EXHIBIT 13.1

The summary information presented below at or for each of the
five years in the period ended December 31, 2007 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,                                   |        
|                                                     |  |                                                   |        
|                                                     |  | 2007                                              |         | 2006 |   | 2005    |  | 2004 |         | 2003 |  
|                                                     |  |                                                   |         |      |   |         |  |      |         |      |  
|Selected
 Financial Condition Data:                  |  |                                                   |         |      |   |         |  |      |         |      |   |         |  |   |         |  
|Total assets                                         |  | $                                                 | 318,131 |      | $ | 298,759 |  | $    | 308,853 |      | $ | 268,152 |  | $ | 261,939 |  
|Loans, net                                           |  |                                                   | 281,042 |      |   | 262,572 |  |      | 251,918 |      |   | 231,272 |  |   | 207,656 |  
|Securities                                           |  |                                                   | 6,165   |      |   | 6,841   |  |      | 11,882  |      |   | 19,117  |  |   | 29,118  |  
|Total cash and cash equivalents                      |  |                                                   | 8,018   |      |   | 7,858   |  |      | 34,235  |      |   | 6,929   |  |   | 14,055  |  
|Total deposits                                       |  |                                                   | 203,032 |      |   | 196,005 |  |      | 201,468 |      |   | 208,787 |  |   | 203,190 |  
|Borrowings                                           |  |                                                   | 40,333  |      |   | 20,172  |  |      | 9,374   |      |   | 18,843  |  |   | 18,090  |  
|Total equity                                         |  |                                                   | 69,037  |      |   | 77,031  |  |      | 93,478  |      |   | 36,258  |  |   | 36,639  |  
|Allowance for loan losses                            |  |                                                   | 1,910   |      |   | 1,965   |  |      | 1,960   |      |   | 2,000   |  |   | 1,809   |  
|Non-performing loans                                 |  |                                                   | 1,003   |      |   | 1,104   |  |      | 947     |      |   | 829     |  |   | 1,406   |  
|Non-performing assets                                |  |                                                   | 1,100   |      |   | 1,149   |  |      | 947     |      |   | 829     |  |   | 1,608   |  
|                                                     |  |                                                   |         |      |   |         |  |      |         |      |   |         |  |   |         |  
|                                                     |  | 2007                                              |         | 2006 |   | 2005    |  | 2004 |         | 2003 |  
|                                                     |  |                                                   |         |      |   |         |  |      |         |      |  
|Selected Operating Data:                             |  |                                                   |         |      |   |         |  |      |         |      |   |         |  |   |         |  
|Interest income                                      |  | $                                                 | 17,919  |      | $ | 17,457  |  | $    | 16,535  |      | $ | 14,498  |  | $ | 14,810  |  
|Interest expense                                     |  |                                                   | 4,798   |      |   | 3,521   |  |      | 3,036   |      |   | 3,042   |  |   | 3,614   |  
|                                                     |  |                                                   |         |      |   |         |  |      |         |      |   |         |  |   |         |  
|Net interest income                                  |  |                                                   | 13,121  |      |   | 13,936  |  |      | 13,499  |      |   | 11,456  |  |   | 11,196  |  
|Provision for loan losses                            |  |                                                   | 50      |      |   | 147     |  |      | 115     |      |   | 390     |  |   | 510     |  
|                                                     |  |                                                   |         |      |   |         |  |      |         |      |   |         |  |   |         |  
|Net interest income after
 provision for loan losses |  |                                                   | 13,071  |      |   | 13,789  |  |      | 13,384  |      |   | 11,066  |  |   | 10,686  |  
|Non-interest income:                                 |  |                                                   |         |      |   |         |  |      |         |      |   |         |  |   |         |  
|Service charges and other income                     |  |                                                   | 2,152   |      |   | 1,885   |  |      | 1,921   |      |   | 1,596   |  |   | 1,165   |  
|Net gain (loss) on
 securities transactions          |  |                                                   | 11      |      |   | 11      |  |      | 105     |      |   | 176     |  |   | (693    | )
|                                                     |  |                                                   |         |      |   |         |  |      |         |      |   |         |  |   |         |  
|Total non-interest income                            |  |                                                   | 2,163   |      |   | 1,896   |  |      | 2,026   |      |   | 1,772   |  |   | 472     |  
|Total non-interest expense                           |  |                                                   | 10,572  |      |   | 11,859  |  |      | 9,977   |      |   | 9,102   |  |   | 8,835   |  
|                                                     |  |                                                   |         |      |   |         |  |      |         |      |   |         |  |   |         |  
|Income before income taxes                           |  |                                                   | 4,662   |      |   | 3,826   |  |      | 5,433   |      |   | 3,736   |  |   | 2,323   |  
|Income taxes                                         |  |                                                   | 1,608   |      |   | 1,338   |  |      | 2,031   |      |   | 1,336   |  |   | 786     |  
|                                                     |  |                                                   |         |      |   |         |  |      |         |      |   |         |  |   |         |  
|Net income                                           |  | $                                                 | 3,054   |      | $ | 2,488   |  | $    | 3,402   |      | $ | 2,400   |  | $ | 1,537   |  
|                                                     |  |                                                   |         |      |   |         |  |      |         |      |   |         |  |   |         |  

---



|                                                                        |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|----------------------------------------------------------------------- |  | --------------------------------------- | ------ | ---- | - | ------ | - | ---- | ------ | ---- | - | ------ | - | - | ------ | -
|                                                                        |  | At or for the 
 Year Ended December 31, |       
|                                                                        |  |                                         |       
|                                                                        |  | 2007                                    |        | 2006 |   | 2005   |   | 2004 |        | 2003 |  
|                                                                        |  |                                         |        |      |   |        |   |      |        |      |  
|Selected Financial Ratios and Other
 Data                               |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Performance Ratios:                                                     |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Basic earnings per share                                                |  | $                                       | 0.40   |      | $ | 0.29   |   | $    | 0.37   |      | $ | 0.26   |   | $ | 0.16   |  
|Diluted earnings per share                                              |  | $                                       | 0.39   |      | $ | 0.29   |   | $    | 0.36   |      | $ | 0.25   |   | $ | 0.16   |  
|Return on average assets                                                |  |                                         | 1.00   | %    |   | 0.83   | % |      | 1.13   | %    |   | 0.91   | % |   | 0.59   | %
|Return on average equity                                                |  |                                         | 4.14   | %    |   | 2.91   | % |      | 4.29   | %    |   | 6.67   | % |   | 4.16   | %
|Net interest rate spread (tax equivalent)                               |  |                                         | 4.06   | %    |   | 4.37   | % |      | 4.27   | %    |   | 4.41   | % |   | 4.27   | %
|Net interest margin (tax equivalent)                                    |  |                                         | 4.74   | %    |   | 5.04   | % |      | 4.80   | %    |   | 4.73   | % |   | 4.70   | %
|Non-interest expense to average assets                                  |  |                                         | 3.45   | %    |   | 3.94   | % |      | 3.31   | %    |   | 3.45   | % |   | 3.42   | %
|Efficiency ratio (1)                                                    |  |                                         | 68.99  | %    |   | 74.59  | % |      | 64.09  | %    |   | 68.72  | % |   | 70.22  | %
|Average interest earning assets to average
interest-bearing liabilities |  |                                         | 139.84 | %    |   | 152.72 | % |      | 149.44 | %    |   | 125.61 | % |   | 128.15 | %
|                                                                       
|Capital Ratios:                                                         |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Average equity to average assets                                        |  |                                         | 24.09  | %    |   | 28.46  | % |      | 26.27  | %    |   | 13.63  | % |   | 14.29  | %
|Equity to total assets at end of period                                 |  |                                         | 21.70  | %    |   | 25.78  | % |      | 30.27  | %    |   | 13.52  | % |   | 13.99  | %
|Book value per share                                                    |  | $                                       | 8.86   |      | $ | 9.10   |   | $    | 9.66   |      | $ | 8.57   |   | $ | 8.55   |  
|                                                                       
|Regulatory Capital Ratios: (2)                                          |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Core capital (Tier 1 capital)                                           |  |                                         | 20.24  | %    |   | 21.27  | % |      | 18.96  | %    |   | 11.03  | % |   | 13.68  | %
|Total risk-based capital                                                |  |                                         | 27.73  | %    |   | 28.90  | % |      | 28.04  | %    |   | 15.36  | % |   | 19.19  | %
|                                                                       
|Asset Quality Ratios:                                                   |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Nonperforming loans as percent of loans                                 |  |                                         | 0.35   | %    |   | 0.42   | % |      | 0.37   | %    |   | 0.36   | % |   | 0.67   | %
|Nonperforming assets as percent of total
assets                         |  |                                         | 0.35   | %    |   | 0.38   | % |      | 0.31   | %    |   | 0.31   | % |   | 0.61   | %
|Allowance for loan losses as a percent of
loans                         |  |                                         | 0.68   | %    |   | 0.74   | % |      | 0.77   | %    |   | 0.86   | % |   | 0.86   | %
|Allowance for loan losses as a percent of
non-performing loans          |  |                                         | 190.4  | %    |   | 178.0  | % |      | 207.0  | %    |   | 241.3  | % |   | 128.7  | %
|                                                                       
|Other Data:                                                             |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Number of:                                                              |  |                                         |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Deposit accounts                                                        |  |                                         | 35,484 |      |   | 34,881 |   |      | 34,864 |      |   | 35,136 |   |   | 34,443 |  
|Full service offices                                                    |  |                                         | 5      |      |   | 4      |   |      | 4      |      |   | 4      |   |   | 4      |  

|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Note: | All per share amounts have
 been adjusted to reflect Rome Bancorp, Inc.s second step stock conversion
 effective March 30, 2005 as well as a three-for-two stock split effective
 June 16, 2003.                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|(1)   | Non-interest expense divided
 by the sum of net interest income, the tax equivalent adjustment on
 tax-exempt municipal securities and other non-interest income.                                                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|(2)   | The regulatory capital ratios
 for the year ended December 31, 2007, 2006, 2005 and 2004 are for Rome
 Savings Bank only; the regulatory capital ratios for all other periods are
 for Rome Savings Bank and Rome Bancorp, Inc. on a consolidated basis. Due to
 Rome Savings Banks conversion to a federal savings bank on April 27, 2004,
 Rome Bancorp, Inc. is no longer subject to formula based capital requirements
 at a holding company level.

---



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

Forward-Looking Statements

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

Any or all of
our forward-looking statements in this Annual Report and in any other public
statements we make may turn out to be wrong. They can be affected by inaccurate
assumptions we might make or unknown risks and uncertainties. Consequently, no
forward-looking statements can be guaranteed. We disclaim any obligation to
subsequently revise any forward-looking statements to reflect events or
circumstances after the date of such statements, or to reflect the occurrence of
anticipated or unanticipated events

General

Rome Bancorp,
Inc. commenced operations on October 6, 1999, when The Rome Savings Bank
converted from a New York mutual savings bank to a New York mutual holding
company structure whereby Rome Savings became a wholly-owned subsidiary of Rome
Bancorp, a majority owned subsidiary of Rome, MHC.

On April 27,
2004, Rome Savings 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 (the OTS).

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 Rome Savings and the
public (the Offering). Following the completion of the Conversion and
Offering, Rome Bancorp was succeeded by a new, fully public, Delaware
corporation with the same name and Rome, MHC ceased to exist.

Rome Bancorps
sole business is conducted by its wholly-owned subsidiary, Rome Savings. Rome
Savings 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. Rome Savings
also invests in long and short-term marketable securities and other liquid investments.

2007 Highlights and Overview

The following
discussion focuses on the factors affecting the consolidated financial
condition of Rome Bancorp as of the two years ended December 31, 2007 and 2006
and Rome Bancorps results of operations for the three years ended December 31,
2007. The consolidated financial statements and related notes for the three
years ended December 31, 2007 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.

---



Rome Savings
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. Rome Savings 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 Rome Savings, 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. Rome Savings operations and lending are principally
concentrated in the Central New York area, and therefore its operations and
earnings are influenced by the economics of the area it operates in. Deposit
balances and cost of funds are influenced by prevailing market rates on
competing investments, customer preferences and levels of personal income and
savings in Rome Savings primary
market area.

Net income for
2007 was $3.1 million compared to $2.5 million in the prior year. The
significant factors and trends impacting 2007, which are discussed in greater
depth below, were as follows:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net interest
 income before loan loss provision in 2007 decreased by $815,000 or 5.8% to
 $13.1 million from $13.9 million for the prior year. This decrease was
 principally due to an increase in the average balance and interest rate paid
 on interest bearing liabilities, partially offset by an increase in the yield
 earned on interest bearing assets. Rome Bancorps ratio of interest earning
 assets to interest bearing liabilities decreased to 139.84% in 2007 from
 152.72% in the prior year, while the yield on earning assets increased to
 6.47% in 2007 from 6.30% in 2006.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Rome
 Bancorps provision for loan losses was $50,000 in 2007, a decrease of
 $97,000 from $147,000 in the prior year, primarily due to favorable 2007 loan
 loss experience and continued stable asset quality. Rome Savings does not
 have any sub-prime mortgage loans in its portfolio and credit quality has not
 been affected by the slowing economy to date.                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Non-interest
 income increased $267,000 to $2.2 million in 2007 primarily due to increases
 in the cash surrender value of Bank-owned life insurance and higher fee revenue
 earned.                                                                                                                                                                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Non-interest
 expense decreased by $1.3 million from $11.9 million in 2006 to $10.6 in
 2007. The majority of this decrease is related to the expensing in the prior
 year of Rome Bancorps 2006 stock-based compensation grants in accordance
 with the provisions of FASB No.123(R).                                                                                                                                                                                                                                                                                                           

Critical Accounting Policies

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

These critical
policies and their application are reviewed periodically by the Audit Committee
and the Board of Directors. All accounting policies are important, and as such,
we encourage the reader

---



to review each
of the policies included in Note 2 to the Consolidated Financial Statements to
obtain a better understanding of how our financial performance is reported.

Management of Interest Rate Risk

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

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

A simulation
model is the primary tool used to assess the impact of changes in interest
rates on net interest income. Key assumptions used in the model include
prepayment speeds on loans and mortgage-backed securities, loan volumes and
pricing and customer preferences, and sensitivity to changing rates. These
assumptions are compared to actual results and revised as necessary. Rome
Bancorps analysis compares net interest income under a scenario of no change
from current interest rates with one of a 100, 200 and 300 basis point increase
in interest rates and one of a 100 basis point decrease in rates. The change in
interest rates is assumed to occur in the first twelve months following the
current financial statement date. Net interest income is measured for each of
the three twelve-month periods following the balance sheet date. Rome Bancorps
policy is that net interest income should not vary by more than 20% for each of
the three forecasted twelve-month periods. At December 31, 2007, based on
simulation model results, Rome Bancorp was within these guidelines.

The following
table sets forth at December 31, 2007 and 2006 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.

---



|                                               |  |                            |   |                            |  |                                |      |                        |  |                           |    |                                |        |  |   |     |   |  |       |  
|---------------------------------------------- |  | -------------------------- | - | -------------------------- |  | ------------------------------ | ---- | ---------------------- |  | ------------------------- | -- | ------------------------------ | ------ |  | - | --- | - |  | ----- | -
|                                               |  | 2007                       |   | 2006                       | 
|                                               |  |                            |   |                            | 
|                                               |  | Annual Net Interest Income |   | Annual Net Interest Income | 
|                                               |  |                            |   |                            | 
|                                               |  |                            |   |                            |  |                                |      |                        |  |                           |    |                                |        |  |   |     |   |  |      
|Change in
 Interest Rates
 in
 Basis Points(1) |  | DollarAmount               |   | DollarChangeFrom Base      |  | Percentage
 Change
 From
 Base |      | DollarAmount           |  | Dollar
 Change
 From Base |    | Percentage
 Change
 From
 Base |       
|                                               |  |                            |   |                            |  |                                |      |                        |  |                           |    |                                |        |  |   |     |   |  |      
|                                               |  |                            |   |                            |  |                                |      | (Dollars in thousands) |  |                           |    |                                |        |  |  
|                                               |  |                            |   |                            |  |                                |      |                        |  |                           |    |                                |        |  |   |     |   |  |      
|+300                                           |  |                            | $ | 13,137                     |  | $                              | (229 | )                      |  | (1.71                     | )% | $                              | 13,390 |  | $ | 22  |   |  | 0.16  | %
|+200                                           |  |                            |   | 13,239                     |  |                                | (127 | )                      |  | (0.95                     | )  |                                | 13,445 |  |   | 77  |   |  | 0.58  |  
|+100                                           |  |                            |   | 13,331                     |  |                                | (35  | )                      |  | (0.26                     | )  |                                | 13,429 |  |   | 61  |   |  | 0.46  |  
|Base                                           |  |                            |   | 13,366                     |  |                                |     |                        |  |                          |    |                                | 13,368 |  |   |    |   |  |      |  
|-100                                           |  |                            |   | 13,382                     |  |                                | 16   |                        |  | 0.12                      |    |                                | 13,327 |  |   | (41 | ) |  | (0.31 | )

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

The above
table reflects that as of both December 31, 2007 and 2006, Rome Bancorp had a
relatively low risk of volatility in net interest income due to interest rate
fluctuations. The interest rate risk modeled as of December 31, 2007 was
slightly higher, exhibiting negative variances in periods of rising interest
rates. This can be attributed to the increase in the Companys overnight
borrowings to $23.0 million at December 31, 2007 from $11.8 million a year
earlier. These short-term borrowings reprice directly in relation to changes in
prevailing interest rates, hence an increase in underlying interest rates would
immediately impact the Companys interest expense.

---



Analysis of Net Interest Income.

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

|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|----------------------------------------------------------------- |  | ------------------------------------------------------------------ | ------- | ------------------------ | - | --------------------- | - | -------------- | ---- | ------------------------ | - | --------------------- |  | ---------------- | ------ | -------------------------- |  | --------------------- | - | - | ------- |  | - | ------ | - |  | ---- | -
|                                                                  |  | Average Balances, Interest and Average Yields for the years
 ended |        
|                                                                  |  |                                                                    |        
|                                                                  |  | December 31, 2007                                                  |         | December 31, 2006        |   | December 31, 2005     |  
|                                                                  |  |                                                                    |         |                          |   |                       |  
|                                                                  |  | Average
 Balance                                                   |         | Interest
 Income/Expense |   | Average
 Yield/
 Cost |   | AverageBalance |      | Interest
 Income/Expense |   | Average
 Yield/
 Cost |  | Average
 Balance |        | Interest
 Income/
 Expense |  | Average
 Yield/
 Cost |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |  
|                                                                  |  | (Dollars in thousands)                                             |        
|Assets:                                                           |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Interest-earning assets:                                          |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Loans                                                             |  | $                                                                  | 270,373 |                          | $ | 17,481                |   |                | 6.47 | %                        | $ | 255,201               |  | $                | 16,330 |                            |  | 6.40                  | % | $ | 242,464 |  | $ | 14,993 |   |  | 6.18 | %
|Securities                                                        |  |                                                                    | 6,452   |                          |   | 437                   |   |                | 6.77 |                          |   | 8,447                 |  |                  | 541    |                            |  | 6.40                  |   |   | 15,712  |  |   | 864    |   |  | 5.50 |  
|Federal funds sold & other interest bearing
 deposits             |  |                                                                    | 1,110   |                          |   | 52                    |   |                | 4.67 |                          |   | 14,546                |  |                  | 664    |                            |  | 4.57                  |   |   | 26,182  |  |   | 826    |   |  | 3.15 |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Total interest-earnings assets                                    |  |                                                                    | 277,935 |                          |   | 17,970                |   |                | 6.47 |                          |   | 278,194               |  |                  | 17,535 |                            |  | 6.30                  |   |   | 284,358 |  |   | 16,683 |   |  | 5.87 |  
|Noninterest-earning assets                                        |  |                                                                    | 28,625  |                          |   |                       |   |                |      |                          |   | 22,474                |  |                  |        |                            |  |                       |   |   | 17,396  |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Total assets                                                      |  | $                                                                  | 306,560 |                          |   |                       |   |                |      |                          | $ | 300,668               |  |                  |        |                            |  |                       |   | $ | 301,754 |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Liabilities and Shareholders
Equity:                             |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Interest-bearing liabilities:                                     |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Savings accounts                                                  |  | $                                                                  | 82,355  |                          | $ | 454                   |   |                | 0.55 |                          | $ | 87,560                |  | $                | 657    |                            |  | 0.75                  |   | $ | 95,061  |  | $ | 703    |   |  | 0.74 |  
|Time deposits                                                     |  |                                                                    | 69,822  |                          |   | 2,834                 |   |                | 4.06 |                          |   | 66,822                |  |                  | 2,276  |                            |  | 3.41                  |   |   | 67,214  |  |   | 1,820  |   |  | 2.71 |  
|Money market accounts                                             |  |                                                                    | 6,994   |                          |   | 139                   |   |                | 1.99 |                          |   | 5,382                 |  |                  | 88     |                            |  | 1.62                  |   |   | 6,145   |  |   | 55     |   |  | 0.90 |  
|Other interest bearing deposits                                   |  |                                                                    | 11,695  |                          |   | 65                    |   |                | 0.56 |                          |   | 11,321                |  |                  | 69     |                            |  | 0.61                  |   |   | 10,170  |  |   | 65     |   |  | 0.64 |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Total interest-bearing deposits                                   |  |                                                                    | 170,866 |                          |   | 3,492                 |   |                | 2.04 |                          |   | 171,085               |  |                  | 3,090  |                            |  | 1.81                  |   |   | 178,590 |  |   | 2,643  |   |  | 1.48 |  
|Borrowings                                                        |  |                                                                    | 27,883  |                          |   | 1,306                 |   |                | 4.68 |                          |   | 11,069                |  |                  | 431    |                            |  | 3.90                  |   |   | 11,693  |  |   | 393    |   |  | 3.36 |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Total interest-bearing liabilities                                |  |                                                                    | 198,749 |                          |   | 4,798                 |   |                | 2.41 |                          |   | 182,154               |  |                  | 3,521  |                            |  | 1.93                  |   |   | 190,283 |  |   | 3,036  |   |  | 1.60 |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Noninterest-bearing deposits                                      |  |                                                                    | 28,337  |                          |   |                       |   |                |      |                          |   | 28,232                |  |                  |        |                            |  |                       |   |   | 27,647  |  |   |        |   |  |      |  
|Other liabilities                                                 |  |                                                                    | 5,622   |                          |   |                       |   |                |      |                          |   | 4,712                 |  |                  |        |                            |  |                       |   |   | 4,558   |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Total liabilities                                                 |  |                                                                    | 232,708 |                          |   |                       |   |                |      |                          |   | 215,098               |  |                  |        |                            |  |                       |   |   | 222,488 |  |   |        |   |  |      |  
|Shareholders equity                                              |  |                                                                    | 73,852  |                          |   |                       |   |                |      |                          |   | 85,570                |  |                  |        |                            |  |                       |   |   | 79,266  |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Total liabilities and shareholders
equity                        |  | $                                                                  | 306,560 |                          |   |                       |   |                |      |                          | $ | 300,668               |  |                  |        |                            |  |                       |   | $ | 301,754 |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Net interest income                                               |  |                                                                    |         |                          |   | 13,172                |   |                |      |                          |   |                       |  |                  | 14,014 |                            |  |                       |   |   |         |  |   | 13,647 |   |  |      |  
|Tax equivalent adjustment on securities                           |  |                                                                    |         |                          |   | (51                   | ) |                |      |                          |   |                       |  |                  | (78    | )                          |  |                       |   |   |         |  |   | (148   | ) |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Net interest income per consolidated financial
 statements        |  |                                                                    |         |                          | $ | 13,121                |   |                |      |                          |   |                       |  | $                | 13,936 |                            |  |                       |   |   |         |  | $ | 13,499 |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                          |   |                       |   |                |      |                          |   |                       |  |                  |        |                            |  |                       |   |   |         |  |   |        |   |  |      |  
|Net interest rate spread                                          |  |                                                                    |         |                          |   |                       |   |                | 4.06 | %                        |   |                       |  |                  |        |                            |  | 4.37                  | % |   |         |  |   |        |   |  | 4.27 | %
|Net interest margin                                               |  |                                                                    |         |                          |   |                       |   |                | 4.74 | %                        |   |                       |  |                  |        |                            |  | 5.04                  | % |   |         |  |   |        |   |  | 4.80 | %
|Ratio of interest-earning assets to
 interest-bearing liabilities |  |                                                                    |         |                          |   |                       |   |                | 1.40 | x                        |   |                       |  |                  |        |                            |  | 1.53                  | x |   |         |  |   |        |   |  | 1.49 | x

---



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

|                                   |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |   |   |      |   |   |       |  
|---------------------------------- |  | --------------------------------------------------------------------------- | ---- | --------------------------------------------------------------------------- | - | ----- | - | ---- | ----- | ------ | - | --- | - | - | ---- | - | - | ----- | -
|                                   |  | Rate Volume Analysis                                                        |     
|                                   |  |                                                                             |     
|                                   |  | Year Ended December 31,
  2007
  Compared to Year Ended
  December 31, 2006 |      | Year Ended December 31,
  2006
  Compared to Year Ended
  December 31, 2005 |  
|                                   |  |                                                                             |      |                                                                             |  
|                                   |  | Increases (decreases) due to                                                |      | Increases (decreases) due to                                                |  
|                                   |  |                                                                             |     
|                                   |  | Rate                                                                        |      | Volume                                                                      |   | Net   |   | Rate |       | Volume |   | Net |  
|                                   |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |  
|                                   |  | ( in thousands)                                                             |     
|                                   |  |                                                                             |     
|Assets:                            |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |   |   |      |   |   |       |  
|Interest-earning assets:           |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |   |   |      |   |   |       |  
|Loans                              |  | $                                                                           | 146  |                                                                             | $ | 1,005 |   | $    | 1,151 |        | $ | 573 |   | $ | 764  |   | $ | 1,337 |  
|Securities                         |  |                                                                             | 24   |                                                                             |   | (128  | ) |      | (104  | )      |   | 76  |   |   | (399 | ) |   | (323  | )
|Federal funds sold & other         |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |   |   |      |   |   |       |  
|Interest bearing deposits          |  |                                                                             | 1    |                                                                             |   | (613  | ) |      | (612  | )      |   | 205 |   |   | (367 | ) |   | (162  | )
|                                   |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |   |   |      |   |   |       |  
|Total interest-earnings assets     |  |                                                                             | 171  |                                                                             |   | 264   |   |      | 435   |        |   | 854 |   |   | (2   | ) |   | 852   |  
|                                   |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |   |   |      |   |   |       |  
|Interest-bearing liabilities:      |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |   |   |      |   |   |       |  
|Savings accounts                   |  |                                                                             | (164 | )                                                                           |   | (39   | ) |      | (203  | )      |   | 10  |   |   | (56  | ) |   | (46   | )
|Time deposits                      |  |                                                                             | 456  |                                                                             |   | 102   |   |      | 558   |        |   | 467 |   |   | (11  | ) |   | 456   |  
|Money market accounts              |  |                                                                             | 25   |                                                                             |   | 26    |   |      | 51    |        |   | 39  |   |   | (6   | ) |   | 33    |  
|Other interest bearing deposits    |  |                                                                             | (6   | )                                                                           |   | 2     |   |      | (4    | )      |   | (3  | ) |   | 7    |   |   | 4     |  
|                                   |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |   |   |      |   |   |       |  
|Total interest-bearing deposits    |  |                                                                             | 311  |                                                                             |   | 91    |   |      | 402   |        |   | 513 |   |   | (66  | ) |   | 447   |  
|                                   |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |   |   |      |   |   |       |  
|Borrowings                         |  |                                                                             | 219  |                                                                             |   | 656   |   |      | 875   |        |   | 59  |   |   | (21  | ) |   | 38    |  
|                                   |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |   |   |      |   |   |       |  
|Total interest-bearing liabilities |  |                                                                             | 530  |                                                                             |   | 747   |   |      | 1,277 |        |   | 572 |   |   | (87  | ) |   | 485   |  
|                                   |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |   |   |      |   |   |       |  
|Net change in interest income      |  | $                                                                           | (359 | )                                                                           | $ | (483  | ) | $    | (842  | )      | $ | 282 |   | $ | 85   |   | $ | 367   |  
|                                   |  |                                                                             |      |                                                                             |   |       |   |      |       |        |   |     |   |   |      |   |   |       |  

Comparison of Financial Condition at December
31, 2007 and December 31, 2006

Rome Bancorps
total assets at December 31, 2007 were $318.1 million, an increase of $19.3
million or 6.5% from $298.8 million at December 31, 2006. Most of the growth
was attributable to increases in the loan portfolio.

Cash and cash
equivalents remained relatively constant over the past year. Securities
available for sale were $2.7 million at December 31, 2007, a decrease of $1.6
million or 37.2% from $4.3 million at December 31, 2006. This decrease was due
to maturities and principal reductions. Rome Bancorp invested $1.0 million in
Federal Home Loan Bank stock in 2007, in connection with its line of credit
borrowing with this institution.

Total loans increased by $18.5
million, or 7.0% to $283.0 million at December 31, 2007 from $264.5 million at
December 31, 2006. During the year ended December 31, 2007, Rome Bancorp
originated approximately $61.7 million of loans. The majority of the loan growth
was in the residential mortgage loan portfolio, which grew by $14.6 million, or
10.8%. Asset quality improved over the same period as non-performing loans as a
percentage of total loans declined to 0.35% at December 31, 2007 as compared to
0.42% at December 31, 2006. The allowance for loan losses as a percent of
non-performing loans increased to 190.4% at December 31, 2007, from 178.0% at
December 31, 2006. These ratios are considered appropriate due to the growth in
Rome Bancorps

---



residential
mortgage portfolio in 2007. Due to stringent underwriting standards, the
history of losses on this portfolio is significantly lower than on the
remaining loans in the total loan portfolio.

Total deposits
increased by $7.0 million or 3.6% from $196.0 million at December 31, 2006 to
$203.0 million at December 31, 2007. The overall increase in deposits is
primarily attributable to increases in time deposits, money market accounts,
other interest-bearing and non-interest bearing deposit accounts partially
offset by decreases in savings balances. Time deposits increased to $73.2
million at December 31, 2007 from $66.4 million a year earlier due to promotion
of these accounts. Money market balances grew by $2.3 million in 2007,
increasing from $5.1 million at December 31, 2006 to $7.4 million at December
31, 2007. Non-interest bearing deposits and other interest bearing deposits
increased by $1.5 million or 5.2% and $808,000 or 6.5%, respectively over the
past year. Savings deposits decreased $4.3 million from $84.1 million at
December 31, 2006 to $79.8 million at December 31, 2007. The decline in this
deposit category is attributed to customers seeking higher returns in other
investment vehicles, consistent with trends among financial institutions.

Comparison of Results of Operations for the
Years Ended December 31, 2007 and December 31, 2006

General.Net income
for the year ended December 31, 2007 was $3.1 million, an increase of $566,000
from $2.5 million for the year ended December 31, 2006. The increase in net
income was attributable to decreases in non-interest expense of $1.3 million,
an increase in non-interest income of $267,000 and a decrease in loan loss
provision of $97,000, partially offset by a decrease in net interest income
before loan loss provision of $815,000 and an increase in income tax expense of
$270,000.

Net Interest Income.Net
interest income was $13.1 million in 2007, a decrease of $815,000 or 5.9% from
$13.9 million in 2006. This decrease is principally due to an increase in interest
expense.

Interest Income.Interest
income increased by $462,000 for the year ended December 31, 2007, from $17.5
million for the year ended December 31, 2006. Interest income earned on the
loan portfolio increased to $17.5 million in 2007 from $16.3 million in 2006.
Average loan balances increased to $270.4 million in 2007 from $255.2 million
in 2006, primarily due to growth in the residential mortgage portfolio. The
yield on loans in 2007 increased to 6.47% compared to 6.40% in 2006. Interest and
dividend income on securities decreased in 2007 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 $6.5 million in 2006
from $8.4 million in 2006 while their yields increased to 6.77% from 6.40% over
the same period. Interest income of other short-term investments, including
federal funds sold, dropped from $664,000 in 2006 to $52,000 in 2007, as a
result of a decrease in average federal funds sold from $14.5 million in 2006
to $1.1 million in 2007.

Interest Expense.Interest
expense increased to $4.8 million in 2007 from $3.5 million in 2006 primarily
due to increases in the average balances of outstanding debt and in the rates
paid on debt and deposit accounts, consistent with current market trends.
Interest expense on borrowings increased from $431,000 in 2006 to $1.3 million
in 2007 as the average balances increased from $11.1 million in 2006 to $27.9
million in the current year. In addition, the average rate paid on this debt
increased to 4.68% in 2007 from 3.90% in 2006. The average rate paid on
interest bearing deposits in 2007 was 2.04% compared to 1.81% in 2006, principally
due to higher rates paid on time deposits.

Provision for Loan Losses.The
provision for loan losses was $50,000 in 2007 compared to $147,000 in 2006,
reflecting a lower level of charge-offs in 2007. The allowance for loan losses
was $1.9 million or 0.68% of total loans at December 31, 2007 compared to $2.0
million and 0.74% of total loans at December 31, 2006. The allowance for loan
losses as a percent of non-performing loans increased to 190.4% at December 31,
2007 compared to 178.0% at December 31, 2006. Non-performing loans, consisting
of non-accrual loans and loans 90 days past due and still accruing, was

---



$1.0 million
or 0.35% of total loans at December 31, 2007 compared to $1.1 million or 0.42%
at December 31, 2006. These ratios are considered appropriate due to the net
growth in Rome Bancorps residential mortgage portfolio of $14.6 million, or
10.8% in 2007. 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. Rome Savings does not originate subprime mortgage 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 $50,000 was
appropriate in 2007.

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

|                          |  |      |       |      |   |          |  |          |     |  |  |       |  
|------------------------- |  | ---- | ----- | ---- | - | -------- |  | -------- | --- |  |  | ----- | -
|                          |  | 2007 |       | 2006 |   | $ Change |  | % Change |    
|                          |  |      |       |      |   |          |  |          |     |  | 
|Gain on securities sold   |  | $    | 11    |      | $ | 11       |  | $        |    |  |  |      |  
|Gain on sale of loans     |  |      | 18    |      |   | 15       |  |          | 3   |  |  | 20.00 | %
|Service charges           |  |      | 1,654 |      |   | 1,559    |  |          | 95  |  |  | 6.09  | %
|Other income              |  |      | 480   |      |   | 311      |  |          | 169 |  |  | 54.34 | %
|                          |  |      |       |      |   |          |  |          |     |  |  |       |  
|Total non-interest income |  | $    | 2,163 |      | $ | 1,896    |  | $        | 267 |  |  | 14.08 | %
|                          |  |      |       |      |   |          |  |          |     |  |  |       |  

Non-interest
income increased $267,000 to $2.2 million in 2007 from $1.9 million in 2006. In
mid-2006, Rome Bancorp invested in $8.0 million of bank-owned life insurance.
The 2007 increase in cash surrender value of that investment was $168,000
higher than in 2006, due to the asset being held for a full year. Service
charge income increased commensurate with deposit and loan activity.

Non-Interest Expense.Non-interest
expense decreased to $10.6 million for the year ended December 31, 2007
compared to $11.9 million for the year ended December 31, 2006. The following
table summarizes changes in the major components of non-interest expense:

|                                           |  |      |        |      |   |          |  |          |        |   |  |        |    
|------------------------------------------ |  | ---- | ------ | ---- | - | -------- |  | -------- | ------ | - |  | ------ | ---
|                                           |  | 2007 |        | 2006 |   | $ Change |  | % Change |       
|                                           |  |      |        |      |   |          |  |          |        |   | 
|Salaries and employee
  benefits           |  | $    | 5,887  |      | $ | 6,986    |  | $        | (1,099 | ) |  | (15.73 | )% 
|Occupancy and equipment
  expense          |  |      | 1,896  |      |   | 1,824    |  |          | 72     |   |  | 3.95   | %  
|Marketing expense                          |  |      | 176    |      |   | 247      |  |          | (71    | ) |  | (28.75 | ) %
|Outside consulting and
  professional fees |  |      | 712    |      |   | 792      |  |          | (80    | ) |  | (10.10 | ) %
|Other expense                              |  |      | 1,901  |      |   | 2,010    |  |          | (109   | ) |  | (5.42  | ) %
|                                           |  |      |        |      |   |          |  |          |        |   |  |        |    
|Total non-interest expense                 |  | $    | 10,572 |      | $ | 11,859   |  | $        | (1,287 | ) |  | (10.85 | ) %
|                                           |  |      |        |      |   |          |  |          |        |   |  |        |    

The decrease
in salaries and employee benefits is related to the 2006 adoption of SFAS No.
123(R), Share-Based Payments, and its requirement to record stock-based
compensation cost using the fair value method. In 2006, adoption of this
standard resulted in additional non-cash compensation expense of $1.6 million.
Under the provisions of SFAS No. 123(R), in addition to expensing the fair
value of options and restricted share awards over the underlying requisite
service period of those awards, grants made to individuals eligible for
retirement or early retirement as defined in Rome Bancorps defined benefit
pension plan were required to be expensed at the point when the individuals met
the retirement eligibility criteria. This resulted in accelerating $1.3 million
of stock-based compensation amortization expense into 2006 that otherwise would
have been recorded in subsequent years. Increases in occupancy costs are
related to the opening of Rome Bancorps fifth branch in mid-2007. Other cost
decreases were the result of cost containment practices.

Income Tax Expense.Income
tax expense was $1.6 million for 2007, an increase of $270,000 from 2006 income
tax expense of $1.3 million. The increase is directly attributable to higher
pre-tax earnings.

---



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

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

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

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

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

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

In determining
the level of the provision for loan losses necessary to absorb probable
incurred credit losses, management considers the level of and trend in
non-performing loans, the level of and trend in net loan charge-offs, the
dollar amount and mix of the loan portfolio, as well as general economic
conditions and real estate trends in Rome Bancorps market area, which can
impact the inherent risk

---



of loss in
Rome Bancorps loan portfolio. As a result of these factors, management
determined that a provision of $147,000 was necessary in 2006.

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

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

Non-interest income
decreased by $130,000 to $1.9 million in 2006 as compared to $2.0 million in
2005, principally due to lower gains on securities sales. Rome Bancorp recorded
net securities sales gains of $11,000 in 2006 versus $105,000 in 2005, due to a
lower volume of sales activity. In mid-2006, Rome Bancorp made an $8.0 million
investment in Bank-owned life insurance policies on key officers, resulting in
$215,000 of increased cash surrender value being recognized through the balance
of 2006. During 2005, Rome Bancorp recovered $167,000 in costs related to the
aforementioned fiscal 2000 loan write-off.

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

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

The increase in salaries and
employee benefits is related to the 2006 adoption of SFAS No. 123(R),
Share-Based Payments, and its requirement to record stock-based compensation
cost using the fair value method. For 2006, adopting this standard resulted in
additional non-cash compensation expense of $1.6 million. Under the provisions
of SFAS No. 123(R), in addition to expensing the fair value of options and
restricted share awards over the underlying requisite service period of those
awards, grants made to individuals eligible for retirement or early retirement
as defined in Rome Bancorps defined benefit pension plan were required to be
expensed at the point when the individuals met the retirement eligibility
criteria. This resulted in accelerating $1.3 million of stock-based
compensation amortization expense into 2006 that otherwise would have been
recorded in subsequent years. Increases in occupancy costs and professional
fees are primarily attributable to additional costs related to information
technology infrastructure and continued Sarbanes-Oxley Act compliance
activities.

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

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. Rome Bancorp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. Rome Savings also has a written agreement
with the Federal Home Loan Bank of New York that allows it to borrow up to
$60.4 million on a line of credit. At December 31, 2007, Rome Savings had
outstanding borrowings of $23.0 million against this line of credit, in
addition to bullet and amortizing notes totaling $17.3 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.

Rome Bancorps
primary investing activities include the origination of loans and to a lesser
extent the purchase of investment securities. In 2007, Rome Bancorp originated
approximately $61.7 million in loans compared to approximately $51.7 million in
2006. Purchases of investment securities were $1.0 in 2007 and $1.6 million in
2006. At December 31, 2007, Rome Bancorp had loan commitments to borrowers of
approximately $8.0 million, and customer available letters and lines of credit
of approximately $20.1 million.

Total deposits
were $203.0 million at December 31, 2007, an increase of 3.6% from $196.0
million at December 31, 2006. Time deposit accounts scheduled to mature within
one year were $46.4 million at December 31, 2007. Based on our deposit
retention experience and current pricing strategy, we anticipate that a
significant portion of these time deposits will remain with Rome Bancorp. We
are committed to maintaining a strong liquidity position, therefore, Rome
Bancorp monitors its liquidity position on a daily basis. Rome Bancorp
anticipates that it will have sufficient funds to meet its current funding
commitments. The marginal cost of new funding however, whether from deposits or
from borrowings from the Federal Home Loan Bank, will be carefully considered
as Rome Bancorp monitors its liquidity needs. Therefore, in order to minimize
its cost of funds, Rome Bancorp may consider additional borrowings from the
Federal Home Loan Bank in the future.

During 2007,
Rome Bancorp repurchased 838,100 outstanding shares of its common stock at a
total cost of $10.2 million. Rome Bancorp paid cash dividends of $0.32 per
share in 2007, requiring a cash outlay of $2.5 million.

At December
31, 2007 and 2006, Rome Savings exceeded each of the applicable regulatory
capital requirements. Rome Savings leverage (Tier 1) capital at December 31, 2007 and
2006 was $64.3 million and $63.2 million or 20.24% and 21.27% of adjusted
assets, respectively. In order to be classified as well-capitalized by the
OTS and the Federal Deposit Insurance Corporation (FDIC), at December 31,
2007 and 2006, Rome Savings is required to have leverage (Tier 1) capital of
$15.9 million and $14.9 million, respectively, or 5.0% of adjusted assets,
respectively. To be classified as a well-capitalized bank by the OTS and
FDIC, Rome Savings must also have a risk-based total capital ratio of 10.0%. At
December 31, 2007 and 2006, Rome Savings had a risk-based total capital ratio
of 27.73% and 28.9%, respectively.

Rome Bancorp
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.

---



Rome Bancorp
is contractually obligated to make payments as follows:

|                                           |  |       |         |                    |   |                         |  |           |        |                     |   |       |  |   |       | 
|------------------------------------------ |  | ----- | ------- | ------------------ | - | ----------------------- |  | --------- | ------ | ------------------- | - | ----- |  | - | ----- | 
|                                           |  |       |         |                    |   | Payments due by Period: |  |           |       
|                                           |  |       |         |                    |   |                         |  |           |       
|                                           |  | Total |         | Less than 
 1 year |   | 1-3 years               |  | 3-5 years |        | More than 
 5 years |  
|                                           |  |       |         |                    |   |                         |  |           |        |                     |  
|Time deposits                              |  | $     | 73,209  |                    | $ | 46,446                  |  | $         | 23,101 |                     | $ | 3,662 |  |   |      | 
|Federal Home Loan Bank borrowings          |  |       | 40,333  |                    |   | 25,709                  |  |           | 11,647 |                     |   | 1,765 |  | $ | 1,212 | 
|Software maintenance and service contracts |  |       | 1,207   |                    |   | 465                     |  |           | 707    |                     |   | 35    |  |   |      | 
|                                           |  |       |         |                    |   |                         |  |           |        |                     |   |       |  |   |       | 
|Total contractual obligations              |  | $     | 114,749 |                    | $ | 72,620                  |  | $         | 35,455 |                     | $ | 5,462 |  | $ | 1,212 | 
|                                           |  |       |         |                    |   |                         |  |           |        |                     |   |       |  |   |       | 

Off-Balance Sheet Arrangements

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

Recently Adopted
Accounting Pronouncements

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

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

Rome Bancorp adopted FASB Interpretation 48, Accounting for Uncertainty in Income Taxes
(FIN 48), as of January 1, 2007. A tax position is recognized as a
benefit only if it is more likely than not that the tax position would be
sustained in a tax examination, with a tax examination being presumed to occur.
The amount recognized is the largest amount of tax benefit that is greater than
50% likely of being realized on examination. For tax positions not meeting the
more likely than not test, no tax benefit is recorded. The adoption had no
effect on Rome Bancorps financial statements.

---



Newly Issued But Not Yet Effective Accounting
Pronouncements

In September
2006, the FASB issued Statement No. 157, Fair Value Measurements. This
Statement defines fair value, establishes a framework for measuring fair value
and expands disclosures about fair value measurements. This Statement
establishes a fair value hierarchy about the assumptions used to measure fair
value and clarifies assumptions about risk and the effect of a restriction on
the sale or use of an asset. The standard is effective for fiscal years
beginning after November 15, 2007. The impact of adoption was not material.

In February
2007, the FASB issued Statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities. The standard provides companies with an option
to report selected financial assets and liabilities at fair value and
establishes presentation and disclosure requirements designed to facilitate
comparisons between companies that choose different measurement attributes for
similar types of assets and liabilities. The new standard is effective for Rome
Bancorp on January 1, 2008. Rome Bancorp did not elect the fair value option
for any financial assets or financial liabilities as of January 1, 2008. In
February 2008, the FASB issued Staff Position (FSP) 157-2, Effective Date of
FASB Statement No. 157. This FSP delays the effective date of FAS 157 for all
non-financial assets and non-financial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually) to
fiscal years beginning after November 15, 2008, and interim periods within
those fiscal years. The impact of adoption was not material.

In September
2006, the FASB Emerging Issues Task Force finalized Issue No. 06-4, Accounting
for Deferred Compensation and Postretirement Benefit Aspects of Endorsement
Split-Dollar Life Insurance Arrangements. This issue requires that a liability
be recorded during the service period when a split-dollar life insurance
agreement continues after participants employment or retirement. The required
accrued liability will be based on either the post-employment benefit cost for
the continuing life insurance or based on the future death benefit depending on
the contractual terms of the underlying agreement. This issue is effective for
fiscal years beginning after December 15, 2007. The impact of adoption was not
material.

MARKET FOR THE COMPANYS COMMON STOCK

Rome Bancorps
common stock is traded on the Nasdaq Global Market under the symbol ROME.

At December
31, 2007, the last trading date in Rome Bancorps fiscal year, the common stock
of Rome Bancorp closed at $11.57 per share. At March 3, 2008, there were
7,619,015 shares of Rome Bancorps common stock outstanding, which were held of
record by approximately 2,647 registered shareholders.

The table
below shows the high and low sales price of Rome Bancorps common stock during
the periods indicated. Rome Bancorp paid cash dividends of $0.32 per share in
2007. Rome Bancorp also paid a quarterly cash dividend of $0.085 per share to
shareholders of record as of February 5, 2008. Our ability to pay dividends
depends on a number of factors including:

| |   |                                                                  
| | - | -----------------------------------------------------------------
| |  | investment
  opportunities available to the Bank or Rome Bancorp;
| |   |                                                                  
| |  | the Banks
  capital requirements;                               
| |   |                                                                  
| |  | federal laws
  and regulations;                                  
| |   |                                                                  
| |  | our
  financial results;                                         
| |   |                                                                  
| |  | tax
  considerations; and                                        
| |   |                                                                  
| |  | general
  economic conditions.                                   

---



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

|                                   |  |             |       |     |   |           |  |   |       | 
|---------------------------------- |  | ----------- | ----- | --- | - | --------- |  | - | ----- | 
|                                   |  | Price Range |      
|                                   |  |             |      
|Date                               |  | High        |       | Low |   | Dividends | 
|                                   |  |             |       |     |   |           | 
|Year ended December 31, 2007       |  |             |       |     |   |           | 
|                                  
|Quarter
  ended March 31, 2007     |  | $           | 12.82 |     | $ | 12.00     |  | $ | 0.08  | 
|Quarter
  ended June 30, 2007      |  |             | 12.59 |     |   | 12.00     |  |   | 0.08  | 
|Quarter
  ended September 30, 2007 |  |             | 12.46 |     |   | 11.00     |  |   | 0.08  | 
|Quarter
  ended December 31, 2007  |  |             | 11.91 |     |   | 11.00     |  |   | 0.08  | 
|                                   |  |             |       |     |   |           |  |   |       | 
|Year ended December 31, 2006       |  |             |       |     |   |           |  |   |       | 
|                                   |  |             |       |     |   |           |  |   |       | 
|Quarter
  ended March 31, 2006     |  | $           | 12.10 |     | $ | 10.75     |  | $ | 0.075 | 
|Quarter
  ended June 30, 2006      |  |             | 12.95 |     |   | 11.71     |  |   | 0.075 | 
|Quarter ended
  September 30, 2006 |  |             | 13.00 |     |   | 12.11     |  |   | 0.075 | 
|Quarter
  ended December 31, 2006  |  |             | 12.96 |     |   | 12.46     |  |   | 0.075 | 

---



Performance Graph. The graph below compares Rome
Bancorps total cumulative shareholder return, including reinvestment of
dividends and adjusted for stock splits, by an investor who invested $100.00 on
December 31, 2002, to December 31, 2007, to the total return by an investor who
invested $100.00 in each of the Nasdaq Composite Index (U.S. Companies) and the
Nasdaq Bank Composite Index (banks and bank holding companies, over 99% of
which are based in the United States).

(LINE GRAPH)

|                   |  |               |        |          |  |          |  |          |        |          |  |          |  |  |        |  |  |        | 
|------------------ |  | ------------- | ------ | -------- |  | -------- |  | -------- | ------ | -------- |  | -------- |  |  | ------ |  |  | ------ | 
|                   |  | Period Ending |       
|                   |  |               |       
|Index              |  | 12/31/02      |        | 12/31/03 |  | 12/31/04 |  | 12/31/05 |        | 12/31/06 |  | 12/31/07 | 
|                   |  |               |        |          |  |          |  |          |        |          |  |          | 
|Rome Bancorp, Inc. |  |               | 100.00 |          |  | 188.19   |  |          | 178.82 |          |  | 155.36   |  |  | 187.22 |  |  | 174.39 | 
|NASDAQ Bank        |  |               | 100.00 |          |  | 129.93   |  |          | 144.21 |          |  | 137.97   |  |  | 153.15 |  |  | 119.35 | 
|NASDAQ Composite   |  |               | 100.00 |          |  | 150.01   |  |          | 162.89 |          |  | 165.13   |  |  | 180.85 |  |  | 198.60 | 

---



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, 2007. 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, 2007.

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

|                                                              
|--------------------------------------------------------------
|/s/ Charles
  M. Sprock                                       
|                                                              
|Charles M.
  Sprock                                           
|Chairman of
  the Board, President and Chief Executive Officer
|March 7,
  2008                                               
|                                                              
|/s/ David C.
  Nolan                                          
|                                                              
|David C.
  Nolan                                              
|Executive
  Vice President and Chief Financial Officer        
|March 7,
  2008                                               

---



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

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

We have audited Rome
Bancorp, Inc.s internal control over financial reporting as of December 31,
2007 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, included in the accompanying
Managements Report On Internal Control Over Financial Reporting.. Our
responsibility is to express an opinion on the effectiveness of Rome Bancorp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). Those 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,
assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed
risk, 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, Rome
Bancorp, Inc. maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2007, 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 Accounting Oversight Board
(United States), the consolidated balance sheets of Rome Bancorp Inc. as of
December 31, 2007 and 2006, and the related consolidated statements of income,
shareholders equity and comprehensive income, and cash flows for each of
the three years in the period ended December 31, 2007, and our report dated March
7, 2008 expressed an unqualified opinion on those consolidated financial
statements.

|                                  
|----------------------------------
|/s/ Crowe Chizek and
  Company LLC
|                                  
|Crowe Chizek and Company
  LLC    
|Cleveland, Ohio                   
|                                  
|March 7, 2008                     

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM ON FINANCIAL STATEMENTS

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, 2007 and 2006 and the related consolidated
statements of income, shareholders equity and comprehensive income, and cash
flows for each of the three years in the period ended December 31, 2007. These
consolidated financial statements are the responsibility of Rome Bancorp,
Inc.s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted
our audits in accordance with the 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, 2007 and 2006 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2007, in conformity with U.S. generally accepted accounting
principles.

We have also
audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the effectiveness of Rome Bancorp, Inc.s
internal control over financial reporting as of December 31, 2007, 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 7, 2008 expressed an unqualified opinion thereon.

|                                  
|----------------------------------
|/s/ Crowe
  Chizek and Company LLC
|                                  
|Crowe Chizek
  and Company LLC    
|Cleveland,
  Ohio                 
|March 7,
  2008                   

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets

December 31, 2007 and 2006

(In thousands, except share data)

|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------- | ---- | - | ------- | -
|                                                                                                                                                                                                                                                             |  | 2007 |         | 2006 |  
|Assets                                                                                                                                                                                                                                                       |  |      |         |      |  
|Cash and due from banks                                                                                                                                                                                                                                      |  | $    | 6,978   |      | $ | 6,769   |  
|Federal funds sold and other short-term
  investments                                                                                                                                                                                                        |  |      | 1,040   |      |   | 1,089   |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Total cash and cash
equivalents                                                                                                                                                                                                                              |  |      | 8,018   |      |   | 7,858   |  
|Securities available for sale, at fair
  value                                                                                                                                                                                                               |  |      | 2,674   |      |   | 4,319   |  
|Securities held to maturity (fair value of
  $1,195 and $1,175 at December 31, 2007 and 2006, respectively)                                                                                                                                                  |  |      | 1,147   |      |   | 1,178   |  
|Federal Home Loan Bank stock                                                                                                                                                                                                                                 |  |      | 2,344   |      |   | 1,344   |  
|Loans                                                                                                                                                                                                                                                        |  |      | 282,952 |      |   | 264,537 |  
|Less: Allowance for loan
losses                                                                                                                                                                                                                              |  |      | (1,910  | )    |   | (1,965  | )
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Net loans                                                                                                                                                                                                                                                    |  |      | 281,042 |      |   | 262,572 |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Premises and equipment, net                                                                                                                                                                                                                                  |  |      | 6,568   |      |   | 6,072   |  
|Accrued interest receivable                                                                                                                                                                                                                                  |  |      | 1,124   |      |   | 1,094   |  
|Bank-owned life insurance                                                                                                                                                                                                                                    |  |      | 8,598   |      |   | 8,215   |  
|Other assets                                                                                                                                                                                                                                                 |  |      | 6,616   |      |   | 6,107   |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Total assets                                                                                                                                                                                                                                                 |  | $    | 318,131 |      | $ | 298,759 |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Liabilities and Shareholders
Equity                                                                                                                                                                                                                         |  |      |         |      |   |         |  
|Liabilities:                                                                                                                                                                                                                                                 |  |      |         |      |   |         |  
|Deposits:                                                                                                                                                                                                                                                    |  |      |         |      |   |         |  
|Non-interest bearing                                                                                                                                                                                                                                         |  | $    | 29,509  |      | $ | 28,042  |  
|Savings                                                                                                                                                                                                                                                      |  |      | 79,750  |      |   | 84,089  |  
|Money market                                                                                                                                                                                                                                                 |  |      | 7,406   |      |   | 5,123   |  
|Time                                                                                                                                                                                                                                                         |  |      | 73,209  |      |   | 66,401  |  
|Other interest
bearing                                                                                                                                                                                                                                       |  |      | 13,158  |      |   | 12,350  |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Total deposits                                                                                                                                                                                                                                               |  |      | 203,032 |      |   | 196,005 |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Borrowings                                                                                                                                                                                                                                                   |  |      | 40,333  |      |   | 20,172  |  
|Other liabilities                                                                                                                                                                                                                                            |  |      | 5,729   |      |   | 5,551   |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Total liabilities                                                                                                                                                                                                                                            |  |      | 249,094 |      |   | 221,728 |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Commitments and contingencies
(Note 14)                                                                                                                                                                                                                      |  |      |        |      |   |        |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Shareholders equity:                                                                                                                                                                                                                                        |  |      |         |      |   |         |  
|Common stock, $.01 par value;
authorized:
  30,000,000 shares; issued: 9,891,515 shares; outstanding: 7,788,415 shares at
  December 31, 2007; authorized: 30,000,000 shares; issued: 9,726,572 shares;
  outstanding: 8,461,572 shares at December 31, 2006 |  |      | 99      |      |   | 97      |  
|Additional paid-in
capital                                                                                                                                                                                                                                   |  |      | 61,884  |      |   | 60,712  |  
|Retained earnings                                                                                                                                                                                                                                            |  |      | 36,179  |      |   | 35,643  |  
|Treasury stock, at cost;
2,103,100 shares
  at December 31, 2007 and 1,265,000 shares at December 31, 2006                                                                                                                                                   |  |      | (26,488 | )    |   | (16,307 | )
|Accumulated other comprehensive
income
  (loss)                                                                                                                                                                                                              |  |      | (376    | )    |   | (633    | )
|Unallocated shares of employee
stock ownership plan (ESOP) 370,206 shares at December 31, 2007; 416,171 shares at
  December 31, 2006                                                                                                                        |  |      | (2,261  | )    |   | (2,481  | )
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Total shareholders
equity                                                                                                                                                                                                                                   |  |      | 69,037  |      |   | 77,031  |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  
|Total liabilities and
shareholders equity                                                                                                                                                                                                                   |  | $    | 318,131 |      | $ | 298,759 |  
|                                                                                                                                                                                                                                                             |  |      |         |      |   |         |  

See
accompanying notes to consolidated financial statements.

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Income

Years ended December 31, 2007, 2006 and 2005

(In thousands, except share data)

|                                                      |  |      |        |      |   |        |  |   |        | 
|----------------------------------------------------- |  | ---- | ------ | ---- | - | ------ |  | - | ------ | 
|                                                      |  | 2007 |        | 2006 |   | 2005   | 
|Interest income:                                      |  |      |        |      |   |        |  |   |        | 
|Loans                                                 |  | $    | 17,481 |      | $ | 16,330 |  | $ | 14,993 | 
|Securities                                            |  |      | 386    |      |   | 463    |  |   | 716    | 
|Other short-term
investments                          |  |      | 52     |      |   | 664    |  |   | 826    | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Total interest income                                 |  |      | 17,919 |      |   | 17,457 |  |   | 16,535 | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Interest expense:                                     |  |      |        |      |   |        |  |   |        | 
|Deposits                                              |  |      | 3,492  |      |   | 3,090  |  |   | 2,643  | 
|Borrowings                                            |  |      | 1,306  |      |   | 431    |  |   | 393    | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Total interest
expense                                |  |      | 4,798  |      |   | 3,521  |  |   | 3,036  | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Net interest income                                   |  |      | 13,121 |      |   | 13,936 |  |   | 13,499 | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Provision for loan losses                             |  |      | 50     |      |   | 147    |  |   | 115    | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Net interest income after
provision for
  loan losses |  |      | 13,071 |      |   | 13,789 |  |   | 13,384 | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Non-interest income:                                  |  |      |        |      |   |        |  |   |        | 
|Service charges                                       |  |      | 1,654  |      |   | 1,559  |  |   | 1,585  | 
|Net gain on
securities                                |  |      | 11     |      |   | 11     |  |   | 105    | 
|Other income                                          |  |      | 498    |      |   | 326    |  |   | 336    | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Total non-interest
income                             |  |      | 2,163  |      |   | 1,896  |  |   | 2,026  | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Non-interest expense:                                 |  |      |        |      |   |        |  |   |        | 
|Salaries and employee
benefits                        |  |      | 5,887  |      |   | 6,986  |  |   | 5,359  | 
|Building, occupancy and
equipment                     |  |      | 1,896  |      |   | 1,824  |  |   | 1,670  | 
|Directors fees                                       |  |      | 184    |      |   | 219    |  |   | 228    | 
|Marketing                                             |  |      | 176    |      |   | 247    |  |   | 312    | 
|Outside consulting and
professional fees              |  |      | 712    |      |   | 792    |  |   | 640    | 
|ATM service fees                                      |  |      | 236    |      |   | 210    |  |   | 251    | 
|Supplies                                              |  |      | 197    |      |   | 172    |  |   | 160    | 
|Other                                                 |  |      | 1,284  |      |   | 1,409  |  |   | 1,357  | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Total non-interest
expense                            |  |      | 10,572 |      |   | 11,859 |  |   | 9,977  | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Income before income tax
expense                      |  |      | 4,662  |      |   | 3,826  |  |   | 5,433  | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Income tax expense                                    |  |      | 1,608  |      |   | 1,338  |  |   | 2,031  | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Net income                                            |  | $    | 3,054  |      | $ | 2,488  |  | $ | 3,402  | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Basic earnings per share                              |  | $    | 0.40   |      | $ | 0.29   |  | $ | 0.37   | 
|                                                      |  |      |        |      |   |        |  |   |        | 
|Diluted earnings per share                            |  | $    | 0.39   |      | $ | 0.29   |  | $ | 0.36   | 
|                                                      |  |      |        |      |   |        |  |   |        | 

See accompanying notes to
consolidated financial statements.

---



|                                                                            
|----------------------------------------------------------------------------
|ROME BANCORP, INC. AND SUBSIDIARY                                           
|Consolidated
  Statements of Shareholders Equity
  and Comprehensive Income
|Years
  ended December 31, 2007, 2006 and 2005                              
|(In
  thousands, except share data)                                         

|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|-------------------------------------------------------------------------------------- |  | -------------- | -- | ------------------------------ | - | ------------------- | - | ---------------- | ------ | ------------------------------------------------- | - | --------------------------- | - | ----------------------- | ---- | ----- | - | ------ | - | - | --- | - | - | ------- | -
|                                                                                       |  | Common
  stock |    | Additional
  paid-in
  capital |   | Retained
  earnings |   | Treasury
  Stock |        | Accumulated
  other
  comprehensive income (loss) |   | Unallocated
  ESOP
  shares |   | Unearned
  compensation |      | Total |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |  
|Balances at December 31, 2004                                                          |  | $              | 33 |                                | $ | 10,756              |   | $                | 34,627 |                                                   | $ | (8,963                      | ) | $                       | 391  |       | $ | (560   | ) | $ | (26 | ) | $ | 36,258  |  
|Comprehensive income:                                                                  |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Net income                                                                             |  |                |   |                                |   |                    |   |                  | 3,402  |                                                   |   |                            |   |                         |     |       |   |       |   |   |    |   |   | 3,402   |  
|Other comprehensive loss                                                               |  |                |   |                                |   |                    |   |                  |       |                                                   |   |                            |   |                         | (306 | )     |   |       |   |   |    |   |   | (306    | )
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Total comprehensive income                                                             |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 3,096   |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Proceeds of common stock offering and
  conversion of existing shares, net of expenses |  |                | 64 |                                |   | 57,758              |   |                  |       |                                                   |   |                            |   |                         |     |       |   | (2,360 | ) |   |    |   |   | 55,462  |  
|Retirement of 1,747,266 treasury shares                                                |  |                |   |                                |   | (8,963              | ) |                  |       |                                                   |   | 8,963                       |   |                         |     |       |   |       |   |   |    |   |   |        |  
|Exercise of stock options and related tax
  benefit 35,882 shares, net                 |  |                |   |                                |   | 130                 |   |                  |       |                                                   |   |                            |   |                         |     |       |   |       |   |   |    |   |   | 130     |  
|Amortization and tax benefits of unearned
  compensation                               |  |                |   |                                |   | 73                  |   |                  |       |                                                   |   |                            |   |                         |     |       |   |       |   |   | 26  |   |   | 99      |  
|Dividends paid ($0.265 per share)                                                      |  |                |   |                                |   |                    |   |                  | (2,046 | )                                                 |   |                            |   |                         |     |       |   |       |   |   |    |   |   | (2,046  | )
|ESOP shares released for allocation (45,965
  shares)                                  |  |                |   |                                |   | 259                 |   |                  |       |                                                   |   |                            |   |                         |     |       |   | 220    |   |   |    |   |   | 479     |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Balances at December 31, 2005                                                          |  |                | 97 |                                |   | 60,013              |   |                  | 35,983 |                                                   |   |                            |   |                         | 85   |       |   | (2,700 | ) |   |    |   |   | 93,478  |  
|Comprehensive income:                                                                  |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Net income                                                                             |  |                |   |                                |   |                    |   |                  | 2,488  |                                                   |   |                            |   |                         |     |       |   |       |   |   |    |   |   | 2,488   |  
|Other comprehensive loss                                                               |  |                |   |                                |   |                    |   |                  |       |                                                   |   |                            |   |                         | (42  | )     |   |       |   |   |    |   |   | (42     | )
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Total comprehensive income                                                             |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 2,446   |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Adjustment to initially apply SFAS No. 158, net
  of tax (Note 1)                      |  |                |   |                                |   |                    |   |                  |       |                                                   |   |                            |   |                         | (676 | )     |   |       |   |   |    |   |   | (676    | )
|Purchase of 1,383,000 treasury shares                                                  |  |                |   |                                |   |                    |   |                  |       |                                                   |   | (17,818                     | ) |                         |     |       |   |       |   |   |    |   |   | (17,818 | )
|Exercise of stock options and related tax
  benefit 48,444 shares, net                 |  |                |   |                                |   | 245                 |   |                  |       |                                                   |   |                            |   |                         |     |       |   |       |   |   |    |   |   | 245     |  
|Grant of restricted shares                                                             |  |                |   |                                |   | (1,511              | ) |                  |       |                                                   |   | 1,511                       |   |                         |     |       |   |       |   |   |    |   |   |        |  
|Amortization of stock option and restricted
  share grants                             |  |                |   |                                |   | 1,616               |   |                  |       |                                                   |   |                            |   |                         |     |       |   |       |   |   |    |   |   | 1,616   |  
|Dividends paid ($0.30 per share)                                                       |  |                |   |                                |   |                    |   |                  | (2,622 | )                                                 |   |                            |   |                         |     |       |   |       |   |   |    |   |   | (2,622  | )
|ESOP shares released for allocation (45,965
  shares)                                  |  |                |   |                                |   | 349                 |   |                  |       |                                                   |   |                            |   |                         |     |       |   | 219    |   |   |    |   |   | 568     |  
|Adjustment to initially apply SAB No. 108 (Note
  1)                                   |  |                |   |                                |   |                    |   |                  | (206   | )                                                 |   |                            |   |                         |     |       |   |       |   |   |    |   |   | (206    | )
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Balances at December 31, 2006                                                          |  |                | 97 |                                |   | 60,712              |   |                  | 35,643 |                                                   |   | (16,307                     | ) |                         | (633 | )     |   | (2,481 | ) |   |    |   |   | 77,031  |  
|Comprehensive income:                                                                  |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Net income                                                                             |  |                |   |                                |   |                    |   |                  | 3,054  |                                                   |   |                            |   |                         |     |       |   |       |   |   |    |   |   | 3,054   |  
|Other comprehensive income                                                             |  |                |   |                                |   |                    |   |                  |       |                                                   |   |                            |   |                         | 257  |       |   |       |   |   |    |   |   | 257     |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Total comprehensive income                                                             |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   | 3,311   |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Purchase of 838,100 treasury shares                                                    |  |                |   |                                |   |                    |   |                  |       |                                                   |   | (10,181                     | ) |                         |     |       |   |       |   |   |    |   |   | (10,181 | )
|Exercise of stock options and related tax
  benefit 164,943 shares, net                |  |                | 2  |                                |   | 510                 |   |                  |       |                                                   |   |                            |   |                         |     |       |   |       |   |   |    |   |   | 512     |  
|Amortization and tax benefits of stock option
  and restricted share grants            |  |                |   |                                |   | 325                 |   |                  |       |                                                   |   |                            |   |                         |     |       |   |       |   |   |    |   |   | 325     |  
|Dividends paid ($0.32 per share)                                                       |  |                |   |                                |   |                    |   |                  | (2,518 | )                                                 |   |                            |   |                         |     |       |   |       |   |   |    |   |   | (2,518  | )
|ESOP shares released for allocation (45,965
  shares)                                  |  |                |   |                                |   | 337                 |   |                  |       |                                                   |   |                            |   |                         |     |       |   | 220    |   |   |    |   |   | 557     |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  
|Balances at December 31, 2007                                                          |  | $              | 99 |                                | $ | 61,884              |   | $                | 36,179 |                                                   | $ | (26,488                     | ) | $                       | (376 | )     | $ | (2,261 | ) | $ |    |   | $ | 69,037  |  
|                                                                                       |  |                |    |                                |   |                     |   |                  |        |                                                   |   |                             |   |                         |      |       |   |        |   |   |     |   |   |         |  

See accompanying notes to
consolidated financial statements.

---



ROME
BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

Years ended December 31, 2007, 2006 and 2005

(In thousands)

|                                                                                     |  |      |         |      |   |         |   |   |         |  
|------------------------------------------------------------------------------------ |  | ---- | ------- | ---- | - | ------- | - | - | ------- | -
|                                                                                     |  | 2007 |         | 2006 |   | 2005    |  
|Cash flows from operating activities:                                                |  |      |         |      |   |         |   |   |         |  
|Net income                                                                           |  | $    | 3,054   |      | $ | 2,488   |   | $ | 3,402   |  
|Adjustments to reconcile net income to net cash
provided by operating
  activities:  |  |      |         |      |   |         |   |   |         |  
|Depreciation                                                                         |  |      | 587     |      |   | 548     |   |   | 515     |  
|Increase in accrued interest receivable                                              |  |      | (30     | )    |   | (41     | ) |   | (51     | )
|Provision for loan losses                                                            |  |      | 50      |      |   | 147     |   |   | 115     |  
|Net gain on securities transactions                                                  |  |      | (11     | )    |   | (11     | ) |   | (105    | )
|Gain on sales of loans                                                               |  |      | (18     | )    |   | (15     | ) |   | (20     | )
|Proceeds from sale of loans                                                          |  |      | 1,509   |      |   | 1,114   |   |   | 1,715   |  
|Origination of loans for sale                                                        |  |      | (1,491  | )    |   | (1,099  | ) |   | (1,695  | )
|Net premium amortization on securities                                               |  |      | (5      | )    |   | (9      | ) |   | (7      | )
|Increase in cash surrender value of Bank-owned
life insurance                        |  |      | (383    | )    |   | (215    | ) |   |        |  
|(Gain) loss on sale of other real estate                                             |  |      |        |      |   | 13      |   |   | (15     | )
|Loss on sale of fixed assets                                                         |  |      |        |      |   | 3       |   |   |        |  
|Increase in other liabilities                                                        |  |      | 178     |      |   | 436     |   |   | 269     |  
|Deferred income tax (benefit) expense                                                |  |      | (37     | )    |   | (762    | ) |   | 282     |  
|Increase in other assets                                                             |  |      | (65     | )    |   | (512    | ) |   | (112    | )
|Allocation of ESOP shares                                                            |  |      | 557     |      |   | 568     |   |   | 479     |  
|Amortization of stock-based compensation                                             |  |      | 313     |      |   | 1,616   |   |   | 26      |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Net
  cash provided by operating activities                                          |  |      | 4,208   |      |   | 4,269   |   |   | 4,798   |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Cash flows from investing activities:                                                |  |      |         |      |   |         |   |   |         |  
|Net increase in loans                                                                |  |      | (18,572 | )    |   | (10,702 | ) |   | (20,678 | )
|Proceeds from sales of securities available for
sale                                 |  |      | 357     |      |   | 365     |   |   | 1,754   |  
|Purchase of bank-owned life
  insurance                                              |  |      |        |      |   | (8,000  | ) |   |        |  
|Proceeds from maturities and principal reductions
of securities
  available for sale |  |      | 1,209   |      |   | 4,938   |   |   | 4,967   |  
|Purchases of securities available for
sale                                           |  |      | (1,000  | )    |   | (568    | ) |   | (55     | )
|Purchases of securities held to maturity                                             |  |      |        |      |   | (1,000  | ) |   |        |  
|Proceeds from maturities and principal reductions
of securities held
  to maturity   |  |      | 34      |      |   | 1,254   |   |   | 171     |  
|Proceeds from sale of real estate owned                                              |  |      |        |      |   | 41      |   |   | 98      |  
|Purchases of premises and equipment, net                                             |  |      | (1,077  | )    |   | (2,114  | ) |   | (507    | )
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Net cash used in investing activities                                                |  |      | (19,049 | )    |   | (15,786 | ) |   | (14,250 | )
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Cash flows from financing activities:                                                |  |      |         |      |   |         |   |   |         |  
|Increase (decrease) in time deposits                                                 |  |      | 6,808   |      |   | 103     |   |   | (2,656  | )
|Increase (decrease) in other deposits                                                |  |      | 219     |      |   | (5,566  | ) |   | (4,663  | )
|Stock offering and conversion                                                        |  |      |        |      |   |        |   |   | 55,462  |  
|Repayments of borrowings                                                             |  |      | (3,239  | )    |   | (2,402  | ) |   | (12,469 | )
|Advances on borrowings                                                               |  |      | 23,400  |      |   | 13,200  |   |   | 3,000   |  
|Purchase of treasury stock                                                           |  |      | (10,181 | )    |   | (17,818 | ) |   |        |  
|Dividends                                                                            |  |      | (2,518  | )    |   | (2,622  | ) |   | (2,046  | )
|Exercise of stock options and related tax
benefits                                   |  |      | 512     |      |   | 245     |   |   | 130     |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Net cash provided by (used in) financing
  activities                                |  |      | 15,001  |      |   | (14,860 | ) |   | 36,758  |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Net increase (decrease) in cash and cash equivalents                                 |  |      | 160     |      |   | (26,377 | ) |   | 27,306  |  
|Cash and cash equivalents at beginning of year                                       |  |      | 7,858   |      |   | 34,235  |   |   | 6,929   |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  
|Cash and cash equivalents at end of year                                             |  | $    | 8,018   |      | $ | 7,858   |   | $ | 34,235  |  
|                                                                                     |  |      |         |      |   |         |   |   |         |  

See accompanying notes to consolidated financial statements.

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows
(continued)

Years ended December 31, 2007, 2006 and 2005

|                                          |  |      |       |      |   |       |  |   |       | 
|----------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|(In thousands)                            | 
|                                          |  |      |       |      |   |       |  |   |       | 
|                                          |  | 2007 |       | 2006 |   | 2005  | 
|Other
 non-cash activities:               |  |      |       |      |   |       | 
|Retirement of 1,747,266
 treasury shares  |  | $    |      |      | $ |      |  | $ | 8,963 | 
|Transfers from loans to real estate owned |  |      | 52    |      |   | 99    |  |   | 83    | 
|Cash paid
 during the period for:         |  |      |       |      |   |       |  |   |       | 
|Interest                                  |  |      | 4,802 |      |   | 3,517 |  |   | 3,044 | 
|Income taxes                              |  |      | 1,056 |      |   | 1,940 |  |   | 1,850 | 

See
accompanying notes to consolidated financial statements.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Business                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Rome Bancorp, Inc. (the
 Company) is a registered savings and loan 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 five branches in Oneida County of New York State.
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(2) | Summary
 of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                     | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                         | The consolidated financial
 statements have been prepared in conformity with accounting principles
 generally accepted in the United States of America. Amounts in the prior
 years consolidated financial statements are reclassified when necessary to
 conform with the current years presentation. A description of the
 significant accounting policies is presented below. To prepare financial
 statements in conformity with accounting principles generally accepted in the
 United States of America (U.S. generally accepted accounting principles),
 management makes estimates and assumptions based on the available
 information. Management is required to make estimates and assumptions that
 affect the reported amounts of assets and liabilities as of the date of the
 balance sheet and disclosures of contingent assets and liabilities and the
 reported amounts of revenues and expenses for the period. Significant estimates
 include the allowance for loan losses, valuation of securities, deferred tax
 assets and employee benefit obligations. Actual results could differ from
 those estimates.
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                         | The consolidated financial
 statements include the accounts of the Rome Bancorp, Inc. and its
 wholly-owned subsidiary. All significant inter-company accounts and
 transactions are eliminated in consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                     | Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                         | The Company classifies its
 debt securities as either available-for-sale or held-to-maturity as the
 Company does not hold any securities considered to be trading.
 Held-to-maturity securities are those debt securities the Company has the
 ability and intent to hold until maturity. All other debt securities are
 classified as available for sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                         | Held-to-maturity
 securities are recorded at amortized cost. Available-for-sale securities are
 recorded at fair value. Unrealized holding gains and losses, net of the
 related tax effect, on available-for-sale securities are excluded from
 earnings and reported as accumulated other comprehensive income, a component
 of shareholders equity, until realized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                         | A decline in the fair
 value of an available-for-sale or held-to-maturity security below cost that
 is deemed to be other than temporary is charged to earnings resulting in the
 establishment of a new cost basis for the security.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                         | Premiums and discounts are
 amortized or accreted over the life of the related security as an adjustment
 to yield using the interest method. Dividend and interest income are
 recognized when earned. Purchases and sales are recorded on a trade date
 basis with settlement occurring shortly thereafter. Realized gains and losses
 on securities sold are derived using the specific identification method for
 determining the cost of securities sold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) | Federal Home Loan Bank (FHLB) Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Bank is a member of
 the FHLB system. Members are required to own a certain amount of stock based
 on the level of borrowings and other factors, and may invest in additional
 amounts. FHLB stock is carried at cost, classified as a restricted security,
 and periodically evaluated for impairment based on ultimate recovery of par
 value. Both cash and stock dividends are reported as income.                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (d) | Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Loans are reported at the
 principal amount outstanding net of loans in process, net deferred loan fess
 and costs and an allowance for loan losses. Origination fees and certain
 direct origination costs related to lending activities are deferred and
 amortized over the life of the related loans. The Company has the ability and
 intent to hold its loans for the foreseeable future or until maturity or
 payoff.                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Interest on loans is
 accrued and included in income at contractual rates applied to principal
 outstanding. The accrual of interest on loans (including impaired loans) is
 generally discontinued, and previously accrued interest is reversed, when
 loan payments are 90 days or more past due, or when, by the judgment of
 management, collectibility becomes uncertain. Subsequent recognition of
 income occurs only to the extent that payment is received. Loans are
 generally returned to an accrual status when both principal and interest
 become current and the loan is determined to be performing in accordance with
 the applicable loan terms.                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (e) | Allowance for Loan Losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The allowance for loan
 losses is a valuation allowance for probable incurred credit losses. The
 allowance for loan losses is increased by the provision for loan losses
 charged to operations and is decreased by the charge-off of loans, net of
 recoveries. Loans are charged off when management determines that ultimate
 success of the loans collectibility is remote.                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Managements evaluation of
 the adequacy of the allowance considers the Companys historical loan loss
 experience, review of specific loans, current economic conditions and such
 other factors considered appropriate to estimate losses. Management uses
 presently available information to estimate probable losses on loans;
 however, future additions to the allowance may be necessary based on changes
 in estimates, assumptions or economic conditions. In addition, various
 regulatory agencies, as an integral part of their examination process,
 periodically review the Companys allowance for loan losses and may require
 the Company to recognize additions to the allowance based on their judgment
 of information available to them at the time of their examination.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The allowance consists of
 specific and general components. The specific component relates to loans that
 are individually classified as impaired or loans otherwise classified as
 substandard or doubtful. The general component covers non-classified loans
 and is based on historical loss experience adjusted for current factors.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The allowance for loan
 losses is evaluated on a quarterly basis by management in order to maintain
 the allowance at a level sufficient to absorb probable incurred loan losses
 based upon known and inherent risks in the loan portfolio.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Company estimates
 losses on impaired loans based on the present value of expected future cash
 flows (discounted at the loans effective interest rate) or the fair value of
 the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | 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
 judgment and the related factors discussed above.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (f) | Real Estate Owned                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Real estate acquired
 through foreclosure or deed in lieu of foreclosure is recorded at fair value
 less estimated costs to sell. Write-downs from cost to fair value which are
 required at the time of foreclosure are charged to the allowance for loan
 losses. Adjustments to the carrying value of such properties that result from
 subsequent declines in value are charged to operations in the period in which
 the declines occur. Operating costs associated with the properties are charged
 to expense as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (g) | Premises and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Land is carried at cost
 and buildings and improvements and furniture and equipment are carried at
 cost less accumulated depreciation and amortization. Depreciation is computed
 on the straight-line method over the estimated useful lives of the assets (7
 to 40 years for buildings and 3 to 10 years for furniture and equipment).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (h) | Employee Benefit Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | The Company maintains a
 non-contributory defined benefit pension plan that covers approximately 60%
 of all current full time employees. The Companys Board of Directors amended
 the plan in December of 2002 to cease the accrual of any further benefits.
 The benefits under the pension plan are based on the employees years of
 service and compensation. Pension expense is the net of service cost and
 interest cost, return on plan assets and amortization of gains and loses not
 immediately recognized. The Companys funding policy is to contribute
 annually at least the minimum required to meet the funding standards set
 forth under provisions of the Employee Retirement Income Security Act of
 1974.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | The Company provides
 health care and life insurance benefits to certain retired full time
 employees. The estimated costs of providing benefits are accrued over the
 years the employees render services necessary to earn those benefits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | The Company has a defined
 contribution 401(k) Savings Plan for all employees. Employees are permitted
 to contribute up to 75% of base pay to the Savings Plan, subject to certain
 limitations. The Company matches 50% of each employees contributions up to a
 limit of 3% of the employees base pay.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | The Company also sponsors
 a non-contributory Employee Stock Ownership Plan (ESOP) covering
 substantially all full time employees. The number of shares allocable to Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | 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.                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (i) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Company and its
 subsidiary file a consolidated tax return. Deferred tax assets and
 liabilities are recognized for the future tax consequences attributable to
 temporary differences between the financial statement carrying amounts of
 existing assets and liabilities and their respective tax bases. Deferred tax
 assets and liabilities are measured using enacted tax rates expected to apply
 to taxable income in the years in which those temporary differences are
 expected to be recovered or settled. The effect on deferred tax assets and
 liabilities of a change in tax rates is recognized in the period that
 includes the enactment date. The Company recognizes interest and/or penalties
 related to income tax matters in income tax expense.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (j) | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Effective January 1, 2006,
 the Company adopted Statement of Financial Accounting Standards (SFAS) No.
 123(R), Share-Based Payment, using the modified prospective transition
 method. Accordingly, the Company has recorded stock-based compensation cost
 using the fair value method starting in 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Prior to January 1, 2006,
 employee compensation expense under stock options was reported using the
 intrinsic value method; therefore no stock-based compensation cost is
 reflected in net income for the year ended December 31, 2005, as all options
 granted had an exercise price equal to or greater than the market price of
 the underlying common stock at date of grant. The following table illustrates
 the effect on net income and earnings per share if expense was measured using
 the fair value recognition provisions of FASB Statement No. 123, Accounting
 for Stock-Based compensation for the year ending December 31, 2005.                                                                                                                        

|                                                                                                                  |  |      |       |  
|----------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | -
|                                                                                                                  |  | 2005 |      
|                                                                                                                  |  |      |       |  
|                                                                                                                  |  |      |       |  
|Net income:                                                                                                       |  |      |       |  
|As reported                                                                                                       |  | $    | 3,402 |  
|                                                                                                                  |  |      |       |  
|Add: Stock based compensation expense included in

 net income, net of related tax expense                        |  |      | 17    |  
|                                                                                                                  |  |      |       |  
|Deduct: Total stock based compensation expense 
 determined under fair value method, net of related 
 tax expense |  |      | (35   | )
|                                                                                                                  |  |      |       |  
|Pro forma                                                                                                         |  | $    | 3,384 |  
|                                                                                                                  |  |      |       |  
|                                                                                                                  |  |      |       |  
|Basic earnings per share:                                                                                         |  |      |       |  
|As reported                                                                                                       |  | $    | 0.37  |  
|Pro forma                                                                                                         |  | $    | 0.37  |  
|                                                                                                                  |  |      |       |  
|Diluted earnings per share:                                                                                       |  |      |       |  
|As reported                                                                                                       |  | $    | 0.36  |  
|Pro forma                                                                                                         |  | $    | 0.36  |  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (k) | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | For purposes of reporting
 cash flows, cash and cash equivalents include cash on hand, amounts due from
 banks, and federal funds sold which represents short-term highly liquid
 investments. Net cash flows are reported for customer loan and deposit transactions,
 interest bearing deposits in other financial institutions, and federal funds
 purchased agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (l) | Financial Instruments With Off-Balance Sheet Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Companys off-balance
 sheet financial instruments are limited to commitments to extend credit and
 standby letters of credit. The Companys policy is to record such instruments
 when funded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (m) | Earnings Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Basic earnings per share
 is calculated by dividing net income by the weighted average number of common
 shares outstanding during the year. Unallocated shares held by the Companys
 ESOP and unvested RRP shares are not included in the weighted average number
 of shares outstanding. Stock options and unvested stock grants are regarded
 as common stock equivalents and are considered in earnings per share
 calculations if dilutive using the treasury stock method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (n) | Segment Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Companys operations
 are solely in the financial services industry providing traditional community
 banking services in the geographical region of Oneida County and surrounding
 areas in New York State. The Company has determined that it has no reportable
 segments as defined by SFAS No. 131, Disclosures about Segments of an
 Enterprise and Related Information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (o) | Bank Owned Life Insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Company has purchased
 life insurance policies on certain key officers and employees. Under adoption
 of EITF 06-5, which is discussed further below, Company owned life insurance
 is recorded at the amount that can be realized under the insurance contract
 at the balance sheet date, which is the cash surrender value adjusted for
 other charges or other amounts due that are probable at settlement. Prior to
 the adoption of EITF 06-5, the Company recorded owned life insurance at its
 cash surrender value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | In September 2006, the
 FASB Emerging Issues Task Force finalized Issue No. 06-5, Accounting for
 Purchases of Life Insurance  Determining the Amount That Could be Realized
 in Accordance with FASB Technical Bulletin No 85-7 (Accounting for Purchases
 of Life Insurance. This Issue requires that a policyholder consider
 contractual terms of a life insurance policy in determining the amount that
 could be realized under the insurance contract. It also requires that if the
 contract provides for a greater surrender value if all individual policies in
 a group are surrendered at the same time, that the surrender value be
 determined based on the assumption that the policies will be surrendered on
 an individual basis. Lastly, the Issue requires disclosure when there are
 contractual restrictions on the Companys ability to surrender a policy. The
 adoption of EITF 06-5 on January 1, 2007 had no impact on the Companys
 financial condition or results of operations.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (p) | Recently Adopted Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Effective January 1, 2006,
 the Company adopted Statement of Financial Accounting Standards (SFAS) No.
 123(R), Share-Based Payment. See the discussion above under Stock Option Plan
 for further discussion of the effect of adopting this standard.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | In September 2006, the
 Securities and Exchange Commission (SEC) released Staff Accounting Bulletin
 No. 108, Considering the Effects of Prior Year Misstatements when Quantifying
 Misstatements in Current Year Financial Statements (SAB 108),which was effective for fiscal years
 ending on or after November 15, 2006. SAB 108 provides guidance on how the
 effects of prior-year uncorrected financial statement misstatements should be
 considered in quantifying a current year misstatement. SAB 108 required
 public companies to quantify misstatements using both an income statement
 (rollover) and balance sheet (iron curtain) approach and evaluate whether
 either approach results in a misstatement that, when all relevant
 quantitative and qualitative factors are considered, is material. If prior
 year errors that had been previously considered immaterial now are considered
 material based on either approach, no restatement is required so long as
 management properly applied its previous approach and all relevant facts and
 circumstances were considered. Adjustments considered immaterial in prior
 years under the method previously used, but now considered material under the
 dual approach required by SAB 108, are to be recorded upon initial adoption
 of SAB 108. The amount so recorded is shown as a cumulative effect adjustment
 and is recorded in opening retained earnings as of January 1, 2006. The
 Company recorded a cumulative effect adjustment that decreased retained
 earnings in the amount of $206,000, which was comprised of a reduction of
 reserves for income and franchise taxes in the amount of $204,000, offset by
 corrections to increase payroll and benefit accruals in the amount of
 $410,000, net of taxes.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The Company adopted FASB
 Interpretation 48, Accounting for Uncertainty in Income Taxes (FIN 48), as
 of January 1, 2007. A tax position is recognized as a benefit only if it is
 more likely than not that the tax position would be sustained in a tax
 examination, with a tax examination being presumed to occur. The amount
 recognized is the largest amount of tax benefit that is greater than 50%
 likely of being realized on examination. For tax positions not meeting the
 more likely than not test, no tax benefit is recorded. The adoption had no
 affect on the Companys financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (q) | Newly Issued But Not Yet Effective Accounting
 Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | In September 2006, the
 FASB issued Statement No. 157, Fair Value Measurements. This Statement
 defines fair value, establishes a framework for measuring fair value and
 expands disclosures about fair value measurements. This Statement establishes
 a fair value hierarchy about the assumptions used to measure fair value and
 clarifies assumptions about risk and the effect of a restriction on the sale
 or use of an asset. The standard is effective for fiscal years beginning
 after November 15, 2007. The impact of adoption was not material. In February
 2008, the FASB issued Staff Position (FSP) 157- 2, Effective Date of FASB
 Statement No. 157. This FSP delays the effective date of FAS 157 for all
 non-financial assets and non-financial liabilities, except those that are
 recognized or disclosed at fair value on a recurring basis (at least
 annually) to fiscal years beginning after November 15, 2008, and interim
 periods within those fiscal years. The impact of adoption is not expected to
 be material.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | In February 2007, the FASB
 issued Statement No. 159, The Fair Value Option for Financial Assets and
 Financial Liabilities. The standard provides companies with an option to
 report selected financial assets and liabilities at fair value and
 establishes presentation and disclosure requirements designed to facilitate
 comparisons between                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | companies that choose
 different measurement attributes for similar types of assets and liabilities.
 The new standard is effective for the Company on January 1, 2008. The Company
 did not elect the fair value option for any financial assets or financial
 liabilities as of January 1, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | In September
 2006, the FASB Emerging Issues Task Force finalized Issue No. 06-4,
 Accounting for Deferred Compensation and Postretirement Benefit Aspects of
 Endorsement Split-Dollar Life Insurance Arrangements. This issue requires
 that a liability be recorded during the service period when a split-dollar
 life insurance agreement continues after participants employment or
 retirement. The required accrued liability will be based on either the
 post-employment benefit cost for the continuing life insurance or based on
 the future death benefit depending on the contractual terms of the underlying
 agreement. This issue is effective for fiscal years beginning after December
 15, 2007. The impact of adoption was not material.

---



Rome Bancorp, Inc
and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

|    |           
|--- | ----------
|(3) | Securities

| |                                                       |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
| | ----------------------------------------------------- |  | ----------------- | ----- | -------------------------- | - | --------------------------- |  | ------------ | -- |  | - | ----- | 
| | Securities are summarized as
 follows (In thousands): |  |                   |       |                            |   |                             |  |              |    | 
|
| |                                                       |  |                   |      
| |                                                       |  | December 31, 2007 |      
| |                                                       |  |                   |      
| |                                                       |  | Amortized 
 Cost  |       | Gross 
 unrealized 
 gains |   | Gross 
 unrealized 
 losses |  | Fair 
 value |   
| |                                                       |  |                   |      
| | Available-for-sale:                                   |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
| | State and municipal obligations                       |  | $                 | 1,255 |                            | $ | 29                          |  | $            |   |  | $ | 1,284 | 
| | Mortgage-backed securities:                           |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
| | FNMA                                                  |  |                   | 45    |                            |   |                            |  |              |   |  |   | 45    | 
| | FHLMC                                                 |  |                   | 259   |                            |   | 2                           |  |              |   |  |   | 261   | 
| |                                                       |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
|
| | Total debt securities                                 |  |                   | 1,559 |                            |   | 31                          |  |              |   |  |   | 1,590 | 
|
| | Equity and other securities                           |  |                   | 1,137 |                            |   |                            |  |              | 53 |  |   | 1,084 | 
| |                                                       |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
| |                                                       |  | $                 | 2,696 |                            | $ | 31                          |  | $            | 53 |  | $ | 2,674 | 
| |                                                       |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
|
| | Held-to-maturity:                                     |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
| | U.S. Government securities                            |  | $                 | 1,001 |                            | $ | 47                          |  | $            |   |  | $ | 1,048 | 
| | Mortgage-backed securities:                           |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
| | GNMA                                                  |  |                   | 14    |                            |   | 1                           |  |              |   |  |   | 15    | 
| | FHLMC                                                 |  |                   | 1     |                            |   |                            |  |              |   |  |   | 1     | 
| | Other bonds                                           |  |                   | 131   |                            |   |                            |  |              |   |  |   | 131   | 
| |                                                       |  |                   |       |                            |   |                             |  |              |    |  |   |       | 
| |                                                       |  | $                 | 1,147 |                            | $ | 48                          |  | $            |   |  | $ | 1,195 | 
| |                                                       |  |                   |       |                            |   |                             |  |              |    |  |   |       | 

| |                                 |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
| | ------------------------------- |  | ----------------- | ----- | -------------------------- | - | --------------------------- |  | ------------ | - |  | - | ----- | 
| |                                 |  |                   |      
| |                                 |  | December 31, 2006 |      
| |                                 |  |                   |      
| |                                 |  | Amortized
 
 Cost |       | Gross 
 unrealized 
 gains |   | Gross 
 Unrealized 
 Losses |  | Fair 
 value |  
| |                                 |  |                   |       |                            |   |                             |  |              |  
| | Available-for-sale:             |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
| | U.S. Government agencies        |  | $                 | 383   |                            | $ | 14                          |  | $            |  |  | $ | 397   | 
| | State and municipal obligations |  |                   | 2,335 |                            |   | 42                          |  |              |  |  |   | 2,377 | 
| | Mortgage-backed securities      |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
| | FNMA                            |  |                   | 58    |                            |   |                            |  |              |  |  |   | 58    | 
| | FHLMC                           |  |                   | 336   |                            |   | 3                           |  |              |  |  |   | 339   | 
| |                                 |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
| | Total debt securities           |  |                   | 3,112 |                            |   | 59                          |  |              |  |  |   | 3,171 | 
|
| | Equity and other securities     |  |                   | 1,137 |                            |   | 11                          |  |              |  |  |   | 1,148 | 
| |                                 |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
| |                                 |  | $                 | 4,249 |                            | $ | 70                          |  | $            |  |  | $ | 4,319 | 
| |                                 |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
| | Held-to-maturity:               |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
| | U.S. Government securities      |  | $                 | 1,001 |                            | $ |                            |  | $            | 4 |  | $ | 997   | 
| | Mortgage-backed securities      |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
| | GNMA                            |  |                   | 28    |                            |   | 1                           |  |              |  |  |   | 29    | 
| | FHLMC                           |  |                   | 2     |                            |   |                            |  |              |  |  |   | 2     | 
| | Other bonds                     |  |                   | 147   |                            |   |                            |  |              |  |  |   | 147   | 
| |                                 |  |                   |       |                            |   |                             |  |              |   |  |   |       | 
| |                                 |  | $                 | 1,178 |                            | $ | 1                           |  | $            | 4 |  | $ | 1,175 | 
| |                                 |  |                   |       |                            |   |                             |  |              |   |  |   |       | 

---



Rome Bancorp, Inc and Subsidiary 
Notes to Consolidated Financial Statements 
Years ended December 31, 2007, 2006 and 2005

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At December
 31, 2007, the Companys investment in an equity fund had an unrealized loss
 of $53,000. This investment was first in an unrealized loss position in late
 December of 2007. The unrealized loss represents aggregate depreciation of
 7.2% of the Companys amortized cost basis in the security. Management has
 reviewed the investment and its relation to the overall market and has
 determined that at December 31, 2007 the unrealized loss was of a temporary
 nature. Accordingly, the unrealized loss on this investment has not been
 recognized into income.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | 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, 2007 |      
|                                        |  |                   |      
|                                        |  | Amortized 
 Cost  |       | Fair 
 Value |  
|                                        |  |                   |       |              |  
|Available-for-sale:                     |  |                   |       |              |   |       | 
|Due within one year                     |  | $                 | 865   |              | $ | 872   | 
|Due after one year through
 five years  |  |                   | 408   |              |   | 417   | 
|Due after five years through
 ten years |  |                   | 286   |              |   | 301   | 
|                                        |  |                   |       |              |   |       | 
|                                        |  | $                 | 1,559 |              | $ | 1,590 | 
|                                        |  |                   |       |              |   |       | 
|Held-to-maturity:                       |  |                   |       |              |   |       | 
|Due within one year                     |  | $                 |      |              | $ |      | 
|Due after one year through
 five years  |  |                   | 1,016 |              |   | 1,064 | 
|Due after five years through
 ten years |  |                   |      |              |   |      | 
|Due after ten years                     |  |                   | 131   |              |   | 131   | 
|                                        |  |                   |       |              |   |       | 
|                                        |  | $                 | 1,147 |              | $ | 1,195 | 
|                                        |  |                   |       |              |   |       | 

| |                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Gross gains
 of $11,000, $11,000 and $105,000 were realized on sales of securities in
 2007, 2006 and 2005, respectively.                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                          
| | Securities
 pledged at year end 2007 and 2006 had a carrying amount of $1.0 million and
 $1.0 million, respectively. These securities collateralize state and Treasury
 department programs. At year end 2007 and 2006, there were no holdings of
 securities of any one issuer, other than the U.S. Government and its
 agencies, in an amount greater than 10% of shareholders equity.

---



Rome Bancorp, Inc and Subsidiary 
Notes to Consolidated Financial Statements 
Years ended December 31, 2007, 2006 and 2005

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

|                                    |  |      |         |      |   |         | 
|----------------------------------- |  | ---- | ------- | ---- | - | ------- | 
|                                    |  | 2007 |         | 2006 |  
|                                    |  |      |         |      |  
|Mortgage loans:                     |  |      |         |      |   |         | 
|Residential (1-4 family)            |  | $    | 149,702 |      | $ | 135,078 | 
|Commercial                          |  |      | 49,795  |      |   | 54,493  | 
|Construction and land               |  |      | 5,258   |      |   | 2,562   | 
|                                    |  |      |         |      |   |         | 
|Total Mortgage loans                |  |      | 204,755 |      |   | 192,133 | 
|                                    |  |      |         |      |   |         | 
|                                   
|Other loans:                        |  |      |         |      |   |         | 
|Commercial                          |  |      | 29,127  |      |   | 24,189  | 
|Automobile loans                    |  |      | 16,009  |      |   | 17,779  | 
|Property improvement and
 equipment |  |      | 15,829  |      |   | 15,536  | 
|Other consumer                      |  |      | 17,232  |      |   | 14,900  | 
|                                    |  |      |         |      |   |         | 
|Total Other loans                   |  |      | 78,197  |      |   | 72,404  | 
|                                    |  |      |         |      |   |         | 
|Total Loans                         |  | $    | 282,952 |      | $ | 264,537 | 
|                                    |  |      |         |      |   |         | 

| |                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------
| | The Company
 serviced loans for third parties totaling $6,690,000 and $4,830,000 at
 December 31, 2007 and 2006 respectively.
| |                                                                                                                              
| | Changes in
 the allowance for loan losses are summarized as follows (in thousands):                                          

|                                 |  |                            |       |      |   |       |   |   |       |  
|-------------------------------- |  | -------------------------- | ----- | ---- | - | ----- | - | - | ----- | -
|                                 |  | Years ended 
 December 31, |      
|                                 |  |                            |      
|                                 |  | 2007                       |       | 2006 |   | 2005  |  
|                                 |  |                            |       |      |   |       |  
|Balance at beginning of
 period  |  | $                          | 1,965 |      | $ | 1,960 |   | $ | 2,000 |  
|Provision charged to
 operations |  |                            | 50    |      |   | 147   |   |   | 115   |  
|Loans charged off                |  |                            | (233  | )    |   | (372  | ) |   | (687  | )
|Recoveries                       |  |                            | 128   |      |   | 230   |   |   | 532   |  
|                                 |  |                            |       |      |   |       |   |   |       |  
|                                
|Balance at end of period         |  | $                          | 1,910 |      | $ | 1,965 |   | $ | 1,960 |  
|                                 |  |                            |       |      |   |       |   |   |       |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 Companys recorded investment in loans that are considered impaired totaled
 $180,000 and $318,000 at December 31, 2007 and 2006, respectively. These
 impaired loans carried allowances of $45,000 and $177,000, at December 31,
 2007 and 2006, respectively. The average recorded investment in impaired
 loans was $224,000, $228,000 and $247,000 in 2007, 2006 and 2005,
 respectively. The Company recognized no interest on impaired loans during the
 three years ended December 31, 2007.                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | The
 principal balances of loans not accruing interest amounted to $968,000 and
 $1.1 million at December 31, 2007 and 2006, respectively. Loans 90 days past
 due and accruing interest amounted to $35,000 and $8,000 at December 31, 2007
 and 2006, 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, 2007, 2006 and 2005 was
 $78,000, $75,800 and $62,500, respectively. There are no commitments to
 extend further credit on non-accruing loans.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | A
  substantial portion of the Companys loans are mortgage and consumer loans in
  Oneida County. Accordingly, the ultimate collectibility of a substantial
  portion of the Companys loan portfolio is susceptible to changes in market
  conditions in this area. A majority of the Companys loan portfolio is
  secured by real estate. Other than general economic risks, management is not
  aware of any material concentrations of credit risk to any industry or
  individual borrower.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(5) | Premises and
Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Premises and
  equipment at December 31 are summarized as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                 

|                                                 |  |      |        |      |   |        | 
|------------------------------------------------ |  | ---- | ------ | ---- | - | ------ | 
|                                                 |  | 2007 |        | 2006 |  
|                                                 |  |      |        |      |  
|Land                                             |  | $    | 2,648  |      | $ | 2,547  | 
|Buildings and improvements                       |  |      | 6,200  |      |   | 5,713  | 
|Furniture and equipment                          |  |      | 7,813  |      |   | 7,324  | 
|                                                 |  |      |        |      |   |        | 
|                                                 |  |      | 16,661 |      |   | 15,584 | 
|                                                 |  |      |        |      |   |        | 
|Less accumulated depreciation
  and amortization |  |      | 10,093 |      |   | 9,512  | 
|                                                 |  |      |        |      |   |        | 
|                                                 |  | $    | 6,568  |      | $ | 6,072  | 
|                                                 |  |      |        |      |   |        | 

|    |                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Depreciation
  and amortization expense included in building, occupancy and equipment
  expense amounted to $587,000, $548,000 and $515,000 during the years ended
  December 31, 2007, 2006 and 2005, respectively.
|    |                                                                                                                                                                                                                     
|(6) | Deposits                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                     
|    | Contractual
  maturities of time deposits at December 31 are summarized as follows (in
  thousands):                                                                                                                

|                         |  |      |        |  |  |  | 
|------------------------ |  | ---- | ------ |  |  |  | 
|                         |  | 2007 |        |  |  | 
|                         |  |      |        |  |  | 
|Within one year          |  | $    | 46,446 |  |  |  | 
|One through two years    |  |      | 18,017 |  |  |  | 
|Two through three years  |  |      | 5,084  |  |  |  | 
|Three through four years |  |      | 2,546  |  |  |  | 
|Four through five years  |  |      | 1,116  |  |  |  | 
|                         |  |      |        |  |  |  | 
|Total time deposits      |  | $    | 73,209 |  |  |  | 
|                         |  |      |        |  |  |  | 

| |                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | At December
  31, 2007 and 2006, time deposits with balances of $100,000 or more totaled
  approximately $14,969,000 and $13,110,000, respectively.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

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

|                       |  |      |       |      |   |       |  |   |       | 
|---------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|                       |  | 2007 |       | 2006 |   | 2005  | 
|                       |  |      |       |      |   |       | 
|Savings                |  | $    | 454   |      | $ | 657   |  | $ | 703   | 
|Money market           |  |      | 139   |      |   | 88    |  |   | 55    | 
|Time                   |  |      | 2,834 |      |   | 2,276 |  |   | 1,820 | 
|Other interest bearing |  |      | 65    |      |   | 69    |  |   | 65    | 
|                       |  |      |       |      |   |       |  |   |       | 
|                       |  | $    | 3,492 |      | $ | 3,090 |  | $ | 2,643 | 
|                       |  |      |       |      |   |       |  |   |       | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(7) | Borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company
  is a member of the Federal Home Loan Bank of New York (FHLB). As a member,
  the Company is required to own capital stock in the FHLB and is authorized to
  apply for advances from the FHLB. Each advance is payable at its maturity
  date with a prepayment penalty for fixed rate advances. 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):

|                                                                   |  |      |        |      |   |        | 
|------------------------------------------------------------------ |  | ---- | ------ | ---- | - | ------ | 
|                                                                   |  | 2007 |        | 2006 |  
|                                                                   |  |      |        |      |  
|Bearing interest at 3.67% fixed, due 7/3/15                        |  | $    | 2,065  |      | $ | 2,294  | 
|Bearing interest at 3.36% fixed, due 7/3/13                        |  |      | 3,341  |      |   | 3,868  | 
|Bearing interest at 3.59% fixed, due 11/26/08                      |  |      | 1,927  |      |   | 2,210  | 
|Bearing interest at 3.95% fixed, due 12/21/09                      |  |      | 5,000  |      |   |       | 
|Bearing interest at 3.90% fixed, due 12/31/09                      |  |      | 5,000  |      |   |       | 
|FHLB Overnight Line of Credit, bearing interest at 3.61% and 5.41% |  |      | 23,000 |      |   | 11,800 | 
|                                                                   |  |      |        |      |   |        | 
|                                                                   |  | $    | 40,333 |      | $ | 20,172 | 
|                                                                   |  |      |        |      |   |        | 

| |                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
  following table summarizes the combined aggregate amount of maturities for
  the above advances and notes for each of the five years after December 31,
  2007, as well as remaining maturities beyond five years:

|                             |  |   |        | 
|---------------------------- |  | - | ------ | 
|Due in one year              |  | $ | 25,709 | 
|Due one through two years    |  |   | 10,809 | 
|Due two through three years  |  |   | 838    | 
|Due three through four years |  |   | 867    | 
|Due four through five years  |  |   | 898    | 
|Due past five years          |  |   | 1,212  | 
|                             |  |   |        | 
|Total                        |  | $ | 40,333 | 
|                             |  |   |        | 

| |                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At December
  31, 2007, the Company had additional availability on its FHLB line of credit
  of $37.4 million. This line of credit is subject to periodic review and
  renewal.

---



Rome Bancorp, Inc and Subsidiary 
Notes to Consolidated Financial Statements 
Years ended December 31, 2007, 2006 and 2005

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

|                         |  |      |       |      |   |       |   |   |       | 
|------------------------ |  | ---- | ----- | ---- | - | ----- | - | - | ----- | 
|                         |  | 2007 |       | 2006 |   | 2005  |  
|                         |  |      |       |      |   |       |  
|Current:                 |  |      |       |      |   |       |   |   |       | 
|Federal                  |  | $    | 1,539 |      | $ | 1,959 |   | $ | 1,661 | 
|State                    |  |      | 106   |      |   | 141   |   |   | 88    | 
|                         |  |      |       |      |   |       |   |   |       | 
|                         |  |      | 1,645 |      |   | 2,100 |   |   | 1,749 | 
|                         |  |      |       |      |   |       |   |   |       | 
|Deferred:                |  |      |       |      |   |       |   |   |       | 
|Federal                  |  |      | (38   | )    |   | (598  | ) |   | 155   | 
|State                    |  |      | (1    | )    |   | (164  | ) |   | 127   | 
|                         |  |      |       |      |   |       |   |   |       | 
|                         |  |      | (37   | )    |   | (762  | ) |   | 282   | 
|                         |  |      |       |      |   |       |   |   |       | 
|                         |  |      |       |      |   |       |   |   |       | 
|Total income tax expense |  | $    | 1,608 |      | $ | 1,338 |   | $ | 2,031 | 
|                         |  |      |       |      |   |       |   |   |       | 
|                         |  |      |       |      |   |       |   |   |       | 

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

|                                                              |  |      |       |      |   |       |   |   |       |  
|------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | - | - | ----- | -
|                                                              |  | 2007 |       | 2006 |   | 2005  |  
|                                                              |  |      |       |      |   |       |  
|Computed expected tax
 expense                              |  | $    | 1,585 |      | $ | 1,301 |   | $ | 1,847 |  
|Increases (decreases) in income taxes resulting
from:         |  |      |       |      |   |       |   |   |       |  
|State taxes, net of Federal tax benefit                       |  |      | 71    |      |   | (16   | ) |   | 126   |  
|Tax exempt interest                                           |  |      | (33   | )    |   | (47   | ) |   | (98   | )
|Tax exempt increase in cash surrender value of life
insurance |  |      | (130  | )    |   | (73   | ) |   |      |  
|Non-deductible ESOP expense                                   |  |      | 107   |      |   | 119   |   |   | 87    |  
|Non-deductible stock option expense                           |  |      |      |      |   | 45    |   |   |      |  
|Other, net                                                    |  |      | 8     |      |   | 9     |   |   | 69    |  
|                                                              |  |      |       |      |   |       |   |   |       |  
|                                                              |  |      |       |      |   |       |   |   |       |  
|                                                              |  | $    | 1,608 |      | $ | 1,338 |   | $ | 2,031 |  
|                                                              |  |      |       |      |   |       |   |   |       |  
|                                                              |  |      |       |      |   |       |   |   |       |  
|Effective tax rate                                            |  |      | 34.5  | %    |   | 35.0  | % |   | 37.4  | %
|                                                              |  |      |       |      |   |       |   |   |       |  

---



Rome Bancorp, Inc
and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

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):

|                                                   |  |      |       |      |   |       | 
|-------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | 
|                                                   |  | 2007 |       | 2006 |  
|                                                   |  |      |       |      |  
|Deferred tax assets:                               |  |      |       |      |   |       | 
|Allowance for loan losses                          |  | $    | 654   |      | $ | 671   | 
|Accrued postretirement benefits                    |  |      | 950   |      |   | 920   | 
|Deferred compensation                              |  |      | 779   |      |   | 704   | 
|Stock-based compensation and benefits              |  |      | 607   |      |   | 642   | 
|Unrealized losses on available for sale securities |  |      | 8     |      |   |      | 
|Other                                              |  |      | 97    |      |   | 39    | 
|                                                   |  |      |       |      |   |       | 
|                                                   |  |      |       |      |   |       | 
|Total gross deferred tax assets                    |  |      | 3,095 |      |   | 2,976 | 
|                                                   |  |      |       |      |   |       | 
|                                                   |  |      |       |      |   |       | 
|Deferred tax liabilities:                          |  |      |       |      |   |       | 
|Depreciation                                       |  |      | 147   |      |   | 202   | 
|Prepaid pension cost                               |  |      | 726   |      |   | 429   | 
|Undistributed income of subsidiary                 |  |      | 51    |      |   | 69    | 
|Unrealized gains on available-for-sale securities  |  |      |      |      |   | 28    | 
|Deferred loan costs                                |  |      | 126   |      |   | 72    | 
|Other                                              |  |      | 17    |      |   | 14    | 
|                                                   |  |      |       |      |   |       | 
|                                                   |  |      |       |      |   |       | 
|Total gross deferred tax liabilities               |  |      | 1,067 |      |   | 814   | 
|                                                   |  |      |       |      |   |       | 
|Net deferred tax assets                            |  | $    | 2,028 |      | $ | 2,162 | 
|                                                   |  |      |       |      |   |       | 

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

In accordance with SFAS No. 109, the Company has not recognized
deferred tax liabilities with respect to Rome Savings Federal and state
base-year reserves of approximately $3.4 million at December 31, 2007,
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 Rome Savings stock or
certain excess distributions to the Holding Company. The unrecognized deferred tax
liability at December 31, 2007 with respect to the base-year reserve was
approximately $1.3 million.

The adoption of FIN 48 at January 1, 2007 did not have a material
impact on the Companys financial statements. At January 1, 2007 (date of
adoption) and December 31, 2007, the Company had approximately $20,000 and
$53,000, respectively, of unrecognized tax benefits and interest. As of
December 31, 2007, $53,000 of these tax benefits would affect the effective tax
rate if recognized. As of December 31, 2007, accrued interest related to
uncertain tax positions was $11,000, net of the related tax benefit. The
Company accounts for interest and

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | penalties
 related to uncertain tax positions as part of its provision for federal and
 state income taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The Company
 is subject to U.S. federal income tax as well as New York state income tax.
 The Company is no longer subject to federal examination for years prior to
 2004. The Companys 2002-2005 New York state income tax returns are presently
 under examination. The tax years 2004-2006 remain open to federal examination
 and the 2006 tax year remains open to state examination. Management does not
 anticipate the state examination will result in an unfavorable material
 change to its financial position. However, the Company does anticipate that a
 reduction in unrecognized tax benefits of up to $53,000 may occur in the next
 twelve months from the outcome of the state examination.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | A
 reconciliation of the beginning and ending amount of unrecognized tax
 benefits (excluding interest and the federal income tax benefit of
 unrecognized state tax benefits) is as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |                                                              |  |   |    | 
| | ------------------------------------------------------------ |  | - | -- | 
| | Balance at January 1, 2007                                   |  | $ | 15 | 
| | Additions based on tax positions related to the
current year |  |   |   | 
| | Additions based on tax positions of prior
years              |  |   | 49 | 
| | Reductions for tax positions of prior
years                  |  |   |   | 
| | Reductions due to statute of limitations                     |  |   |   | 
| | Settlements                                                  |  |   |   | 
| |                                                              |  |   |    | 
| | Balance at December 31, 2007                                 |  | $ | 64 | 
| |                                                              |  |   |    | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

|    |                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(9) | Pension and Postretirement Benefits                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                   
|    | The
 following table sets forth the changes in the Companys pension and
 postretirement plans accumulated benefit obligations, fair value of assets
 and funded status and amounts recognized in the consolidated balance sheets
 at December 31, 2007 and 2006:

| |                                                                     |  |                  |       |                         |   |       |   |      |        |   |   |        |  
| | ------------------------------------------------------------------- |  | ---------------- | ----- | ----------------------- | - | ----- | - | ---- | ------ | - | - | ------ | -
| |                                                                     |  | Pension benefits |       | Postretirement benefits |  
| |                                                                     |  |                  |       |                         |  
| | (in thousands)                                                      |  | 2007             |       | 2006                    |   | 2007  |   | 2006 |       
| |                                                                     |  |                  |       |                         |   |       |   |      |       
| | Change in benefit obligation:                                       |  |                  |       |                         |   |       |   |      |       
| | Benefit obligation at beginning
 of year                            |  | $                | 7,192 |                         | $ | 7,381 |   | $    | 2,354  |   | $ | 2,353  |  
| | Service cost                                                        |  |                  |      |                         |   |      |   |      | 25     |   |   | 25     |  
| | Interest cost                                                       |  |                  | 430   |                         |   | 424   |   |      | 140    |   |   | 135    |  
| | Amendments and settlements                                          |  |                  | (328  | )                       |   | (38   | ) |      |       |   |   |       |  
| | Actuarial(gain)/ loss                                               |  |                  | (104  | )                       |   | (239  | ) |      | (23    | ) |   | (134   | )
| | Benefits paid                                                       |  |                  | (220  | )                       |   | (336  | ) |      | (103   | ) |   | (70    | )
| | Participant contributions                                           |  |                  |      |                         |   |      |   |      | 47     |   |   | 45     |  
| |                                                                     |  |                  |       |                         |   |       |   |      |        |   |   |        |  
| | Benefit obligation at end of
 year                                  |  |                  | 6,970 |                         |   | 7,192 |   |      | 2,440  |   |   | 2,354  |  
| |                                                                     |  |                  |       |                         |   |       |   |      |        |   |   |        |  
| | Change in plan assets:                                              |  |                  |       |                         |   |       |   |      |        |   |   |        |  
| | Fair value of plan assets at
 beginning of year                     |  |                  | 8,326 |                         |   | 8,058 |   |      |       |   |   |       |  
| | Actual return on plan assets                                        |  |                  | 1,091 |                         |   | 642   |   |      |       |   |   |       |  
| | Employer contributions                                              |  |                  |      |                         |   |      |   |      | 56     |   |   | 25     |  
| | Settlements                                                         |  |                  | (328  | )                       |   | (38   | ) |      |       |   |   |       |  
| | Participant contributions                                           |  |                  |      |                         |   |      |   |      | 47     |   |   | 45     |  
| | Benefits paid                                                       |  |                  | (220  | )                       |   | (336  | ) |      | (103   | ) |   | (70    | )
| |                                                                     |  |                  |       |                         |   |       |   |      |        |   |   |        |  
| | Fair value of plan assets at
 end of year                           |  |                  | 8,869 |                         |   | 8,326 |   |      |       |   |   |       |  
| |                                                                     |  |                  |       |                         |   |       |   |      |        |   |   |        |  
| |                                                                     |  |                  |       |                         |   |       |   |      |        |   |   |        |  
| | Funded status at end of year
 (plan assets less benefit obligations |  | $                | 1,899 |                         | $ | 1,134 |   | $    | (2,440 | ) | $ | (2,354 | )
| |                                                                     |  |                  |       |                         |   |       |   |      |        |   |   |        |  

Assumptions
as of measurement dates: Pension September 30; Postretirement December 31:

| |                                |  |  |      |   |  |       |   |  |      |   |  |       |  
| | ------------------------------ |  |  | ---- | - |  | ----- | - |  | ---- | - |  | ----- | -
| | Discount rate                  |  |  | 6.25 | % |  | 6.125 | % |  | 6.25 | % |  | 6.125 | %
| | Expected return on plan assets |  |  | 9.00 | % |  | 9.00  | % |  |     |   |  |      |  
| | Rate of compensation increase  |  |  | N/A  |   |  | N/A   |   |  |     |   |  |      |  

Amounts
recognized in accumulated other comprehensive income (net of tax) at December
31 consist of:

| |                             |  |      |      |      |   |      |   |      |    |  |   |    | 
| | --------------------------- |  | ---- | ---- | ---- | - | ---- | - | ---- | -- |  | - | -- | 
| |                             |  | 2007 |      | 2006 |   | 2007 |   | 2006 |   
| |                             |  |      |      |      |   |      |   |      |   
| | Net actuarial gain (loss)   |  | $    | (425 | )    | $ | (728 | ) | $    | 33 |  | $ | 33 | 
| | Prior service credit (cost) |  |      |     |      |   |     |   |      | 28 |  |   | 19 | 
| |                             |  |      |      |      |   |      |   |      |    |  |   |    | 
| | Total                       |  | $    | (425 | )    | $ | (728 | ) | $    | 61 |  | $ | 52 | 
| |                             |  |      |      |      |   |      |   |      |    |  |   |    | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The estimated prior
 service credit that will be amortized from other comprehensive income into
 net periodic benefit cost over the next fiscal year is $8,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 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 the plans target allocation, the expected rate of return is
 determined to be 9%, which is roughly the midpoint of the range of expected
 return.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

| |                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 Companys pension plan weighted average allocations at September 30, 2007 and
 2006, by asset category are summarized in the following table:

| |                   |  |                               |   |      |     |   | 
| | ----------------- |  | ----------------------------- | - | ---- | --- | - | 
| |                   |  | Plan
 assets at September 30, |  
| |                   |  |                               |  
| | Asset
 Category   |  | 2007                          |   | 2006 |    
| |                   |  |                               |   |      |    
| | Equity Securities |  | 70                            | % |      | 73  | % | 
| | Debt Securities   |  | 30                            | % |      | 27  | % | 
| |                   |  |                               |   |      |     |   | 
| | 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 10% 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. 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, 2008, the Company expects to make no contributions
 to the pension plan. The following estimated future benefit payments, which
 reflect expected future service, as appropriate, are expected to be paid (in
 thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| |                  |  |                   |   |                            |  |  |  |   |     |  | 
| | ---------------- |  | ----------------- | - | -------------------------- |  |  |  | - | --- |  | 
| | Asset
 Category  |  | Pension
 Benefits |   | Postretirement
 
 Benefits | 
| |                  |  |                   |   |                            | 
| | Fiscal 2008      |  |                   | $ | 455                        |  |  |  | $ | 170 |  | 
| | Fiscal 2009      |  |                   |   | 466                        |  |  |  |   | 147 |  | 
| | Fiscal 2010      |  |                   |   | 475                        |  |  |  |   | 152 |  | 
| | Fiscal 2011      |  |                   |   | 488                        |  |  |  |   | 157 |  | 
| | Fiscal 2012      |  |                   |   | 508                        |  |  |  |   | 164 |  | 
| | Fiscal 2013-2017 |  |                   |   | 2,678                      |  |  |  |   | 843 |  | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | The
 components of net periodic benefit cost and other amounts recognized in other
 comprehensive income include the following:

| |                                                                               |  |                  |      |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
| | ----------------------------------------------------------------------------- |  | ---------------- | ---- | ----------------------- | - | ---- | - | ---- | ---- | ---- | - | ---- | - | - | --- | - | - | --- | -
| |                                                                               |  | Pension benefits |      | Postretirement benefits |  
| |                                                                               |  |                  |      |                         |  
| | (in thousands)                                                                |  | 2007             |      | 2006                    |   | 2005 |   | 2007 |      | 2006 |   | 2005 |  
| |                                                                               |  |                  |      |                         |   |      |   |      |      |      |   |      |  
| |                                                                               |  |                  |      |                         |   |      |   |      |      |      |   |      |  
| | Service cost                                                                  |  | $                |     |                         | $ |     |   | $    |     |      | $ | 25   |   | $ | 25  |   | $ | 31  |  
| | Interest cost                                                                 |  |                  | 430  |                         |   | 424  |   |      | 417  |      |   | 140  |   |   | 135 |   |   | 148 |  
| | Expected return on assets                                                     |  |                  | (734 | )                       |   | (710 | ) |      | (655 | )    |   |     |   |   |    |   |   |    |  
| | Amortization                                                                  |  |                  | 42   |                         |   | 69   |   |      | 66   |      |   | (8   | ) |   | (8  | ) |   | (1  | )
| |                                                                               |  |                  |      |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
| | Net periodic (benefit) cost                                                   |  |                  | (262 | )                       |   | (217 | ) |      | (172 | )    |   | 157  |   |   | 152 |   |   | 178 |  
| |                                                                               |  |                  |      |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
| |                                                                               |  |                  |      |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
| | Net loss (gain)                                                               |  |                  | (504 | )                       |   |     |   |      |     |      |   | (24  | ) |   |    |   |   |    |  
| | Prior service cost (credit)                                                   |  |                  |     |                         |   |     |   |      |     |      |   |      |   |   |    |   |   |    |  
| | Amortization of prior service
 cost                                           |  |                  |     |                         |   |     |   |      |     |      |   | 8    |   |   |    |   |   |    |  
| |                                                                               |  |                  |      |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
| | Total recognized in other
 comprehensive income                               |  |                  | (504 | )                       |   |     |   |      |     |      |   | (16  | ) |   |    |   |   |    |  
| |                                                                               |  |                  |      |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
| | Total recognized in net
 periodic benefit cost and other comprehensive income |  | $                | (766 | )                       | $ | (217 | ) | $    | (172 | )    | $ | 141  |   | $ | 152 |   | $ | 178 |  
| |                                                                               |  |                  |      |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | In December
 of 2002, the Companys Board of Directors amended the defined benefit pension
 plan to cease the accrual of further benefits. There is no assumed increase
 in the per capita cost of current health care benefits since the employer
 contributions are fixed with the retiree paying for any cost increases.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(10) | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | On May 3, 2000, the
 Companys shareholders approved the Rome Bancorp, Inc. 2000 Stock Option Plan
 (the 2000 Stock Option Plan). The primary objective of the 2000 Stock
 Option Plan is to provide officers and directors with a proprietary interest
 in the Company and an incentive to encourage such persons to remain with the
 Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | Under the
 2000 Stock Option Plan, 517,952 shares of authorized but unissued common
 stock are reserved for issuance upon option exercises. The Company also has
 the alternative to fund the 2000 Stock Option Plan with treasury stock.
 Options under the plan may be either non-qualified stock options or incentive
 stock options. Each option entitles the holder to purchase one share of common
 stock at an exercise price equal to the fair market value on the date of
 grant. On June 28, 2000, 382,357 options were awarded at an exercise price of
 $2.19 per share. These options have a ten-year term and vested at a rate of
 20% per year from the grant date. At December 31, 2007 and 2006 the remaining
 contractual life of these options was 2.5 years and 3.5 years, respectively.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | On May 3,
 2006, the Companys shareholders approved the Rome Bancorp, Inc. 2006 Stock
 Option Plan (the 2006 Stock Option Plan), which also has the primary
 objective of providing officers and directors with a proprietary interest in
 the Company and an incentive to encourage such persons to remain with the
 Company. Under the 2006 Stock Option Plan, 590,000 shares of authorized but
 unissued common stock are reserved for issuance upon option exercises. The
 Company also has the alternative to fund the 2006 Stock Option Plan with
 treasury stock. Options under the plan may be either non-qualified stock
 options or incentive stock options.                                                                                                                                  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

Each option
entitles the holder to purchase one share of common stock at an exercise price
equal to the fair market value on the date of grant. On May 24, 2006, 354,000
options were awarded at an exercise price of $12.84 per share. These options
have a ten-year term and vest at a rate of 20% per year from the grant date.
The fair value of the 2006 options awarded was estimated on the date of grant
using a closed form option valuation (Black-Scholes) model and the following
assumptions: risk free interest rate 4.60%, an expected term of 6.5 years,
expected stock price volatility of 8.25% and a dividend yield of 2.52%. At
December 31, 2007 and December 31, 2006 the remaining contractual life of these
options was 8.4 years and 9.4 years, respectively.

Under the
provisions of FASB No. 123(R), stock-based compensation expense of $1.69 per
option granted under the 2006 Stock Option Plan is being recorded over the
sooner of the vesting period of the options, or upon the date at which a
recipient becomes eligible for normal or early retirement under the Companys
defined benefit plan. At May 24, 2006, certain awardees met the retirement
eligibility criteria and accordingly, stock-based compensation expense of
$350,000 related to their options was expensed immediately. Total compensation
cost related to the Companys stock option plans was $50,000, $379,000 and $0
for 2007, 2006 and 2005, respectively.

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

|                                                 |  |      |             |      |   |         |  |   |         | 
|------------------------------------------------ |  | ---- | ----------- | ---- | - | ------- |  | - | ------- | 
|                                                 |  | 2007 |             | 2006 |   | 2005    | 
|                                                 |  |      |             |      |   |         | 
|                                                 |  |      |             |      |   |         |  |   |         | 
|Intrinsic
  value of options exercised           |  | $    | 1.7 million |      | $ | 487,000 |  | $ | 293,000 | 
|Cash
  received from option exercises            |  |      | 356,000     |      |   | 101,000 |  |   | 73,000  | 
|Tax benefit
  realized from option exercises     |  |      | 156,000     |      |   | 144,000 |  |   | 57,000  | 
|Weighted
  average fair value of options granted |  |      | 0           |      |   | 1.69    |  |   | 0       | 

As of December
31, 2007, there was $171,000 of total unrecognized compensation cost related to
nonvested stock options granted under the Plan. The cost is expected to be
recognized over a weighted-average period of 3.42 years. At December 31, 2007,
the intrinsic value of both all outstanding options and exercisable options was
$51,000.

The following table
presents the stock option activity for the year ended December 31, 2007 (in
thousands):

|                                   |  |        |          |                                    |   |       | 
|---------------------------------- |  | ------ | -------- | ---------------------------------- | - | ----- | 
|                                   |  | 2007   |         
|                                   |  |        |         
|                                   |  | Shares |          | Weighted Average 
  Exercise Price |  
|                                   |  |        |          |                                    |  
|                                  
|Outstanding at beginning
  of year |  |        | 524,892  |                                    | $ | 9.37  | 
|Exercised                          |  |        | (165,446 | )                                  |   | 2.19  | 
|Granted                            |  |        |         |                                    |   |      | 
|                                   |  |        |          |                                    |   |       | 
|Outstanding at end of year         |  |        | 359,446  |                                    | $ | 12.68 | 
|                                   |  |        |          |                                    |   |       | 
|Exercisable at end of year         |  |        | 76,246   |                                    | $ | 12.08 | 
|                                   |  |        |          |                                    |   |       | 

All
outstanding stock options are expected to vest.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

|     |                               
|---- | ------------------------------
|(11) | Recognition and Retention Plan

The Companys
shareholders approved the Rome Bancorp, Inc. 2000 Recognition and Retention
Plan (2000 RRP) on May 3, 2000. The purpose of the plan is to promote the
long-term interests of the Company and its shareholders by providing a
stock-based compensation program to attract and retain officers and directors.
During 2000, 119,742 shares were awarded under the 2000 RRP. The shares vested
at a rate of 20% per year from the grant date. The fair market value of the
shares awarded under the plan was $262,000 at the grant date, and was amortized
to compensation expense on a straight-line basis over the vesting periods of
the underlying shares.

The Companys
shareholders approved the Rome Bancorp, Inc. 2006 Recognition and Retention
Plan (2006 RRP) on May 3, 2006 in order to further promote the long-term
interests of the Company and its shareholders by providing a stock-based
compensation program to attract and retain officers and directors.

On May 24,
2006, 168,300 shares were awarded under the 2006 RRP. These shares vest at a
rate of 20% per year from the grant date. The fair market value of the shares
awarded under the plan was $2.2 million at the grant date, and is being
amortized over the sooner of the vesting period of the awards, or upon the date
at which a recipient becomes eligible for normal or early retirement under the
Companys defined benefit plan. At May 24, 2006, certain awardees met the
retirement eligibility criteria and accordingly, stock-based compensation
expense of $1.1 million related to their 2006 RRP awards was expensed
immediately. Stock-based compensation expense of $263,000, $1.2 million and
$26,000 related to RRP awards was recorded in 2007, 2006 and 2005,
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.

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

|                                 |  |        |         |                                           |   |       | 
|-------------------------------- |  | ------ | ------- | ----------------------------------------- | - | ----- | 
|                                 |  | Shares |         | Weighted-Average 
  Grant-Date Fair Value |  
|                                 |  |        |         |                                           |  
|Nonvested at
  January 1, 2007   |  |        | 168,300 |                                           |   |      | 
|Granted                          |  |        |        |                                           |   |      | 
|Vested                           |  |        | 33,660  |                                           | $ | 12.84 | 
|Forfeited                        |  |        |        |                                           |   |      | 
|                                 |  |        |         |                                           |   |       | 
|Nonvested at
  December 31, 2007 |  |        | 134,640 |                                           | $ | 12.84 | 
|                                 |  |        |         |                                           |   |       | 

As of December
31, 2007, there was $662,000 of total unrecognized compensation cost related to
nonvested shares granted under the RRP. The cost is expected to be recognized
over a weighted-average period of 3.4 years. The total fair value of shares
vested during the years ended December 31, 2007, 2006 and 2005 was $416,000, $0
and $241,000.

|     |                        
|---- | -----------------------
|(12) | Other Employee Benefits

The Company
has a defined contribution 401(k) Savings Plan for all full time salaried
employees. Employees are permitted to contribute up to 75% of base pay to the
Savings Plan, subject to certain limitations. The Company matches 50% of each
employees contributions up to a limit of 3% of the employees base pay.

Contributions to the defined
contribution 401(k) Savings Plan were $77,000, $80,000 and $78,000 during the
years ended December 31, 2007, 2006 and 2005, respectively.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | In
  connection with establishing an ESOP in 1999, the ESOP borrowed $933,000 from
  the Company to purchase 453,488 shares of the Companys common stock. The
  loan bears interest at 8% and is payable in fifteen annual installments. At
  December 31, 2007, 272,084 of the original ESOP shares had been released or
  committed to be released of which 181,404 remained as unallocated shares.                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     | On March 30,
  2005, in connection with the Companys second-step conversion and stock
  offering, the ESOP borrowed $2,360,000 from the Company to purchase an
  additional 236,000 shares of the Companys common stock. The loan bears
  interest at 5% and is payable in fifteen annual installments. At December 31,
  2007, 47,198 of these shares had been released or committed to be released
  and 188,802 remained as unallocated shares.                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     | The fair
  value of the unallocated shares on December 31, 2007 was $4.3 million. The
  Company recognized compensation expense of $557,000, $568,000 and $479,000 in
  2007, 2006 and 2005, respectively in connection with the ESOP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     | The Company has also adopted a Benefit Restoration Plan
  for the Companys CEO. This plan provides the beneficiary with the benefits
  that would otherwise be due to him as a participant in the 401(k)
  plan and the employee stock ownership plan if such benefits were not limited
  by certain provisions of the Internal Revenue Code. In addition, in the event
  the beneficiary retires prior to the
  end of the ESOP loan term, the plan will provide him a benefit equal to the
  value of the shares of Rome Bancorp that would have been allocated to his
  account under the ESOP had he remained
  employed through the end of the ESOP loan term. The liability associated with
  this plan was $755,000 and $683,000 at December 31, 2007 and December 31,
  2006, respectively.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(13) | Comprehensive Income (Loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     | Comprehensive
  income represents net income and other comprehensive income (loss) which is
  the net change in the unrealized gains or losses on securities
  available-for-sale and unrealized gains and losses on pension and
  postretirement liabilities, net of taxes. The following summarizes the
  components of other comprehensive income (loss) (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                         

| |                                                                            |  |                          |     |      |   |      |   |   |      |  
| | -------------------------------------------------------------------------- |  | ------------------------ | --- | ---- | - | ---- | - | - | ---- | -
| |                                                                            |  | Years ended December 31, |    
| |                                                                            |  |                          |    
| |                                                                            |  | 2007                     |     | 2006 |   | 2005 |  
| |                                                                            |  |                          |     |      |   |      |  
| | Unrealized holding gains
  (losses) arising during the period              |  | $                        | 439 |      | $ | (59  | ) | $ | (405 | )
| |                                                                            |  |                          |     |      |   |      |   |   |      |  
| | Reclassification adjustment for
  net realized gain included in net income |  |                          | (11 | )    |   | (11  | ) |   | (105 | )
| |                                                                            |  |                          |     |      |   |      |   |   |      |  
| |                                                                            |  |                          |     |      |   |      |   |   |      |  
| | Other comprehensive Income
  (loss), before tax                            |  |                          | 428 |      |   | (70  | ) |   | (510 | )
| | Deferred tax expense (benefit)                                             |  |                          | 171 |      |   | (28  | ) |   | (204 | )
| |                                                                            |  |                          |     |      |   |      |   |   |      |  
| |                                                                            |  |                          |     |      |   |      |   |   |      |  
| | Other comprehensive income
  (loss), net of tax                            |  | $                        | 257 |      | $ | (42  | ) | $ | (306 | )
| |                                                                            |  |                          |     |      |   |      |   |   |      |  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | The
  following is a summary of the accumulated other comprehensive income (loss)
  balances net of tax:

| |                                                                  |  |                       |      |               |   |                        |   |   |      |  
| | ---------------------------------------------------------------- |  | --------------------- | ---- | ------------- | - | ---------------------- | - | - | ---- | -
| |                                                                  |  | Balance at
  12/31/06 |      | 2007
  Change |   | Balance at 
  12/31/07 |  
| |                                                                  |  |                       |      |               |   |                        |  
| | Unrealized gains (losses) on available for sale securities       |  | $                     | 43   |               | $ | (55                    | ) | $ | (12  | )
| | Unrealized gains (losses) on pension and postretirement
benefits |  |                       | (676 | )             |   | 312                    |   |   | (364 | )
| |                                                                  |  |                       |      |               |   |                        |   |   |      |  
| |                                                                  |  | $                     | (633 | )             | $ | 257                    |   | $ | (376 | )
| |                                                                  |  |                       |      |               |   |                        |   |   |      |  

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(14) | Commitments
and Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | The Company
  is a party to financial instruments with off-balance sheet risk in the normal
  course of business to meet the financing needs of its customers. These
  financial instruments consist of commitments to extend credit and involve, to
  varying degrees, elements of credit, market and interest rate risk in excess
  of the amounts recognized in the consolidated balance sheet. Credit risk
  represents the accounting loss that would be recognized at the reporting date
  if obligated counterparties failed completely to perform as contracted.
  Market risk represents risk that future changes in market prices make
  financial instruments less valuable.                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | Commitments
  to extend credit are agreements to lend to a customer as long as there is no
  violation of any condition established in the contract. Commitments generally
  have fixed expiration dates or other termination clauses and may require
  payment of a fee. Since some of the commitments are expected to expire
  without being drawn upon, the total commitment amounts do not necessarily
  represent future cash requirements. The Company evaluates each customers
  creditworthiness on a case-by-case basis. The amount of collateral obtained,
  if deemed necessary by the Company upon extension of credit, is based on
  managements evaluation of the customers financial position. Collateral held
  varies, but may include real estate, accounts receivable, inventory,
  property, plant and equipment and income-producing commercial properties.
  Substantially all commitments to extend credit, if exercised, will represent
  loans secured by real estate.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | At December
  31, 2007 and 2006 the Company was committed to originate mortgage and other
  loans of approximately $8.0 million and $12.1 million, respectively. At
  December 31, 2007 and December 31, 2006, the Companys fixed rate loan
  commitments totaled $4.0 million and $7.1 million, respectively. The range of
  interest rates on these fixed rate commitments was 5.375% to 7.0% at December
  31, 2007 and 5.875% to 6.8% at December 31, 2006. Commitments under unused
  lines of credit and letters of credit were approximately $20.1 million and
  $17.2 million at December 31, 2007 and 2006, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

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

|                                            |  |      |       |      |   |       |  |   |       | 
|------------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|                                            |  | 2007 |       | 2006 |   | 2005  | 
|                                            |  |      |       |      |   |       | 
|Basic earnings per
 share:                  |  |      |       |      |   |       |  |   |       | 
|Net Income available to common shareholders |  | $    | 3,054 |      | $ | 2,488 |  | $ | 3,402 | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Weighted average basic shares outstanding   |  |      | 7,688 |      |   | 8,527 |  |   | 9,205 | 
|                                            |  |      |       |      |   |       |  |   |       | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Basic earnings per share                    |  | $    | 0.40  |      | $ | 0.29  |  | $ | 0.37  | 
|                                            |  |      |       |      |   |       |  |   |       | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Diluted earnings
 per share:                |  |      |       |      |   |       |  |   |       | 
|Net Income available to common shareholders |  | $    | 3,054 |      | $ | 2,488 |  | $ | 3,402 | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Weighted average basic shares outstanding   |  |      | 7,688 |      |   | 8,527 |  |   | 9,205 | 
|Effect of dilutive securities:              |  |      |       |      |   |       |  |   |       | 
|Stock options                               |  |      | 19    |      |   | 142   |  |   | 195   | 
|Unearned RRP shares                         |  |      | 84    |      |   | 55    |  |   | 6     | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Weighted average diluted shares outstanding |  |      | 7,791 |      |   | 8,724 |  |   | 9,406 | 
|                                            |  |      |       |      |   |       |  |   |       | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Diluted earnings per share                  |  | $    | 0.39  |      | $ | 0.29  |  | $ | 0.36  | 
|                                            |  |      |       |      |   |       |  |   |       | 

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | Stock
 options for 354,000, 206,500 and 0 shares of common stock were not considered
 in computing diluted earnings per common share for 2007, 2006 and 2005
 because they were anti-dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(16) | Shareholders Equity and Regulatory Matters                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | Rome Savings
 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, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | 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 Rome Savings is subject to continued compliance with minimum regulatory
 capital requirements. In addition, regulatory approval is generally required
 prior to Rome Savings 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 Rome
 Savings are subject to various regulatory requirements administered by the
 federal banking agencies and Rome Savings is a federal savings bank regulated
 by the Office of Thrift Supervision (OTS). The Company is a Delaware
 corporation and is regulated as a savings and loan holding company by the
 OTS.                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | Under
 capital adequacy guidelines and the regulatory framework for prompt
 corrective action, Rome Savings 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                                                                                                                                                                                                                                     

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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
 October 16, 2006, the most recent notification from the OTS categorized Rome
 Savings as well capitalized under the regulatory framework for prompt
 corrective actions. To be categorized as well capitalized, Rome Savings must
 meet the minimum ratios as set forth in the table below. There have been no
 conditions or events since that notification that management believes have
 changed Rome Savings category. Management believes, as of December 31, 2007,
 that the Company and Bank meet all capital adequacy requirements to which
 they are subject.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | The
 Qualified Thrift lender test requires at least 65% of assets be maintained in
 housing-related finance and other specified areas. If this test is not met,
 limits are placed on growth, branching, new investments, FHLB advances and
 dividends, or the Bank must convert to a commercial bank charter. Management
 believes that this test is met.                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | The
 following is a summary of Rome Savings 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 capitaladequacy
 requirements |  | To be classified as
 Well-capitalized
 under prompt
 corrective action
 provisions |  
|                                           |  |        |        |                                       |  |                                                                                    |  
|                                           |  | Amount |        | Ratio                                 |  | Amount                                                                             |   | Ratio |        | Amount |  | Ratio |  
|                                           |  |        |        |                                       |  |                                                                                    |   |       |        |        |  |       |  
|As of December 31, 2007:                   |  |        |        |                                       |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|Total capital (to risk weighted
 assets):  |  | $      | 65,899 |                                       |  | 27.73                                                                              | % | $     | 19,011 |        |  | >=8   | % | $ | 23,764 |  |  | >=10 | %
|                                           |  |        |        |                                       |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|Tier 1 Capital (to risk
 weighted assets): |  |        | 64,315 |                                       |  | 27.06                                                                              | % |       | 9,505  |        |  | >=4   | % |   | 14,258 |  |  | >=6  | %
|                                           |  |        |        |                                       |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|Tier 1 Capital (to adjusted
 assets):      |  |        | 64,315 |                                       |  | 20.24                                                                              | % |       | 9,534  |        |  | >=3   | % |   | 15,889 |  |  | >=5  | %
|                                           |  |        |        |                                       |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|As of December 31, 2006:                   |  |        |        |                                       |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|Total capital (to risk weighted
 assets):  |  | $      | 64,834 |                                       |  | 28.9                                                                               | % | $     | 17,957 |        |  | >=8   | % | $ | 22,447 |  |  | >=10 | %
|                                           |  |        |        |                                       |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|Tier 1 Capital (to risk
 weighted assets): |  |        | 63,201 |                                       |  | 28.16                                                                              | % |       | 8,979  |        |  | >=4   | % |   | 13,468 |  |  | >=6  | %
|                                           |  |        |        |                                       |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|Tier 1 Capital (to adjusted
 assets):      |  |        | 63,201 |                                       |  | 21.27                                                                              | % |       | 8,915  |        |  | >=3   | % |   | 14,858 |  |  | >=5  | %

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

| |                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------
| | Following is
  a reconciliation of Rome Savings GAAP shareholders equity to regulatory
  Tier 1 capital at December 31, 2007 and 2006.

|                                                                                                                  |  |                     |        |                     |   |        |  
|----------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------ | ------------------- | - | ------ | -
|                                                                                                                  |  | December 31,
  2007 |        | December 31,
  2006 |  
|                                                                                                                  |  |                     |        |                     |  
|GAAP Shareholders Equity                                                                                         |  | $                   | 63,932 |                     | $ | 62,514 |  
|Plus: Minority interest in consolidated subsidiary and
        other comprehensive loss related to SFAS No.
  158 |  |                     | 434    |                     |   | 745    |  
|Less: Disallowed assets and unrealized gains on available-for-
        sale securities, net of tax                |  |                     | (51    | )                   |   | (58    | )
|                                                                                                                  |  |                     |        |                     |   |        |  
|Tier 1 Capital                                                                                                    |  |                     | 64,315 |                     |   | 63,201 |  
|                                                                                                                  |  |                     |        |                     |   |        |  
|                                                                                                                  |  |                     |        |                     |   |        |  
|Plus: Allowance for loan losses                                                                                   |  |                     | 1,910  |                     |   | 1,965  |  
|Allowed unrealized
  gain on available-for-sale securities                                                        |  |                     |       |                     |   |       |  
|Less: Real estate held for investment                                                                             |  |                     | (326   | )                   |   | (332   | )
|                                                                                                                  |  |                     |        |                     |   |        |  
|                                                                                                                  |  |                     |        |                     |   |        |  
|Total Regulatory Capital                                                                                          |  | $                   | 65,899 |                     | $ | 64,834 |  
|                                                                                                                  |  |                     |        |                     |   |        |  

|     |                                                                                                                        
|---- | -----------------------------------------------------------------------------------------------------------------------
|(17) | Fair Value of Financial Instruments                                                                                    
|     |                                                                                                                        
|     | The
  following methods and assumptions were used by Rome Savings 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.                                                                                                                                                                                                                                                                                             
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Federal Home Loan Bank Stock:It is not
  practicable to determine the value of FHLB stock due to restrictions placed
  on its transferability.                                                                                                                                                                                                                                                                                                                                                                        
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Loans: The fair values for all loans are
  estimated using discounted cash flow analyses, using interest rates currently
  being offered for loans with similar terms to borrowers of similar credit
  rating. The carrying amount of accrued interest receivable approximates its
  fair value.                                                                                                                                                                                                                      
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Deposits: The fair values of demand deposits
  (interest and non-interest checking) savings accounts and money market
  accounts are, by definition, equal to the amount payable on demand at the
  reporting date (i.e., their carrying amounts). Fair values for fixed-rate
  certificates of deposits, are estimated using a discounted cash flow
  calculation that applies interest rates currently being offered on these
  products to a schedule of aggregated expected monthly maturities on time
  deposits.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Borrowings:Fair values of long-term
  borrowings are estimated using a discounted cash flow approach, based on
  current market rates for similar borrowings. The fair value of accrued
  interest approximates carrying value.                                                                                                                                                                                                                                                                                       
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Off-balance-sheet instruments: Fair values
  for the Companys off-balance-sheet instruments (lines of credit and
  commitments to fund loans) are based on fees currently charged to enter into
  similar agreements, taking into account the remaining terms of the                                                                                                                                                                                                                                                 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

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

|                              |  |                   |         |              |   |                   |  |              |         |  |   |         | 
|----------------------------- |  | ----------------- | ------- | ------------ | - | ----------------- |  | ------------ | ------- |  | - | ------- | 
|                              |  | 2007              |         | 2006         |  
|                              |  |                   |         |              |  
|                              |  | Carrying
  amount |         | Fair
  value |   | Carrying
  amount |  | Fair
  value |        
|                              |  |                   |         |              |   |                   |  |              |        
|Financial assets:             |  |                   |         |              |   |                   |  |              |         |  |   |         | 
|Cash and cash equivalents     |  | $                 | 8,018   |              | $ | 8,018             |  | $            | 7,858   |  | $ | 7,858   | 
|Securities available for sale |  |                   | 2,674   |              |   | 2,674             |  |              | 4,319   |  |   | 4,319   | 
|Securities held to maturity   |  |                   | 1,147   |              |   | 1,195             |  |              | 1,178   |  |   | 1,175   | 
|Loans, net                    |  |                   | 281,042 |              |   | 281,492           |  |              | 262,572 |  |   | 259,388 | 
|Federal Home Loan Bank Stock  |  |                   | 2,344   |              |   |                  |  |              | 1,344   |  |   |        | 
|Accrued interest receivable   |  |                   | 1,124   |              |   | 1,124             |  |              | 1,094   |  |   | 1,094   | 
|Financial liabilities:        |  |                   |         |              |   |                   |  |              |         |  |   |         | 
|Non-interest bearing deposits |  |                   | 29,509  |              |   | 29,509            |  |              | 28,042  |  |   | 28,042  | 
|Interest bearing deposits     |  |                   | 173,523 |              |   | 173,619           |  |              | 167,963 |  |   | 167,749 | 
|Borrowings                    |  |                   | 40,333  |              |   | 40,221            |  |              | 20,172  |  |   | 19,778  | 
|Accrued interest payable      |  |                   | 29      |              |   | 29                |  |              | 33      |  |   | 33      | 

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

|     |                                                                                                                                                                                                                                     
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(18) | Parent Company Only Financial Statements                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                     
|     | Presented
  below is the condensed balance sheet of the Parent Company as of December 31,
  2007 and 2006 and statement of income and statement of cash flows for the
  years ended December 31, 2007, 2006 and 2005 (in thousands):

|                                           |  |      |        |      |   |        | 
|------------------------------------------ |  | ---- | ------ | ---- | - | ------ | 
|Condensed
  Balance Sheet                  |  |      |        |      |  
|                                          
|                                           |  | 2007 |        | 2006 |  
|                                           |  |      |        |      |  
|Assets:                                    |  |      |        |      |   |        | 
|Cash and due from banks                    |  | $    | 724    |      | $ | 10,097 | 
|Investment in subsidiary bank              |  |      | 63,932 |      |   | 62,514 | 
|Loan receivable from ESOP                  |  |      | 2,467  |      |   | 2,646  | 
|Other assets                               |  |      | 1,970  |      |   | 1,916  | 
|                                           |  |      |        |      |   |        | 
|Total assets                               |  | $    | 69,093 |      | $ | 77,173 | 
|                                           |  |      |        |      |   |        | 
|                                           |  |      |        |      |   |        | 
|Total liabilities                          |  | $    | 56     |      | $ | 142    | 
|Total shareholders equity                 |  |      | 69,037 |      |   | 77,031 | 
|                                           |  |      |        |      |   |        | 
|Total liabilities and shareholders equity |  | $    | 69,093 |      | $ | 77,173 | 
|                                           |  |      |        |      |   |        | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2007, 2006 and 2005

|                                                                                                                              |  |      |       |      |   |        |   |   |       | 
|----------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- | - | ------ | - | - | ----- | 
|Condensed
  Statement of Income                                                                                               |  |      |       |      |   |        |  
|                                                                                                                             
|                                                                                                                              |  | 2007 |       | 2006 |   | 2005   |  
|                                                                                                                              |  |      |       |      |   |        |  
|Interest and investment income                                                                                                |  | $    | 301   |      | $ | 497    |   | $ | 466   | 
|Dividends from subsidiary bank                                                                                                |  |      | 3,000 |      |   |       |   |   |      | 
|                                                                                                                              |  |      |       |      |   |        |   |   |       | 
|Total operating income                                                                                                        |  |      | 3,301 |      |   | 497    |   |   | 466   | 
|                                                                                                                              |  |      |       |      |   |        |   |   |       | 
|                                                                                                                             
|Other operating expenses                                                                                                      |  |      | 680   |      |   | 2,072  |   |   | 369   | 
|                                                                                                                              |  |      |       |      |   |        |   |   |       | 
|Income (loss) before income taxes and dividends in excess of net
  income/(equity in undistributed income) of subsidiary bank |  |      | 2,621 |      |   | (1,575 | ) |   | 97    | 
|                                                                                                                              |  |      |       |      |   |        |   |   |       | 
|Equity in undistributed income of subsidiary bank                                                                             |  |      | 433   |      |   | 4,063  |   |   | 3,305 | 
|                                                                                                                              |  |      |       |      |   |        |   |   |       | 
|                                                                                                                              |  |      |       |      |   |        |   |   |       | 
|Net income                                                                                                                    |  | $    | 3,054 |      | $ | 2,488  |   | $ | 3,402 | 
|                                                                                                                              |  |      |       |      |   |        |   |   |       | 

|                                                                                             |  |      |         |      |   |         |   |   |         |  
|-------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | - | - | ------- | -
|Condensed
  Statement of Cash Flows                                                          |  |      |         |      |   |         |  
|                                                                                            
|                                                                                             |  | 2007 |         | 2006 |   | 2005    |  
|                                                                                             |  |      |         |      |   |         |  
|Operating activities:                                                                        |  |      |         |      |   |         |   |   |         |  
|Net income                                                                                   |  | $    | 3,054   |      | $ | 2,488   |   | $ | 3,402   |  
|Adjustments to reconcile net income to cash provided by operating
  activities:              |  |      |         |      |   |         |   |   |         |  
|(Equity in undistributed earnings of)/dividends in excess of net
  income of subsidiary bank |  |      | (433    | )    |   | (4,063  | ) |   | (3,305  | )
|Amortization of stock-based compensation                                                     |  |      | 313     |      |   | 1,616   |   |   |         |  
|(Increase) decrease in other assets                                                          |  |      | (213    | )    |   | (742    | ) |   | 483     |  
|(Decrease) increase in other liabilities                                                     |  |      | (86     | )    |   | (764    | ) |   | 859     |  
|                                                                                             |  |      |         |      |   |         |   |   |         |  
|Net
  cash (used in) provided by operating activities                                        |  |      | 2,635   |      |   | (1,465  | ) |   | 1,439   |  
|                                                                                             |  |      |         |      |   |         |   |   |         |  
|                                                                                             |  |      |         |      |   |         |   |   |         |  
|Investing activities:                                                                        |  |      |         |      |   |         |   |   |         |  
|Investment in subsidiary bank                                                                |  |      |        |      |   |        |   |   | (25,653 | )
|Decrease (increase) in loan to ESOP                                                          |  |      | 179     |      |   | 169     |   |   | (2,172  | )
|                                                                                             |  |      |         |      |   |         |   |   |         |  
|Net
  cash provided by (used in) investing activities                                        |  |      | 179     |      |   | 169     |   |   | (27,825 | )
|                                                                                             |  |      |         |      |   |         |   |   |         |  
|                                                                                             |  |      |         |      |   |         |   |   |         |  
|Financing activities:                                                                        |  |      |         |      |   |         |   |   |         |  
|Net proceeds of common stock offering and conversion                                         |  |      |        |      |   |        |   |   | 55,462  |  
|Purchase of treasury stock                                                                   |  |      | (10,181 | )    |   | (17,818 | ) |   |        |  
|Dividends                                                                                    |  |      | (2,518  | )    |   | (2,622  | ) |   | (2,046  | )
|Exercise of stock options and related tax benefits                                           |  |      | 512     |      |   | 245     |   |   | 130     |  
|                                                                                             |  |      |         |      |   |         |   |   |         |  
|Net
  cash (used in) provided by financing activities                                        |  |      | (12,187 | )    |   | (20,195 | ) |   | 53,546  |  
|                                                                                             |  |      |         |      |   |         |   |   |         |  
|                                                                                             |  |      |         |      |   |         |   |   |         |  
|Net (decrease) increase in cash and cash equivalents                                         |  |      | (9,373  | )    |   | (21,491 | ) |   | 27,160  |  
|                                                                                             |  |      |         |      |   |         |   |   |         |  
|Cash and cash equivalents at beginning of year                                               |  |      | 10,097  |      |   | 31,588  |   |   | 4,428   |  
|                                                                                             |  |      |         |      |   |         |   |   |         |  
|Cash and cash equivalents at end of year                                                     |  | $    | 724     |      | $ | 10,097  |   | $ | 31,588  |  
|                                                                                             |  |      |         |      |   |         |   |   |         |  

---



Rome Bancorp, Inc and Subsidiary 
Notes to Consolidated Financial Statements 
Years ended December 31, 2007, 2006 and 2005

|     |                                      
|---- | -------------------------------------
|(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 Rome Savings
reorganized from the two-tier mutual holding company structure to the stock
holding company structure. The Conversion was consummated on March 30, 2005.
Prior to the completion of the Conversion, the MHC owned approximately 61.5% of
the common stock of the Company.

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

The Conversion
was accounted for as a change in corporate form with no resulting change in the
historical basis of the Companys assets, liabilities and equity. Costs related
to the Offering, primarily marketing fees paid to the companys investment
banking firm, professional fees, registration fees, printing and mailing costs
were $3.1 million and accordingly, net proceeds were $55.9 million. In
addition, as part of the conversion and dissolution of the MHC, Rome Savings
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, Rome Savings 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 Rome Savings 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
Rome Savings at the time that Rome Savings 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 Rome Savings
would be entitled, in the event of a complete liquidation of Rome Savings 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, Rome Savings 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, 2007, 2006 and 2005

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

Selected
quarterly financial data for 2007 and 2006 are as follows:

|                                                    |  |                                          |       |          |   |               |  |              |       |  |   |       | 
|--------------------------------------------------- |  | ---------------------------------------- | ----- | -------- | - | ------------- |  | ------------ | ----- |  | - | ----- | 
|                                                    |  | 2007 Quarter Ending                      |      
|                                                    |  |                                          |      
|                                                    |  | March 31,                                |       | June 30, |   | September 30, |  | December 31, |      
|                                                    |  | (In thousands, except per share amounts) |      
|                                                    |  |                                          |       |          |   |               |  |              |       |  |   |       | 
|Net interest income                                 |  | $                                        | 3,299 |          | $ | 3,277         |  | $            | 3,253 |  | $ | 3,292 | 
|Net interest income after provision for loan losses |  |                                          | 3,299 |          |   | 3,277         |  |              | 3,253 |  |   | 3,242 | 
|Net income                                          |  |                                          | 837   |          |   | 747           |  |              | 803   |  |   | 667   | 
|Earnings per common share:                          |  |                                          |       |          |   |               |  |              |       |  |   |       | 
|Basic:                                              |  | $                                        | 0.11  |          | $ | 0.10          |  | $            | 0.11  |  | $ | 0.09  | 
|Diluted                                             |  |                                          | 0.10  |          |   | 0.09          |  |              | 0.11  |  |   | 0.09  | 

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

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

---



|                                                                                        |  |                                                       
|--------------------------------------------------------------------------------------- |  | ------------------------------------------------------
|Directors of Rome Bancorp, Inc. & The Rome
 Savings Bank                                |  | Executive
 Officers of The Rome Savings Bank          
|                                                                                        |  |                                                       
|Charles M. Sprock                                                                       |  | Charles M. Sprock                                     
|Chairman of the Board, President and Chief
 Executive Officer                           |  | President
 and Chief Executive Officer                
|                                                                                        |  |                                                       
|Bruce R. Engelbert                                                                      |  | David C. Nolan                                        
|Retired, Former Owner and President, Engelberts
 Jewelers, Inc.                        |  | Executive
 Vice President and Chief Financial Officer 
|                                                                                        |  |                                                       
|David C. Grow                                                                           |  | D. Bruce Fraser                                       
|Partner, law firm of McMahon & Grow                                                     |  | Vice
 President, Human Resources, Security, Compliance
|                                                                                        |  |                                                       
|Kirk B. Hinman                                                                          |  | Mary Faith Messenger                                  
|President, Rome Strip Steel Company, Inc.                                               |  | Vice
 President and Controller                        
|                                                                                        |  |                                                       
|Dale A. Laval                                                                           |  | Sandra L. Reader                                      
|Retired Chairman, Independent Audit Associates,
 Inc.                                   |  | Vice
 President, Consumer Loans                       
|                                                                                        |  |                                                       
|John A. Reinhardt                                                                       |  | James F. Sullivan                                     
|Retired, Former Executive Director of the Madison
 County Industrial Development Agency |  | Vice
 President, Senior Loan Officer                  
|                                                                                        |  |                                                       
|Michael J. Valentine                                                                    |  | Francis C. Thalmann                                   
|Chairman and President, Mele Manufacturing Company,
 Inc.                               |  | Vice
 President, Operations and Branch Administration 
|                                                                                        |  |                                                       
|Crystal
 M. Seymore                                                                    
|Corporate Secretary                                                                    

---