EXHIBIT 13.1

The summary information presented below at or
for each of the five years in the period ended December 31, 2008 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,                                    |        
|                                                     |  |                                                    |        
|                                                     |  | 2008                                               |         | 2007 |   | 2006    |  | 2005 |         | 2004 |  
|                                                     |  |                                                    |         |      |   |         |  |      |         |      |  
|Selected
 Financial Condition Data:                  |  |                                                    |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Total assets                                         |  | $                                                  | 337,886 |      | $ | 318,131 |  | $    | 298,759 |      | $ | 308,853 |  | $ | 268,152 | 
|Loans, net                                           |  |                                                    | 298,453 |      |   | 281,042 |  |      | 262,572 |      |   | 251,918 |  |   | 231,272 | 
|Securities                                           |  |                                                    | 8,588   |      |   | 6,165   |  |      | 6,841   |      |   | 11,882  |  |   | 19,117  | 
|Total cash and cash equivalents                      |  |                                                    | 9,579   |      |   | 8,018   |  |      | 7,858   |      |   | 34,235  |  |   | 6,929   | 
|Total deposits                                       |  |                                                    | 205,932 |      |   | 203,032 |  |      | 196,005 |      |   | 201,468 |  |   | 208,787 | 
|Borrowings                                           |  |                                                    | 66,324  |      |   | 40,333  |  |      | 20,172  |      |   | 9,374   |  |   | 18,843  | 
|Total equity                                         |  |                                                    | 60,344  |      |   | 69,037  |  |      | 77,031  |      |   | 93,478  |  |   | 36,258  | 
|Allowance for loan losses                            |  |                                                    | 1,936   |      |   | 1,910   |  |      | 1,965   |      |   | 1,960   |  |   | 2,000   | 
|Non-performing loans                                 |  |                                                    | 1,273   |      |   | 1,003   |  |      | 1,104   |      |   | 947     |  |   | 829     | 
|Non-performing assets                                |  |                                                    | 1,604   |      |   | 1,100   |  |      | 1,149   |      |   | 947     |  |   | 829     | 
|                                                     |  |                                                    |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|                                                     |  | 2008                                               |         | 2007 |   | 2006    |  | 2005 |         | 2004 |  
|                                                     |  |                                                    |         |      |   |         |  |      |         |      |  
|                                                     |  |                                                    |         |      |   |         |  |      |         |      |  
|Selected
 Operating Data:                            |  |                                                    |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Interest income                                      |  | $                                                  | 17,954  |      | $ | 17,919  |  | $    | 17,457  |      | $ | 16,535  |  | $ | 14,498  | 
|Interest expense                                     |  |                                                    | 4,887   |      |   | 4,798   |  |      | 3,521   |      |   | 3,036   |  |   | 3,042   | 
|                                                     |  |                                                    |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Net interest income                                  |  |                                                    | 13,067  |      |   | 13,121  |  |      | 13,936  |      |   | 13,499  |  |   | 11,456  | 
|Provision for loan losses                            |  |                                                    | 300     |      |   | 50      |  |      | 147     |      |   | 115     |  |   | 390     | 
|                                                     |  |                                                    |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Net interest income after
 provision for loan losses |  |                                                    | 12,767  |      |   | 13,071  |  |      | 13,789  |      |   | 13,384  |  |   | 11,066  | 
|Non-interest income:                                 |  |                                                    |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Service charges and other
 income                    |  |                                                    | 2,209   |      |   | 2,152   |  |      | 1,885   |      |   | 1,921   |  |   | 1,596   | 
|Net (loss) gain on securities
 transactions          |  |                                                    | (265    | )    |   | 11      |  |      | 11      |      |   | 105     |  |   | 176     | 
|                                                     |  |                                                    |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Total non-interest income                            |  |                                                    | 1,944   |      |   | 2,163   |  |      | 1,896   |      |   | 2,026   |  |   | 1,772   | 
|Total non-interest expense                           |  |                                                    | 10,410  |      |   | 10,572  |  |      | 11,859  |      |   | 9,977   |  |   | 9,102   | 
|                                                     |  |                                                    |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Income before income taxes                           |  |                                                    | 4,301   |      |   | 4,662   |  |      | 3,826   |      |   | 5,433   |  |   | 3,736   | 
|Income taxes                                         |  |                                                    | 1,396   |      |   | 1,608   |  |      | 1,338   |      |   | 2,031   |  |   | 1,336   | 
|                                                     |  |                                                    |         |      |   |         |  |      |         |      |   |         |  |   |         | 
|Net income                                           |  | $                                                  | 2,905   |      | $ | 3,054   |  | $    | 2,488   |      | $ | 3,402   |  | $ | 2,400   | 
|                                                     |  |                                                    |         |      |   |         |  |      |         |      |   |         |  |   |         | 

---



|                                                                         |  |                                        |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|------------------------------------------------------------------------ |  | -------------------------------------- | ------ | ---- | - | ------ | - | ---- | ------ | ---- | - | ------ | - | - | ------ | -
|                                                                         |  | At or for the
 Year Ended December 31, |       
|                                                                         |  |                                        |       
|                                                                         |  | 2008                                   |        | 2007 |   | 2006   |   | 2005 |        | 2004 |  
|                                                                         |  |                                        |        |      |   |        |   |      |        |      |  
|                                                                         |  |                                        |        |      |   |        |   |      |        |      |  
|Selected Financial Ratios and Other Data                                 |  |                                        |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Performance Ratios:                                                      |  |                                        |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Basic earnings per share                                                 |  | $                                      | 0.42   |      | $ | 0.40   |   | $    | 0.29   |      | $ | 0.37   |   | $ | 0.26   |  
|Diluted earnings per share                                               |  | $                                      | 0.42   |      | $ | 0.39   |   | $    | 0.29   |      | $ | 0.36   |   | $ | 0.25   |  
|Return on average assets                                                 |  |                                        | 0.89   | %    |   | 1.00   | % |      | 0.83   | %    |   | 1.13   | % |   | 0.91   | %
|Return on average equity                                                 |  |                                        | 4.47   | %    |   | 4.14   | % |      | 2.91   | %    |   | 4.29   | % |   | 6.67   | %
|Net interest rate spread (tax
 equivalent)                               |  |                                        | 3.90   | %    |   | 4.06   | % |      | 4.37   | %    |   | 4.27   | % |   | 4.41   | %
|Net interest margin (tax
 equivalent)                                    |  |                                        | 4.40   | %    |   | 4.74   | % |      | 5.04   | %    |   | 4.80   | % |   | 4.73   | %
|Non-interest expense to average
 assets                                  |  |                                        | 3.18   | %    |   | 3.45   | % |      | 3.94   | %    |   | 3.31   | % |   | 3.45   | %
|Efficiency ratio (1)                                                     |  |                                        | 68.04  | %    |   | 68.99  | % |      | 74.59  | %    |   | 64.09  | % |   | 68.72  | %
|Average interest earning assets
 to average interest-bearing liabilities |  |                                        | 130.86 | %    |   | 139.84 | % |      | 152.72 | %    |   | 149.44 | % |   | 125.61 | %
|                                                                         |  |                                        |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Capital
 Ratios:                                                         |  |                                        |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Average equity to average
 assets                                        |  |                                        | 19.84  | %    |   | 24.09  | % |      | 28.46  | %    |   | 26.27  | % |   | 13.63  | %
|Equity to total assets at end
 of period                                 |  |                                        | 17.86  | %    |   | 21.70  | % |      | 25.78  | %    |   | 30.27  | % |   | 13.52  | %
|Book value per share                                                     |  | $                                      | 8.55   |      | $ | 8.86   |   | $    | 9.10   |      | $ | 9.66   |   | $ | 8.57   |  
|                                                                         |  |                                        |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Regulatory
 Capital Ratios:                                              |  |                                        |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Core capital (Tier 1 capital)                                            |  |                                        | 17.15  | %    |   | 20.24  | % |      | 21.27  | %    |   | 18.96  | % |   | 11.03  | %
|Total risk-based capital                                                 |  |                                        | 24.45  | %    |   | 27.73  | % |      | 28.90  | %    |   | 28.04  | % |   | 15.36  | %
|                                                                         |  |                                        |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Asset Quality
 Ratios:                                                   |  |                                        |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Nonperforming loans as percent
 of loans                                 |  |                                        | 0.42   | %    |   | 0.35   | % |      | 0.42   | %    |   | 0.37   | % |   | 0.36   | %
|Nonperforming assets as percent
 of total assets                         |  |                                        | 0.47   | %    |   | 0.35   | % |      | 0.38   | %    |   | 0.31   | % |   | 0.31   | %
|Allowance for loan losses as a
 percent of loans                         |  |                                        | 0.64   | %    |   | 0.68   | % |      | 0.74   | %    |   | 0.77   | % |   | 0.86   | %
|Allowance for loan losses as a
 percent of non-performing loans          |  |                                        | 152.1  | %    |   | 190.4  | % |      | 178.0  | %    |   | 207.0  | % |   | 241.3  | %
|                                                                         |  |                                        |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Other Data:                                                              |  |                                        |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Number of:                                                               |  |                                        |        |      |   |        |   |      |        |      |   |        |   |   |        |  
|Deposit accounts                                                         |  |                                        | 35,159 |      |   | 35,484 |   |      | 34,881 |      |   | 34,864 |   |   | 35,136 |  
|Full service offices                                                     |  |                                        | 5      |      |   | 5      |   |      | 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.
|                                                                                                                                       |                                                                                                                                                                  
|(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.

---



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION ANDRESULTS 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 (the FDIC) 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.

2008 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, 2008 and 2007
and Rome Bancorps results of operations for the three years ended December 31,
2008. The consolidated financial statements and related notes for the three
years ended December 31, 2008 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
2008 was $2.9 million compared to $3.1 million in the prior year. The
significant factors and trends impacting 2008, which are discussed in greater
depth below, were as follows:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net interest income before
 loan loss provision was $13.1 million in both 2008 and 2007. Decreases in
 prevailing market rates resulted in declines in both the yields earned on
 earning assets and the Companys cost of funds. These rate decreases were
 offset by increases in the average balances of interest earning assets and
 interest bearing liabilities. Rome Bancorps ratio of interest earning assets
 to interest bearing liabilities decreased to 130.86% in 2008 from 139.84% in
 the prior year, while the yield on earning assets decreased to 6.05% in 2008
 from 6.47% in 2007. The cost of funds decreased to 2.15% in 2008 from 2.41%
 the prior year.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Rome Bancorps provision
 for loan losses increased to $300,000 in 2008 from $50,000 in 2007. The
 increase was necessary due to an increased level of loan charge-offs as well
 as growth in the loan portfolio in 2008.
 Rome Savings does not originate or hold any sub-prime mortgage loans
 in its portfolio.                                                                                                                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Non-interest income
 decreased by $219,000 to $1.9 million in 2008 primarily due to the recording
 of a $265,000 impairment charge on an equity security held by the Company.
 This was partially offset by an increase in fee revenue and other income.                                                                                                                                                                                                                                                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Non-interest
 expense decreased by $162,000 from $10.6 million in 2007 to $10.4 in 2008. The
 majority of this decrease is related to lower stock based compensation and
 benefits expense and a reduction in professional fees incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                       

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 incurred 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 incurred losses on loans; however, future
additions to the allowance may be necessary based on changes in estimates,
assumptions or economic conditions. Significant factors that could give rise to
changes in these estimates include, but are not limited to, changes in economic
conditions in the local area, concentrations of risk and declines of local
property values.

---



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

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

Management
of Interest Rate Risk

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

Managing
interest rate risk is of primary importance to Rome Bancorp. The responsibility for interest rate risk
management is the function of Rome Bancorps Asset/Liability Committee
(ALCO), which includes the President and Chief Executive Officer, 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 quarterly 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, 2008, based on simulation model results, Rome Bancorp was within
these guidelines.

---



The following
table sets forth at December 31, 2008 and 2007 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.

|                                             |  |                            |        |                            |   |                             |   |                 |       |                           |   |                             |  |   |      |   |  |       |   
|-------------------------------------------- |  | -------------------------- | ------ | -------------------------- | - | --------------------------- | - | --------------- | ----- | ------------------------- | - | --------------------------- |  | - | ---- | - |  | ----- | --
|                                             |  | 2008                       |        | 2007                       |  
|                                             |  |                            |        |                            |  
|                                             |  | Annual Net Interest Income |        | Annual Net Interest Income |  
|                                             |  |                            |        |                            |  
|                                             |  |                            |        |                            |   |                             |   |                 |       |                           |   |                             | 
|Change in
 Interest Rates
 inBasis Points(1) |  | Dollar 
 Amount            |        | Dollar 
 ChangeFrom
 Base  |   | PercentageChange 
 FromBase |   | Dollar 
 Amount |       | Dollar 
 ChangeFrom
 Base |   | PercentageChange 
 FromBase | 
|                                             |  |                            |        |                            |   |                             |   |                 |       |                           |   |                             | 
|                                             |  | (Dollars
 in thousands)   
|                                            
|+300                                         |  | $                          | 13,451 |                            | $ | (289                        | ) |                 | (2.10 | )%                        | $ | 13,137                      |  | $ | (229 | ) |  | (1.71 | )%
|+200                                         |  |                            | 13,588 |                            |   | (152                        | ) |                 | (1.11 | )                         |   | 13,239                      |  |   | (127 | ) |  | (0.95 | ) 
|+100                                         |  |                            | 13,749 |                            |   | 9                           |   |                 | 0.07  |                           |   | 13,331                      |  |   | (35  | ) |  | (0.26 | ) 
|Base                                         |  |                            | 13,740 |                            |   |                            |   |                 |      |                           |   | 13,366                      |  |   |     |   |  |      |   
|-100                                         |  |                            | 13,476 |                            |   | (264                        | ) |                 | (1.92 | )                         |   | 13,382                      |  |   | 16   |   |  | 0.12  |   

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

The above table reflects
that as of both December 31, 2008 and 2007, 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, 2008 was slightly higher,
exhibiting negative variances in periods of rising and decreasing interest
rates. In the up 200 and 300 basis point rate environments, the most immediate
interest rate risk lies in the Companys $23.7 million of overnight borrowings
which reprice directly in relation to changes in prevailing interest rates.
However, in the simulation of a 100 basis point decrease in rates, these funds
do not reprice downwards in step with the decrease in rates, due to the
historically low interest rates on these borrowings at December 31, 2008. In
that case, the savings on interest bearing liabilities would not entirely
offset the loss of income on earnings assets due to rate declines.

---



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, 2008                                                  |         |                   | December 31, 2007 |                 |   | December 31, 2006 |        
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |        
|                                                                  |  | Average                                                            |         | Interest
 Income/ |                   | Average
 Yield/ |   |                   | Average |   | Interest
 Income/ |   | Average
 Yield/ |  |   | Average |   | Interest
 Income/ |      | Average
 Yield/ | 
|                                                                  |  | Balance                                                            |         | Expense           |                   | Cost            |   |                   | Balance |   | Expense           |   | Cost            |  |   | Balance |   | Expense           |      | Cost            | 
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 | 
|                                                                  |  | (Dollars in thousands)                                             |        
|Assets:                                                           |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Interest-earning assets:                                          |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Loans                                                             |  | $                                                                  | 288,630 |                   | $                 | 17,561          |   |                   | 6.08    | % |                   | $ | 270,373         |  | $ | 17,481  |   |                   | 6.47 | %               |  | $ | 255,201 |  | $ | 16,330 |   |  | 6.40 | %
|Securities                                                        |  |                                                                    | 7,488   |                   |                   | 392             |   |                   | 5.24    |   |                   |   | 6,452           |  |   | 437     |   |                   | 6.77 |                 |  |   | 8,447   |  |   | 541    |   |  | 6.40 |  
|Federal funds sold & other interest bearing
 deposits             |  |                                                                    | 1,250   |                   |                   | 26              |   |                   | 2.04    |   |                   |   | 1,110           |  |   | 52      |   |                   | 4.67 |                 |  |   | 14,546  |  |   | 664    |   |  | 4.57 |  
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Total interest-earnings assets                                    |  |                                                                    | 297,368 |                   |                   | 17,979          |   |                   | 6.05    |   |                   |   | 277,935         |  |   | 17,970  |   |                   | 6.47 |                 |  |   | 278,194 |  |   | 17,535 |   |  | 6.30 |  
|Noninterest-earning assets                                        |  |                                                                    | 29,994  |                   |                   |                 |   |                   |         |   |                   |   | 28,625          |  |   |         |   |                   |      |                 |  |   | 22,474  |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Total assets                                                      |  | $                                                                  | 327,362 |                   |                   |                 |   |                   |         |   |                   | $ | 306,560         |  |   |         |   |                   |      |                 |  | $ | 300,668 |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Liabilities and Shareholders
Equity:                             |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Interest-bearing liabilities:                                     |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Savings accounts                                                  |  | $                                                                  | 80,971  |                   | $                 | 446             |   |                   | 0.55    |   |                   | $ | 82,355          |  | $ | 454     |   |                   | 0.55 |                 |  | $ | 87,560  |  | $ | 657    |   |  | 0.75 |  
|Time deposits                                                     |  |                                                                    | 72,347  |                   |                   | 2,634           |   |                   | 3.64    |   |                   |   | 69,822          |  |   | 2,834   |   |                   | 4.06 |                 |  |   | 66,822  |  |   | 2,276  |   |  | 3.41 |  
|Money market accounts                                             |  |                                                                    | 9,833   |                   |                   | 193             |   |                   | 1.97    |   |                   |   | 6,994           |  |   | 139     |   |                   | 1.99 |                 |  |   | 5,382   |  |   | 88     |   |  | 1.62 |  
|Other interest bearing deposits                                   |  |                                                                    | 13,357  |                   |                   | 69              |   |                   | 0.51    |   |                   |   | 11,695          |  |   | 65      |   |                   | 0.56 |                 |  |   | 11,321  |  |   | 69     |   |  | 0.61 |  
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Total interest-bearing deposits                                   |  |                                                                    | 176,508 |                   |                   | 3,342           |   |                   | 1.89    |   |                   |   | 170,866         |  |   | 3,492   |   |                   | 2.04 |                 |  |   | 171,085 |  |   | 3,090  |   |  | 1.81 |  
|Borrowings                                                        |  |                                                                    | 50,737  |                   |                   | 1,545           |   |                   | 3.04    |   |                   |   | 27,883          |  |   | 1,306   |   |                   | 4.68 |                 |  |   | 11,069  |  |   | 431    |   |  | 3.90 |  
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Total interest-bearing liabilities                                |  |                                                                    | 227,245 |                   |                   | 4,887           |   |                   | 2.15    |   |                   |   | 198,749         |  |   | 4,798   |   |                   | 2.41 |                 |  |   | 182,154 |  |   | 3,521  |   |  | 1.93 |  
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Noninterest-bearing deposits                                      |  |                                                                    | 29,331  |                   |                   |                 |   |                   |         |   |                   |   | 28,337          |  |   |         |   |                   |      |                 |  |   | 28,232  |  |   |        |   |  |      |  
|Other liabilities                                                 |  |                                                                    | 5,849   |                   |                   |                 |   |                   |         |   |                   |   | 5,622           |  |   |         |   |                   |      |                 |  |   | 4,712   |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Total liabilities                                                 |  |                                                                    | 262,425 |                   |                   |                 |   |                   |         |   |                   |   | 232,708         |  |   |         |   |                   |      |                 |  |   | 215,098 |  |   |        |   |  |      |  
|Shareholders equity                                              |  |                                                                    | 64,937  |                   |                   |                 |   |                   |         |   |                   |   | 73,852          |  |   |         |   |                   |      |                 |  |   | 85,570  |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Total liabilities and shareholders
equity                        |  | $                                                                  | 327,362 |                   |                   |                 |   |                   |         |   |                   | $ | 306,560         |  |   |         |   |                   |      |                 |  | $ | 300,668 |  |   |        |   |  |      |  
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Net interest income                                               |  |                                                                    |         |                   |                   | 13,092          |   |                   |         |   |                   |   |                 |  |   | 13,172  |   |                   |      |                 |  |   |         |  |   | 14,014 |   |  |      |  
|Tax equivalent adjustment on securities                           |  |                                                                    |         |                   |                   | (25             | ) |                   |         |   |                   |   |                 |  |   | (51     | ) |                   |      |                 |  |   |         |  |   | (78    | ) |  |      |  
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Net interest income per consolidated financial
 statements        |  |                                                                    |         |                   | $                 | 13,067          |   |                   |         |   |                   |   |                 |  | $ | 13,121  |   |                   |      |                 |  |   |         |  | $ | 13,936 |   |  |      |  
|                                                                  |  |                                                                    |         |                   |                   |                 |   |                   |         |   |                   |   |                 |  |   |         |   |                   |      |                 |  |   |         |  |   |        |   |  |      |  
|Net interest rate spread                                          |  |                                                                    |         |                   |                   |                 |   |                   | 3.90    | % |                   |   |                 |  |   |         |   |                   | 4.06 | %               |  |   |         |  |   |        |   |  | 4.37 | %
|Net interest margin                                               |  |                                                                    |         |                   |                   |                 |   |                   | 4.40    | % |                   |   |                 |  |   |         |   |                   | 4.74 | %               |  |   |         |  |   |        |   |  | 5.04 | %
|Ratio of interest-earning assets to
 interest-bearing liabilities |  |                                                                    |         |                   |                   |                 |   |                   | 1.31    | x |                   |   |                 |  |   |         |   |                   | 1.40 | x               |  |   |         |  |   |        |   |  | 1.53 | 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, 
 2008
 Compared to Year Ended 
 December 31, 2007 |        |        | Year Ended
 December 31, 
 2007
 Compared to Year Ended 
 December 31, 2006 |      
|                                                      |  |                                                                             |        |        |                                                                             |       |   |   |      |   |        |   |      |  
|                                                      |  |                                                                             |        |        |                                                                             |      
|                                                      |  | Increases
 (decreases) due to                                               |        |        | Increases (decreases) due to                                                |      
|                                                      |  |                                                                             |        |        |                                                                             |      
|                                                      |  | Rate                                                                        |        | Volume |                                                                             | Net   |   |   | Rate |   | Volume |   | Net  |  
|                                                      |  |                                                                             |        |        |                                                                             |       |   |   |      |   |        |   |      |  
|                                                      |  | ( in thousands)                                                             |       
|                                                      |  |                                                                             |       
|Assets:                                               |  |                                                                             |        |        |                                                                             |       |   |   |      |   |        |   |      |   |   |       |   |   |       |  
|Interest-earning assets:                              |  |                                                                             |        |        |                                                                             |       |   |   |      |   |        |   |      |   |   |       |   |   |       |  
|Loans                                                 |  | $                                                                           | (1,125 | )      | $                                                                           | 1,205 |   | $ | 80   |   |        | $ | 146  |   | $ | 1,005 |   | $ | 1,151 |  
|Securities                                            |  |                                                                             | (115   | )      |                                                                             | 70    |   |   | (45  | ) |        |   | 24   |   |   | (128  | ) |   | (104  | )
|Federal funds sold & other
 Interest bearing deposits |  |                                                                             | (33    | )      |                                                                             | 7     |   |   | (26  | ) |        |   | 1    |   |   | (613  | ) |   | (612  | )
|                                                      |  |                                                                             |        |        |                                                                             |       |   |   |      |   |        |   |      |   |   |       |   |   |       |  
|Total interest-earnings assets                        |  |                                                                             | (1,273 | )      |                                                                             | 1,282 |   |   | 9    |   |        |   | 171  |   |   | 264   |   |   | 435   |  
|                                                      |  |                                                                             |        |        |                                                                             |       |   |   |      |   |        |   |      |   |   |       |   |   |       |  
|Interest-bearing liabilities:                         |  |                                                                             |        |        |                                                                             |       |   |   |      |   |        |   |      |   |   |       |   |   |       |  
|Savings accounts                                      |  |                                                                             |       |        |                                                                             | (8    | ) |   | (8   | ) |        |   | (164 | ) |   | (39   | ) |   | (203  | )
|Time deposits                                         |  |                                                                             | (302   | )      |                                                                             | 102   |   |   | (200 | ) |        |   | 456  |   |   | 102   |   |   | 558   |  
|Money market accounts                                 |  |                                                                             | (2     | )      |                                                                             | 56    |   |   | 54   |   |        |   | 25   |   |   | 26    |   |   | 51    |  
|Other interest bearing deposits                       |  |                                                                             | (6     | )      |                                                                             | 10    |   |   | 4    |   |        |   | (6   | ) |   | 2     |   |   | (4    | )
|                                                      |  |                                                                             |        |        |                                                                             |       |   |   |      |   |        |   |      |   |   |       |   |   |       |  
|Total interest-bearing deposits                       |  |                                                                             | (310   | )      |                                                                             | 160   |   |   | (150 | ) |        |   | 311  |   |   | 91    |   |   | 402   |  
|                                                      |  |                                                                             |        |        |                                                                             |       |   |   |      |   |        |   |      |   |   |       |   |   |       |  
|Borrowings                                            |  |                                                                             | (832   | )      |                                                                             | 1,071 |   |   | 239  |   |        |   | 219  |   |   | 656   |   |   | 875   |  
|                                                      |  |                                                                             |        |        |                                                                             |       |   |   |      |   |        |   |      |   |   |       |   |   |       |  
|Total interest-bearing
 liabilities                   |  |                                                                             | (1,142 | )      |                                                                             | 1,231 |   |   | 89   |   |        |   | 530  |   |   | 747   |   |   | 1,277 |  
|                                                      |  |                                                                             |        |        |                                                                             |       |   |   |      |   |        |   |      |   |   |       |   |   |       |  
|Net change in interest income                         |  | $                                                                           | (131   | )      | $                                                                           | 51    |   | $ | (80  | ) |        | $ | (359 | ) | $ | (483  | ) | $ | (842  | )
|                                                      |  |                                                                             |        |        |                                                                             |       |   |   |      |   |        |   |      |   |   |       |   |   |       |  

Comparison of
Financial Condition at December 31, 2008 and December 31, 2007

Rome Bancorps total assets
at December 31, 2008 were $337.9 million, an increase of $19.8 million or 6.2%
from $318.1 million at December 31, 2007. The majority of this growth was
attributable to increases in the loan portfolio.

Cash and cash equivalents
increased to $9.6 million at December 31, 2008 from $8.0 million a year
earlier. Securities available for sale were $3.6 million at December 31, 2008,
an increase of $889,000 from $2.7 million at December 31, 2007. This increase
was due the purchase of three bonds, partially offset by principal reductions
and the impairment charge of $265,000 recorded on an equity investment. Rome
Bancorp invested $1.2 million in Federal Home Loan Bank stock in 2008, in
connection with its line of credit borrowing with this institution.

Total loans increased by $17.4
million, or 6.1% to $300.4 million at December 31, 2008 from $283.0 million at
December 31, 2007. During the year ended December 31, 2008, Rome Bancorp
originated approximately $66.4 million of loans. The majority of the loan
growth was in the residential mortgage construction and loan portfolio, which
grew by $21.5 million, or 14.1%. The Companys non-performing loans as a
percentage of total loans increased to 0.42% at December 31, 2008 as compared
to 0.35% at December 31, 2007, primarily due to the inclusion of two commercial
mortgages. The allowance for loan losses as a percent of non-performing loans
decreased to 152.1% at December 31, 2008, from 190.4% at December 31, 2007.
This ratio is considered appropriate due

---



to the growth
in Rome Bancorps residential mortgage portfolio in 2008. 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
$2.9 million or 1.4% from $203.0 million at December 31, 2007 to $205.9 million
at December 31, 2008. The overall increase in deposits is primarily
attributable to increases in money market accounts and other interest-bearing
deposit accounts partially offset by decreases in non-interest bearing deposit,
time deposit and savings balances. Money market balances grew by $4.6 million,
or 62.2%, in 2008, increasing from $7.4 million at December 31, 2007 to $12.0
million at December 31, 2008. Other interest bearing deposits increased by $1.0
million, or 8.0%, over the past year. Time deposits decreased to $72.1 million
at December 31, 2008 from $73.2 million a year earlier, reflecting the rate
sensitivity of these accounts. Savings deposits decreased $529,000 from $79.8
million at December 31, 2007 to $79.2 million at December 31, 2008.
Non-interest bearing deposits decreased by $1.1 million, or 3.9%, from $29.5
million at December 31, 2007 to $28.4 million at year end 2008.

Comparison of Results
of Operations for the Years Ended December 31, 2008 and December 31, 2007

General.Net income for the year ended December 31,
2008 was $2.9 million, a decrease of $149,000 from $3.1 million for the year
ended December 31, 2007. The decrease in net income was attributable to
decreases in net interest income before loan loss provision of $54,000, an
increase in the provision for loan losses of $250,000, and a decrease in
non-interest income of $219,000, partially offset by decreases in non-interest
expense and income tax expense of $162,000 and $212,000, respectively.

Net Interest Income.The
Company recorded net interest income of
$13.1 million in both 2008 and 2007. The changes in the components of net
interest income are discussed in detail below.

Interest Income.Interest income increased by $35,000 for the
year ended December 31, 2008, from $17.9 million for the year ended December
31, 2007. Interest income earned on the loan portfolio increased to $17.6
million in 2008 from $17.5 million in 2007. Average loan balances increased to
$288.6 million in 2008 from $270.4 million in 2007, primarily due to growth in
the residential mortgage portfolio. The yield on loans in 2008 decreased to
6.08% compared to 6.47% in 2007 concurrent with the decline in overall
benchmark interest rates. Interest and dividend income on securities decreased
in 2008 primarily due to a decline in the yield on these assets. Average
securities increased to $7.5 million in 2008 from $6.5 million in 2007 while
their yields decreased to 5.24% from 6.77% over the same period. Interest
income of other short-term investments, including federal funds sold, dropped
from $52,000 in 2007 to $26,000 in 2008, as a result of a decrease in the yield
earned on these funds, again driven by declines in market interest rates
throughout 2008.

Interest Expense.Interest expense increased to $4.9 million in
2008 from $4.8 million in 2007 primarily due to increases in the average
balances of outstanding debt and deposits, partially offset by a decrease in
the cost of these funds, consistent with current market trends. Interest
expense on borrowings increased from $1.3 million in 2007 to $1.5 million in
2008 as the average balances increased from $27.9 million in 2007 to $50.7
million in the current year. The average rate paid on this debt decreased to
3.04% in 2008 from 4.68% in 2007. The average rate paid on interest bearing
deposits in 2008 was 1.89% compared to 2.04% in 2007, principally due to lower
rates paid on time deposits.

Provision for Loan
Losses.The provision for loan losses was $300,000 in
2008 compared to $50,000 in 2007, reflecting a higher level of charge-offs and
loan growth in 2008. Net loan charge-offs increased to $274,000 in 2008 from
$105,000 in the prior year. The allowance for loan losses was $1.9 million or
0.64% of total loans at December 31, 2008 compared to $1.9 million and 0.68% of
total loans at December 31, 2007. The allowance for loan losses as a percent of
non-performing

---



loans
decreased to 152.1% at December 31, 2008 compared to 190.4% at December 31,
2007. Management considers these ratios to be appropriate due to the net growth
in Rome Bancorps residential mortgage and construction loan portfolio of $21.5
million, or 14.1% in 2008. Due to stringent underwriting standards, the history
of losses on the residential mortgage loan portfolio is significantly lower
than on the other types of loans. Non-performing loans, consisting of
non-accrual loans and loans 90 days past due and still accruing, were $1.3
million or 0.42% of total loans at December 31, 2008 compared to $1.0 million
or 0.35% at December 31, 2007. Rome Savings does not originate or hold subprime
mortgage loans or securities collateralized by subprime 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 $300,000 was
appropriate in 2008.

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

|                           |  |      |       |      |   |          |  |          |      |   |  |           |   
|-------------------------- |  | ---- | ----- | ---- | - | -------- |  | -------- | ---- | - |  | --------- | --
|                           |  | 2008 |       | 2007 |   | $ Change |  | % Change |     
|                           |  |      |       |      |   |          |  |          |     
|(Loss) gain
 on securities |  | $    | (265  | )    | $ | 11       |  | $        | (276 | ) |  | (2,509.10 | )%
|Gain on sale
 of loans     |  |      | 17    |      |   | 18       |  |          | (1   | ) |  | (5.56     | ) 
|Service
 charges           |  |      | 1,706 |      |   | 1,654    |  |          | 52   |   |  | 3.14      |   
|Other income               |  |      | 486   |      |   | 480      |  |          | 6    |   |  | 1.25      |   
|                           |  |      |       |      |   |          |  |          |      |   |  |           |   
|Total
 non-interest income |  | $    | 1,944 |      | $ | 2,163    |  | $        | (219 | ) |  | (10.12    | )%
|                           |  |      |       |      |   |          |  |          |      |   |  |           |   

Non-interest income
decreased $219,000 to $1.9 million in 2008 from $2.2 million in 2007. During
the fourth quarter of 2008, in relation to declines in global investment
markets, the Company recognized a write-down of $265,000 on its investment in a
large blue chip mutual fund, due to impairment that was determined to be other
than temporary under generally accepted accounting principles. This charge
reduced fourth quarter and year to date net earnings by $162,000, or $0.02 per
diluted share. After the write-down to fair market value, this investment is
valued at $472,000. As this investment is classified as an available for sale
security, stockholders equity had already been reduced by the amount of the
unrealized loss, net of taxes. The other than temporary write-down does not
necessarily mean that the value has been permanently lost. The fair market
value of the security may increase or decrease on a going forward basis.
Service charge income increased commensurate with deposit and loan activity.

Non-Interest Expense.Non-interest expense decreased to $10.4 million
for the year ended December 31, 2008 compared to $10.6 million for the year
ended December 31, 2007. The following table summarizes changes in the major
components of non-interest expense:

|                                          |  |      |        |      |   |          |  |          |      |   |  |        |   
|----------------------------------------- |  | ---- | ------ | ---- | - | -------- |  | -------- | ---- | - |  | ------ | --
|                                          |  | 2008 |        | 2007 |   | $ Change |  | % Change |     
|                                          |  |      |        |      |   |          |  |          |     
|Salaries and
 employee benefits           |  | $    | 5,733  |      | $ | 5,887    |  | $        | (154 | ) |  | (2.62  | )%
|Occupancy
 and equipment expense          |  |      | 1,903  |      |   | 1,896    |  |          | 7    |   |  | 0.37   |   
|Marketing
 expense                        |  |      | 128    |      |   | 176      |  |          | (48  | ) |  | (27.27 | ) 
|Outside
 consulting and professional fees |  |      | 580    |      |   | 712      |  |          | (132 | ) |  | (18.54 | ) 
|Other
 expense                            |  |      | 2,066  |      |   | 1,901    |  |          | 165  |   |  | 8.68   |   
|                                          |  |      |        |      |   |          |  |          |      |   |  |        |   
|Total non-interest expense                |  | $    | 10,410 |      | $ | 10,572   |  | $        | (162 | ) |  | (1.53  | )%
|                                          |  |      |        |      |   |          |  |          |      |   |  |        |   

The decrease in salaries and
employee benefits is primarily related to lower stock-based compensation and
benefits costs. Advertising and promotional expense decreased from 2007 when
the Company opened its fifth branch location and heavily promoted demand
deposit accounts. In 2008 the Company required less legal and consulting
services. A major component of the increase in other expenses was contribution
expense. Contribution expense increased from $15,000 in 2007 to $151,000 in
2008 due to the donation of a parcel of Company owned real estate to the Rome
Rescue Mission, Inc.

---



Income Tax Expense. Income tax expense was
$1.4 million for 2008, a decrease of $212,000 from 2007 income tax expense of
$1.6 million. The decrease is attributable to lower pre-tax earnings, an
increase in positive permanent tax benefits and favorable settlement of a state
tax audit.

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 were 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.

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 $58.9

---



million on a
line of credit. At December 31, 2008, Rome Savings had outstanding borrowings
of $23.7 million against this line of credit, in addition to bullet and
amortizing notes totaling $42.6 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 2008, Rome Bancorp originated
approximately $66.4 million in loans compared to approximately $61.7 million in
2007. Purchases of investment securities were $3.6 million in 2008 and $1.0
million in 2007. At December 31, 2008, Rome Bancorp had loan commitments to
borrowers of approximately $3.3 million, and customer available letters and
lines of credit of approximately $18.7 million.

Total deposits
were $205.9 million at December 31, 2008, an increase of 1.4% from $203.0
million at December 31, 2007. Time deposit accounts scheduled to mature within
one year were $54.4 million at December 31, 2008. 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 2008
Rome Bancorp repurchased 731,750 outstanding shares of its common stock at a
total cost of $8.2 million. On January 28, 2009 the Companys Board of
Directors authorized the repurchase of 100,000 shares of its common stock. On
February 25, 2009, the Board further authorized the repurchase of an additional
five percent, or approximately 346,000 shares, of the Companys common stock. 
Rome Bancorp paid cash dividends of $0.34 per share in 2008, requiring a cash
outlay of $2.4 million.

At December
31, 2008 and 2007, Rome Savings exceeded each of the applicable regulatory
capital requirements. Rome Savings leverage (Tier 1) capital at December 31, 2008 and
2007 was $58.2 million and $64.3 million or 17.15% and 20.24% of adjusted
assets, respectively. In order to be classified as well-capitalized by the
OTS and the FDIC at December 31, 2008 and 2007, Rome Savings was required to
have leverage (Tier 1) capital of $17.0 million and $15.9 million,
respectively, or 5.0% of adjusted assets. 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, 2008 and 2007, Rome
Savings had a risk-based total capital ratio of 24.45% and 27.73%,
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                              |  | $     | 72,138  |                   | $                       | 54,356    |  | $         | 14,486 |                    | $ | 3,296 |  |   |      | 
|Federal Home Loan Bank borrowings          |  |       | 66,324  |                   |                         | 34,509    |  |           | 23,705 |                    |   | 3,610 |  | $ | 4,500 | 
|Software maintenance and service contracts |  |       | 542     |                   |                         | 356       |  |           | 186    |                    |   |      |  |   |      | 
|                                           |  |       |         |                   |                         |           |  |           |        |                    |   |       |  |   |       | 
|Total contractual obligations              |  | $     | 139,004 |                   | $                       | 89,221    |  | $         | 38,377 |                    | $ | 6,906 |  | $ | 4,500 | 
|                                           |  |       |         |                   |                         |           |  |           |        |                    |   |       |  |   |       | 

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

In September 2006, the FASB
issued Statement No. 157, Fair Value Measurements (FAS 157). 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 was effective for fiscal years beginning after
November 15, 2007. 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 nonfinancial assets and nonfinancial 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
October 2008, the FASB issued Staff Position (FSP) 157-3, Determining the Fair
Value of a Financial Asset when the Market for That Asset Is Not Active.
This FSP clarifies the application of FAS 157 in a market that is not active.
The impact of such adoption and clarification was not material.

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 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 was 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 was effective for fiscal years beginning after
December 15, 2007. The
impact of adoption was not material.

In December 2007, the SEC issued SAB No. 110, which expresses the views of
the SEC regarding the use of a simplified method, as discussed in SAB No.
107, in developing an estimate of expected term of plain vanilla share
options in accordance with SFAS No. 123(R), Share-Based Payment. The SEC
concluded that a company could, under certain circumstances, continue to use
the simplified method for share option grants after December 31, 2007. The
Company does not use the simplified method for share options and therefore SAB
No. 110 has no impact on the Companys consolidated financial statements.

Newly Issued But Not Yet Effective
Accounting Pronouncements

In December 2007, the
FASB issued FAS No. 141 (revised 2007), Business Combinations (FAS 141(R)),
which establishes principles and requirements for how an acquirer recognizes
and measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in an acquiree, including
the recognition and measurement of goodwill acquired in a business combination.
FAS No. 141(R) is effective for fiscal years beginning on or after
December 15, 2008. Earlier adoption is prohibited. The adoption of this
standard is not expected to have a material effect on the Corporations results
of operations or financial position.

In
December 2007, the FASB issued SFAS No. 160, Noncontrolling
Interest in Consolidated Financial Statements, an amendment of ARB No. 51
(SFAS No. 160), which will change the accounting and reporting for
minority interests, which will be recharacterized as noncontrolling interests
and classified as a component of equity within the consolidated balance sheets. FAS
No. 160 is effective as of the beginning of the first fiscal year beginning on
or after December 15, 2008. Earlier adoption is prohibited and the
Corporation does not expect the adoption of FAS No. 160 to have a significant
impact on its results of operations or financial position.

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, 2008, the last trading date in Rome Bancorps fiscal year, the common stock
of Rome Bancorp closed at $8.70 per share. At March 2, 2009, there were
6,935,307 shares of Rome Bancorps common stock outstanding, which were held of
record by approximately 2,459 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 $0.34 per share in
2008. Rome Bancorp also paid a quarterly cash dividend of $0.085 per share to
shareholders of record as of February 6, 2009. 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, 2008    |  |             |       |     |   |           |  |   |       | 
|                                 |  |             |       |     |   |           |  |   |       | 
|Quarter ended March 31, 2008     |  | $           | 11.86 |     | $ | 10.91     |  | $ | 0.085 | 
|Quarter ended June 30, 2008      |  |             | 11.70 |     |   | 9.54      |  |   | 0.085 | 
|Quarter ended September 30, 2008 |  |             | 11.20 |     |   | 9.50      |  |   | 0.085 | 
|Quarter ended December 31, 2008  |  |             | 11.00 |     |   | 7.82      |  |   | 0.085 | 
|                                 |  |             |       |     |   |           |  |   |       | 
|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  | 

---



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,
2003, to December 31, 2008, 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              |  | 12/31/03      |  | 12/31/04 |  | 12/31/05 |  | 12/31/06 |  | 12/31/07 |  | 12/31/08 | 
|                  
|Rome Bancorp, Inc. |  | 100.00        |  | 95.02    |  | 82.55    |  | 99.49    |  | 92.67    |  | 71.88    | 
|NASDAQ Bank        |  | 100.00        |  | 110.99   |  | 106.18   |  | 117.87   |  | 91.85    |  | 69.88    | 
|NASDAQ Composite   |  | 100.00        |  | 108.59   |  | 110.08   |  | 120.56   |  | 132.39   |  | 78.72    | 

---



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, 2008. 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, 2008.

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 2,
 2009                                                | 
|                                                              | 
|/s/ David C.
 Nolan                                           | 
|                                                              | 
|David C.
 Nolan                                               | 
|Executive
 Vice President and Chief Financial Officer        
|March 2,
 2009                                                | 

---



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. and subsidiarys internal control over financial reporting as of
December 31, 2008, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Rome Bancorp, Inc. and subsidiary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 Inc. and subsidiary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, and 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. and subsidiary maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2008, based on
criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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. and
subsidiary as of December 31, 2008 and 2007, 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, 2008, and
our report dated March 2, 2009 expressed an unqualified opinion on those
consolidated financial statements.

|                      | 
|--------------------- | 
|/s/ Crowe Horwath LLP
|                      | 
|Crowe Horwath LLP     | 
|Cleveland, Ohio      
|                      | 
|March 2, 2009         | 

---



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, 2008 and 2007 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, 2008. These
consolidated financial statements are the responsibility of Rome Bancorp, Inc.
and subsidiary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 financial statements referred to above present fairly, in all
material respects, the financial position of the Company and subsidiary as of
December 31, 2008 and 2007 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2008, in
conformity with accounting principles generally accepted in the United States
of America.

We also have
audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Rome Bancorp, Inc. and subsidiarys internal
control over financial reporting as of December 31, 2008, 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 2,
2009 expressed an unqualified opinion thereon.

|                      | 
|--------------------- | 
|/s/ Crowe Horwath LLP
|                      | 
|Crowe Horwath LLP     | 
|Cleveland, Ohio      
|March 2, 2009         | 

---



ROME BANCORP, INC.
AND SUBSIDIARY

Consolidated Balance Sheets

December 31, 2008 and 2007

(In thousands, except share data)

|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | -
|                                                                                                                                                                                                                                                          |  | 2008 |         | 2007 |  
|Assets                                                                                                                                                                                                                                                    |  |      |         |      |  
|Cash and due from banks                                                                                                                                                                                                                                   |  | $    | 6,823   |      | $ | 6,978   |  
|Federal funds sold and other
 short-term investments                                                                                                                                                                                                      |  |      | 2,756   |      |   | 1,040   |  
|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|Total cash and cash equivalents                                                                                                                                                                                                                           |  |      | 9,579   |      |   | 8,018   |  
|Securities available for sale,
 at fair value                                                                                                                                                                                                             |  |      | 3,563   |      |   | 2,674   |  
|Securities held to maturity
 (fair value of $1,561 and $1,195 at December 31, 2008 and 2007, respectively)                                                                                                                                                |  |      | 1,447   |      |   | 1,147   |  
|Federal Home Loan Bank stock                                                                                                                                                                                                                              |  |      | 3,578   |      |   | 2,344   |  
|Loans                                                                                                                                                                                                                                                     |  |      | 300,389 |      |   | 282,952 |  
|Less: Allowance for loan losses                                                                                                                                                                                                                           |  |      | (1,936  | )    |   | (1,910  | )
|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|Net loans                                                                                                                                                                                                                                                 |  |      | 298,453 |      |   | 281,042 |  
|Premises and equipment, net                                                                                                                                                                                                                               |  |      | 6,372   |      |   | 6,568   |  
|Accrued interest receivable                                                                                                                                                                                                                               |  |      | 1,085   |      |   | 1,124   |  
|Bank-owned life insurance                                                                                                                                                                                                                                 |  |      | 9,006   |      |   | 8,598   |  
|Other assets                                                                                                                                                                                                                                              |  |      | 4,803   |      |   | 6,616   |  
|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|Total assets                                                                                                                                                                                                                                              |  | $    | 337,886 |      | $ | 318,131 |  
|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|                                                                                                                                                                                                                                                         
|Liabilities and Shareholders Equity                                                                                                                                                                                                                      |  |      |         |      |   |         |  
|Liabilities:                                                                                                                                                                                                                                              |  |      |         |      |   |         |  
|Deposits:                                                                                                                                                                                                                                                 |  |      |         |      |   |         |  
|Non-interest bearing                                                                                                                                                                                                                                      |  | $    | 28,373  |      | $ | 29,509  |  
|Savings                                                                                                                                                                                                                                                   |  |      | 79,221  |      |   | 79,750  |  
|Money market                                                                                                                                                                                                                                              |  |      | 11,996  |      |   | 7,406   |  
|Time                                                                                                                                                                                                                                                      |  |      | 72,138  |      |   | 73,209  |  
|Other interest bearing                                                                                                                                                                                                                                    |  |      | 14,204  |      |   | 13,158  |  
|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|Total deposits                                                                                                                                                                                                                                            |  |      | 205,932 |      |   | 203,032 |  
|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|Borrowings                                                                                                                                                                                                                                                |  |      | 66,324  |      |   | 40,333  |  
|Other liabilities                                                                                                                                                                                                                                         |  |      | 5,286   |      |   | 5,729   |  
|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|Total liabilities                                                                                                                                                                                                                                         |  |      | 277,542 |      |   | 249,094 |  
|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|                                                                                                                                                                                                                                                         
|Commitments and contingencies
 (Note 14)                                                                                                                                                                                                                  |  |      |        |      |   |        |  
|                                                                                                                                                                                                                                                         
|Shareholders equity:                                                                                                                                                                                                                                     |  |      |         |      |   |         |  
|Common stock, $.01 par value;
 authorized: 30,000,000 shares; issued: 9,893,716 shares; outstanding:
 7,058,866 shares at December 31, 2008; authorized: 30,000,000 shares; issued:
 9,891,515 shares; outstanding: 7,788,415 shares at December 31, 2007 |  |      | 99      |      |   | 99      |  
|Additional paid-in capital                                                                                                                                                                                                                                |  |      | 62,440  |      |   | 61,884  |  
|Retained earnings                                                                                                                                                                                                                                         |  |      | 36,721  |      |   | 36,179  |  
|Treasury stock, at cost;
 2,834,850 shares at December 31, 2008 and 2,103,100 shares at December 31,
 2007                                                                                                                                                |  |      | (34,662 | )    |   | (26,488 | )
|Accumulated other comprehensive
 income (loss)                                                                                                                                                                                                            |  |      | (2,212  | )    |   | (376    | )
|Unallocated shares of employee
 stock ownership plan (ESOP) 324,239 shares at December 31, 2008; 370,206
 shares at December 31, 2007                                                                                                                     |  |      | (2,042  | )    |   | (2,261  | )
|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|Total shareholders equity                                                                                                                                                                                                                                |  |      | 60,344  |      |   | 69,037  |  
|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|Total liabilities and
 shareholders equity                                                                                                                                                                                                               |  | $    | 337,886 |      | $ | 318,131 |  
|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|                                                                                                                                                                                                                                                          |  |      |         |      |   |         |  
|See accompanying notes to
 consolidated financial statements.                                                                                                                                                                                             |  |      |         |      |   |         |  

---



ROME BANCORP,
INC. AND SUBSIDIARY

Consolidated Statements of Income

Years ended December 31, 2008,
2007 and 2006

(In thousands, except share data)

|                                                             |  |      |        |      |   |        |  |   |        | 
|------------------------------------------------------------ |  | ---- | ------ | ---- | - | ------ |  | - | ------ | 
|                                                             |  | 2008 |        | 2007 |   | 2006   | 
|Interest income:                                             |  |      |        |      |   |        |  |   |        | 
|Loans                                                        |  | $    | 17,561 |      | $ | 17,481 |  | $ | 16,330 | 
|Securities                                                   |  |      | 367    |      |   | 386    |  |   | 463    | 
|Other short-term investments                                 |  |      | 26     |      |   | 52     |  |   | 664    | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Total interest income                                        |  |      | 17,954 |      |   | 17,919 |  |   | 17,457 | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Interest expense:                                            |  |      |        |      |   |        |  |   |        | 
|Deposits                                                     |  |      | 3,342  |      |   | 3,492  |  |   | 3,090  | 
|Borrowings                                                   |  |      | 1,545  |      |   | 1,306  |  |   | 393    | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Total interest expense                                       |  |      | 4,887  |      |   | 4,798  |  |   | 3,521  | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Net interest income                                          |  |      | 13,067 |      |   | 13,121 |  |   | 13,936 | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Provision for loan losses                                    |  |      | 300    |      |   | 50     |  |   | 147    | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Net interest income after
 provision for loan losses         |  |      | 12,767 |      |   | 13,071 |  |   | 13,789 | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Non-interest income:                                         |  |      |        |      |   |        |  |   |        | 
|Service charges                                              |  |      | 1,706  |      |   | 1,654  |  |   | 1,559  | 
|Net (loss) gain on securities                                |  |      | (265   | )    |   | 11     |  |   | 11     | 
|Other income                                                 |  |      | 503    |      |   | 498    |  |   | 326    | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Total non-interest income                                    |  |      | 1,944  |      |   | 2,163  |  |   | 1,896  | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Non-interest expense:                                        |  |      |        |      |   |        |  |   |        | 
|Salaries and employee benefits                               |  |      | 5,733  |      |   | 5,887  |  |   | 6,986  | 
|Building, occupancy and
 equipment                           |  |      | 1,903  |      |   | 1,896  |  |   | 1,824  | 
|Directors fees                                              |  |      | 174    |      |   | 184    |  |   | 219    | 
|Marketing                                                    |  |      | 128    |      |   | 176    |  |   | 247    | 
|Outside consulting and
 professional fees                    |  |      | 580    |      |   | 712    |  |   | 792    | 
|ATM service fees                                             |  |      | 236    |      |   | 236    |  |   | 210    | 
|Supplies                                                     |  |      | 195    |      |   | 197    |  |   | 172    | 
|Other                                                        |  |      | 1,461  |      |   | 1,284  |  |   | 1,409  | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Total non-interest expense                                   |  |      | 10,410 |      |   | 10,572 |  |   | 11,859 | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Income before income tax
 expense                            |  |      | 4,301  |      |   | 4,662  |  |   | 3,826  | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Income tax expense                                           |  |      | 1,396  |      |   | 1,608  |  |   | 1,338  | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Net income                                                   |  | $    | 2,905  |      | $ | 3,054  |  | $ | 2,488  | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Basic earnings per share                                     |  | $    | 0.42   |      | $ | 0.40   |  | $ | 0.29   | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|Diluted earnings per share                                   |  | $    | 0.42   |      | $ | 0.39   |  | $ | 0.29   | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|                                                             |  |      |        |      |   |        |  |   |        | 
|See accompanying notes to consolidated financial statements. |  |      |        |      |   |        |  |   |        | 

---



ROME BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Shareholders Equity and Comprehensive Income
Years ended December 31, 2008, 2007 and 2006
(In thousands, except share data)

|                                                                           |  |               |    |                              |   |                    |   |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |         |  
|-------------------------------------------------------------------------- |  | ------------- | -- | ---------------------------- | - | ------------------ | - | --------------- | ------ | ------------------------------------------------ | - | ------------------------- | - | ----- | ------ | - | - | ------ | - | - | ------- | -
|                                                                           |  | Common
 stock |    | Additional
 paid-in
 capital |   | Retained
 earnings |   | Treasury
 Stock |        | Accumulated
 other
 comprehensive
 income (loss) |   | Unallocated
 ESOP
 shares |   | Total |       
|                                                                           |  |               |    |                              |   |                    |   |                 |        |                                                  |   |                           |   |       |       
|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 loss                                                   |  |               |   |                              |   |                   |   |                 |       |                                                  |   |                          |   |       | 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  |  
|Comprehensive
 income:                                                     |  |               |    |                              |   |                    |   |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |         |  
|Net income                                                                 |  |               |   |                              |   |                   |   |                 | 2,905  |                                                  |   |                          |   |       |       |   |   |       |   |   | 2,905   |  
|Other comprehensive loss                                                   |  |               |   |                              |   |                   |   |                 |       |                                                  |   |                          |   |       | (1,836 | ) |   |       |   |   | (1,836  | )
|                                                                           |  |               |    |                              |   |                    |   |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |         |  
|Total comprehensive income                                                 |  |               |    |                              |   |                    |   |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   | 1,069   |  
|                                                                          
|Purchase
 of 731,750 treasury shares                                       |  |               |   |                              |   |                   |   |                 |       |                                                  |   | (8,174                    | ) |       |       |   |   |       |   |   | (8,174  | )
|Exercise of stock options and related tax
 benefit 2,201 shares, net       |  |               |   |                              |   |                   |   |                 |       |                                                  |   |                          |   |       |       |   |   |       |   |   |        |  
|Amortization and tax benefits of stock option
 and restricted share grants |  |               |   |                              |   | 280                |   |                 |       |                                                  |   |                          |   |       |       |   |   |       |   |   | 280     |  
|Dividends
 paid ($0.34 per share)                                          |  |               |   |                              |   |                   |   |                 | (2,387 | )                                                |   |                          |   |       |       |   |   |       |   |   | (2,387  | )
|Effect of changing pension plan measurement
 date pursuant to FAS No. 158  |  |               |   |                              |   |                   |   |                 | 24     |                                                  |   |                          |   |       |       |   |   |       |   |   | 24      |  
|ESOP shares released for allocation (45,967
 shares)                       |  |               |   |                              |   | 276                |   |                 |       |                                                  |   |                          |   |       |       |   |   | 219    |   |   | 495     |  
|                                                                           |  |               |    |                              |   |                    |   |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |         |  
|Balances
 at December 31, 2008                                             |  | $             | 99 |                              | $ | 62,440             |   | $               | 36,721 |                                                  | $ | (34,662                   | ) | $     | (2,212 | ) | $ | (2,042 | ) | $ | 60,344  |  
|                                                                           |  |               |    |                              |   |                    |   |                 |        |                                                  |   |                           |   |       |        |   |   |        |   |   |         |  
|                                                                          
|See accompanying notes to consolidated financial statements.               |  |               |    |                              |   |                    |   |                 |        |                                                  |   |                           |  

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

Years ended December 31, 2008, 2007 and 2006

(In thousands)

|                                                                                    |  |      |         |      |   |         |   |   |         |  
|----------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | - | - | ------- | -
|                                                                                    |  | 2008 |         | 2007 |   | 2006    |  
|Cash flows from operating
 activities:                                              |  |      |         |      |   |         |   |   |         |  
|Net income                                                                          |  | $    | 2,905   |      | $ | 3,054   |   | $ | 2,488   |  
|Adjustments to reconcile net income to net cash provided by operating
 activities:  |  |      |         |      |   |         |   |   |         |  
|Depreciation                                                                        |  |      | 563     |      |   | 587     |   |   | 548     |  
|Decrease (increase) in accrued interest receivable                                  |  |      | 39      |      |   | (30     | ) |   | (41     | )
|Provision for loan losses                                                           |  |      | 300     |      |   | 50      |   |   | 147     |  
|Net loss on other than temporary securities impairment                              |  |      | 265     |      |   |        |   |   |        |  
|Net gains on securities transactions                                                |  |      |        |      |   | (11     | ) |   | (11     | )
|Gain on sales of loans                                                              |  |      | (17     | )    |   | (18     | ) |   | (15     | )
|Proceeds from sale of loans                                                         |  |      | 1,180   |      |   | 1,509   |   |   | 1,114   |  
|Origination of loans for sale                                                       |  |      | (1,163  | )    |   | (1,491  | ) |   | (1,099  | )
|Net accretion (amortization) on securities                                          |  |      | 3       |      |   | (5      | ) |   | (9      | )
|Increase in cash surrender value of Bank-owned life
insurance                       |  |      | (408    | )    |   | (383    | ) |   | (215    | )
|Loss on sale of other real estate                                                   |  |      | 18      |      |   |        |   |   | 13      |  
|Loss on sale of fixed assets                                                        |  |      |        |      |   |        |   |   | 3       |  
|(Decrease) increase in other liabilities                                            |  |      | (3,527  | )    |   | 178     |   |   | 436     |  
|Deferred income tax (benefit) expense                                               |  |      | 126     |      |   | (37     | ) |   | (762    | )
|Decrease (increase) in other assets                                                 |  |      | 3,122   |      |   | (65     | ) |   | (512    | )
|Allocation of ESOP shares                                                           |  |      | 495     |      |   | 557     |   |   | 568     |  
|Amortization of stock-based compensation                                            |  |      | 280     |      |   | 313     |   |   | 1,616   |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Net
 cash provided by operating activities                                          |  |      | 4,181   |      |   | 4,208   |   |   | 4,269   |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Cash flows from investing
 activities:                                              |  |      |         |      |   |         |   |   |         |  
|Net increase in loans                                                               |  |      | (18,216 | )    |   | (18,572 | ) |   | (10,702 | )
|Proceeds from sales of securities available for sale                                |  |      |        |      |   | 357     |   |   | 365     |  
|Purchase of bank-owned life insurance                                               |  |      |        |      |   |        |   |   | (8,000  | )
|Proceeds from maturities and principal reductions of securities
 available for sale |  |      | 921     |      |   | 1,209   |   |   | 4,938   |  
|Purchases of securities available for sale                                          |  |      | (3,244  | )    |   | (1,000  | ) |   | (568    | )
|Purchases of securities held to maturity                                            |  |      | (326    | )    |   |        |   |   | (1,000  | )
|Proceeds from maturities and principal reductions of securities held
 to maturity   |  |      | 23      |      |   | 34      |   |   | 1,254   |  
|Proceeds from sale of real estate owned                                             |  |      | 253     |      |   |        |   |   | 41      |  
|Purchases of premises and equipment, net                                            |  |      | (361    | )    |   | (1,077  | ) |   | (2,114  | )
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Net
 cash used in investing activities                                              |  |      | (20,950 | )    |   | (19,049 | ) |   | (15,786 | )
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Cash flows from financing
 activities:                                              |  |      |         |      |   |         |   |   |         |  
|(Decrease) increase in time deposits                                                |  |      | (1,071  | )    |   | 6,808   |   |   | 103     |  
|Increase (decrease) in other deposits                                               |  |      | 3,971   |      |   | 219     |   |   | (5,566  | )
|Repayments of borrowings                                                            |  |      | (12,709 | )    |   | (3,239  | ) |   | (2,402  | )
|Advances on borrowings                                                              |  |      | 38,700  |      |   | 23,400  |   |   | 13,200  |  
|Purchase of treasury stock                                                          |  |      | (8,174  | )    |   | (10,181 | ) |   | (17,818 | )
|Dividends                                                                           |  |      | (2,387  | )    |   | (2,518  | ) |   | (2,622  | )
|Exercise of stock options and related tax benefits                                  |  |      |        |      |   | 512     |   |   | 245     |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Net
 cash provided by (used in) financing activities                                |  |      | 18,330  |      |   | 15,001  |   |   | (14,860 | )
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Net increase (decrease) in
 cash and cash equivalents                               |  |      | 1,561   |      |   | 160     |   |   | (26,377 | )
|Cash and cash equivalents
 at beginning of year                                     |  |      | 8,018   |      |   | 7,858   |   |   | 34,235  |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Cash and cash equivalents
 at end of year                                           |  | $    | 9,579   |      | $ | 8,018   |   | $ | 7,858   |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|                                                                                   
|(Continued)                                                                         | 

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows (continued)

Years ended December 31, 2008, 2007 and 2006

(In thousands)

|                                                              |  |      |       |      |   |       |  |   |       | 
|------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|                                                              |  | 2008 |       | 2007 |   | 2006  | 
|Other non-cash activities:                                    |  |      |       |      |   |       |  |   |       | 
|Transfers from loans to real estate owned                     |  | $    | 505   |      | $ | 52    |  | $ | 99    | 
|Cash paid during the period for:                              |  |      |       |      |   |       |  |   |       | 
|Interest                                                      |  |      | 4,795 |      |   | 4,802 |  |   | 3,517 | 
|Income taxes                                                  |  |      | 1,514 |      |   | 1,056 |  |   | 1,940 | 
|                                                              |  |      |       |      |   |       |  |   |       | 
|See accompanying notes to
 consolidated financial statements. |  |      |       |      |   |       |  |   |       | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 its subsidiaries (Rome Savings  or 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, 2008, 2007 and 2006

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (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.                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Most of the
 Companys business activity is with customers located within Oneida County,
 New York. Therefore, the Companys exposure to credit risk is significantly
 affected by changes in the economy in the Oneida County area.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (e) | Allowance for Loan Losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The
 allowance for loan losses is a valuation allowance for 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | The Company
 estimates losses on impaired loans based on the present value of expected
 future cash flows (discounted at the loans effective interest rate) or the
 fair value of the underlying collateral if the loan is collateral dependent.
 An impairment loss exists if the recorded investment in a loan exceeds the
 value of the loan as measured by the aforementioned methods. Impairment
 losses are included as a component of the allowance for loan losses. A loan
 is considered impaired when it is probable that the Company will be unable to
 collect all amounts due according to the contractual terms of the loan
 agreement. Generally, all commercial mortgage loans and commercial loans
 greater than $250,000 in a non-accrual status are considered impaired.
 Commercial mortgage loans and commercial loans less than $250,000 and all
 residential mortgage loans, consumer loans and education loans are evaluated
 collectively by portfolio since they are homogeneous and generally carry
 smaller individual balances. The Company recognizes interest income on
 impaired loans using the cash basis of income recognition. Cash receipts on
 impaired loans are generally applied according to the terms of the loan
 agreement, or as a reduction of principal, based upon managements 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 50% 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | The Company
 also sponsors a non-contributory Employee Stock Ownership Plan (ESOP)
 covering substantially all full time employees. The number of shares
 allocable to participants of the Plan 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 subsidiaries 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) | 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.                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (k) | Financial Instruments With Off-Balance
 Sheet Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The
 Companys off-balance sheet financial instruments are limited to commitments
 to extend credit and standby letters of credit. The Companys policy is to
 record such instruments when funded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (l) | Earnings Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Basic
 earnings per share is calculated by dividing net income by the weighted
 average number of common shares outstanding during the year. Unallocated
 shares held by the Companys ESOP and unvested RRP shares are not included in
 the weighted average number of shares outstanding. Stock options and unvested
 stock grants are regarded as common stock equivalents and are considered in
 earnings per share calculations if dilutive using the treasury stock method.                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (m) | Segment Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The
 Companys operations are solely in the financial services industry providing
 traditional community banking services in the geographical region of Oneida
 County and surrounding areas in New York State. The Company has determined
 that it has no reportable segments as defined by SFAS No. 131, Disclosures
 about Segments of an Enterprise and Related Information.                                                                                                                                                                                                                                                                                                                                                                                              

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (n) | Bank Owned Life Insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | The Company
 has purchased life insurance policies on certain key officers and employees.
 Under adoption of EITF 06-5, 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. In accordance with EITF 06-5,
 the Company recorded owned life insurance at its cash surrender value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (o) | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Compensation
 cost is recognized for stock options and restricted stock awards issued to
 employees, based on the fair value of these awards at the date of grant. A
 Black-Scholes model is utilized to estimate the fair value of stock options,
 while the market price of the Corporations common stock at the date of grant
 is used for restricted stock awards. Compensation cost is recognized over the
 required service period, generally defined as the vesting period. For awards
 with graded vesting, compensation cost is recognized on a straight-line basis
 over the requisite service period for the entire award                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (p) | Recently Adopted Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | In September
 2006, the FASB issued Statement No. 157, Fair Value Measurements (FAS 157).
 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 was effective for fiscal years
 beginning after November 15, 2007. 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 nonfinancial assets and nonfinancial
 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 October 2008, the FASB issued Staff Position
 (FSP) 157-3, Determining the Fair Value of a Financial Asset when the Market
 for That Asset Is Not Active.
 This FSP clarifies the application of FAS 157 in a market that is not active.
 The impact of such adoption and clarification was not material.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | 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 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 was 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---



Rome Bancorp, Inc and Subsidiary 
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | 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 was effective for fiscal years beginning after December
 15, 2007. The impact of adoption was not material.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | In December
 2007, the SEC issued SAB No. 110, which expresses the views of the SEC
 regarding the use of a simplified method, as discussed in SAB No. 107, in
 developing an estimate of expected term of plain vanilla share options in
 accordance with SFAS No. 123(R), Share-Based Payment. The SEC concluded that
 a company could, under certain circumstances, continue to use the simplified
 method for share option grants after December 31, 2007. The Company does not
 use the simplified method for share options and therefore SAB No. 110 has no
 impact on the Companys consolidated financial statements.                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (q) | Newly Issued But Not Yet Effective
 Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | In December
 2007, the FASB issued FAS No. 141 (revised 2007), Business Combinations (FAS
 141(R)), which establishes principles and requirements for how an acquirer
 recognizes and measures in its financial statements the identifiable assets
 acquired, the liabilities assumed, and any noncontrolling interest in an
 acquiree, including the recognition and measurement of goodwill acquired in a
 business combination. FAS No. 141(R) is effective for fiscal years beginning
 on or after December 15, 2008. Earlier adoption is prohibited. The adoption
 of this standard is not expected to have a material effect on the Companys
 results of operations or financial position.                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | In December
 2007, the FASB issued SFAS No. 160,Noncontrolling
 Interest in Consolidated Financial Statements, an amendment of ARB No. 51
 (SFAS No. 160), which will change the accounting and reporting for minority
 interests, which will be recharacterized as noncontrolling interests and
 classified as a component of equity within the consolidated balance sheets.
 FAS No. 160 is effective as of the beginning of the first fiscal year
 beginning on or after December 15, 2008. Earlier adoption is prohibited and
 the Company does not expect the adoption of FAS No. 160 to have a significant
 impact on its results of operations or financial position.                                                                                

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

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

|                                |  |                   |       |                          |   |                           |  |             |   |  |   |       | 
|------------------------------- |  | ----------------- | ----- | ------------------------ | - | ------------------------- |  | ----------- | - |  | - | ----- | 
|                                |  |                   |      
|                                |  | December 31, 2008 |      
|                                |  |                   |      
|                                |  | Amortized
 Cost   |       | Gross
 unrealized
 gains |   | Gross
 unrealized
 losses |  | Fair
 value |  
|                                |  |                   |       |                          |   |                           |  |             |  
|Available-for-sale:             |  |                   |       |                          |   |                           |  |             |   |  |   |       | 
|State and municipal obligations |  | $                 | 2,620 |                          | $ | 52                        |  | $           | 9 |  | $ | 2,663 | 
|Mortgage-backed securities:     |  |                   |       |                          |   |                           |  |             |   |  |   |       | 
|FNMA                            |  |                   | 4     |                          |   |                          |  |             |  |  |   | 4     | 
|FHLMC                           |  |                   | 24    |                          |   |                          |  |             |  |  |   | 24    | 
|                                |  |                   |       |                          |   |                           |  |             |   |  |   |       | 
|                                |  |                   |       |                          |   |                           |  |             |   |  |   |       | 
|Total debt securities           |  |                   | 2,648 |                          |   | 52                        |  |             | 9 |  |   | 2,691 | 
|                                |  |                   |       |                          |   |                           |  |             |   |  |   |       | 
|Equity and other securities     |  |                   | 872   |                          |   |                          |  |             |  |  |   | 872   | 
|                                |  |                   |       |                          |   |                           |  |             |   |  |   |       | 
|                                |  | $                 | 3,520 |                          | $ | 52                        |  | $           | 9 |  | $ | 3,563 | 
|                                |  |                   |       |                          |   |                           |  |             |   |  |   |       | 
|                                |  |                   |       |                          |   |                           |  |             |   |  |   |       | 
|Held-to-maturity:               |  |                   |       |                          |   |                           |  |             |   |  |   |       | 
|U.S. Government securities      |  | $                 | 1,322 |                          | $ | 114                       |  | $           |  |  | $ | 1,436 | 
|Mortgage-backed securities:     |  |                   |       |                          |   |                           |  |             |   |  |   |       | 
|GNMA                            |  |                   | 7     |                          |   |                          |  |             |  |  |   | 7     | 
|Other bonds                     |  |                   | 118   |                          |   |                          |  |             |  |  |   | 118   | 
|                                |  |                   |       |                          |   |                           |  |             |   |  |   |       | 
|                                |  | $                 | 1,447 |                          | $ | 114                       |  | $           |  |  | $ | 1,561 | 
|                                |  |                   |       |                          |   |                           |  |             |   |  |   |       | 

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

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Included in
 the Companys equity securities is an investment in a mutual fund which
 purchases blue chip common stocks. The downturn in the equity markets during
 2008 caused a decrease in the market value of such fund. During the fourth
 quarter of 2008, in connection with its ongoing review of long term asset
 values, the Company determined that this investment had been other than
 temporarily impaired, as defined by generally accepted accounting principles.
 Accordingly, an impairment charge of $265,000 (pre-tax) was recorded to lower
 the carrying value of this security to the current fair market value of
 $472,000. This charge reduced 2008 net earnings by $162,000, or $0.02 per
 diluted share. As this investment is classified as an available for sale
 security, stockholders equity had already been reduced by the amount of the
 unrealized loss, net

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

| |                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | of taxes.
 The other than temporary write-down does not necessarily mean that the
 value has been permanently lost. The fair market value of the security may
 increase or decrease on a going forward basis. At December 31, 2007, the
 Companys investment in this equity fund had an unrealized loss of $53,000.
 This investment was first in an unrealized loss position in late December of
 2007.
| |                                                                                                                                                                                                                                                                                                                                                                                                            
| | 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, 2008 |      
|                                       |  |                   |      
|                                       |  | Amortized
 Cost   |       | Fair
 Value |  
|                                       |  |                   |       |             |  
|Available-for-sale:                    |  |                   |       |             |   |       | 
|Due within one year                    |  | $                 | 353   |             | $ | 359   | 
|Due after one year through five years  |  |                   | 1,003 |             |   | 995   | 
|Due after five years through ten years |  |                   | 1,272 |             |   | 1,317 | 
|Due after 10 years                     |  |                   | 20    |             |   | 20    | 
|                                       |  |                   |       |             |   |       | 
|                                       |  | $                 | 2,648 |             | $ | 2,691 | 
|                                       |  |                   |       |             |   |       | 
|Held-to-maturity:                      |  |                   |       |             |   |       | 
|Due within one year                    |  | $                 | 1     |             | $ | 1     | 
|Due after one year through five years  |  |                   | 1,328 |             |   | 1,442 | 
|Due after five years through ten years |  |                   |      |             |   |      | 
|Due after ten years                    |  |                   | 118   |             |   | 118   | 
|                                       |  |                   |       |             |   |       | 
|                                       |  | $                 | 1,447 |             | $ | 1,561 | 
|                                       |  |                   |       |             |   |       | 

| |                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Gross gains
 of $0, $11,000 and $11,000 were realized on sales of securities in 2008, 2007
 and 2006, respectively. The tax provision related to these realized gains was
 $0, $4,000 and $4,000, respectively.                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                        
| | Securities
 pledged at year end 2008 and 2007 had a carrying amount of $1.3 million and
 $1.0 million, respectively. These securities collateralize state and Treasury
 department programs. At year end 2008 and 2007, there were no holdings of
 securities of any one issuer in an amount greater than 10% of shareholders
 equity.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

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

|                                   |  |      |         |      |   |         | 
|---------------------------------- |  | ---- | ------- | ---- | - | ------- | 
|                                   |  | 2008 |         | 2007 |  
|                                   |  |      |         |      |  
|Mortgage loans:                    |  |      |         |      |   |         | 
|Residential (1-4 family)           |  | $    | 170,197 |      | $ | 149,702 | 
|Commercial                         |  |      | 49,231  |      |   | 49,795  | 
|Construction and land              |  |      | 5,827   |      |   | 5,258   | 
|                                   |  |      |         |      |   |         | 
|Total Mortgage loans               |  |      | 225,255 |      |   | 204,755 | 
|                                   |  |      |         |      |   |         | 
|                                   |  |      |         |      |   |         | 
|Other loans:                       |  |      |         |      |   |         | 
|Commercial                         |  |      | 28,472  |      |   | 29,127  | 
|Automobile loans                   |  |      | 12,927  |      |   | 16,009  | 
|Property improvement and equipment |  |      | 17,459  |      |   | 15,829  | 
|Other consumer                     |  |      | 16,276  |      |   | 17,232  | 
|                                   |  |      |         |      |   |         | 
|Total Other loans                  |  |      | 75,137  |      |   | 78,197  | 
|                                   |  |      |         |      |   |         | 
|Total Loans                        |  | $    | 300,389 |      | $ | 282,952 | 
|                                   |  |      |         |      |   |         | 

| |                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------
| | The Company
 serviced loans for third parties totaling $7,138,000 and $6,690,000 at
 December 31, 2008 and 2007, respectively.
| |                                                                                                                               
| | Changes in
 the allowance for loan losses are summarized as follows (in thousands):                                           
| |                                                                                                                               

|                                 |  |                           |       |      |   |       |   |   |       |  
|-------------------------------- |  | ------------------------- | ----- | ---- | - | ----- | - | - | ----- | -
|                                 |  | Years ended
 December 31, |      
|                                 |  |                           |      
|                                 |  | 2008                      |       | 2007 |   | 2006  |  
|                                 |  |                           |       |      |   |       |  
|                                 |  |                           |       |      |   |       |  
|Balance at beginning of
 period  |  | $                         | 1,910 |      | $ | 1,965 |   | $ | 1,960 |  
|Provision charged to
 operations |  |                           | 300   |      |   | 50    |   |   | 147   |  
|Loans charged off                |  |                           | (348  | )    |   | (233  | ) |   | (372  | )
|Recoveries                       |  |                           | 74    |      |   | 128   |   |   | 230   |  
|                                 |  |                           |       |      |   |       |   |   |       |  
|                                 |  |                           |       |      |   |       |   |   |       |  
|Balance at end of period         |  | $                         | 1,936 |      | $ | 1,910 |   | $ | 1,965 |  
|                                 |  |                           |       |      |   |       |   |   |       |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 Companys recorded investment in loans that are considered impaired totaled
 $710,000 and $180,000 at December 31, 2008 and 2007, respectively. These
 impaired loans carried allowances of $246,000 and $45,000, at December 31,
 2008 and 2007, respectively. The average recorded investment in impaired
 loans was $904,000, $224,000 and $228,000 in 2008, 2007 and 2006,
 respectively. The Company recognized no interest on impaired loans during the
 three years ended December 31, 2008.                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | The
 principal balances of loans not accruing interest amounted to $1.3 million
 and $968,000 at December 31, 2008 and 2007, respectively. Loans 90 days or
 more past due and accruing interest amounted to $0 and $35,000 at December
 31, 2008 and 2007, 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, 2008, 2007 and
 2006 was $85,800,

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | $78,000 and
 $75,800, respectively. There are no commitments to extend further credit on
 non-accruing loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Nonaccrual
 loans and loans past 90 days still on accrual include both smaller balance
 homogenous loans that are collectively evaluated for impairment and
 individually classified impaired loans.                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | A
 substantial portion of the Companys loans are mortgage and consumer loans in
 Oneida County. Accordingly, the ultimate collectibility of a substantial
 portion of the Companys loan portfolio is susceptible to changes in market
 conditions in this area. A majority of the Companys loan portfolio is
 secured by real estate. Other than general economic risks, management is not
 aware of any material concentrations of credit risk to any industry or
 individual borrower. The Company does not originate sub-prime mortgage loans
 and has not purchased investments collateralized by sub-prime loans.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(5) | Premises and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Premises and
 equipment at December 31 are summarized as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                                |  |      |        |      |   |        | 
|----------------------------------------------- |  | ---- | ------ | ---- | - | ------ | 
|                                                |  | 2008 |        | 2007 |  
|                                                |  |      |        |      |  
|                                                |  |      |        |      |   |        | 
|Land                                            |  | $    | 2,638  |      | $ | 2,648  | 
|Buildings and improvements                      |  |      | 6,369  |      |   | 6,200  | 
|Furniture and equipment                         |  |      | 8,015  |      |   | 7,813  | 
|                                                |  |      |        |      |   |        | 
|                                                |  |      | 17,022 |      |   | 16,661 | 
|Less accumulated
 depreciation and amortization |  |      | 10,650 |      |   | 10,093 | 
|                                                |  |      |        |      |   |        | 
|                                                |  | $    | 6,372  |      | $ | 6,568  | 
|                                                |  |      |        |      |   |        | 

|    |                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Depreciation
 and amortization expense included in building, occupancy and equipment
 expense amounted to $563,000, $587,000 and $548,000 during the years ended
 December 31, 2008, 2007 and 2006, respectively.
|    |                                                                                                                                                                                                                  
|(6) | Deposits                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                  
|    | Contractual
 maturities of time deposits at December 31 are summarized as follows (in
 thousands):                                                                                                               

|                         |  |      |        | 
|------------------------ |  | ---- | ------ | 
|                         |  | 2008 |       
|                         |  |      |       
|                         |  |      |        | 
|Within one year          |  | $    | 54,356 | 
|One through two years    |  |      | 10,632 | 
|Two through three years  |  |      | 3,854  | 
|Three through four years |  |      | 1,980  | 
|Four through five years  |  |      | 1,316  | 
|                         |  |      |        | 
|                         |  |      |        | 
|Total time deposits      |  | $    | 72,138 | 
|                         |  |      |        | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

| |                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| | At December
 31, 2008 and 2007, time deposits with balances of $100,000 or more totaled
 approximately $16,031,000 and $14,969,000, respectively.
| |                                                                                                                                                  
| | Interest
 expense on deposits for the years ended December 31 is summarized as follows
 (in thousands):                                          

|                       |  |      |       |      |   |       |  |   |       | 
|---------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|                       |  | 2008 |       | 2007 |   | 2006  | 
|                       |  |      |       |      |   |       | 
|                       |  |      |       |      |   |       |  |   |       | 
|Savings                |  | $    | 446   |      | $ | 454   |  | $ | 657   | 
|Money market           |  |      | 193   |      |   | 139   |  |   | 88    | 
|Time                   |  |      | 2,634 |      |   | 2,834 |  |   | 2,276 | 
|Other interest bearing |  |      | 69    |      |   | 65    |  |   | 69    | 
|                       |  |      |       |      |   |       |  |   |       | 
|                       |  | $    | 3,342 |      | $ | 3,492 |  | $ | 3,090 | 
|                       |  |      |       |      |   |       |  |   |       | 

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

|                                                                   |  |      |        |      |   |        | 
|------------------------------------------------------------------ |  | ---- | ------ | ---- | - | ------ | 
|                                                                   |  | 2008 |        | 2007 |  
|                                                                   |  |      |        |      |  
|Bearing interest at 3.67% fixed, due 7/3/15                        |  | $    | 1,827  |      | $ | 2,065  | 
|Bearing interest at 3.36% fixed, due 7/3/13                        |  |      | 2,797  |      |   | 3,341  | 
|Bearing interest at 3.59% fixed, due 11/26/08                      |  |      |       |      |   | 1,927  | 
|Bearing interest at 3.95% fixed, due 12/21/09                      |  |      | 5,000  |      |   | 5,000  | 
|Bearing interest at 3.90% fixed, due 12/31/09                      |  |      | 5,000  |      |   | 5,000  | 
|Bearing interest at 3.12% fixed, due 1/19/10                       |  |      | 3,000  |      |   |       | 
|Bearing interest at 3.00% fixed, due 1/22/10                       |  |      | 3,000  |      |   |       | 
|Bearing interest at 2.90% fixed, due 2/1/10                        |  |      | 3,000  |      |   |       | 
|Bearing interest at 2.86% fixed, due 2/5/10                        |  |      | 3,000  |      |   |       | 
|Bearing interest at 2.68% fixed, due 3/4/10                        |  |      | 1,000  |      |   |       | 
|Bearing interest at 3.06% fixed, due 3/4/11                        |  |      | 2,000  |      |   |       | 
|Bearing interest at 3.91% fixed, due 5/31/11                       |  |      | 3,000  |      |   |       | 
|Bearing interest at 3.74% fixed, due 6/6/11                        |  |      | 2,000  |      |   |       | 
|Bearing interest at 4.29% fixed, due 6/18/18                       |  |      | 1,000  |      |   |       | 
|Bearing interest at 4.364% fixed, due 9/4/18                       |  |      | 2,000  |      |   |       | 
|Bearing interest at 4.236% fixed, due 9/2/15                       |  |      | 1,000  |      |   |       | 
|Bearing interest at 3.70% fixed, due 11/8/10                       |  |      | 2,000  |      |   |       | 
|Bearing interest at 2.61% fixed, due 1/3/12                        |  |      | 2,000  |      |   |       | 
|FHLB Overnight Line of Credit, bearing interest at 0.44% and
3.61% |  |      | 23,700 |      |   | 23,000 | 
|                                                                   |  |      |        |      |   |        | 
|                                                                   |  | $    | 66,324 |      | $ | 40,333 | 
|                                                                   |  |      |        |      |   |        | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

| |                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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,
 2008, as well as remaining maturities beyond five years:

|                              |  |   |        | 
|----------------------------- |  | - | ------ | 
|Due in one year               |  | $ | 34,509 | 
|Due one through two years     |  |   | 15,838 | 
|Due two through three
 years  |  |   | 7,867  | 
|Due three through four
 years |  |   | 2,898  | 
|Due four through five
 years  |  |   | 712    | 
|Due past five years           |  |   | 4,500  | 
|                              |  |   |        | 
|Total                         |  | $ | 66,324 | 
|                              |  |   |        | 

|    |                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | At December
 31, 2008, the Company had additional availability on its FHLB line of credit
 of $35.2 million. This line of credit is subject to periodic review and
 renewal.
|    |                                                                                                                                                                             
|(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):                          

|                         |  |      |       |      |   |       |   |   |       |  
|------------------------ |  | ---- | ----- | ---- | - | ----- | - | - | ----- | -
|                         |  | 2008 |       | 2007 |   | 2006  |  
|                         |  |      |       |      |   |       |  
|Current:                 |  |      |       |      |   |       |   |   |       |  
|Federal                  |  | $    | 1,143 |      | $ | 1,539 |   | $ | 1,959 |  
|State                    |  |      | 127   |      |   | 106   |   |   | 141   |  
|                         |  |      |       |      |   |       |   |   |       |  
|                         |  |      | 1,270 |      |   | 1,645 |   |   | 2,100 |  
|                         |  |      |       |      |   |       |   |   |       |  
|Deferred:                |  |      |       |      |   |       |   |   |       |  
|Federal                  |  |      | 172   |      |   | (38   | ) |   | (598  | )
|State                    |  |      | (46   | )    |   | 1     |   |   | (164  | )
|                         |  |      |       |      |   |       |   |   |       |  
|                         |  |      | 126   |      |   | (37   | ) |   | (762  | )
|                         |  |      |       |      |   |       |   |   |       |  
|                         |  |      |       |      |   |       |   |   |       |  
|Total income tax expense |  | $    | 1,396 |      | $ | 1,608 |   | $ | 1,338 |  
|                         |  |      |       |      |   |       |   |   |       |  
|                         |  |      |       |      |   |       |   |   |       |  

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

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

|                                                               |  |      |       |      |   |       |   |   |       |  
|-------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | - | - | ----- | -
|                                                               |  | 2008 |       | 2007 |   | 2006  |  
|                                                               |  |      |       |      |   |       |  
|Computed expected tax expense                                |  | $    | 1,462 |      | $ | 1,585 |   | $ | 1,301 |  
|                                                              
|Increases (decreases) in income
 taxes resulting from:         |  |      |       |      |   |       |   |   |       |  
|State taxes, net of Federal tax
 benefit                       |  |      | 54    |      |   | 71    |   |   | (16   | )
|Tax exempt interest                                            |  |      | (19   | )    |   | (33   | ) |   | (47   | )
|Tax exempt increase in cash
 surrender value of life insurance |  |      | (139  | )    |   | (130  | ) |   | (73   | )
|Non-deductible ESOP
expense                                    |  |      | 57    |      |   | 107   |   |   | 119   |  
|Non-deductible stock option
 expense                           |  |      |      |      |   |      |   |   | 45    |  
|Other, net                                                     |  |      | (19   | )    |   | 8     |   |   | 9     |  
|                                                               |  |      |       |      |   |       |   |   |       |  
|                                                               |  |      |       |      |   |       |   |   |       |  
|                                                               |  | $    | 1,396 |      | $ | 1,608 |   | $ | 1,338 |  
|                                                               |  |      |       |      |   |       |   |   |       |  
|                                                               |  |      |       |      |   |       |   |   |       |  
|Effective tax rate                                             |  |      | 32.5  | %    |   | 34.5  | % |   | 35.0  | %
|                                                               |  |      |       |      |   |       |   |   |       |  

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):

| |                                                     |  |      |       |      |   |       | 
| | --------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | 
| |                                                     |  | 2008 |       | 2007 |  
| |                                                     |  |      |       |      |  
| | Deferred tax assets:                                |  |      |       |      |   |       | 
| | Allowance for loan
losses                           |  | $    | 677   |      | $ | 654   | 
| | Accrued postretirement
benefits                     |  |      | 1,000 |      |   | 950   | 
| | Deferred compensation                               |  |      | 737   |      |   | 779   | 
| | Stock-based compensation and
 benefits              |  |      | 560   |      |   | 607   | 
| | Unrealized losses on available
 for sale securities |  |      |      |      |   | 8     | 
| | Capital loss
carry-forward                          |  |      | 100   |      |   |      | 
| | Accrued pension cost                                |  |      | 430   |      |   |      | 
| | Other                                               |  |      | 79    |      |   | 97    | 
| |                                                     |  |      |       |      |   |       | 
| |                                                     |  |      |       |      |   |       | 
| | Total gross deferred tax
assets                     |  |      | 3,583 |      |   | 3,095 | 
| |                                                     |  |      |       |      |   |       | 
| |                                                     |  |      |       |      |   |       | 
| | Deferred tax liabilities:                           |  |      |       |      |   |       | 
| | Depreciation                                        |  |      | 196   |      |   | 147   | 
| | Prepaid pension cost                                |  |      |      |      |   | 726   | 
| | Undistributed income of
 subsidiary                 |  |      | 71    |      |   | 51    | 
| | Unrealized gains on
 available-for-sale securities  |  |      | 17    |      |   |      | 
| | Deferred loan costs                                 |  |      | 158   |      |   | 126   | 
| | Other                                               |  |      | 15    |      |   | 17    | 
| |                                                     |  |      |       |      |   |       | 
| |                                                     |  |      |       |      |   |       | 
| | Total gross deferred tax
 liabilities               |  |      | 457   |      |   | 1,067 | 
| |                                                     |  |      |       |      |   |       | 
| | Net deferred tax
assets                             |  | $    | 3,126 |      | $ | 2,028 | 
| |                                                     |  |      |       |      |   |       | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

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, 2008, 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,
2008 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 December 31, 2008 and 2007, the Company had
approximately $18,000 and $53,000, respectively, of unrecognized tax benefits
and interest. As of December 31, 2008 and 2007, $53,000 and $18,000,
respectively, of these tax benefits would affect the effective tax rate if
recognized. As of December 31, 2008 and 2007, accrued interest related to
uncertain tax positions was $11,000 and $2,000, respectively, net of the
related tax benefit. The Company accounts for interest and 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 2005.
The Companys 2002-2005 New York state examination has closed with no material
impact to its financial position. The tax years 2005-2007 remain open to
federal and state examination.

Unrecognized Tax Benefits

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):

|                                                              |  |      |     |      |   |    | 
|------------------------------------------------------------- |  | ---- | --- | ---- | - | -- | 
|                                                              |  | 2008 |     | 2007 |  
|                                                              |  |      |     |      |  
|Balance at January 1                                          |  | $    | 64  |      | $ | 15 | 
|Additions based on tax
 positions related to the current year |  |      | 3   |      |   |   | 
|Additions based on tax
 positions of prior years              |  |      | 21  |      |   | 49 | 
|Reductions for tax
 positions of prior years                  |  |      |    |      |   |   | 
|Reductions due to statute
 of limitations                     |  |      |    |      |   |   | 
|Settlements                                                   |  |      | (64 | )    |   |   | 
|                                                              |  |      |     |      |   |    | 
|Balance at December 31                                        |  | $    | 24  |      | $ | 64 | 
|                                                              |  |      |     |      |   |    | 

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

|    |                                    
|--- | -----------------------------------
|(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, 2008 and
2007:

|                                                                               |  |                  |        |                         |   |       |   |      |        |   |   |        |  
|------------------------------------------------------------------------------ |  | ---------------- | ------ | ----------------------- | - | ----- | - | ---- | ------ | - | - | ------ | -
|                                                                               |  | Pension benefits |        | Postretirement benefits |  
|                                                                               |  |                  |        |                         |  
|(in thousands)                                                                 |  | 2008             |        | 2007                    |   | 2008  |   | 2007 |       
|                                                                               |  |                  |        |                         |   |       |   |      |       
|Change in benefit obligation:                                                  |  |                  |        |                         |   |       |   |      |        |   |   |        |  
|Benefit obligation at beginning
 of year                                       |  | $                | 6,970  |                         | $ | 7,192 |   | $    | 2,440  |   | $ | 2,354  |  
|Adjustment for measurement date
 change                                        |  |                  | 80     |                         |   |      |   |      | 40     |   |   |       |  
|Service cost                                                                   |  |                  |       |                         |   |      |   |      | 21     |   |   | 25     |  
|Interest cost                                                                  |  |                  | 353    |                         |   | 430   |   |      | 147    |   |   | 140    |  
|Amendments and
settlements                                                     |  |                  | (1,219 | )                       |   | (328  | ) |      |       |   |   |       |  
|Curtailment charge                                                             |  |                  |        |                         |   |      |   |      |       |   |   |       |  
|Actuarial(gain)/ loss                                                          |  |                  | 185    |                         |   | (104  | ) |      | (28    | ) |   | (23    | )
|Benefits paid                                                                  |  |                  | (418   | )                       |   | (220  | ) |      | (101   | ) |   | (103   | )
|Participant
contributions                                                      |  |                  |       |                         |   |      |   |      | 45     |   |   | 47     |  
|                                                                               |  |                  |        |                         |   |       |   |      |        |   |   |        |  
|Benefit obligation at end of
 year                                             |  |                  | 5,951  |                         |   | 6,970 |   |      | 2,564  |   |   | 2,440  |  
|                                                                               |  |                  |        |                         |   |       |   |      |        |   |   |        |  
|Change in plan assets:                                                         |  |                  |        |                         |   |       |   |      |        |   |   |        |  
|Fair value of plan assets at
 beginning of year                                |  |                  | 8,869  |                         |   | 8,326 |   |      |       |   |   |       |  
|Actual return on plan
assets                                                   |  |                  | (2,261 | )                       |   | 1,091 |   |      |       |   |   |       |  
|Employer contributions                                                         |  |                  |       |                         |   |      |   |      | 56     |   |   | 56     |  
|Settlements                                                                    |  |                  | (1,219 | )                       |   | (328  | ) |      |       |   |   |       |  
|Participant
contributions                                                      |  |                  |       |                         |   |      |   |      | 45     |   |   | 47     |  
|Benefits paid                                                                  |  |                  | (418   | )                       |   | (220  | ) |      | (101   | ) |   | (103   | )
|                                                                               |  |                  |        |                         |   |       |   |      |        |   |   |        |  
|Fair value of plan assets at
 end of year                                      |  |                  | 4,971  |                         |   | 8,869 |   |      |       |   |   |       |  
|                                                                               |  |                  |        |                         |   |       |   |      |        |   |   |        |  
|                                                                               |  |                  |        |                         |   |       |   |      |        |   |   |        |  
|Funded status at end of year
 (plan assets less benefit obligations)           |  | $                | (980   | )                       | $ | 1,899 |   | $    | (2,564 | ) | $ | (2,440 | )
|                                                                               |  |                  |        |                         |   |       |   |      |        |   |   |        |  
|                                                                               |  |                  |        |                         |   |       |   |      |        |   |   |        |  
|Assumptions as of measurement dates: 2008 - December 31; 2007 -
 September 30: |  |                  |        |                         |   |       |  
|Discount rate                                                                  |  |                  | 6.00   | %                       |   | 6.25  | % |      | 6.00   | % |   | 6.25   | %
|Expected return on plan
assets                                                 |  |                  | 9.00   | %                       |   | 9.00  | % |      |       |   |   |       |  
|Rate of compensation
increase                                                  |  |                  | N/A    |                         |   | N/A   |   |      |       |   |   |       |  

In September 2006, the
Financial Accounting Standards Board (FASB) issued SFAS No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement Plans  an
amendment of FASB Statements No. 87, 88, 106 and 132(R). This Statement
requires that benefit plan assets and obligations are to be measured as of the
date of the employers fiscal year-end, starting in 2008. Through 2007, the
Company utilized the early measurement date option available under FASB
Statement No. 87 Employers Accounting for Pensions, and measured the
funded status of the defined benefit plan and postretirement benefits plan
assets and obligations as of September 30 each year. In accordance with
the adoption provisions, the net periodic benefit cost for the period between
the September 30 measurement date and the 2008 fiscal year end measurement were
allocated proportionately between amounts to be recognized as an adjustment to
retained earnings and net periodic benefit cost for the fiscal year. As a result
of this adoption, the Company increased January 1, 2008 opening retained
earnings by $24,000, increased deferred income tax liability by $16,000,
decreased the pension liability by $80,000, and increased the other
postretirement liability by $40,000.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

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

|                            |  |                   |        |                         |   |      |   |      |    |  |   |    | 
|--------------------------- |  | ----------------- | ------ | ----------------------- | - | ---- | - | ---- | -- |  | - | -- | 
|                            |  | Pension
 benefits |        | Postretirement benefits |  
|                            |  |                   |        |                         |  
|                            |  | 2008              |        | 2007                    |   | 2008 |   | 2007 |   
|                            |  |                   |        |                         |   |      |   |      |   
|Net actuarial gain (loss)   |  | $                 | (2,312 | )                       | $ | (425 | ) | $    | 22 |  | $ | 33 | 
|Prior service credit (cost) |  |                   |       |                         |   |     |   |      | 52 |  |   | 28 | 
|                            |  |                   |        |                         |   |      |   |      |    |  |   |    | 
|Total                       |  | $                 | (2,312 | )                       | $ | (425 | ) | $    | 74 |  | $ | 61 | 
|                            |  |                   |        |                         |   |      |   |      |    |  |   |    | 

The estimated net
unrecognized loss and prior service credit that will be amortized from other
comprehensive loss into net periodic benefit cost over the next fiscal year are
$(383,000) and $8,000, respectively.

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.

The Companys
pension plan weighted average allocations at December 31, 2008 and September
30, 2007, by asset category are summarized in the following table:

|                  |  |                    |     |                     |  |     |  
|----------------- |  | ------------------ | --- | ------------------- |  | --- | -
|                  |  | Plan assets at     |    
|                  |  |                    |    
|Asset Category    |  | December
 31, 2008 |     | September
 30, 2007 | 
|                  |  |                    |     |                     | 
|Equity Securities |  |                    | 59  | %                   |  | 70  | %
|Debt Securities   |  |                    | 41  | %                   |  | 30  | %
|                  |  |                    |     |                     |  |     |  
|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 diversified investment
funds of the RSI Retirement Trust (the Trust), a series of no load series
open-ended mutual funds. 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.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

For the fiscal
year ended December 31, 2009, 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 2009      |  | $                 | 351   |                          | $ | 142 | 
|Fiscal 2010      |  |                   | 366   |                          |   | 148 | 
|Fiscal 2011      |  |                   | 382   |                          |   | 155 | 
|Fiscal 2012      |  |                   | 407   |                          |   | 156 | 
|Fiscal 2013      |  |                   | 413   |                          |   | 161 | 
|Fiscal 2014-2018 |  |                   | 2,194 |                          |   | 823 | 

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

|                                                                              |  |                  |       |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
|----------------------------------------------------------------------------- |  | ---------------- | ----- | ----------------------- | - | ---- | - | ---- | ---- | ---- | - | ---- | - | - | --- | - | - | --- | -
|                                                                              |  | Pension benefits |       | Postretirement benefits |  
|                                                                              |  |                  |       |                         |  
|(in thousands)                                                                |  | 2008             |       | 2007                    |   | 2006 |   | 2008 |      | 2007 |   | 2006 |  
|                                                                              |  |                  |       |                         |   |      |   |      |      |      |   |      |  
|Service cost                                                                  |  | $                |      |                         | $ |     |   | $    |     |      | $ | 21   |   | $ | 25  |   | $ | 25  |  
|Interest cost                                                                 |  |                  | 353   |                         |   | 430  |   |      | 424  |      |   | 147  |   |   | 140 |   |   | 135 |  
|Expected return on assets                                                     |  |                  | (673  | )                       |   | (734 | ) |      | (710 | )    |   |     |   |   |    |   |   |    |  
|Settlement charge                                                             |  |                  | 134   |                         |   |     |   |      |     |      |   |     |   |   |    |   |   |    |  
|Amortization                                                                  |  |                  |      |                         |   | 42   |   |      | 69   |      |   | (8   | ) |   | (8  | ) |   | (8  | )
|                                                                              |  |                  |       |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
|Net periodic (benefit) cost                                                   |  |                  | (186  | )                       |   | (262 | ) |      | (217 | )    |   | 160  |   |   | 157 |   |   | 152 |  
|                                                                              |  |                  |       |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
|                                                                              |  |                  |       |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
|Net loss (gain)                                                               |  |                  | 3,280 |                         |   | (504 | ) |      |     |      |   | (30  | ) |   | (24 | ) |   |    |  
|Recognition of loss                                                           |  |                  | (134  | )                       |   |     |   |      |     |      |   |      |   |   |    |   |   |    |  
|Amortization of prior service
 cost                                           |  |                  |      |                         |   |     |   |      |     |      |   | 8    |   |   | 8   |   |   |    |  
|                                                                              |  |                  |       |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
|Total recognized in other
 comprehensive income                               |  |                  | 3,146 |                         |   | (504 | ) |      |     |      |   | (22  | ) |   | (16 | ) |   |    |  
|                                                                              |  |                  |       |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  
|Total recognized in net
 periodic benefit cost and other comprehensive income |  | $                | 2,960 |                         | $ | (766 | ) | $    | (217 | )    | $ | 138  |   | $ | 141 |   | $ | 152 |  
|                                                                              |  |                  |       |                         |   |      |   |      |      |      |   |      |   |   |     |   |   |     |  

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | During the
 quarter ended March 31, 2008, the Company recorded a curtailment charge of
 $134,000 related to a partial settlement of the defined benefit pension plan.
 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

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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, 2008 and 2007 the remaining contractual life of
 these options was 1.5 years and 2.5 years, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | On May 3, 2006, the
 Companys shareholders approved the Rome Bancorp, Inc. 2006 Stock Option Plan
 (the 2006 Stock Option Plan), which also has the primary objective of
 providing officers and directors with a proprietary interest in the Company
 and an incentive to encourage such persons to remain with the Company. Under
 the 2006 Stock Option Plan, 590,000 shares of authorized but unissued common stock
 are reserved for issuance upon option exercises. The Company also has the
 alternative to fund the 2006 Stock Option Plan with treasury stock. Options
 under the plan may be either non-qualified stock options or incentive stock
 options.                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Each option entitles the
 holder to purchase one share of common stock at an exercise price equal to
 the fair market value on the date of grant. On May 24, 2006, 354,000 options
 were awarded at an exercise price of $12.84 per share. These options have a
 ten-year term and vest at a rate of 20% per year from the grant date. The
 fair value of the 2006 options awarded was estimated on the date of grant
 using a closed form option valuation (Black-Scholes) model and the following
 assumptions: risk free interest rate 4.60%, an expected term of 6.5 years,
 expected stock price volatility of 8.25% and a dividend yield of 2.52%. At
 December 31, 2008 and December 31, 2007 the remaining contractual life of
 these options was 7.4 years and 8.4 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, $50,000 and $379,000
 for 2008, 2007 and 2006, respectively.                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Information related to the
 stock option plans during each year follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|                                                |  |      |        |      |   |             |  |   |         | 
|----------------------------------------------- |  | ---- | ------ | ---- | - | ----------- |  | - | ------- | 
|                                                |  | 2008 |        | 2007 |   | 2006        | 
|                                                |  |      |        |      |   |             | 
|                                               
|Intrinsic
 value of options exercised           |  | $    | 25,000 |      | $ | 1.7 million |  | $ | 487,000 | 
|Cash
 received from option exercises            |  |      |       |      |   | 356,000     |  |   | 101,000 | 
|Tax benefit realized from option exercises      |  |      |       |      |   | 156,000     |  |   | 144,000 | 
|Weighted
 average fair value of options granted |  |      |       |      |   |            |  |   | 1.69    | 

| |                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of December 31, 2008,
 there was $121,000 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 2.42 years. At December 31,
 2008, the intrinsic value of all outstanding options and exercisable options
 was $18,000.
| |                                                                                                                                                                                                                                                                                                                                                  
| | The
 following table presents the stock option activity for the year ended
 December 31, 2008:                                                                                                                                                                                                                                                   

|                                 |  |        |         |                                  |   |       | 
|-------------------------------- |  | ------ | ------- | -------------------------------- | - | ----- | 
|                                 |  | 2008   |        
|                                 |  |        |        
|                                 |  | Shares |         | Weighted Average
 Exercise Price |  
|                                 |  |        |         |                                  |  
|                                
|Outstanding at beginning of year |  |        | 359,446 |                                  | $ | 12.68 | 
|Exercised                        |  |        | (2,720  | )                                |   | 2.19  | 
|Granted                          |  |        |        |                                  |   |      | 
|                                 |  |        |         |                                  |   |       | 
|Outstanding at end of year       |  |        | 356,726 |                                  | $ | 12.76 | 
|                                 |  |        |         |                                  |   |       | 
|Exercisable at end of year       |  |        | 144,326 |                                  | $ | 12.64 | 
|                                 |  |        |         |                                  |   |       | 

| |                                                     
| | ----------------------------------------------------
| | All
 outstanding stock options are expected to vest.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 $231,000, $263,000
 and $1.2 million related to RRP awards was recorded in 2008, 2007 and 2006,
 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, 2008   |  |        | 134,640 |                                         |   |      | 
|Granted                         |  |        |        |                                         |   |      | 
|Vested                          |  |        | 33,660  |                                         | $ | 12.84 | 
|Forfeited                       |  |        |        |                                         |   |      | 
|                                |  |        |         |                                         |   |       | 
|Nonvested at
 December 31, 2008 |  |        | 100,980 |                                         | $ | 12.84 | 
|                                |  |        |         |                                         |   |       | 

|     |                                                                                                                                                                                                                                                                                                                                                            
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | As of December 31, 2008,
 there was $430,000 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 2.4 years. The total fair value of shares
 vested during the years ended December 31, 2008, 2007 and 2006 was $384,000,
 $416,000 and $0.
|     |                                                                                                                                                                                                                                                                                                                                                            
|(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 $86,000, $77,000 and
 $80,000 during the years ended December 31, 2008, 2007 and 2006,
 respectively.                                                                                                                                                                                  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 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, 2008, 302,316 of the original ESOP shares had been released or
 committed to be released of which 151,172 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,
 2008, 62,933 of these shares had been released or committed to be released
 and 173,067 remained as unallocated shares.                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | The fair
 value of the unallocated shares on December 31, 2008 was $2.8 million. The
 Company recognized compensation expense of $495,000, $557,000 and $568,000 in
 2008, 2007 and 2006, 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 $685,000 and $755,000 at December 31, 2008 and December 31,
 2007, 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, |       
|                                                                                 |  |                          |       
|                                                                                 |  | 2008                     |        | 2007 |   | 2006 |  
|                                                                                 |  |                          |        |      |   |      |  
|Unrealized holding (losses)
 gains arising during the period                     |  | $                        | (3,325 | )    | $ | 439  |   | $ | (59 | )
|Reclassification adjustment for
 net realized loss (gain) included in net income |  |                          | 265    |      |   | (11  | ) |   | (11 | )
|                                                                                 |  |                          |        |      |   |      |   |   |     |  
|                                                                                 |  |                          |        |      |   |      |   |   |     |  
|Other comprehensive (loss)
 income, before tax                                   |  |                          | (3,060 | )    |   | 428  |   |   | (70 | )
|Deferred tax (benefit) expense                                                   |  |                          | (1,224 | )    |   | 171  |   |   | (28 | )
|                                                                                 |  |                          |        |      |   |      |   |   |     |  
|                                                                                 |  |                          |        |      |   |      |   |   |     |  
|Other comprehensive (loss)
 income, net of tax                                   |  | $                        | (1,836 | )    | $ | 257  |   | $ | (42 | )
|                                                                                 |  |                          |        |      |   |      |   |   |     |  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

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

|                                                                  |  |                      |      |              |   |                      |   |   |        |  
|----------------------------------------------------------------- |  | -------------------- | ---- | ------------ | - | -------------------- | - | - | ------ | -
|                                                                  |  | Balance at
 12/31/07 |      | 2008
 Change |   | Balance at
 12/31/08 |  
|                                                                  |  |                      |      |              |   |                      |  
|Unrealized gains (losses)
 on available for sale securities       |  | $                    | (12  | )            | $ | 38                   |   | $ | 26     |  
|Unrealized gains (losses)
 on pension and postretirement benefits |  |                      | (364 | )            |   | (1,874               | ) |   | (2,238 | )
|                                                                  |  |                      |      |              |   |                      |   |   |        |  
|                                                                  |  | $                    | (376 | )            | $ | (1,836               | ) | $ | (2,212 | )
|                                                                  |  |                      |      |              |   |                      |   |   |        |  

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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, 2008 and 2007 the Company was committed to originate mortgage and other
 loans of approximately $3.3 million and $8.0 million, respectively. At
 December 31, 2008 and December 31, 2007, the Companys fixed rate loan
 commitments totaled $1.4 million and $4.0 million, respectively. The range of
 interest rates on these fixed rate commitments was 5.875% to 8.5% at December
 31, 2008 and 5.375% to 7.0% at December 31, 2007. Commitments under unused
 lines of credit and letters of credit were approximately $18.7 million and
 $20.1 million at December 31, 2008 and 2007, 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, 2008, 2007 and 2006

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

|                                            |  |      |       |      |   |       |  |   |       | 
|------------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|                                            |  | 2008 |       | 2007 |   | 2006  | 
|                                            |  |      |       |      |   |       | 
|Basic earnings per
 share:                  |  |      |       |      |   |       |  |   |       | 
|Net Income available to common shareholders |  | $    | 2,905 |      | $ | 3,054 |  | $ | 2,488 | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Weighted average basic shares outstanding   |  |      | 6,886 |      |   | 7,688 |  |   | 8,527 | 
|                                            |  |      |       |      |   |       |  |   |       | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Basic earnings per share                    |  | $    | 0.42  |      | $ | 0.40  |  | $ | 0.29  | 
|                                            |  |      |       |      |   |       |  |   |       | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Diluted earnings
 per share:                |  |      |       |      |   |       |  |   |       | 
|Net Income available to common shareholders |  | $    | 2,905 |      | $ | 3,054 |  | $ | 2,488 | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Weighted average basic shares outstanding   |  |      | 6,886 |      |   | 7,688 |  |   | 8,527 | 
|Effect of dilutive securities:              |  |      |       |      |   |       |  |   |       | 
|Stock options                               |  |      | 3     |      |   | 19    |  |   | 142   | 
|Unearned RRP shares                         |  |      | 75    |      |   | 84    |  |   | 55    | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Weighted average diluted shares outstanding |  |      | 6,964 |      |   | 7,791 |  |   | 8,724 | 
|                                            |  |      |       |      |   |       |  |   |       | 
|                                            |  |      |       |      |   |       |  |   |       | 
|Diluted earnings per share                  |  | $    | 0.42  |      | $ | 0.39  |  | $ | 0.29  | 
|                                            |  |      |       |      |   |       |  |   |       | 

| |                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Stock
 options for 354,000, 354,000 and 206,500 shares of common stock were not
 considered in computing diluted earnings per common share for 2008, 2007 and
 2006 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, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | 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 could 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. The Bank must obtain regulatory approval to pay cash dividends
 to the Company.                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | 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, 2008, 2007 and 2006

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | can initiate
 certain mandatory and possibly additional discretionary, actions by the
 regulators that, if undertaken, could have a direct material effect on the
 Companys and Banks financial statements.                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | The Federal
 Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), established
 capital levels for which insured institutions are categorized as well
 capitalized, adequately capitalized, undercapitalized, significantly
 undercapitalized, or critically undercapitalized.                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | As of August
 21, 2008, the most recent notification from the OTS categorized Rome Savings
 as well capitalized under the regulatory framework for prompt corrective
 actions. There have been no conditions or events since that notification that
 management believes have changed Rome Savings category. Management believes,
 as of December 31, 2008, that the Company and Bank meet and exceed 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 capital
 adequacy
 requirements |  | To be classified as
 Well-capitalized
 under prompt
 corrective action
 provisions |  
|                                           |  |        |        |                                         |  |                                                                                    |  
|                                           |  | Amount |        | Ratio                                   |  | Amount                                                                             |   | Ratio |        | Amount |  | Ratio |  
|                                           |  |        |        |                                         |  |                                                                                    |   |       |        |        |  |       |  
|As of December 31, 2008:                   |  |        |        |                                         |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|Total capital (to risk weighted
 assets):  |  | $      | 59,845 |                                         |  | 24.45                                                                              | % | $     | 19,579 |        |  | >=8   | % | $ | 24,474 |  |  | >=10 | %
|                                           |  |        |        |                                         |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|Tier 1 Capital (to risk
 weighted assets): |  |        | 58,229 |                                         |  | 23.79                                                                              | % |       | 9,790  |        |  | >=4   | % |   | 14,684 |  |  | >=6  | %
|                                           |  |        |        |                                         |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|Tier 1 Capital (to adjusted
 assets):      |  |        | 58,229 |                                         |  | 17.15                                                                              | % |       | 10,186 |        |  | >=3   | % |   | 16,977 |  |  | >=5  | %
|                                           |  |        |        |                                         |  |                                                                                    |   |       |        |        |  |       |   |   |        |  |  |      |  
|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  | %

---



Rome Bancorp, Inc and
Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | Following is a reconciliation of Rome Savings GAAP
 shareholders equity to regulatory Tier 1 capital at December 31, 2008 and
 2007.

|                                                                                                          |  |                     |        |                     |   |        |  
|--------------------------------------------------------------------------------------------------------- |  | ------------------- | ------ | ------------------- | - | ------ | -
|                                                                                                          |  | December
 31,
 2008 |        | December
 31,
 2007 |  
|                                                                                                          |  |                     |        |                     |  
|GAAP
 Shareholders Equity                                                                                |  | $                   | 55,983 |                     | $ | 63,932 |  
|Plus: Minority interest
 in consolidated subsidiary and other comprehensive loss related to SFAS No.
 158 |  |                     | 2,342  |                     |   | 434    |  
|Less: Disallowed assets
 and unrealized gains on available-for-sale securities, net of tax                |  |                     | (26    | )                   |   | (51    | )
|                                                                                                          |  |                     |        |                     |   |        |  
|Tier 1 Capital                                                                                            |  |                     | 58,229 |                     |   | 64,315 |  
|                                                                                                          |  |                     |        |                     |   |        |  
|                                                                                                          |  |                     |        |                     |   |        |  
|Plus: Allowance
 for loan losses                                                                          |  |                     | 1,936  |                     |   | 1,910  |  
|Allowed
 unrealized gain on available-for-sale securities                                                 |  |                     |       |                     |   |       |  
|Less: Real
 estate held for investment                                                                    |  |                     | (320   | )                   |   | (326   | )
|                                                                                                          |  |                     |        |                     |   |        |  
|                                                                                                          |  |                     |        |                     |   |        |  
|Total Regulatory
 Capital                                                                                 |  | $                   | 59,845 |                     | $ | 65,889 |  
|                                                                                                          |  |                     |        |                     |   |        |  

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                        
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(17) | Fair Value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                        
|     | Statement 157 establishes
 a fair value hierarchy which requires an entity to maximize the use of
 observable inputs and minimize the use of unobservable inputs when measuring
 fair value. The standard describes three levels of inputs that may be used to
 measure fair value:                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Level 1: Quoted prices
 (unadjusted) for identical assets or liabilities in active markets that the
 entity has the ability to access as of the measurement date.                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Level 2: Significant
 other observable inputs other than Level 1 prices such as quoted prices for
 similar assets or liabilities; quoted prices in markets that are not active;
 or other inputs that are observable or can be corroborated by observable
 market data.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Level 3: Significant
 unobservable inputs that reflect a reporting entitys own assumptions about
 the assumptions that market participants would use in pricing an asset or
 liability.                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                        
|     | The fair values of
 securities available for sale are determined by obtaining quoted prices on
 nationally recognized securities exchanges (Level 1 inputs) or matrix
 pricing, which is a mathematical technique widely used to in the industry to
 value debt securities without relying exclusively on quoted prices for the
 specific securities but rather by relying on the securities relationship to
 other benchmark quoted securities (Level 2 inputs).                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                        
|     | The fair value of impaired loans with specific
 allocations of the allowance for loan losses is generally based on recent
 real estate appraisals. These appraisals may utilize a single valuation
 approach or a combination of approaches including comparable sales and the
 income approach. Adjustments are routinely made in the appraisal process by
 the appraisers to adjust for differences between the comparable sales and
 income data available. Such adjustments are typically significant and result
 in a Level 3 classification of the inputs for determining fair value.

---



Rome Bancorp, Inc and
Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

|                                      |                                                                                         
|------------------------------------- | ----------------------------------------------------------------------------------------
|Assets Measured on a
 Recurring Basis
|                                      |                                                                                         
|                                      | Assets measured at fair
 value on a recurring basis are summarized below (in thousands):

| |                                |  |                                                                    |     |                                           |   |       |  | 
| | ------------------------------ |  | ------------------------------------------------------------------ | --- | ----------------------------------------- | - | ----- |  | 
| |                                |  | Fair Value Measurements
 at December 31, 2008 Using                |     |                                          
| |                                |  |                                                                    |     |                                          
| |                                |  | Quoted Prices in
 Active Markets
 for Identical
 Assets
 (Level 1) |     | SignificantOtherObservableInputs(Level 2) |   |      
| |                                |  |                                                                    |     |                                           |   |      
| | Assets:                        |  |                                                                    |     |                                           |   |       |  | 
| | Available for sale
 securities |  | $                                                                  | 500 |                                           | $ | 3,063 |  | 

| |                                                                                             
| | --------------------------------------------------------------------------------------------
| | Assets measured at fair
 value on a non-recurring basis are summarized below (in thousands):

| |                |  |                                                                    |   |                                           |   |                                        |  |   |     | 
| | -------------- |  | ------------------------------------------------------------------ | - | ----------------------------------------- | - | -------------------------------------- |  | - | --- | 
| |                |  | Fair Value Measurements
 at December 31, 2008 Using                |  
| |                |  |                                                                    |  
| |                |  | Quoted Prices in
 Active Markets
 for Identical
 Assets
 (Level 1) |   | SignificantOtherObservableInputs(Level 2) |   | SignificantUnobservableInputs(Level 3) | 
| |                |  |                                                                    |   |                                           |   |                                        | 
| |                |  |                                                                    |   |                                           |   |                                        |  |   |     | 
| | Impaired loans |  | $                                                                  |  |                                           | $ |                                       |  | $ | 464 | 

| |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following represent
 impairment charges recognized during the period:                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | Impaired loans, which are measured for impairment using
 the fair value of the collateral for collateral dependent loans, had a carrying amount of $710,000, with a valuation allowance of
$246,000,
 resulting in an additional provision for loan losses of $234,000 for the period.
| |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 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:The fair values of securities
 available for sale are determined by obtaining quoted prices on nationally
 recognized securities exchanges (Level 1 inputs) or matrix pricing, which is
 a mathematical technique widely used to in the industry to value debt
 securities without relying exclusively on quoted prices for the specific
 securities but rather by relying on the securities relationship to other
 benchmark quoted securities (Level 2 inputs).  
| |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                        | 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. The Company has not considered market
 illiquidity in estimating the fair value of loans due to uncertain and
 inconsistent market pricing being experienced at December 31, 2008.

---



Rome Bancorp, Inc and
Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

| |                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                  | Deposits:
 The fair values of demand deposits (interest and non-interest checking)
 savings accounts and money market accounts are, by definition, equal to the
 amount payable on demand at the reporting date (i.e., their carrying
 amounts). Fair values for fixed-rate certificates of deposits, are estimated
 using a discounted cash flow calculation that applies interest rates
 currently being offered on these products to a schedule of aggregated
 expected monthly maturities on time deposits.
| |                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                  | Borrowings:Fair values of long-term borrowings are estimated using a
 discounted cash flow approach, based on current market rates for similar
 borrowings. The fair value of accrued interest approximates carrying value.                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                  | Off-balance-sheet
 instruments: Fair values for the Companys
 off-balance-sheet instruments (lines of credit and commitments to fund loans)
 are based on fees currently charged to enter into similar agreements, taking
 into account the remaining terms of the agreements and the counterparties
 credit standing. The fair value of these financial instruments is immaterial
 and has therefore been excluded from the table below.                                                                    
| |                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | The estimated carrying values and fair values of the
 Companys financial instruments, not previously presented, for December 31
 are as follows (in thousands):

| |                               |  |                  |         |             |   |                  |  |             |         |  |   |         | 
| | ----------------------------- |  | ---------------- | ------- | ----------- | - | ---------------- |  | ----------- | ------- |  | - | ------- | 
| |                               |  | 2008             |         | 2007        |  
| |                               |  |                  |         |             |  
| |                               |  | Carrying
 amount |         | Fair
 value |   | Carrying
 amount |  | Fair
 value |        
| |                               |  |                  |         |             |   |                  |  |             |        
| | Financial assets:             |  |                  |         |             |   |                  |  |             |         |  |   |         | 
| | Cash and cash equivalents     |  | $                | 9,579   |             | $ | 9,579            |  | $           | 8,018   |  | $ | 8,018   | 
| | Securities available for sale |  |                  | 3,563   |             |   | 3,563            |  |             | 2,674   |  |   | 2,674   | 
| | Securities held to maturity   |  |                  | 1,447   |             |   | 1,561            |  |             | 1,147   |  |   | 1,195   | 
| | Loans, net                    |  |                  | 298,453 |             |   | 302,424          |  |             | 281,042 |  |   | 281,492 | 
| | Federal Home Loan Bank Stock  |  |                  | 3,578   |             |   | n/a              |  |             | 2,344   |  |   | n/a     | 
| | Accrued interest receivable   |  |                  | 1,085   |             |   | 1,085            |  |             | 1,124   |  |   | 1,124   | 
| | Financial liabilities:        |  |                  |         |             |   |                  |  |             |         |  |   |         | 
| | Non-interest bearing deposits |  |                  | 28,373  |             |   | 28,373           |  |             | 29,509  |  |   | 29,509  | 
| | Interest bearing deposits     |  |                  | 177,559 |             |   | 178,007          |  |             | 173,523 |  |   | 173,619 | 
| | Borrowings                    |  |                  | 66,324  |             |   | 67,273           |  |             | 40,333  |  |   | 40,221  | 
| | Accrued interest payable      |  |                  | 121     |             |   | 121              |  |             | 29      |  |   | 29      | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | It is not practicable to determine the fair value of
 FHLB stock due to restrictions placed on its transferability. 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.

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

|     |                                                                                                                                                                                                                                  
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(18) | Parent Company Only Financial Statements                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                  
|     | Presented
 below is the condensed balance sheet of the Parent Company as of December 31,
 2008 and 2007 and statement of income and statement of cash flows for the
 years ended December 31, 2008, 2007 and 2006 (in thousands):

|                                            |  |      |        |      |   |        | 
|------------------------------------------- |  | ---- | ------ | ---- | - | ------ | 
|                                            |  | 2008 |        | 2007 |  
|                                            |  |      |        |      |  
|Condensed Balance
 Sheet                    |  |      |        |      |   |        | 
|Assets:                                     |  |      |        |      |   |        | 
|Cash and due from banks                     |  | $    | 421    |      | $ | 724    | 
|Investment in subsidiary bank               |  |      | 55,982 |      |   | 63,932 | 
|Loan receivable from ESOP                   |  |      | 2,277  |      |   | 2,467  | 
|Other assets                                |  |      | 1,749  |      |   | 1,970  | 
|                                            |  |      |        |      |   |        | 
|Total assets                                |  | $    | 60,429 |      | $ | 69,093 | 
|                                            |  |      |        |      |   |        | 
|                                            |  |      |        |      |   |        | 
|Total liabilities                           |  | $    | 85     |      | $ | 56     | 
|Total shareholders
 equity                 |  |      | 60,344 |      |   | 69,037 | 
|                                            |  |      |        |      |   |        | 
|Total liabilities and
 shareholders equity |  | $    | 60,429 |      | $ | 69,093 | 
|                                            |  |      |        |      |   |        | 

|                                                                                                                              |  |      |        |      |   |       |  |   |        |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ----- |  | - | ------ | -
|                                                                                                                              |  | 2008 |        | 2007 |   | 2006  | 
|                                                                                                                              |  |      |        |      |   |       | 
|Condensed Statement of Income                                                                                                 |  |      |        |      |   |       |  |   |        |  
|Interest and investment income                                                                                                |  | $    | 172    |      | $ | 301   |  | $ | 497    |  
|Dividends from subsidiary bank                                                                                                |  |      | 10,300 |      |   | 3,000 |  |   |       |  
|                                                                                                                              |  |      |        |      |   |       |  |   |        |  
|Total operating income                                                                                                        |  |      | 10,472 |      |   | 3,301 |  |   | 497    |  
|                                                                                                                              |  |      |        |      |   |       |  |   |        |  
|                                                                                                                              |  |      |        |      |   |       |  |   |        |  
|Net loss on securities                                                                                                        |  |      | 265    |      |   |      |  |   |       |  
|Other operating expenses                                                                                                      |  |      | 574    |      |   | 680   |  |   | 2,072  |  
|                                                                                                                              |  |      |        |      |   |       |  |   |        |  
|Income (loss) before income
 taxes and dividends in excess of net income/(equity in undistributed income)
 of subsidiary bank |  |      | 9,633  |      |   | 2,621 |  |   | (1,575 | )
|                                                                                                                              |  |      |        |      |   |       |  |   |        |  
|Equity in undistributed income
 (dividends in excess of net income) of subsidiary bank                                        |  |      | (6,728 | )    |   | 433   |  |   | 4,063  |  
|                                                                                                                              |  |      |        |      |   |       |  |   |        |  
|                                                                                                                              |  |      |        |      |   |       |  |   |        |  
|Net income                                                                                                                    |  | $    | 2,905  |      | $ | 3,054 |  | $ | 2,488  |  
|                                                                                                                              |  |      |        |      |   |       |  |   |        |  

---



Rome Bancorp, Inc and Subsidiary
Notes to Consolidated Financial Statements
Years ended December 31, 2008, 2007 and 2006

|                                                                                            |  |      |         |      |   |         |   |   |         |  
|------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | - | - | ------- | -
|                                                                                            |  | 2008 |         | 2007 |   | 2006    |  
|                                                                                            |  |      |         |      |   |         |  
|Condensed Statement of Cash Flows                                                           |  |      |         |      |   |         |   |   |         |  
|Operating activities:                                                                       |  |      |         |      |   |         |   |   |         |  
|Net income                                                                                  |  | $    | 2,905   |      | $ | 3,054   |   | $ | 2,488   |  
|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 |  |      | 6,728   |      |   | (433    | ) |   | (4,063  | )
|Amortization of stock-based
 compensation                                                   |  |      | 280     |      |   | 313     |   |   | 1,616   |  
|Net loss on securities other
 than temporarily impaired                                     |  |      | 265     |      |   |        |   |   |        |  
|Increase in other assets                                                                    |  |      | (139    | )    |   | (213    | ) |   | (742    | )
|Increase (decrease) increase in
 other liabilities                                          |  |      | 29      |      |   | (86     | ) |   | (764    | )
|                                                                                            |  |      |         |      |   |         |   |   |         |  
|Net cash provided by (used in) operating
 activities                                        |  |      | 10,068  |      |   | 2,635   |   |   | (1,465  | )
|                                                                                            |  |      |         |      |   |         |   |   |         |  
|                                                                                            |  |      |         |      |   |         |   |   |         |  
|Investing activities:                                                                       |  |      |         |      |   |         |   |   |         |  
|Decrease in loan to ESOP                                                                    |  |      | 190     |      |   | 179     |   |   | 169     |  
|                                                                                            |  |      |         |      |   |         |   |   |         |  
|Net cash provided by investing activities                                                   |  |      | 190     |      |   | 179     |   |   | 169     |  
|                                                                                            |  |      |         |      |   |         |   |   |         |  
|                                                                                            |  |      |         |      |   |         |   |   |         |  
|Financing activities:                                                                       |  |      |         |      |   |         |   |   |         |  
|Purchase of treasury stock                                                                  |  |      | (8,174  | )    |   | (10,181 | ) |   | (17,818 | )
|Dividends                                                                                   |  |      | (2,387  | )    |   | (2,518  | ) |   | (2,622  | )
|Exercise of stock options and
 related tax benefits                                         |  |      |        |      |   | 512     |   |   | 245     |  
|                                                                                            |  |      |         |      |   |         |   |   |         |  
|Net cash used in financing activities                                                       |  |      | (10,561 | )    |   | (12,187 | ) |   | (20,195 | )
|                                                                                            |  |      |         |      |   |         |   |   |         |  
|                                                                                            |  |      |         |      |   |         |   |   |         |  
|Net (decrease) in cash and cash
 equivalents                                                |  |      | (303    | )    |   | (9,373  | ) |   | (21,491 | )
|                                                                                            |  |      |         |      |   |         |   |   |         |  
|Cash and cash equivalents at
 beginning of year                                             |  |      | 724     |      |   | 10,097  |   |   | 31,588  |  
|                                                                                            |  |      |         |      |   |         |   |   |         |  
|Cash and cash equivalents at
 end of year                                                   |  | $    | 421     |      | $ | 724     |   | $ | 10,097  |  
|                                                                                            |  |      |         |      |   |         |   |   |         |  

|     |                                              
|---- | ---------------------------------------------
|(19) | Selected Quarterly Financial Data (Unaudited)

Selected quarterly financial
data for 2008 and 2007 are as follows:

|                                                     |  |                                          |       |          |   |               |  |              |       |  |   |       | 
|---------------------------------------------------- |  | ---------------------------------------- | ----- | -------- | - | ------------- |  | ------------ | ----- |  | - | ----- | 
|                                                     |  | 2008 Quarter Ending                      |      
|                                                     |  |                                          |      
|                                                     |  | March 31,                                |       | June 30, |   | September 30, |  | December 31, |      
|                                                     |  | (In thousands, except per share amounts) |      
|Net interest
 income                                 |  | $                                        | 3,237 |          | $ | 3,205         |  | $            | 3,276 |  | $ | 3,349 | 
|Net interest
 income after provision for loan losses |  |                                          | 3,237 |          |   | 3,205         |  |              | 3,176 |  |   | 3,149 | 
|Net income                                           |  |                                          | 700   |          |   | 780           |  |              | 815   |  |   | 610   | 
|Earnings per
 common share:                          |  |                                          |       |          |   |               |  |              |       |  |   |       | 
|Basic:                                               |  | $                                        | 0.10  |          | $ | 0.11          |  | $            | 0.12  |  | $ | 0.09  | 
|Diluted                                              |  |                                          | 0.10  |          |   | 0.11          |  |              | 0.12  |  |   | 0.09  | 

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

---



|                                                                  |  |                                                       
|----------------------------------------------------------------- |  | ------------------------------------------------------
|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         |  | Vice President,
 Senior Loan Officer                  
|Industrial Development Agency                                     |  |                                                       
|                                                                  |  |                                                       
|Michael J. Valentine                                              |  | Francis C. Thalmann                                   
|Chairman and
 Retired President, Mele Manufacturing               |  | Vice President,
 Operations and Branch Administration 
|Company, Inc.                                                     |  |                                                       

Crystal M. SeymoreCorporate
Secretary

---