMG LLP (KPMG) as the
Companys independent accountant, effective upon the completion of KPMGs audit
of the Companys consolidated financial statements for the year ended December
31, 2003.

The
audit reports of KPMG on the consolidated financial statements of the Company
as of and for the years ended December 31, 2002 and 2001 did not contain an
adverse opinion or disclaimer of opinion and was not qualified or modified as
to uncertainty, audit scope, or accounting principles.

During
2002 and 2001 and any subsequent interim periods through February 25, 2004,
there were no disagreements with KPMG on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to KPMGs satisfaction, would have caused
it to make reference in connection with its report to the subject matter of the
disagreement.

On
February 25, 2004, the Audit Committee of the Board of Directors of the Company
recommended, approved and appointed Crowe Chizek and Company LLC as the
Companys independent accountant to audit the Companys consolidated financial
statements for the fiscal year ending December 31, 2004. Effective as of that
date, the Audit Committee formally engaged Crowe Chizek and Company LLC as the
Companys independent accountant for the fiscal year ending December 31, 2004.

The
Company had not consulted the newly engaged accountant regarding either the
application of accounting principles to a specified transaction either
completed or proposed, the type of audit opinion that might be rendered on the
Companys financial statements or any matter that was either the subject of a
disagreement or a reportable event as described in Item 304(a)(1) of Regulation
S-K.

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, 2005. 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, 2005.

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. SprockCharles M. SprockChairman of the Board, President and Chief Executive
  Officer/s/ David C. NolanDavid C. NolanExecutive Vice President and Chief Financial OfficerREPORT 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, 2005 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, 2005, 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, 2005, 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, 2005 and 2004, and the related
consolidated statements of income, shareholders equity and comprehensive
income, and cash flows for the years ended December 31, 2005 and 2004 and our
report dated March 3, 2006 expressed an unqualified opinion on those
consolidated financial statements.

/s/ Crowe Chizek and Company LLCCrowe Chizek and Company LLCCleveland, OhioMarch 3, 2006

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, 2005 and
December 31, 2004 and the related consolidated statements of income, shareholders
equity and comprehensive income, and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Corporations
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. The financial statements of Rome
Bancorp, Inc. as of December 31, 2003 and for the year then ended were audited
by other auditors whose report dated February 17, 2004 expressed an unqualified
opinion on those statements.

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, 2005 and December
31, 2004 and the results of its operations and its cash flows for the years
then ended, in conformity with U.S. generally accepted accounting principles.

We have also audited, in accordance with the standards
of the Public Company Oversight Board (United States), the effectiveness of
Rome Bancorp, Inc.s internal control over financial reporting as of December
31, 2005, 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 3, 2006 expressed an unqualified opinion thereon.

/s/ Crowe Chizek and Company LLCCrowe Chizek and Company
  LLCCleveland, OhioMarch 3, 2006ROME BANCORP, INC.
AND SUBSIDIARY

Consolidated Balance Sheets

December 31, 2005 and 2004

(in thousands, except share data)

2005

2004AssetsCash and due from banks

$
7,457

$
5,977Federal funds sold and other
  short-term investments


26,778


952Total cash and cash equivalents


34,235


6,929Securities available for sale,
  at fair value


9,666


16,391Securities held to maturity
  (fair value of $1,428 and $1,624 at December 31, 2005 and 2004, respectively)


1,440


1,623Federal Home Loan Bank Stock


776


1,103Loans


253,878


233,272Less: Allowance for loan losses


(1,960
)

(2,000
)Net loans


251,918


231,272Premises and equipment, net


4,503


4,503Accrued interest receivable


1,053


1,002Other assets


5,262


5,329Total assets

$
308,853

$
268,152Liabilities
  and Shareholders EquityLiabilities:Deposits:Non-interest bearing

$
30,039

$
26,390Savings


89,138


95,848Money market


4,929


7,397Time


66,298


68,954Other interest bearing


11,064


10,198Total deposits


201,468


208,787Borrowings


9,374


18,843Other liabilities


4,533


4,264Total liabilities


215,375


231,894Commitments and contingencies
  (Note 14)





Shareholders equity:Common stock, $.01 par value;
  authorized: 30,000,000 shares; issued: 9,678,128 shares;outstanding: 9,678,128 shares
  at December 31, 2005;authorized: 11,339,200; issued
  11,339,200: outstanding 9,591,934 shares at December 31, 2004


97


33Additional paid-in capital


60,013


10,756Retained earnings


35,983


34,627Treasury stock, at cost; 0
  shares at December 31, 2005 and 1,747,266 shares at December 31, 2004





(8,963
)Accumulated other comprehensive
  income


85


391Unallocated shares of employee
  stock ownership plan (ESOP) 462,135 shares at December 31, 2005; 272,100
  shares at December 31, 2004


(2,700
)

(560
)Unearned compensation





(26
)Total shareholders equity


93,478


36,258Total liabilities and
  shareholders equity

$
308,853

$
268,152See accompanying notes to
  consolidated financial statements.ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Income

Years ended December 31, 2005, 2004 and 2003

(in thousands, except share data)

2005

2004

2003Interest income:Loans

$
14,993

$
13,437

$
13,092Securities


716


1,018


1,607Other short-term investments


826


43


111Total interest income


16,535


14,498


14,810Interest expense:Deposits


2,643


2,494


3,037Borrowings


393


548


577Total interest expense


3,036


3,042


3,614Net interest income


13,499


11,456


11,196Provision for loan losses


115


390


510Net interest income after provision for
  loan losses


13,384


11,066


10,686Non-interest income:Service charges


1,585


1,451


927Net gain (loss) on securities


105


176


(693
)Other income


336


145


238Total non-interest income


2,026


1,772


472Non-interest expense:Salaries and employee benefits


5,359


5,137


5,044Building, occupancy and equipment


1,670


1,568


1,409Directors fees


228


214


230Marketing


312


311


279Outside consulting and professional fees


640


341


513ATM service fees


251


186


153Supplies


160


155


152Other


1,357


1,190


1,055Total non-interest expense


9,977


9,102


8,835Income before income tax expense


5,433


3,736


2,323Income tax expense


2,031


1,336


786Net income

$
3,402

$
2,400

$
1,537Basic earnings per share

$
0.37

$
0.26

$
0.16Diluted earnings per share

$
0.36

$
0.25

$
0.16See accompanying notes to
consolidated financial statements.

ROME
BANCORP, INC. AND SUBSIDIARY

Consolidated
Statements of Shareholders Equity and Comprehensive Income
Years ended December 31, 2005, 2004 and 2003

(in thousands, except
share data)

Common
  stock

Additional
  paid-in
  capital

Retained
  earnings

Treasury
  Stock

Accumulated
  other
  comprehensive
  income

Unallocated
  ESOP
  shares

Unearned
  compensation

TotalBalances
at December 31, 2002

$
34

$
10,493

$
33,288

$
(7,101
)

294

$
(684
)
$
(131
)
$
36,193Comprehensive income:Net
income








1,537














1,537Other
comprehensive income














499








499Total
comprehensive income























2,036Retirement
of 229,424 treasury shares


(1
)

(671
)

(253
)

925











Purchase
of treasury stock (99,213 shares)











(1,028
)










(1,028
)Exercise
of stock options and related tax benefit (52,129
  shares, net)





116


(91
)

212











237Amortization and tax benefits of unearned compensation





74














53


127Dividends
paid ($0.128 per share)








(1,226
)













(1,226
)ESOP
shares released for allocation (30,230 shares)





238











62





300Balances
at December 31, 2003


33


10,250


33,255


(6,992
)

793


(622
)

(78
)

36,639Comprehensive income:Net
income








2,400














2,400Other
comprehensive loss














(402
)







(402
)Total
comprehensive incomePurchase
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











92Amortization and tax benefits of unearned compensation





107














52


159Dividends
paid ($0.229 per share)








(987
)













(987
)ESOP
shares released for allocation (30,230 shares)





340











62





402Balances
at December 31, 2004


33


10,756


34,627


(8,963
)

391


(560
)

(26
)

36,258Comprehensive income:Net
income








3,402














3,402Other
comprehensive loss














(306
)







(306
)Total
comprehensive income























3,096Proceeds
of common stock offering and conversion of existing
  shares, net of expenses


64


57,758











(2,360
)




55,462Retirement
of 1,747,266 treasury shares





(8,963
)




8,963











Exercise
of stock options and related tax benefit(35,882 shares,
  net)





130

















130Amortization and tax benefits of unearned compensation





73














26


99Dividends
paid ($0.265 per share)








(2,046
)













(2,046
)ESOP
shares released for allocation (45,965 shares)





259











220





479$
97

$
60,013

$
35,983

$


$
85

$
(2,700
)
$


$
93,478See accompanying notes to consolidated financial statements.

ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

Years ended December 31, 2005, 2004 and 2003

(in thousands)

2005

2004

2003Cash flows from operating activities:Net income

$
3,402

$
2,400

$
1,537Adjustments to reconcile net income to net cash provided by operating
  activities:Depreciation and amortization


515


496


435(Increase) decrease in accrued interest receivable


(51
)

203


193Provision for loan losses


115


390


510Securities impairment charge








1,041Net gain on securities transactions


(105
)

(176
)

(348
)Gain on sales of loans


(20
)




(39
)Proceeds from sale of loans


1,715





Net premium amortization on securities


(7
)

11


30(Gain) loss on sale of other real estate


(15
)

42


(6
)Gain on sale of fixed assets





(16
)Increase (decrease) in other liabilities


269


244


(18
)Deferred income tax expense


282


29


212(Increase) decrease in other assets


(112
)

13


(1,170
)Allocation of ESOP shares


479


402


300Amortization of unearned compensation


26


52


53Tax benefit from exercise of stock options


57


59


116Net cash provided by operating activities


6,550


4,149


2,846Cash flows from investing activities:Net increase in loans


(22,373
)

(24,093
)

(28,070
)Proceeds from sale of education loans








1,305Proceeds from sales of securities available for sale


1,754


2,093


6,697Proceeds from maturities and principal reductions of securities
  available for sale


4,967


51


7,657Purchases of securities available for sale


(55
)

(198
)

(91
)Purchases of securities held to maturity





(100
)

(284
)Proceeds from maturities and principal reductions of securities held
  to maturity


171


1,250


219Proceeds from sale of real estate owned


98


247


61Purchases of premises and equipment, net


(507
)

(276
)

(1,286
)Net cash used in investing activities


(15,945
)

(14,626
)

(13,792
)Cash flows from financing activities:Decrease in time deposits


(2,656
)

(3,408
)

(1,563
)(Decrease) increase in other deposits


(4,663
)

9,005


9,829Stock offering and conversion


55,462





Repayments of borrowings


(12,469
)

(9,247
)

(8,330
)Advances on borrowings


3,000


10,000


11,500Purchase of treasury stock





(2,045
)

(1,028
)Dividends


(2,046
)

(987
)

(1,226
)Exercise of stock options


73


33


121Net cash provided by financing activities


36,701


3,351


9,303Net increase (decrease) in cash and cash equivalents


27,306


(7,126
)

(1,643
)Cash and cash equivalents at beginning of year


6,929


14,055


15,698Cash and cash equivalents at end of year

$
34,235

$
6,929

$
14,055ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows (continued)

Years ended December 31, 2005, 2004 and 2003

(in thousands)

2005

2004

2003Non-cash investing activities:Retirement of 1,747,266 treasury shares

$
8,963





Transfers from loans to real estate owned


83

$
87

$
202Cash paid during the period for:Interest


3,044


3,070


3,598Income taxes


1,850


549


785See accompanying notes to consolidated
financial statements.

ROME
BANCORP, INC. AND SUBSIDIARY

Notes to
Consolidated Financial Statements

Years ended
December 31, 2005, 2004 and 2003

(1)
BusinessRome Bancorp, Inc. (the Company) is a registered
  bank holding company, organized under the laws of Delaware and is the parent
  company of The Rome Savings Bank and subsidiaries (the Bank).  The Company provides traditional community
  banking services for individuals and small-to medium-sized businesses,
  through the Banks four branches in Oneida County of New York State.On October 15, 2003, the Board of Directors of the
  Company and the Bank adopted a Plan of Charter Conversion pursuant to which
  the Bank converted from a New York-chartered savings bank regulated by the
  New York State Banking Department and the Federal Deposit Insurance
  Corporation to a federal savings bank regulated by the Office of Thrift
  Supervision (OTS).  The Company
  remains a Delaware-chartered holding company but is now regulated as a
  savings and loan holding company by the OTS. The Charter Conversion was
  completed on April 27, 2004.(2)
Summary of Significant Accounting
  Policies(a)
Basis of PresentationThe 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)
SecuritiesThe 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 asROME
BANCORP, INC. AND SUBSIDIARY

Notes to
Consolidated Financial Statements

Years ended
December 31, 2005, 2004 and 2003

accumulated other comprehensive income, a component
  of shareholders equity, until realized.A decline in the fair value of an available-for-sale
  or held-to-maturity security below cost that is deemed to be other than
  temporary is charged to earnings resulting in the establishment of a new cost
  basis for the security.Premiums and discounts are amortized or accreted
  over the life of the related security as an adjustment to yield using the
  interest method.  Dividend and
  interest income are recognized when earned.
  Purchases and sales are recorded on a trade date basis with settlement
  occurring shortly thereafter.
  Realized gains and losses on securities sold are derived using the
  specific identification method for determining the cost of securities sold.(c)
LoansLoans are reported at the principal amount
  outstanding.  Origination fees and certain
  direct origination costs related to lending activities are deferred and
  amortized over the life of the related loans.  The Company has the ability and intent to hold its loans to 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.(d)
Allowance for Loan LossesThe 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.ROME
BANCORP, INC. AND SUBSIDIARY

Notes to
Consolidated Financial Statements

Years ended
December 31, 2005, 2004 and 2003

The allowance consists of specific and general
  components. The specific component relates to loans that are individually
  classified as impaired or loans otherwise classified as substandard or
  doubtful. The general component covers non-classified loans and is based on
  historical loss experience adjusted for current factors.The allowance for loan losses is evaluated on a
  quarterly basis by management in order to maintain the allowance at a level
  sufficient to absorb probable incurred loan losses based upon known and
  inherent risks in the loan portfolio.The Company estimates losses on impaired loans based
  on the present value of expected future cash flows (discounted at the loans
  effective interest rate) or the fair value of the underlying collateral if
  the loan is collateral dependent.  An
  impairment loss exists if the recorded investment in a loan exceeds the value
  of the loan as measured by the aforementioned methods.  Impairment losses are included as a
  component of the allowance for loan losses.
  A loan is considered impaired when it is probable that the Company
  will be unable to collect all amounts due according to the contractual terms
  of the loan agreement.  Generally, all
  commercial mortgage loans and commercial loans greater than $250,000 in a
  non-accrual status are considered impaired.
  Commercial mortgage loans and commercial loans less than $250,000 and
  all residential mortgage loans, consumer loans and education loans are
  evaluated collectively by portfolio since they are homogeneous and generally
  carry smaller individual balances.
  The Company recognizes interest income on impaired loans using the
  cash basis of income recognition.
  Cash receipts on impaired loans are generally applied according to the
  terms of the loan agreement, or as a reduction of principal, based upon
  managements judgement and the related factors discussed above.(e)
Real Estate OwnedReal estate acquired through foreclosure or deed in
  lieu of foreclosure is recorded at the lower of the unpaid loan balance on
  the property at the date of transfer, or fair value less estimated costs to
  sell.  Write-downs from cost to fair
  value which are required at the time of foreclosure are charged to the
  allowance for loan losses.
  Adjustments to the carrying value of such properties that result from
  subsequent declines in value are charged to operations in the period in which
  the declines occur.  Operating costs
  associated with the properties are charged to expense as incurred.(f)
Premises and EquipmentLand 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).(g)
Employee Benefit PlansThe 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. TheROME
BANCORP, INC. AND SUBSIDIARY

Notes to
Consolidated Financial Statements

Years ended
December 31, 2005, 2004 and 2003

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 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.The Company also sponsors a non-contributory
  Employee Stock Ownership Plan (ESOP) covering substantially all full time
  employees.  The number of shares
  allocable to Plan participants is determined by the Board of Directors.  Allocations to individual participant
  accounts are based on participant compensation.  As shares are committed to be released to participants, the
  Company reports compensation expense equal to the current market price of the
  shares and the shares become outstanding for earnings per share computations.
  Dividends on allocated shares reduce retained earnings; dividends on
  unallocated ESOP shares reduce debt and accrued interest.(h)
Income TaxesThe Company and its subsidiary file a consolidated
  tax return.  Deferred tax assets and
  liabilities are recognized for the future tax consequences attributable to
  temporary differences between the financial statement carrying amounts of
  existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured
  using enacted tax rates expected to apply to taxable income in the years in
  which those temporary differences are expected to be recovered or
  settled.  The effect on deferred tax
  assets and liabilities of a change in tax rates is recognized in the period
  that includes the enactment date.(i)
Stock Option PlanThe Company applies APB Opinion No. 25 and related
  Interpretations in accounting for its Stock Option Plan.  Accordingly, compensation expense is
  recognized only if the exercise price of the option is less than the fair
  value of the underlying stock at the grant date.  Statement of Financial Accounting Standards (SFAS) No. 123
  requires companies not using a fair value based method of accounting for
  stock options or similar plans, to provide pro forma disclosure of net income
  and earnings per share as if that method of accounting had been applied.Pro forma disclosures for the Company for the years
  ended December 31, 2005, 2004 and 2003 utilizing the estimated fair value of
  the options granted and an assumed 5% forfeiture rate are as follows:ROME
BANCORP, INC. AND SUBSIDIARY

Notes to
Consolidated Financial Statements

Years ended
December 31, 2005, 2004 and 2003

2005

2004

2003(in thousands, except per share data)Net income:As reported

$
3,402

$
2,400

$
1,537Add:  Stock based compensation expense included in net income, net of
  related tax expense


17


35


35Deduct: Total stock based
  compensation expense determined under fair value method, net of related tax
  expense


(35
)

(69
)

(69
)Pro forma

$
3,384

$
2,366

$
1,503Basic earnings per share:As reported

$
0.37

$
0.26

$
0.16Pro forma

$
0.37

$
0.26

$
0.16Diluted earnings per share:As reported

$
0.36

$
0.25

$
0.16Pro forma

$
0.36

$
0.25

$
0.15The effect on reported net income and earnings per
  share for the years ended December 31, 2005, 2004 and 2003 may not be
  representative of the effects on reported net income or earnings per share
  for future years.(j)
Cash and Cash EquivalentsFor 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.(k)
Financial Instruments With
Off-Balance Sheet RiskThe Companys off-balance sheet financial
  instruments are limited to commitments to extend credit and standby letters
  of credit.  The Companys policy is to
  record such instruments when funded.(l)
Earnings Per ShareBasic 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.ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

(m)
Segment ReportingThe
  Companys operations are solely in the financial services industry providing
  traditional community banking services in the geographical region of Oneida
  County and surrounding areas in New York State. The Company has determined
  that it has no reportable segments as defined by SFAS No. 131, Disclosures about Segments of an Enterprise and
  Related Information.(n)
Recent Accounting PronouncementsFASB Staff
  Position on FAS No. 115-1 and FAS No. 124-1 (the FSP), The Meaning of
  Other-Than-Temporary Impairment and Its Application to Certain Investments,
  was issued in November 2005 and addresses the determination of when an
  investment is considered impaired; whether the impairment is
  other-than-temporary; and how to measure an impairment loss. The FSP also
  addresses accounting considerations subsequent to the recognition of an
  other-than-temporary impairment on a debt security, and requires certain
  disclosures about unrealized losses that have not been recognized as
  other-than-temporary impairments. The FSP replaces the impairment guidance on
  Emerging issues Task Force (EITF) Issue No. 03-1 with references to existing
  authoritative literature concerning other-than-temporary determinations.
  Under the FSP, losses arising from impairment deemed to be
  other-than-temporary, must be recognized in earnings at an amount equal to
  the entire difference between the securities cost and its fair value at the
  financial statement date, without considering partial recoveries subsequent
  to that date. The FSP also required that an investor recognize an
  other-than-temporary impairment loss when a decision to sell a security has
  been made and the investor does not expect the fair value of the security to
  fully recover prior to the expected time of sale. The FSP is effective for
  reporting periods beginning after December 15, 2005. The initial adoption of
  this statement is not expected to have a material impact on the Companys
  consolidated financial statements.In December
  2004, the FASB issued SFAS No. 123(R), Share-Based
  Payment. SFAS No. 123(R) requires companies to record compensation
  cost for stock options provided to employees in return for employment
  service. The cost is measured at the fair value of the options when granted,
  and this cost is expensed over the employment service period, which is
  normally the vesting period of the options. This will apply to awards granted
  or modified in fiscal years beginning in 2006. Compensation cost will also be
  recorded for prior option grants that vest after the date of adoption. As of
  December 31, 2005, the Company had no unvested stock options. The effect on
  results of operations will depend on the level of future option grants and
  the calculation of the fair value of the options granted at such future date,
  as well as the vesting periods provided, and so cannot be currently
  predicted.ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

(3)
SecuritiesSecurities
  are summarized as follows (in thousands):December 31, 2005Amortized
  cost

Gross
  unrealized
  gains

Gross
  unrealized
  losses

Fair
  valueAvailable-for-sale:U.S. Government agencies

$
949

$
36

$


$
985State and Municipal obligations


4,506


89





4,595Mortgage-backed securitiesFHLMC


570


13





583Corporate bonds


2,008


9





2,017Total debt securities


8,033


147





8,180Equity and other securities


1,491


6


11


1,486$
9,524

$
153

$
11

$
9,666Held-to-maturity:U.S. Government securities

$
1,208

$


$
15

$
1,193Mortgage-backed securitiesGNMA


48


3





51FHLMC


3








3Other bonds


181








181$
1,440

$
3

$
15

$
1,428December 31, 2004Amortized
  cost

Gross
  unrealized
  gains

Gross
  unrealized
  losses

Fair
  valueAvailable-for-sale:U.S. Government agencies

$
2,244

$
81

$


$
2,325State and Municipal obligations


7,004


262





7,266Mortgage-backed securitiesFNMA


126


3





129FHLMC


840


43





883Corporate bonds


3,024


92





3,116Total debt securities


13,238


481





13,719Equity and other securities


2,500


172





2,672$
15,738

$
653

$


$
16,391Held-to-maturity:U.S. Government securities

$
1,320

$


$
7

$
1,313Mortgage-backed securities





GNMA


100


8





108FHLMC


6








6Other bonds


197








197$
1,623

$
8

$
7

$
1,624FHLB
stock is carried at cost since fair values are not readily determinable.

ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

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 represents aggregate
  depreciation of 1.3% of the Companys amortized cost basis in these
  securities. Unrealized losses on bonds have not been recognized into income
  because the bonds are of high credit quality, management has the intent and
  ability to hold to 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 bonds reach maturity. 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 represents aggregate depreciation of
  0.7% of the Companys cost basis in this security.At December 31,
  2004, four agency investments had a combined unrealized loss of $7,000. These
  investments were in an unrealized loss position for four consecutive months
  at December 31, 2004. The unrealized loss represents aggregate depreciation
  of 0.5% of the Companys amortized cost basis in these securities.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, 2005Amortized
  cost

Fair
  ValueAvailable-for-sale:Due within one year

$
4,211

$
4,231Due after one year through five years


2,890


2,968Due after five years through ten years


646


674Due after ten years


286


307$
8,033

$
8,180Held-to-maturity:Due within one year

$
1,209

$
1,194Due after one year through five years


50


53Due after five years through ten years





Due after ten years


181


181$
1,440

$
1,428ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

Gross gains
  of $105,000, $176,000 and $348,000 were realized on sales of securities in
  2005, 2004 and 2003, respectively.The majority
  of the Companys equity holding represent investments in a mutual fund which
  purchases blue chip common stocks. The downturn in the equity markets during
  2002 and 2003 caused a decrease in the market value of the fund. During the
  third quarter of 2003, in connection with its ongoing review of long term
  asset values, the Company determined that this investment had been other than
  temporarily impaired, as defined by generally accepted accounting principles.
  Accordingly, an impairment charge of $1.0 million (pre-tax) was recorded to
  lower the carrying value of this security to the current fair market value of
  $5.1 million. This charge reduced 2003 net earnings by $636,000, or $0.07 per
  diluted share. As this investment is classified as an available for sale
  security, stockholders equity had already been reduced by the amount of the
  unrealized loss, net of taxes. The other than temporary write-down does not
  necessarily mean that the value has been permanently lost. The fair market
  value of the security may increase or decrease on a going forward basis.
  During the fourth quarter of 2003, the Company sold approximately one-third
  of its investment in this fund, realizing book gains of $101,000 over the
  revised carrying value of the shares sold. Throughout 2005 and 2004, the
  Company sold approximately twenty and thirty percent of the original
  investment, realizing book gains of $65,000 and $167,000, respectively. As a
  condition of the approval of the Companys Charter Conversion on April 27,
  2004, the OTS has required that the Company liquidate its holdings in this
  mutual fund within two years of that date.Securities
  pledged at year end 2005 and 2004 had a carrying amount of $1.1 million and
  $1.2 million. These securities collateralize state and Treasury department
  programs. At year end 2005 and 2004, there were no holdings of securities of
  any one issuer, other than the U.S. Government and its agencies, in an amount
  greater than 10% of shareholders equity.(4)
LoansLoans are
  summarized as follows (in thousands) at December 31:2005

2004Mortgage loans:Residential (1-4 family)

$
126,422

$
114,138Commercial


52,748


49,364Construction and land


3,317


5,469Total Mortgage loans


182,487


168,971Other loans:Commercial


23,832


21,507Automobile loans


18,321


15,529Property improvement and equipment


15,434


12,766Other consumer


13,804


14,499Total Other loans


71,391


64,301Total Loans

$
253,878

$
233,272ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

The Company
  serviced loans for third parties totaling $3,922,000 and $3,977,000 at December
  31, 2005 and 2004 respectively.Changes in
  the allowance for loan losses are summarized as follows (in thousands):Years ended
  December 31,2005

2004

2003Balance at
  beginning of period

$
2,000

$
1,809

$
1,730Provision
  charged to operations


115


390


510Loans
  charged off


(687
)

(384
)

(540
)Recoveries


532


185


109Balance at
  end of period

$
1,960

$
2,000

$
1,809The
  Companys recorded investment in loans that are considered impaired totaled
  $211,000 and $268,000 at December 31, 2005 and 2004, respectively. These
  impaired loans carried allowances of $127,000 and $94,000, at December 31,
  2005 and 2004, respectively. The average recorded investment in impaired
  loans was $247,000, $272,000 and $320,000 in 2005, 2004 and 2003,
  respectively. The Company recognized no interest on impaired loans during the
  three years ended December 31, 2005.The
  principal balances of loans not accruing interest amounted to $871,000 and
  $743,000 at December 31, 2005 and 2004, respectively. Loans 90 days past due
  and accruing interest amounted to $75,000 and $86,000 at December 31, 2005
  and 2004, respectively. The differences between the amount of interest income
  that would have been recorded if non-accrual loans had been paid in
  accordance with their original terms and the amount of interest income that
  was recorded during the years ended December 31, 2005, 2004 and 2003 was
  $62,500, $53,300 and $83,800, respectively. There are no commitments to
  extend further credit on non-accruing loans.A
  substantial portion of the Companys loans are mortgage and consumer loans in
  Oneida County. Accordingly, the ultimate collectibility of a substantial
  portion of the Companys loan portfolio is susceptible to changes in market
  conditions in this area. A majority of the Companys loan portfolio is
  secured by real estate. Other than general economic risks, management is not
  aware of any material concentrations of credit risk to any industry or
  individual borrower.ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

(5)
Premises and EquipmentPremises and
  equipment at December 31 are summarized as follows (in thousands):2005

2004Land

$
1,404

$
1,404Buildings
  and improvements


5,133


5,119Furniture
  and equipment


7,030


6,53713,567


13,060Less
  accumulated depreciation and amortization


9,064


8,557$
4,503

$
4,503

Depreciation
  and amortization expense included in building, occupancy and equipment
  expense amounted to $515,000, $496,000 and $435,000 during the years ended
  December 31, 2005, 2004 and 2003, respectively.(6)
DepositsContractual
  maturities of time deposits at December 31 are summarized as follows (in
  thousands):2005Within one year

$
43,492One through
  two years


10,907Two through
  three years


4,153Three
  through four years


3,704Four through
  five years


4,042Total time deposits

$
66,298At December
  31, 2005 and 2004, time deposits with balances of $100,000 or more totaled
  approximately $11,624,000 and $10,995,000, respectively.ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

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

2005

2004

2003Savings

$
703

$
732

$
911Money market


55


74


89Time


1,820


1,630


2,001Other
  interest bearing


65


58


36$
2,643

$
2,494

$
3,037(7)
BorrowingsThe 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):2005

2004Bearing
  interest at 2.62% fixed, due 3/15/05




$
4,500FHLB
  Overnight Line of Credit, bearing interest at 2.38%





4,000Bearing
  interest at 3.67% fixed, due 7/3/15

$
2,515


2,728Bearing
  interest at 3.36% fixed, due 7/3/13


4,376


4,869Bearing
  interest at 3.59% fixed, due 11/26/08


2,483


2,746$
9,374

$
18,843The
  following table summarizes the combined aggregate amount of maturities for
  the above advances and notes for each of the five years after December 31,
  2005, as well as remaining maturities beyond five years:Due in one
  year

$
1,003Due one
  through two years


1,038Due two
  through three years


2,709Due three
  through four years


809Due four
  through five years


838Due past
  five years


2,977Total

$
9,374ROME
BANCORP, INC. AND SUBSIDIARY

Notes to
Consolidated Financial Statements

Years ended
December 31, 2005, 2004 and 2003

At December 31, 2005, the Company had additional
  availability on its FHLB line of credit of $31.6 million. This line of credit
  is subject to periodic review and renewal.(8)
Income TaxesThe components of income tax expense attributable to
  income from operations for the years ended December 31 consist of (in
  thousands):2005

2004

2003Current:Federal

$
1,661

$
1,141

$
479State


88


166


951,749


1,307


574Deferred:Federal


155


72


270State


127


(43
)

(58
)282


29


212$
2,031

$
1,336

$
786Actual 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):2005

2004

2003Computed expected tax expense

$
1,847

$
1,270

$
790Increases (decreases) in income taxesresulting from:State taxes, net of Federal tax benefit


126


82


25Tax exempt interest


(98
)

(138
)

(131
)Non-deductible ESOP expense


87


116


81Other, net


69


6


21$
2,031

$
1,336

$
78637.4
%

35.8
%

33.8
%ROME
BANCORP, INC. AND SUBSIDIARY

Notes to
Consolidated Financial Statements

Years ended
December 31, 2005, 2004 and 2003

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

2005

2004Deferred
  tax assets:Allowance for loan losses

$
577

$
670Accrued postretirement benefits


901


875Deferred compensation


423


378Capital loss carry-forward


11


66State tax credit carry-forward


3


61Other


17


96Total gross deferred tax assets


1,932


2,146Deferred tax liabilities:Depreciation


203


226Prepaid pension cost


826


721Undistributed income of subsidiary


54


57Unrealized gains on available-for sale securities


57


261Deferred loan costs


97


108Total gross deferred tax liabilities


1,237


1,373Net deferred tax assets

$
695

$
773Realization 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,
2005, 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, 2005 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, 2005, 2004 and 2003

(9)
Pension and Postretirement BenefitsThe
  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, 2005 and 2004:Pension benefits

Postretirement benefits(in thousands)

2005

2004

2005

2004Change in benefit obligation:Benefit obligation at beginning
  of year

$
6,974

$
7,072

$
2,490

$
2,323Service cost








31


33Interest cost


417


432


148


142Amendments and settlements


(24
)

(198
)

(76
)

Actuarial(gain)/ loss


353


6


(126
)

102Benefits paid


(339
)

(338
)

(190
)

(176
)Participant contributions








76


66Benefit obligation at end of
  year


7,381


6,974


2,353


2,490Change in plan assets:Fair value of plan assets at
  beginning of year


7,451


7,293





Actual return on plan assets


871


693





Employer contributions


100





114


110Settlements


(25
)

(197
)




Participant contributions








76


66Benefits paid


(339
)

(338
)

(190
)

(176
)Fair value of plan assets at
  end of year


8,058


7,451





Funded status


677


477


(2,353
)

(2,490
)Unrecognized net actuarial loss


1,451


1,378


102


229Unrecognized prior service cost








(63
)

12Prepaid (accrued) benefit cost

$
2,128

$
1,855

$
(2,314
)
$
(2,249
)Assumptions as of measurement
  dates: PensionSeptember 30; Postretirement
  December 31:Discount rate


5.875
%

6.125
%

5.875
%

6.25
%Expected return on plan assets


9.00
%

9.00
%




Rate of compensation increase


N/A


N/A





The long
  term rate of return on plan assets assumption was set based on historical
  returns earned by equities and fixed income securities, adjusted to reflect
  expectations of future returns as applied to the plans target allocation of
  asset classes. Equities and fixed income securities were assumed to earn real
  rates of return in the ranges of 5-9% and 2-6%, respectively. The long term
  inflation rate was estimated to be 3%. When these overall return expectations
  are applied to theROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

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, 2005 and
  2004, by asset category are summarized in the following table:Plan assets at September 30,Asset
  Category

2005

2004Equity
  Securities


72
%

69
%Debt
  Securities


28
%

31
%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, 2006, 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):Pension

PostretirementAsset
  Category

Benefits

BenefitsFiscal 2006

$
452

$
113Fiscal 2007


455


119Fiscal 2008


460


126Fiscal 2009


469


132Fiscal 2010


476


138Fiscal
  2011-2014


2,556


786ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

The
components of net periodic benefit cost include the following:

Pension
  benefits

Postretirement
  benefits(in thousands)

2005

2004

2003

2005

2004

2003Service cost

$


$


$
49

$
31

$
33

$
26Interest
  cost


417


432


446


148


142


136Expected
  return on assets


(655
)

(642
)

(581
)







Curtailment
  charge








31








Amortization


66


80


109


(1
)

(1
)

(1
)Net periodic
  (benefit) cost

$
(172
)
$
(130
)
$
54

$
178

$
174

$
161In 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 PlanOn May 3,
  2000, the Companys shareholders approved the Rome Bancorp, Inc. 2000 Stock
  Option Plan (the Stock Option Plan).
  The primary objective of the Stock Option Plan is to provide officers
  and directors with a proprietary interest in the Company and an incentive to
  encourage such persons to remain with the Company.Under the
  Stock Option Plan, 566,862 shares of authorized but unissued common stock are
  reserved for issuance upon option exercises.
  The Company also has the alternative to fund the Stock Option Plan
  with treasury stock.  Options under the
  plan may be either non-qualified stock options or incentive stock
  options.  Each option entitles the
  holder to purchase one share of common stock at an exercise price equal to
  the fair market value on the date of grant.
  On June 28, 2000, 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, 2005 and 2004 the
  remaining contractual life of these options was 4.5 years and 5.5 years,
  respectively.ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

The
  following table presents the stock option activity for the years ended
  December 31, 2005, 2004 and 2003 (in thousands):2005

2004

2003Shares

Weighted
  Average
  ExercisePrice

Shares

Weighted
  Average
  ExercisePrice

Shares

Weighted
  Average
  ExercisePriceOutstanding at beginning
  of year


256,253

$
2.19


271,130

$
2.19


323,630

$
2.19Exercised


(36,455
)

2.19


(14,877
)

2.19


(52,500
)

2.19Outstanding at end of year


219,799


2.19


256,253


2.19


271,130


2.19Exercisable at end of year


219,799

$
2.19


179,789

$
2.19


118,199

$
2.19(11)
Recognition and Retention PlanThe
  Companys shareholders approved the Rome Bancorp, Inc. 2000 Recognition and
  Retention Plan (RRP) on May 3, 2000.
  The purpose of the plan is to promote the long-term interests of the
  Company and its shareholders by providing a stock-based compensation program
  to attract and retain officers and directors.During 2000,
  119,742 shares were awarded under the 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 has been amortized
  to compensation expense on a straight-line basis over the vesting periods of
  the underlying shares.  Compensation
  expense of $26,000, $52,000 and $52,000 was recorded in 2005, 2004 and 2003,
  respectively.  The remaining unearned
  compensation cost has been shown as a reduction of shareholders equity.  The shares awarded under the RRP
were
  transferred from treasury stock at cost with the difference between the fair
  market value on the grant date and the cost of the shares recorded as
  additional paid-in capital.(12)
Other Employee BenefitsThe 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 $78,000, $72,000 and
  $63,000 during the years ended December 31, 2005, 2004 and 2003,
  respectively.In
  connection with establishing the 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, 2005, 211,620 of the original ESOP shares had
  been released or committed to be released and 241,868 remained as unallocated
  shares.ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

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, 2005, 15,733 of these shares had been released
  or committed to be released and 220,267 remained as unallocated shares. The
  fair value of the unallocated shares on December 31, 2005 was
  $5,010,000.  The Company recognized
  compensation expense of $478,000, $403,000 and $300,000 in 2005, 2004 and
  2003, respectively in connection with the ESOP.(13)
Comprehensive Income (Loss)Comprehensive
  income represents net income and other comprehensive income which is the net
  change in the unrealized gains or losses on securities available-for-sale net
  of taxes.  The following summarizes
  the components of other comprehensive income (loss) (in thousands):Years
  ended December 31,2005

2004

2003Unrealized holding gains (losses) arising
  during the period

$
(405
)
$
(494
)
$
139Other than temporary write-down of
  securities








1,041Reclassification adjustment for net
  realized gain included in net income


(105
)

(176
)

(348
)Other comprehensive income (loss), before
  tax


(510
)

(670
)

832Deferred tax expense (benefit)


(204
)

(268
)

333Other comprehensive income
(loss), net of
  tax

$
(306
)
$
(402
)
$
499(14)
Commitments and ContingenciesThe 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, ifROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

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, 2005 and 2004 the Company was committed to originate mortgage and other
  loans of approximately $10,409,000 and $7,254,000, respectively. At December
  31, 2005 and December 31, 2004, the Companys fixed rate loan commitments
  totaled $1,621,000 and $1,611,000, respectively. The range of interest rates
  on these fixed rate commitments was 4.875% to 6.79% at December 31, 2005 and
  5.0% to 7.75% at December 31, 2004. Commitments under unused lines of credit
  and letters of credit were approximately $12,969,000 and $11,267,000 at
  December 31, 2005 and 2004, 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.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 ShareThe
  following summarizes the computation of earnings per share for the years
  ended December 31 (in thousands except per share data):2005

2004

2003Basic earnings per share:Net Income
  available to common shareholders

$
3,402

$
2,400

$
1,537Weighted
  average basic shares outstanding


9,205


9,283


9,334Basic
  earnings per share

$
0.37

$
0.26

$
0.16Diluted earnings per share:Net Income
  available to common shareholders

$
3,402

$
2,400

$
1,537Weighted
  average basic shares outstanding


9,205


9,283


9,334Effect of
  dilutive securities:Stock
  options


195


221


245Unearned
  compensation


6


18


25Weighted
  average diluted shares outstanding


9,406


9,522


9,604Diluted
  earnings per share

$
0.36

$
0.25

$
0.16ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

(16)
Shareholders Equity and Regulatory MattersThe 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, 2005.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. Prior to conversion to a federal charter on April 27, 2004, the Bank was
  a New York-chartered savings bank regulated by the New York State Banking
  Department and the Federal Deposit Insurance Corporation.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 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
  December 22, 2005, 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, 2005, that the
  Company and Bank meet all capital adequacy requirements to which they are
  subject.The Company
  converted to a savings and loan holding company from a bank holding company
  on April 27, 2004, at which time it was no longer subject to formula based
  capital requirements at the holding company level. However, the Company is
  required by OTS regulation to maintain adequate capital to support its
  business activities.ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

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
  provisionsAmount

Ratio

Amount

Ratio

Amount

RatioAs 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
%As of December 31, 2004:Total capital (to risk weighted assets):

$
29,164

15.4
%

$
15,725

>=8
%

$
18,987

>=10
%Tier 1 Capital (to risk weighted assets):


29,489

15.5
%


7,862

>=4
%


11,393

>=6
%Tier 1 Capital (to adjusted assets):


29,489

11.0
%


8,025

>=3
%


13,368

>=5
%ROME
BANCORP, INC. AND SUBSIDIARY

Notes to
Consolidated Financial Statements

Years ended
December 31, 2005, 2004 and 2003

Following is a reconciliation of Rome Savings GAAP
  shareholders equity to regulatory Tier 1 capital at December 31, 2005 and
  2004.December
  31,
  2005

December
  31,
  2004GAAP
  Shareholders Equity

$
58,674

$
29,880Less: Disallowed
  assets and unrealized gains on available-for- sale securities, net of tax


(31
)

(391
)Tier 1 Capital


58,643


29,489Plus: Allowance
  for loan losses


1,960


2,000Allowed
  unrealized gain on available-for-sale securities





294Less: Real
  estate held for investment


(338
)

(347
)Other
  investments required to be deducted


(1,091
)

(2,272
)Total Regulatory
  Capital

$
59,174

$
29,164(17)
Fair Value of Financial InstrumentsThe 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.ROME
BANCORP, INC. AND SUBSIDIARY

Notes to
Consolidated Financial Statements

Years ended
December 31, 2005, 2004 and 2003

Off-balance-sheet instruments:
  Fair values for the Companys off-balance-sheet instruments (lines of credit
  and commitments to fund loans) are based on fees currently charged to enter
  into similar agreements, taking into account the remaining terms of the agreements
  and the counterparties credit standing. The fair value of these financial
  instruments is immaterial and has therefore been excluded from the table
  below.The estimated carrying values and fair values of the
  Companys financial instruments for December 31 are as follows (in
  thousands):2005

2004Carrying
  amount

Fair
  value

Carrying
  amount

Fair
  valueFinancial
  assets:Cash and cash
  equivalents

$
34,235

$
34,235

$
6,929

$
6,929Securities
  available for sale


9,666


9,666


16,391


16,391Securities held
  to maturity


1,440


1,428


1,623


1,624Loans, net


251,918


248,073


231,272


231,364Federal Home
  Loan Bank Stock


776


776


1,103


1,103Accrued interest
  receivable


1,053


1,053


1,002


1,002Financial
  liabilities:Non-interest
  bearing deposits


30,039


30,039


26,390


26,390Interest bearing
  deposits


171,429


171,045


182,397


181,707Borrowings


9,374


9,235


18,843


18,536Accrued interest
  payable


29


29


37


37Fair 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.ROME
BANCORP, INC. AND SUBSIDIARY

Notes to
Consolidated Financial Statements

Years ended
December 31, 2005, 2004 and 2003

(18)
Parent Company Only Financial
  StatementsPresented below is the condensed balance sheet of
  the Parent Company as of December 31, 2005 and 2004 and statement of income
  and statement of cash flows for the years ended December 31, 2005, 2004 and
  2003 (in thousands):2005

2004Condensed
  Balance SheetAssets:Cash and due
  from banks

$
31,588

$
4,428Investment in
  subsidiary bank


58,673


29,879Loan receivable
  from ESOP


2,815


643Other assets


1,308


1,355Total assets

$
94,384

$
36,305Total liabilities

$
906

$
47Total shareholders
  equity


93,478


36,258Total
  liabilities and shareholders equity

$
94,384

$
36,3052005

2004

2003Condensed Statement of IncomeInterest income

$
466

$
94

$
79Dividends from
  subsidiary bank





6,000


4,500Total operating
  income


466


6,094


4,579Other operating
  expenses


369


269


294Income (loss)
  before income taxes and dividends in excess of net income/equity in
  undistributed income of subsidiary bank


97


5,825


4,285(Dividends in
  excess of net income)/equity in Undistributed income of subsidiary bank


3,305


(3,425
)

(2,748
)Net income

$
3,402

$
2,400

$
1,537ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

2005

2004

2003Condensed Statement of Cash FlowsOperating activities:Net income

$
3,402

$
2,400

$
1,537Adjustments to reconcile net
  income to cash provided by operating activities:Dividends in excess of net
  income of (equity in undistributed earnings of subsidiary bank


(3,305
)

3,425


2,748Decrease (increase) in other
  assets


483


(449
)

(164
)Increase (decrease) in other
  liabilities


859


(244
)

(142
)Tax benefit from exercise of
  stock options


57


59


116Net cash provided by operating activities


1,496


5,191


4,095Investing activities:Investment in subsidiary bank


(25,653
)




(Increase) decrease in loan to
  ESOP


(2,172
)

47


44Net cash (used in) provided by investing
  activities


(27,825
)

47


44Financing activities:Net proceeds of common stock
  offering and conversion


55,462





Purchase of treasury stock





(2,045
)

(1,028
)Dividends


(2,046
)

(987
)

(1,226
)Exercise of stock options


73


33


121Net cash provided by (used in) financing
  activities


53,489


(2,999
)

(2,133
)Net increase in cash and cash equivalents


27,160


2,239


2,006Cash and cash equivalents at beginning of year


4,428


2,189


183Cash and cash equivalents at end of year

$
31,588

$
4,428

$
2,189ROME BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

(19) Plan of Conversion and Reorganization

On November 11, 2004, the
Boards of Directors of Rome, MHC (the Mutual Holding Company), the Company
and The Rome Savings Bank (the Bank) (collectively, Rome) unanimously
adopted a Plan of Conversion and Agreement and Plan of Reorganization (the
Plan of Conversion), under the terms of which Rome 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.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, 2005, 2004 and 2003

(20) Selected Quarterly Financial Data (Unaudited)

Selected quarterly financial
data for 2005 and 2004 are as follows:

2005 Quarter EndingMarch 31,

June 30,

September 30,

December 31,(thousands, except per share amounts)Net interest
  income

$
3,002

$
3,379

$
3,475

$
3,643Net interest
  income after provision for loan losses


3,002


3,379


3,475


3,528Net income


639


970


1,012


781Earnings per
  common share:Basic:

$
0.07

$
0.10

$
0.11

$
0.09Diluted


0.07


0.10


0.11


0.082004 Quarter EndingMarch 31,

June 30,

September 30,

December 31,(thousands, except per share amounts)Net interest
  income

$
2,796

$
2,790

$
2,853

$
3,017Net interest
  income after provision for loan losses


2,696


2,765


2,653


2,952Net income


446


680


539


736Earnings per
  common share:Basic:

$
0.05

$
0.07

$
0.06

$
0.08Diluted


0.05


0.07


0.06


0.08Directors of
  Rome Bancorp, Inc. & The Rome Savings Bank

Executive Officers of The Rome Savings BankCharles M. Sprock

Charles M. SprockChairman of the Board, President and Chief
  Executive Officer

President and Chief Executive OfficerBruce R. Engelbert

David C. NolanRetired, Former Owner and President,
  Engelberts Jewelers, Inc.

Executive Vice President and Chief Financial OfficerDavid C. GrowPartner, law firm of McMahon & Grow

George L. BarzeeVice President, Sales and Residential
  LendingKirk B. HinmanPresident, Rome Strip Steel Company, Inc.

D. Bruce FraserVice President, Human Resources, Security and ComplianceT. Richard LeidigBusiness ConsultantMary Faith MessengerRichard H. McMahon

Vice President and ControllerPartner, law firm of McMahon & GrowSandra L. ReaderVice President, Consumer LoansMarion C. ScovilleRetired, Former Corporate Secretary and
  Executive Assistant to the President, The Rome Savings Bank

James F. SullivanVice President, Senior Loan OfficerMichael J. ValentinePresident, Mele Manufacturing Company, Inc.

C. Francis ThalmannVice President, Operations and Branch
  Administration