U.S. SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D. C. 20549

FORM
10-K

ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010
Commission File No.: 000-27481

|                                                      
|------------------------------------------------------
|ROME BANCORP, INC.                                    
|(Exact name of registrant as specified in its charter)

|                                                                |  |                                         
|--------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                        |  | 16-1573070                              
|(State or other jurisdiction of
 incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

100
W. Dominick Street, Rome, New York 13440-5810(Address of principal executive offices)(315) 336-7300(Registrants Telephone
Number)

Securities registered pursuant to Section
12(b) of the Act:

|                                        |                                      
|--------------------------------------- | -------------------------------------
|Title of
 Class                         | Name of
 exchange on which registered
|Common Stock, par value $0.01 per share | The NASDAQ Stock Market, LLC         

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o  No x

Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes o  No
x

Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Act during the preceding 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes x  No o

Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-K (Sect. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrants knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. x

Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of large
accelerated filer, accelerated filer and smaller reporting company in Rule
12b-2 of the Exchange Act. (Check one):

Large
accelerated filer o  Accelerated
filer o  Non-accelerated
filer o  Smaller
reporting company x

Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act. Yes o  No x

Based
on the closing sales price on June 30, 2010, the aggregate market value of the
voting stock held by non-affiliates of the registrant was $49,112,000.

Rome
Bancorp had 6,777,551 shares of common stock outstanding as of March 15, 2011.

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TABLE OF CONTENTS

|         |  |                                                                                                                |  |     
|-------- |  | -------------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                                |  | Page
|PART I   |  |                                                                                                                |  |     
|         |  |                                                                                                                |  |     
|ITEM 1.  |  | BUSINESS                                                                                                       |  | 4   
|ITEM 1A. |  | RISK FACTORS                                                                                                   |  | 31  
|ITEM 1B. |  | UNRESOLVED STAFF
 COMMENTS                                                                                     |  | 31  
|ITEM 2.  |  | DESCRIPTION OF
 PROPERTY                                                                                       |  | 32  
|ITEM 3.  |  | LEGAL
 PROCEEDINGS                                                                                             |  | 32  
|         |  |                                                                                                                |  |     
|PART II  |  |                                                                                                                |  |     
|         |  |                                                                                                                |  |     
|ITEM 5.  |  | MARKET FOR
 REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES
 OF EQUITY SECURITIES |  | 34  
|ITEM 6.  |  | SELECTED
 FINANCIAL DATA                                                                                       |  | 36  
|ITEM 7.  |  | MANAGEMENTS
 DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                         |  | 38  
|ITEM 7A. |  | QUANTITATIVE AND
 QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                    |  | 49  
|ITEM 8.  |  | FINANCIAL
 STATEMENTS AND SUPPLEMENTARY DATA                                                                   |  | 50  
|ITEM 9.  |  | CHANGES IN AND
 DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                          |  | 92  
|ITEM 9A. |  | CONTROLS AND
 PROCEDURES                                                                                       |  | 92  
|ITEM 9B. |  | OTHER
 INFORMATION                                                                                             |  | 93  
|         |  |                                                                                                                |  |     
|PART III |  |                                                                                                                |  |     
|         |  |                                                                                                                |  |     
|ITEM 10. |  | DIRECTORS,
 EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                        |  | 94  
|ITEM 11. |  | EXECUTIVE
 COMPENSATION                                                                                        |  | 97  
|ITEM 12. |  | SECURITY
 OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER
 MATTERS               |  | 103 
|ITEM 13. |  | CERTAIN
 RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                     |  | 106 
|ITEM 14. |  | PRINCIPAL
 ACCOUNTING FEES AND SERVICES                                                                        |  | 107 
|         |  |                                                                                                                |  |     
|PART IV  |  |                                                                                                                |  |     
|ITEM 15. |  | EXHIBITS,
 FINANCIAL STATEMENT SCHEDULES                                                                       |  | 108 

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Forward Looking Statements

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

Any
or all of our forward-looking statements in this Annual Report on Form 10-K and
in any other public statements we make may turn out to be wrong. They can be
affected by inaccurate assumptions we might make or unknown risks and
uncertainties. Consequently, no forward-looking statements can be guaranteed.
We disclaim any obligation to subsequently revise any forward-looking
statements to reflect events or circumstances after the date of such
statements, or to reflect the occurrence of anticipated or unanticipated events.

PART
I

|        |         
|------- | --------
|ITEM 1. | BUSINESS

Available Information

The
Company files annual reports, quarterly reports, proxy statements and other
documents with the Securities and Exchange Commission (SEC) under the
Securities Exchange Act of 1934 (Exchange Act). The public may read and copy
any materials that the Company files with the SEC at the SECs Public Reference
Room at 100 F. Street, N.E., Room 1580, Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. Also, the SEC maintains a website that contains reports,
proxy and information statements, and other information regarding issuers,
including the Company, that file electronically with the SEC. The public can obtain
any documents that the Company files with the SEC at www.sec.gov.

The
Company also makes available free of charge through its website
(www.romesavings.com) the Companys Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable,
amendments to those reports filed or furnished pursuant to the Exchange Act as
soon as reasonably practicable after the Company electronically files such
material with, or furnishes it to, the SEC.

General

Rome
Bancorp, Inc. (Rome Bancorp or the Company) is a Delaware corporation
organized on June 9, 1999 as the stock holding company for The Rome Savings
Bank (Rome Savings or the Bank), a federally chartered stock savings bank
headquartered in Rome, New York. Rome Bancorps principal business is to hold
the capital stock of Rome Savings.

Rome
Savings is a federal stock savings bank and the wholly-owned subsidiary of Rome
Bancorp. Rome Savings was originally chartered in 1851 as a New York mutual
savings bank. On October 6, 1999, Rome Savings reorganized into a mutual
holding company structure and formed Rome Bancorp and Rome, MHC. On April 27,
2004, Rome, MHC, Rome Bancorp and Rome Savings completed their conversions from
New York-chartered companies to federally-chartered companies regulated by the
Office of Thrift Supervision (the OTS). On March 30, 2005, Rome, MHC
completed its second-step conversion and related stock

4

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offering
and ceased to exist.

On
October 12, 2010, Berkshire Hills Bancorp, Inc., the parent company of
Berkshire Bank, and the Company entered into an Agreement and Plan of Merger
pursuant to which the Company will merge with and into Berkshire Hills Bancorp,
Inc. Concurrent with the merger, it is expected that the Bank will merge with
and into Berkshire Bank. The transaction is subject to customary closing
conditions, including the receipt of regulatory approvals and approval by the
shareholders of the Company, and is currently expected to be completed on or
about April 1, 2011.

Rome
Savings is a community and customer-oriented retail savings bank that offers
traditional deposit products, residential real estate mortgage loans and
consumer, commercial and commercial real estate loans. In addition, Rome
Savings purchases securities issued by the U.S. Government and government
agencies, municipal securities, mortgage-backed securities and other
investments permitted by applicable laws and regulations. At December 31, 2010,
Rome Bancorp had assets of $327.2 million, deposits of $225.3 million and
stockholders equity of $60.7 million.

Business
Strategy

Our
business is to hold the capital stock of Rome Savings. Our revenues are derived
principally from interest on our loans and interest and dividends on our
investment securities. Our primary sources of funds are deposits, payments of
loan principal and mortgage-backed securities, maturities and calls of
investment securities, borrowings from the Federal Home Loan Bank, and funds
provided by operations.

Market Area

Operations
are conducted out of our executive office in Rome, New York and four branch
offices located in Oneida County, New York, two of which are located in Rome,
one in New Hartford, New York and one in Lee, New York. As of June 30, 2010,
Rome Savings maintained a 7.34% share of all Oneida County, New York deposits,
ranking sixth in size of deposits in Oneida County. Rome Savings also
maintained a 40.95% market share of all reported funds on deposit in the City
of Rome as of June 30, 2010, making it the largest depository institution in
Rome.

Our
geographic market area for loans and deposits is principally Oneida County, New
York. The local economy is not dependent on one key employer. The principal
employment sectors are service-related (excluding financial industries),
wholesale and retail trade, and manufacturing.

Similar
to national trends, in recent years most of the job growth realized in Oneida
County has been in service related industries, and service jobs now account for
the largest portion of the workforce. Our market area also includes a growing
number of healthcare, engineering, software, and technical firms that have
located in Oneida County in order to take advantage of its well-educated work force,
including current and former military and defense industry personnel. Rome, New
York is located 15 miles west of Utica and approximately 45 miles east of
Syracuse. Depending on market conditions, we also occasionally originate loans
in the greater New York City metropolitan area, typically through loan
participations, and outside of New York State. At December 31, 2010, Rome
Savings total loan portfolio consisted of $265.9 million in loans located in
the State of New York, while $2.5 million of such portfolio consisted of loans
made outside of New York.

Our
future growth opportunities will be influenced by growth and stability in the
regional and statewide economies, other demographic trends and the competitive
environment. We believe that Rome Savings has developed lending products and
marketing strategies to address the credit-related needs of the residents in
our local market area.

5

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Competition

Rome
Savings faces intense competition both in making loans and attracting deposits.
New York has a high concentration of financial institutions, many of which are
branches of large money center and regional banks which have resulted from the
consolidation of the banking industry in New York and surrounding states. Some
of these competitors have greater resources than we do and may offer services
that we do not provide. For example, Rome Savings does not provide trust or
investment services, or credit cards. Customers who seek one-stop shopping
may be drawn to these institutions.

Competition
for loans comes principally from commercial banks, savings institutions,
mortgage banking firms, credit unions, finance companies, insurance companies,
and brokerage and investment banking firms. The most direct competition for
deposits has historically come from credit unions, commercial banks, savings
banks, and savings and loan associations. Rome Savings faces additional
competition for deposits from short-term money market funds, corporate and
government securities funds, and from brokerage firms, mutual funds, and
insurance companies.

Lending
Activities

General.
Rome Savings has a long-standing commitment to originate commercial real
estate, commercial and consumer loans, in addition to a traditional emphasis on
residential lending. We retain the majority of the loans that we originate.
Currently, we are selling most of the
longer term residential mortgage loans we originate into the secondary market.
At December 31, 2010, Rome Savings had total loans of $268.4 million, of which
$144.7 million, or 53.91%, were one- to four-family residential mortgages and
residential construction loans. Of residential mortgage loans outstanding at
that date, 20.43% were adjustable-rate mortgage loans and 79.57% were
fixed-rate loans. The remainder of Rome Savings loans at December 31, 2010,
amounting to $123.7 million, or 46.09% of total loans, consisted of commercial
real estate, commercial loans, and consumer loans. Rome Savings originates
commercial real estate and commercial business loans both within and outside of
Oneida County, New York. As of December 31, 2010, 18.07% of Rome Savings loan
portfolio was in commercial real estate loans and 11.17% was in commercial
loans. In addition, as of December 31, 2010, 16.85% of Rome Savings loan portfolio
was in consumer loans.

Our loans
are subject to federal and state laws and regulations. The interest rates we
charge on loans are affected principally by the demand for loans, the supply of
money available for lending purposes and the interest rates offered by our
competitors. These factors are, in turn, affected by general and local economic
conditions, monetary policies of the federal government, including the Federal
Reserve Board, legislative tax policies and governmental budgetary matters.

6

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Loan Portfolio.The
following table sets forth the composition of our mortgage and other loan
portfolios, by type of loan, in dollar amounts and in percentages at the dates
indicated.

|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|------------------------------- |  | ------ | ------- | ---------------- |  | ------ | - | ---------------- | ------- | ------ |  | ---------------- | - | ------ | ------- | ---------------- |  | ------ | - | ---------------- | ------- |  |  | ------ | - | - | ------- |  |  | ------ | -
|                                |  | 2010   |         | 2009             |  | 2008   |   | 2007             |         | 2006   | 
|                                |  |        |         |                  |  |        |   |                  |         |        | 
|                                |  | Amount |         | Percent
of
Total |  | Amount |   | Percent
of
Total |         | Amount |  | Percent
of
Total |   | Amount |         | Percent
of
Total |  | Amount |   | Percent
of
Total |        
|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |        
|Mortgage loans:                 |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|One- to four-family             |  | $      | 141,741 |                  |  | 52.81  | % | $                | 155,547 |        |  | 54.06            | % | $      | 170,197 |                  |  | 56.65  | % | $                | 149,702 |  |  | 52.91  | % | $ | 135,078 |  |  | 51.06  | %
|Commercial real estate          |  |        | 48,510  |                  |  | 18.07  |   |                  | 52,557  |        |  | 18.26            |   |        | 49,231  |                  |  | 16.39  |   |                  | 49,795  |  |  | 17.60  |   |   | 54,493  |  |  | 20.60  |  
|Construction and land           |  |        | 2,951   |                  |  | 1.10   |   |                  | 4,381   |        |  | 1.52             |   |        | 5,827   |                  |  | 1.95   |   |                  | 5,258   |  |  | 1.86   |   |   | 2,562   |  |  | 0.97   |  
|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|Total mortgage loans            |  |        | 193,202 |                  |  | 71.98  |   |                  | 212,485 |        |  | 73.84            |   |        | 225,255 |                  |  | 74.99  |   |                  | 204,755 |  |  | 72.37  |   |   | 192,133 |  |  | 72.63  |  
|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|Commercial loans                |  |        | 29,994  |                  |  | 11.17  |   |                  | 30,429  |        |  | 10.58            |   |        | 28,472  |                  |  | 9.48   |   |                  | 29,127  |  |  | 10.29  |   |   | 24,189  |  |  | 9.14   |  
|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|Consumer loans:                 |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|Automobile                      |  |        | 7,526   |                  |  | 2.80   |   |                  | 9,377   |        |  | 3.26             |   |        | 12,927  |                  |  | 4.30   |   |                  | 16,009  |  |  | 5.66   |   |   | 17,779  |  |  | 6.72   |  
|Property improvement            |  |        | 23,485  |                  |  | 8.75   |   |                  | 19,251  |        |  | 6.69             |   |        | 17,459  |                  |  | 5.81   |   |                  | 15,829  |  |  | 5.59   |   |   | 15,536  |  |  | 5.87   |  
|Other                           |  |        | 14,220  |                  |  | 5.30   |   |                  | 16,207  |        |  | 5.63             |   |        | 16,276  |                  |  | 5.42   |   |                  | 17,232  |  |  | 6.09   |   |   | 14,900  |  |  | 5.64   |  
|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|Total consumer loans            |  |        | 45,231  |                  |  | 16.85  |   |                  | 44,835  |        |  | 15.58            |   |        | 46,662  |                  |  | 15.53  |   |                  | 49,070  |  |  | 17.34  |   |   | 48,215  |  |  | 18.23  |  
|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|Total loans                     |  |        | 268,427 |                  |  | 100.00 | % |                  | 287,749 |        |  | 100.00           | % |        | 300,389 |                  |  | 100.00 | % |                  | 282,952 |  |  | 100.00 | % |   | 264,537 |  |  | 100.00 | %
|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|Less: Allowance for loan losses |  |        | 2,490   |                  |  |        |   |                  | 2,132   |        |  |                  |   |        | 1,936   |                  |  |        |   |                  | 1,910   |  |  |        |   |   | 1,965   |  |  |        |  
|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  
|Loans, net                      |  | $      | 265,937 |                  |  |        |   | $                | 285,617 |        |  |                  |   | $      | 298,453 |                  |  |        |   | $                | 281,042 |  |  |        |   | $ | 262,572 |  |  |        |  
|                                |  |        |         |                  |  |        |   |                  |         |        |  |                  |   |        |         |                  |  |        |   |                  |         |  |  |        |   |   |         |  |  |        |  

7

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Loan
Maturity. The following table presents the contractual maturity of
our loan portfolio at December 31, 2010. The table does not include the effect
of prepayments or scheduled principal amortization.

|                         |  |                            |         |                              |   |                |  |                  |        |  |   |        | 
|------------------------ |  | -------------------------- | ------- | ---------------------------- | - | -------------- |  | ---------------- | ------ |  | - | ------ | 
|                         |  | At December 31, 2010       |        
|                         |  |                            |        
|                         |  | Residential
Mortgage Loans |         | Commercial Real
Estate Loans |   | Consumer
Loans |  | Commercial
Loans |       
|                         |  |                            |         |                              |   |                |  |                  |       
|                         |  | (In thousands)             |        
|Amounts due:             |  |                            |         |                              |   |                |  |                  |        |  |   |        | 
|Within one
year          |  | $                          | 48      |                              | $ | 2,410          |  | $                | 1,646  |  | $ | 10,748 | 
|After one
year:          |  |                            |         |                              |   |                |  |                  |        |  |   |        | 
|One to three years       |  |                            | 1,117   |                              |   | 450            |  |                  | 7,138  |  |   | 1,525  | 
|Three to five years      |  |                            | 1,319   |                              |   | 1,766          |  |                  | 10,906 |  |   | 3,158  | 
|Five to ten years        |  |                            | 12,888  |                              |   | 3,964          |  |                  | 18,234 |  |   | 5,995  | 
|Ten to twenty years      |  |                            | 58,152  |                              |   | 33,069         |  |                  | 3,761  |  |   | 3,091  | 
|After twenty years       |  |                            | 71,131  |                              |   | 6,888          |  |                  | 3,546  |  |   | 5,477  | 
|                         |  |                            |         |                              |   |                |  |                  |        |  |   |        | 
|Total due after one year |  |                            | 144,607 |                              |   | 46,137         |  |                  | 43,585 |  |   | 19,246 | 
|                         |  |                            |         |                              |   |                |  |                  |        |  |   |        | 
|Total loans              |  | $                          | 144,655 |                              | $ | 48,547         |  | $                | 45,231 |  | $ | 29,994 | 
|                         |  |                            |         |                              |   |                |  |                  |        |  |   |        | 

The
following table presents, as of December 31, 2010, the dollar amount of all
loans, due after December 31, 2011, and whether these loans have fixed interest
rates or adjustable interest rates.

|                             |  |                             |         |            |   |        |  |   |         | 
|---------------------------- |  | --------------------------- | ------- | ---------- | - | ------ |  | - | ------- | 
|                             |  | Due After December 31, 2011 |        
|                             |  |                             |        
|                             |  | Fixed                       |         | Adjustable |   | Total  | 
|                             |  |                             |         |            |   |        | 
|                             |  | (In
thousands)              |        
|                             |  |                             |         |            |   |        |  |   |         | 
|Residential mortgage loans   |  | $                           | 119,383 |            | $ | 25,224 |  | $ | 144,607 | 
|Commercial real estate
loans |  |                             | 22,512  |            |   | 23,625 |  |   | 46,137  | 
|Consumer loans               |  |                             | 18,993  |            |   | 24,592 |  |   | 43,585  | 
|Commercial loans             |  |                             | 15,797  |            |   | 3,449  |  |   | 19,246  | 
|                             |  |                             |         |            |   |        |  |   |         | 
|Total loans                  |  | $                           | 176,685 |            | $ | 76,890 |  | $ | 253,575 | 
|                             |  |                             |         |            |   |        |  |   |         | 

The
following table presents Rome Savings loan originations, purchases, sales, and
principal payments for the periods indicated.

|                                           |  |                                 |         |      |   |         |  |   |         | 
|------------------------------------------ |  | ------------------------------- | ------- | ---- | - | ------- |  | - | ------- | 
|                                           |  | For the
Year Ended December 31, |        
|                                           |  |                                 |        
|                                           |  | 2010                            |         | 2009 |   | 2008    | 
|                                           |  |                                 |         |      |   |         | 
|                                           |  |                                 |         |      |   |         |  |   |         | 
|Total loans:                               |  |                                 |         |      |   |         |  |   |         | 
|Balance outstanding at beginning of period |  | $                               | 287,749 |      | $ | 300,389 |  | $ | 282,952 | 
|                                           |  |                                 |         |      |   |         |  |   |         | 
|Originations:                              |  |                                 |         |      |   |         |  |   |         | 
|Mortgage loans                             |  |                                 | 44,984  |      |   | 38,563  |  |   | 53,687  | 
|Commercial and consumer loans              |  |                                 | 11,890  |      |   | 12,909  |  |   | 12,706  | 
|                                           |  |                                 |         |      |   |         |  |   |         | 
|Total originations                         |  |                                 | 56,874  |      |   | 51,472  |  |   | 66,393  | 
|                                           |  |                                 |         |      |   |         |  |   |         | 
|Principal repayments:                      |  |                                 |         |      |   |         |  |   |         | 
|Mortgage loans                             |  |                                 | 43,968  |      |   | 40,300  |  |   | 33,136  | 
|Commercial and consumer loans              |  |                                 | 11,084  |      |   | 12,432  |  |   | 13,804  | 
|                                           |  |                                 |         |      |   |         |  |   |         | 
|Total principal payments                   |  |                                 | 55,052  |      |   | 52,732  |  |   | 46,940  | 
|                                           |  |                                 |         |      |   |         |  |   |         | 
|Transfers to foreclosed
real estate        |  |                                 | 65      |      |   | 192     |  |   | 505     | 
|                                           |  |                                 |         |      |   |         |  |   |         | 
|Loan sales                                 |  |                                 | 19,574  |      |   | 11,018  |  |   | 1,163   | 
|                                           |  |                                 |         |      |   |         |  |   |         | 
|Loans charged off                          |  |                                 | 1,505   |      |   | 170     |  |   | 348     | 
|                                           |  |                                 |         |      |   |         |  |   |         | 
|                                           |  |                                 |         |      |   |         |  |   |         | 
|Balance outstanding at end of period       |  | $                               | 268,427 |      | $ | 287,749 |  | $ | 300,389 | 
|                                           |  |                                 |         |      |   |         |  |   |         | 

8

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Residential
Mortgage Lending. Rome Savings emphasizes the
origination of mortgage loans secured by one- to four-family properties that
serve as the primary residence of the owner. Rome Savings does not originate
subprime or interest only mortgage loans. As of December 31, 2010, loans on
one-to four-family residential properties accounted for $144.7 million, or
53.91%, of Rome Savings total loan portfolio. Of residential mortgage loans
outstanding on that date, 20.43% were adjustable-rate mortgage loans and 79.57%
were fixed-rate loans. Rome Savings has
expanded its residential lending activities primarily through the marketing and
sale to the secondary market of longer term fixed-rate mortgage loans.
Management of Rome Savings believes that the expansion of Rome Savings
residential lending will enhance its reputation as a service-oriented
institution that meets the needs of its local community.

Most
of Rome Savings loan originations are from existing or past customers, members
of Rome Savings local communities or referrals from local real estate agents,
attorneys, and builders. Management of Rome Savings believes that its branch
offices are a significant source of new loan generation.

Rome
Savings mortgage loan originations are generally for terms from 10 to 30
years, amortized on a monthly basis with interest and principal due each month.
Residential real estate loans may remain outstanding for significantly shorter
periods than their contractual terms as borrowers may refinance or prepay loans
at their option without penalty. Conventional residential mortgage loans
granted by Rome Savings customarily contain due-on-sale clauses that permit
Rome Savings to accelerate the indebtedness of the loan upon transfer of
ownership of the mortgage property.

Rome
Savings residential lending policies and procedures conform to secondary
market guidelines. Currently, Rome Savings sells the majority of its newly
originated qualifying fixed-rate longer-term loans into the secondary market,
but continues to retain fixed rate loans with maturities of shorter terms. Rome
Savings originates residential mortgage loans with a loan to value ratio up to
95%. Private mortgage insurance is not required on loans with an 80% or less
loan to value ratio. All mortgages originated with a loan to value above 80%
and up to 95% require private mortgage insurance with 17% to 30% coverage. Rome
Savings at times may originate mortgages outside of secondary market
guidelines, tailored to the needs of its customers. Commitments issued in these
situations are reviewed with the Board of Directors on a monthly basis.

Rome
Savings also offers residential construction loans to customers in its primary
lending market. Private mortgage insurance is not currently available on
construction loans. Rome Savings will make construction loans up to a 90% loan
to value ratio. The program allows for mortgagors to receive up to five
advances during the construction phase. Rome Savings uses third-party
Board-approved inspectors to determine the advance amount and obtains a clear
title report prior to making each advance. The loan converts
to permanent financing at the end of six months from the initial closing
whether the house is completed or not. The interest rate on the permanent
financing is locked in at the time of application for the
construction/permanent mortgage. Construction loans up to an 80% loan to value
ratio carry a pricing premium of 0.50% to the interest rate. Construction loans
with a loan to value ratio of over 80% and up to 90% carry an additional
pricing premium to the interest rate of 0.25% to 0.50%. All construction loans
carry a fee of 0.50% of the loan amount payable at closing in addition to
standard fees and closing costs.

Rome
Savings adjustable-rate mortgages currently in portfolio include limits on
increase or decrease in the interest rate of the loan. The interest rate may
increase or decrease by a maximum 2.0% per adjustment period with a ceiling
rate of 11% over the life of the loan. The retention of adjustable-rate
mortgage loans in our loan portfolio helps reduce exposure to changes in
interest rates. However, there are unquantifiable credit risks resulting from
potential increased costs to the borrower as a result of the pricing of adjustable-rate
mortgage loans. During periods of rising interest rates, the risk of default on
adjustable-rate mortgage loans may increase due to the upward adjustment of
interest cost to the borrower.

During
the year ended December 31, 2010, Rome Savings originated no adjustable-rate
residential mortgage loans and $41.9 million in fixed-rate one- to four- family
residential loans. Approximately 32.64% of all residential loan originations
during fiscal 2010 were refinancings of loans already in Rome Savings
portfolio. At December 31, 2010, Rome Savings loan portfolio included $29.6
million in adjustable-rate one to four-family residential mortgage loans, or
11.03% of its total loan portfolio, and $115.1 million in fixed-rate one to
four-family residential mortgage loans, or 42.88% of its total loan portfolio.

9

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Commercial
Real Estate Loans. We originate commercial real estate
loans to finance the purchase of real property, which generally consists of
developed real estate. In underwriting commercial real estate loans,
consideration is given to the propertys historic cash flow, current and
projected occupancy, location and physical condition. At December 31, 2010, our
commercial real estate loan portfolio consisted of 149 loans, totaling $48.5
million, or 18.07%, of total loans. Most of the commercial real estate
portfolio consists of loans which are collateralized by properties in our
normal lending area. To a lesser extent, commercial real estate loans are
secured by out of market properties. A portion of Rome Savings commercial
mortgages are participation loans. Our commercial real estate loan portfolio is
diverse, and does not have any significant loan concentration by type of
industry or borrower. We lend up to a maximum loan-to-value ratio of 75% on
commercial properties and require a minimum debt coverage ratio of 1.25. Commercial real estate lending involves
additional risks compared with one-to-four-family residential lending. Because
payments on loans secured by commercial real estate properties are often
dependent on the successful operation or management of the properties, or on
the successful operation of the owners business for owner occupied properties,
repayment of such loans may be affected by adverse conditions in the real estate
market or the economy. Also, commercial real estate loans typically involve
large loan balances to single borrowers or groups of related borrowers. Rome
Savings loan policies limit the amount of loans to a single borrower or group
of borrowers to reduce this risk.

Rome
Savings commercial real estate loan portfolio includes $38,000 of construction
loans. From time to time Rome Savings approves commercial construction
mortgages. Recognizing the risks inherent to this type of lending, it is Rome
Savings practice to minimize lending risk by carefully studying project
feasibility, developing a detailed knowledge of the borrower/guarantors entire
business operation, assessing both primary and secondary sources of repayment,
and by structuring the credit in a manner appropriate to the project.

Rome
Savings will only consider construction lending where it holds a first position
mortgage lien on the subject premises. No construction loan will be advanced
without permanent financing approved by Rome Savings or another lender.
Commitments from any source other than this bank must be reviewed for capacity
and conditions. Rome Savings exposure cannot exceed 75% of the project cost.
Rome Savings requires that up-front equity requirements be met in cash or free
and clear value of the land directly associated with the project. The ratio of
projected cash flow versus debt service coverage must equal or exceed 1.25.
Construction loans may have interest only payments until completion of the
project but not beyond 12 months. Personal guaranties are required of the
principals of closely held entities. Funds are disbursed only after proper
documentation of work completed. A 5% to 10% retainage is normally required.

Commercial
Loans. In addition to commercial real estate loans, we
also engage in small business commercial lending, including business term
loans, lines of credit and other commercial loans. At December 31, 2010, our commercial loan portfolio consisted of 459
loans, totaling $30.0 million, or 11.17% of total loans. A portion of Rome
Savings commercial loans are participation loans. Term loans are typically
limited to a term of five years. Substantially all lines of credit have
variable interest rates tied to the prime rate. Typically, Rome Savings
collateralizes these loans with a lien on business assets and equipment,
occasionally commercial real estate, plus the personal guarantees from
principals of the borrower. Interest rates on commercial loans generally have
higher yields than residential mortgages.

Rome
Savings offers commercial services administered by Rome Savings commercial
loan department that are designed to give business owners borrowing
opportunities for modernization, inventory, equipment, construction, consolidation,
real estate, working capital, vehicle purchases, and the refinancing of
existing corporate debt.

Commercial
loans are generally considered to involve a higher degree of risk than
residential mortgage loans because the collateral may be in the form of
intangible assets and/or inventory subject to market obsolescence. Commercial
loans may also involve relatively large loan balances to single borrowers or
groups of related borrowers, with the repayment of such loans typically
dependent on the successful operation and income stream of the borrower. Such
risks can be significantly affected by economic conditions. In addition,
commercial business lending generally requires substantially greater oversight
efforts compared to residential real estate lending. Rome Savings utilizes the
services of an outside consultant to conduct on-site reviews of the commercial
loan portfolio to ensure adherence to underwriting standards and policy
requirements.

10

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Consumer
Loans.Rome Savings offers a variety of consumer
loans. At December 31, 2010, the consumer loan portfolio totaled $45.2 million
or 16.85% of total loans. Consumer loans generally are offered for terms of up
to 10 years, depending on the collateral, at fixed interest rates. Rome Savings consumer loan portfolio
consists primarily of property improvement loans (i.e., home equity loans and
home equity lines of credit) and used automobile loans. To a lesser extent, the
consumer loan portfolio also includes:

| |   |                                                     
| | - | ----------------------------------------------------
| |  | new automobile loans;                               
| |   |                                                     
| |  | recreational vehicles,
boats, and conversion vans;  
| |   |                                                     
| |  | motorcycles, ATVs,
snowmobiles, and equipment loans;
| |   |                                                     
| |  | secured passbook loans;                             
| |   |                                                     
| |  | unsecured loans;                                    
| |   |                                                     
| |  | education loans; and                                
| |   |                                                     
| |  | mobile or manufactured
home loans.                  

Rome
Savings expects consumer lending to be a continuing source of loan volume, with
installment loans continuing to account for the major portion of our consumer
lending volume. Property improvement loans, currently comprises the largest portion
of the consumer loan portfolio at 51.92%. Rome Savings makes loans secured by
deposit accounts up to 90% of the amount of the depositors savings account
balance. Rome Savings also makes other consumer loans, which may or may not be
secured. The terms of such loans vary depending on the collateral.

Rome
Savings provides home equity lines of credit for any purpose, using the
applicants principal residence. The normal loan to value for these lines is
90%. This product has a ten-year interest-only draw period. During this period,
principal reductions are at the applicants discretion. At the end of the
ten-year period, any outstanding principal balance due is termed out over 15
years with payments to principal plus interest monthly. These lines have a variable
interest at prime rate. Access to these lines is by customer checks.All
closing costs are waived providing that the line remains open for at least
three years. In addition, Rome Savings offers fixed rate amortizing installment
home equity loans with terms of up to fifteen years.

Rome
Savings makes loans for automobiles, both new and used, directly to the
borrowers. The term of automobile loans is generally limited to five years. The
financial terms of the loans are determined by the age of the collateral. Rome
Savings obtains a title lien on the vehicle and collision insurance policies
are required on all these loans. Rome Savings pays a referral fee of no more
than $225 to automobile dealers who refer it customers. There is no difference
in the interest rates and terms offered to customers who are referred and those
who are not.

Consumer
loans are generally originated at higher interest rates than residential
mortgage loans, but also tend to have a higher credit risk than residential
loans due to the loan being unsecured or secured by rapidly depreciating
assets. Despite these risks, Rome Savings level of consumer loan delinquencies
generally has been low. No assurance can be given, however, that Rome Savings
delinquency rate on consumer loans will continue to remain low in the future,
or that it will not incur future losses on these activities.

Loan
Approval Procedures and Authority. Rome Savings lending policies are
established by its Board of Directors. The policies differ depending on the
type of loan involved.

| |   |                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Residential
Mortgage Loans: Following underwriting, each mortgage application is reviewed
by a designated employee or officer who has authority to approve mortgages up
to $417,000. Mortgages over $417,000 must be presented to the Banks Lending
Committee, Executive Committee, or Board of Directors for approval.

11

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Commercial
Loans and Commercial Mortgage Loans: The maximum commercial loan or
commercial mortgage amount is dictated by Rome Savings portfolio management
guidelines. The total of all credit extended to one borrower may not exceed
$7.0 million. The maximum amount of any single loan, or combination of loans
secured by the same collateral, is $3.0 million. Rome Savings may not exceed the
legal limits of lending to one borrower, currently 15% of unimpaired capital,
not including accumulated other comprehensive income. See  Regulation and
Supervision  Regulation of Federal Savings Associations  Loans to One
Borrower. Per Rome Savings internal policies, loans to one borrower include
group credit. A group credit is broadly defined as any credit, either direct,
indirect, or contingent, including unused lines of credit and other
commitments by Rome Savings to lend, extended either jointly or severally to
individuals, joint ventures, partnerships, corporations, subsidiaries or
affiliates, which are commonly controlled or where the credit reliance is
similar. The minimum amount for a commercial loan is not specific in policy
but loans under $5,000 are unusual. The minimum amount for a commercial
mortgage is not specified in policy but mortgages under $25,000 are unusual.

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | One
designated vice president of Rome Savings Bank has the authority to approve
commercial loans which are secured by liquid collateral up to $425,000 and
may approve other commercial loans up to $300,000. Rome Savings President
and Chief Executive Office may approve commercial loans which are secured by
liquid collateral up to $650,000, and all other commercial loans up to
$400,000. Jointly these two officers may approve commercial loans which are
secured by liquid collateral up to $800,000 and may approve all other
commercial loans up to $500,000. Any commercial loan request in excess of the
approval authority outlined above must be presented to the banks Lending
Committee, Executive Committee, or Board of Directors for approval.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |   | One
designated vice president of Rome Savings Bank has the authority to approve
commercial mortgages up to $325,000. Rome Savings President and Chief
Executive Officer has authority to approve commercial mortgages up to
$500,000. Jointly these two officers may approve a commercial mortgage up to
$700,000. Any commercial mortgage request in excess of the approval
authorities outlined above must be presented to Rome Savings Lending
Committee, Executive Committee, or Board of Directors for approval.                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Consumer
Loans: Rome Savings extends consumer loans in amounts starting at a minimum
of $1,000, and with no upper limit, other than the portfolio management
guidelines. Approvals begin at the interviewer level with various approval
authorities ranging from $5,000 to $75,000. Loan requests above these amounts
are then addressed up to $100,000 with the Vice President of Consumer Loans,
or the Senior Loan Officer, and up to $400,000 with the President and Chief
Executive Officer. Requests above $400,000 are referred to the Lending
Committee, Executive Committee, or the Board of Directors.                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Home
Equity Lines of Credit: Lines of credit against an applicants principal
residence extend from $7,500 to $250,000. Approvals for these lines are
handled as follows: up to $100,000 by the assistant to the head of the
Consumer Lending Department; $250,000 by the Vice President of Consumer Lending
or the Senior Loan Officer or Rome Savings President and Chief Executive
Officer. Any exceptions to the normal parameters are approved by the Lending
Committee, Executive Committee, or the Board of Directors.                                                                                                                                                                                                                                         

Current
Lending Procedures. Upon receipt of a completed loan application
from a prospective borrower, Rome Savings orders a credit report and verifies
certain other information. If necessary, Rome Savings obtains additional
financial or credit related information. Rome Savings requires an appraisal for
all mortgage loans, including loans made to refinance existing mortgage loans.
Appraisals are performed by licensed or certified third-party appraisal firms
that have been approved by Rome Savings Board of Directors. Rome Savings
requires title insurance on all secondary market mortgage loans and certain
other loans. Rome Savings requires borrowers to obtain hazard insurance, and if
applicable, Rome Savings requires borrowers to obtain flood insurance prior to
closing. Also available to borrowers is the option to advance funds on a
monthly basis, together with each payment of principal and interest, to a

12

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mortgage
escrow account from which Rome Savings makes disbursements for items such as
real estate taxes, flood insurance, and private mortgage insurance premiums, if
required.

Asset
Quality

One
of Rome Savings key operating objectives has been and continues to be
maintaining a high level of asset quality. Through a variety of strategies,
including but not limited to borrower workout arrangements and aggressive
marketing of foreclosed properties, Rome Savings has been proactive in
addressing problem and non-performing assets. These strategies, as well as Rome
Savings high proportion of one-to-four family mortgage loans, the maintenance
of sound credit standards for new loan originations, and loan administration
procedures, have resulted in low delinquency ratios and, in comparison to peer
institutions, a relatively low level of non-performing assets. These factors
have helped strengthen Rome Savings financial condition.

Collection
Procedures. When a
borrower fails to make required payments on a loan, Rome Savings takes a number
of steps to induce the borrower to cure the delinquency and restore the loan to
a current status. In the case of mortgage loans, Rome Savings servicing
department is responsible for collection procedures from the 15th day up to the
120th day of delinquency. A late charge notice is sent at 15 days. A reminder
letter requesting prompt payment is sent on the 25th day. At 30 days, Rome
Savings also attempts to establish telephone contact with the borrower. If no
contact is established, progressively stronger collection letters are sent on
the 45th and 55th days of delinquency. Late charge notices are sent on the 30th
and 60th days of the delinquency. Between the 60th and 90th day of delinquency,
if telephone contact has not been established or if there has been mail
returned, the collector or his or her assistant makes a physical inspection of
the property. When contact is made with the borrower at any time prior to
foreclosure, Rome Savings attempts to obtain full payment of the amount
delinquent or work out a repayment schedule with the borrower in order to avoid
foreclosure. It has been Rome Savings experience that most loan delinquencies
are cured within 105 days and no legal action is taken.

Rome
Savings sends the right to cure foreclosure notice when a loan is
approximately 75 days delinquent. This contains a right to cure clause that
gives the customer the terms that must be met within 30 days of the date the
letter is sent in order to avoid foreclosure action. After this letter expires,
a recommendation for foreclosure is presented to the Board of Directors for
approval. Upon approval the loan is forwarded to outside legal counsel to
commence the foreclosure action. If a foreclosure action is commenced and the
loan is brought current, paid in full, or refinanced before the foreclosure
sale, is held, the foreclosure action would be terminated. If Rome Savings
becomes the owner of the real property at the foreclosure sale, it is held as
other real estate owned. The property is valued at fair market value less
estimated selling costs. Other real estate property is actively marketed and
sold by the Bank as soon as practical. The collection procedures for Federal
Housing Association (FHA) and Veterans Administration (VA) one-to
four-family mortgage loans follow the collection guidelines outlined by those
agencies.

The
collection procedures for consumer, commercial, and other loans, include the
sending of periodic late notices and letters to a borrower once a loan is past
due. Rome Savings attempts to make direct contact with a borrower once a loan
is 15 days past due. Rome Savings follows the same collection procedure as
mortgages in an attempt to reach individuals by telephone and sending them
letters and notices. Supervisory personnel in Rome Savings lending area and in
its collection area review loans 30 days or more delinquent on a regular basis.
If collection activity is unsuccessful after 120 days, Rome Savings may charge
off a loan and/or refer the matter to an outside collection agency or to the
Banks legal counsel for further collection effort. Monthly, loans deemed
uncollectible are proposed for charge-off. Charge-offs up to $10,000 may be
approved by the Banks senior loan officer. Charge-offs $10,000 and greater
require approval of both the senior loan officer and the President of Rome
Savings. All charge-offs are reported to the Board of Directors of Rome Savings
at its next scheduled meeting.

Rome
Savings policies require that management continuously monitor the status of
the loan portfolio and report to the Board of Directors on a monthly basis.
These reports include information on delinquent loans and foreclosed real
estate and Rome Savings actions and plans to cure the delinquent status of the
loans and to dispose of the real estate.

Non-Performing
Assets. Non-performing assets totaled $3.0 million and
$1.9 million at December 31, 2010 and December 31, 2009, respectively.

13

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The
following table presents information regarding non-accrual mortgage and
consumer and other loans, accruing loans delinquent 90 days or more, and
foreclosed real estate as of the dates indicated.

|                                          |  |                        |       |      |   |       |   |      |       |      |   |       |   |   |       |  
|----------------------------------------- |  | ---------------------- | ----- | ---- | - | ----- | - | ---- | ----- | ---- | - | ----- | - | - | ----- | -
|                                          |  | At December 31,        |      
|                                          |  |                        |      
|                                          |  | 2010                   |       | 2009 |   | 2008  |   | 2007 |       | 2006 |  
|                                          |  |                        |       |      |   |       |   |      |       |      |  
|                                          |  | (Dollars in thousands) |      
|Nonaccruing loans:                        |  |                        |       |      |   |       |   |      |       |      |   |       |   |   |       |  
|Mortgage loans                            |  | $                      | 1,590 |      | $ | 1,165 |   | $    | 1,094 |      | $ | 653   |   | $ | 575   |  
|Commercial loans                          |  |                        | 311   |      |   | 528   |   |      | 105   |      |   | 271   |   |   | 423   |  
|Consumer loans                            |  |                        | 291   |      |   | 179   |   |      | 74    |      |   | 44    |   |   | 98    |  
|                                          |  |                        |       |      |   |       |   |      |       |      |   |       |   |   |       |  
|Total                                     |  |                        | 2,192 |      |   | 1,872 |   |      | 1,273 |      |   | 968   |   |   | 1,096 |  
|Accruing loans delinquent 90 days or more |  |                        | 847   |      |   | 43    |   |      |      |      |   | 35    |   |   | 8     |  
|                                          |  |                        |       |      |   |       |   |      |       |      |   |       |   |   |       |  
|Total non-performing loans                |  |                        | 3,039 |      |   | 1,915 |   |      | 1,273 |      |   | 1,003 |   |   | 1,104 |  
|Foreclosed real estate, net               |  |                        |      |      |   |      |   |      | 331   |      |   | 97    |   |   | 45    |  
|                                          |  |                        |       |      |   |       |   |      |       |      |   |       |   |   |       |  
|Total non-performing assets               |  | $                      | 3,039 |      | $ | 1,915 |   | $    | 1,604 |      | $ | 1,100 |   | $ | 1,149 |  
|                                          |  |                        |       |      |   |       |   |      |       |      |   |       |   |   |       |  
|Non-performing loans to total loans       |  |                        | 1.13  | %    |   | 0.67  | % |      | 0.42  | %    |   | 0.35  | % |   | 0.42  | %
|Non-performing assets to total assets     |  |                        | 0.93  | %    |   | 0.58  | % |      | 0.47  | %    |   | 0.35  | % |   | 0.38  | %

With
the exception of first mortgage loans insured or guaranteed by the FHA or VA or
for which the borrower has obtained private mortgage insurance, Rome Savings
stops accruing income on loans when interest or principal payments are 90 days
in arrears or earlier when the timely collectibility of such interest or
principal is doubtful. Rome Savings designates loans on which it stops accruing
income as non-accrual loans and it reverses outstanding interest that it
previously credited. Rome Savings may recognize income in the period that it
collects such income, when the ultimate collectibility of principal is no
longer in doubt. Rome Savings returns a non-accrual loan to accrual status when
factors indicating doubtful collection no longer exist. Rome Savings defines
non-performing loans as both non-accruing and accruing loans for which payments
are 90 days or more past due.

We define
the population for evaluation of impaired loans to be all non-accrual
commercial real estate and commercial loans greater than $250,000. Impaired
loans are individually assessed to determine whether a loans carrying value is
not in excess of the fair value of the collateral or the present value of the
loans cash flows. Smaller balance homogeneous loans that are collectively
evaluated for impairment, such as residential mortgage loans and consumer
loans, are specifically excluded from the impaired loan portfolio. The
Companys recorded investment in loans that are considered impaired totaled
$3.2 million and $698,000 at December 31, 2010 and 2009, respectively. If all
non-accrual loans had been current in accordance with their terms during the
year ended December 31, 2010, 2009 and 2008, interest income on such loans
would have amounted to $33,800, $65,300 and $85,800, respectively. At December
31, 2010, Rome Savings had no loans which were considered to be a troubled
debt restructuring.

14

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Allowance
for Loan Losses. The following table sets forth
activity in Rome Savings allowance for loan losses and other ratios at or for
the dates indicated.

|                                                                         |  |                        |       |      |   |        |   |      |        |      |   |        |   |   |        |  
|------------------------------------------------------------------------ |  | ---------------------- | ----- | ---- | - | ------ | - | ---- | ------ | ---- | - | ------ | - | - | ------ | -
|                                                                         |  | At December 31,        |      
|                                                                         |  |                        |      
|                                                                         |  | 2010                   |       | 2009 |   | 2008   |   | 2007 |        | 2006 |  
|                                                                         |  |                        |       |      |   |        |   |      |        |      |  
|                                                                         |  | (Dollars in thousands) |      
|Balance at beginning of year                                             |  | $                      | 2,132 |      | $ | 1,936  |   | $    | 1,910  |      | $ | 1,965  |   | $ | 1,960  |  
|Provision for loan losses                                                |  |                        | 1,796 |      |   | 300    |   |      | 300    |      |   | 50     |   |   | 147    |  
|Charge-offs:                                                             |  |                        |       |      |   |        |   |      |        |      |   |        |   |   |        |  
|Mortgage loans                                                           |  |                        |      |      |   | 15     |   |      | 15     |      |   |       |   |   | 19     |  
|Commercial loans                                                         |  |                        | 1,395 |      |   | 26     |   |      | 215    |      |   | 78     |   |   | 50     |  
|Consumer loans                                                           |  |                        | 110   |      |   | 129    |   |      | 118    |      |   | 155    |   |   | 303    |  
|                                                                         |  |                        |       |      |   |        |   |      |        |      |   |        |   |   |        |  
|Total                                                                    |  |                        | 1,505 |      |   | 170    |   |      | 348    |      |   | 233    |   |   | 372    |  
|Recoveries                                                               |  |                        |       |      |   |        |   |      |        |      |   |        |   |   |        |  
|Mortgage loans                                                           |  |                        | 4     |      |   | 4      |   |      | 1      |      |   | 1      |   |   | 10     |  
|Commercial loans                                                         |  |                        | 4     |      |   | 1      |   |      | 1      |      |   | 21     |   |   | 79     |  
|Consumer loans                                                           |  |                        | 59    |      |   | 61     |   |      | 71     |      |   | 106    |   |   | 141    |  
|                                                                         |  |                        |       |      |   |        |   |      |        |      |   |        |   |   |        |  
|Total                                                                    |  |                        | 67    |      |   | 66     |   |      | 74     |      |   | 128    |   |   | 230    |  
|                                                                         |  |                        |       |      |   |        |   |      |        |      |   |        |   |   |        |  
|Net charge-offs                                                          |  |                        | 1,438 |      |   | 104    |   |      | 274    |      |   | 105    |   |   | 142    |  
|                                                                         |  |                        |       |      |   |        |   |      |        |      |   |        |   |   |        |  
|Balance at end of year                                                   |  | $                      | 2,490 |      | $ | 2,132  |   | $    | 1,936  |      | $ | 1,910  |   | $ | 1,965  |  
|                                                                         |  |                        |       |      |   |        |   |      |        |      |   |        |   |   |        |  
|Ratio of net charge-offs to average loans
 outstanding during the period |  |                        | 0.51  | %    |   | 0.04   | % |      | 0.09   | %    |   | 0.04   | % |   | 0.06   | %
|Allowance for loan losses as a percent of
 loans                         |  |                        | 0.92  | %    |   | 0.74   | % |      | 0.64   | %    |   | 0.68   | % |   | 0.74   | %
|Allowance for loan losses as a percent of
 non-performing loans          |  |                        | 81.93 | %    |   | 111.40 | % |      | 152.08 | %    |   | 190.40 | % |   | 177.99 | %

The
allowance for loan losses is a valuation account that reflects our evaluation
of the losses inherent in our loan portfolio. We maintain the allowance through
provisions for loan losses that we charge to income. We charge losses on loans
against the allowance for loan losses when we believe the collection of loan
principal is unlikely.

Our
evaluation of risk in maintaining the allowance for loan losses includes the
review of all loans on which the collectibility of principal may not be
reasonably assured. We consider the following factors as part of this
evaluation: our historical loan loss experience, known and inherent risks in
the loan portfolio, the estimated value of the underlying collateral and
current economic and market trends. There may be other factors that may warrant
our consideration in maintaining an allowance at a level sufficient to provide
for probable losses. Although we believe that we have established and
maintained the allowance for loan losses at adequate levels, future additions
may be necessary if economic and other conditions in the future differ
substantially from the current operating environment.

In
addition, various regulatory agencies, as an integral part of their examination
process, periodically review our loan and foreclosed real estate portfolios and
the related allowance for loan losses and valuation allowance for foreclosed
real estate. These agencies, including the OTS, may require us to increase the
allowance for loan losses or the valuation allowance for foreclosed real estate
based on their judgments of information available to them at the time of their
examination, thereby adversely affecting our results of operations.

For the
year ended December 31, 2010, we increased our allowance for loan losses
through a $1.8 million provision for loan losses based on our evaluation of the
items discussed above. We believe that the allowance for loan losses accurately
reflects the level of risk in the loan portfolio. In addition to the
non-performing loans, management has identified, through normal internal credit
review procedures, $12.61 million in potential problem loans at December 31,
2010. Payments are current on $9.10 million or 72.14% of these loans. These
problem loans are defined as loans not included as non-performing loans, but
about which management has developed information regarding possible credit
problems, which may cause the borrowers future difficulties in complying with
loan repayments. Rome

15

---



Savings will continue to be aggressive in identifying, monitoring and
resolving potential problem loans. See Managements Discussion and Analysis of
Financial Condition and Results of Operations - Comparison of Results of
Operations for the Years Ended December 31, 2010 and December 31, 2009 -
Provision for Loan Losses included in the document.

16

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The
following table presents our allocation of the allowance for loan losses by
loan category and the percentage of loans in each category to total loans at
the periods indicated.

|                                |  |                         |       |                                           |  |        |   |                                           |       |        |  |                                           |   |        |       |                                           |  |        |   |                                          |       |  |  |        |   |   |       |  |  |        |  
|------------------------------- |  | ----------------------- | ----- | ----------------------------------------- |  | ------ | - | ----------------------------------------- | ----- | ------ |  | ----------------------------------------- | - | ------ | ----- | ----------------------------------------- |  | ------ | - | ---------------------------------------- | ----- |  |  | ------ | - | - | ----- |  |  | ------ | -
|                                |  | At
 December 31,        |      
|                                |  |                         |      
|                                |  | 2010                    |       | 2009                                      |  | 2008   |   | 2007                                      |       | 2006   | 
|                                |  |                         |       |                                           |  |        |   |                                           |       |        | 
|                                |  | Amount                  |       | Loans in
 Each 
 Category to
 Total Loans |  | Amount |   | Loans in
 Each 
 Category to
 Total Loans |       | Amount |  | Loans in
 Each 
 Category to
 Total Loans |   | Amount |       | Loans in
 Each 
 Category to
 Total Loans |  | Amount |   | Loans in
 Each
 Category to
 Total Loans |      
|                                |  |                         |       |                                           |  |        |   |                                           |       |        |  |                                           |   |        |       |                                           |  |        |   |                                          |      
|                                |  | (Dollars
 in thousands) |      
|Mortgage loans:                 |  |                         |       |                                           |  |        |   |                                           |       |        |  |                                           |   |        |       |                                           |  |        |   |                                          |       |  |  |        |   |   |       |  |  |        |  
|One to four-family              |  | $                       | 251   |                                           |  | 52.81  | % | $                                         | 160   |        |  | 54.06                                     | % | $      | 132   |                                           |  | 56.65  | % | $                                        | 141   |  |  | 52.91  | % | $ | 117   |  |  | 51.06  | %
|Commercial real estate          |  |                         | 513   |                                           |  | 18.07  |   |                                           | 514   |        |  | 18.26                                     |   |        | 746   |                                           |  | 16.39  |   |                                          | 618   |  |  | 17.60  |   |   | 721   |  |  | 20.60  |  
|Construction & land             |  |                         | 2     |                                           |  | 1.10   |   |                                           | 0     |        |  | 1.52                                      |   |        | 0     |                                           |  | 1.95   |   |                                          | 0     |  |  | 1.86   |   |   | 0     |  |  | 0.97   |  
|                                |  |                         |       |                                           |  |        |   |                                           |       |        |  |                                           |   |        |       |                                           |  |        |   |                                          |       |  |  |        |   |   |       |  |  |        |  
|Total mortgage loans            |  |                         | 766   |                                           |  | 71.98  |   |                                           | 674   |        |  | 73.84                                     |   |        | 878   |                                           |  | 74.99  |   |                                          | 759   |  |  | 72.37  |   |   | 838   |  |  | 72.63  |  
|                                |  |                         |       |                                           |  |        |   |                                           |       |        |  |                                           |   |        |       |                                           |  |        |   |                                          |       |  |  |        |   |   |       |  |  |        |  
|Commercial loans                |  |                         | 1,259 |                                           |  | 11.17  |   |                                           | 940   |        |  | 10.58                                     |   |        | 575   |                                           |  | 9.48   |   |                                          | 689   |  |  | 10.29  |   |   | 667   |  |  | 9.14   |  
|                                |  |                         |       |                                           |  |        |   |                                           |       |        |  |                                           |   |        |       |                                           |  |        |   |                                          |       |  |  |        |   |   |       |  |  |        |  
|Consumer loans                  |  |                         | 465   |                                           |  | 16.85  |   |                                           | 518   |        |  | 15.58                                     |   |        | 483   |                                           |  | 15.53  |   |                                          | 462   |  |  | 17.34  |   |   | 460   |  |  | 18.23  |  
|                                |  |                         |       |                                           |  |        |   |                                           |       |        |  |                                           |   |        |       |                                           |  |        |   |                                          |       |  |  |        |   |   |       |  |  |        |  
|                                |  |                         |       |                                           |  |        |   |                                           |       |        |  |                                           |   |        |       |                                           |  |        |   |                                          |       |  |  |        |   |   |       |  |  |        |  
|Total allowance for loan losses |  | $                       | 2,490 |                                           |  | 100.00 | % | $                                         | 2,132 |        |  | 100.00                                    | % | $      | 1,936 |                                           |  | 100.00 | % | $                                        | 1,910 |  |  | 100.00 | % | $ | 1,965 |  |  | 100.00 | %
|                                |  |                         |       |                                           |  |        |   |                                           |       |        |  |                                           |   |        |       |                                           |  |        |   |                                          |       |  |  |        |   |   |       |  |  |        |  

17

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Investment Activities

General.
The Board of Directors reviews and approves our investment policy on an annual
basis. The Board of Directors has delegated primary responsibility for ensuring
that the guidelines in the investment policy are followed to the Executive Vice
President/Chief Financial Officer. The Executive Vice President/Chief Financial
Officer reports to the Asset Liability Committee (ALCO) and to the Executive
Committee monthly.

Our
investment policy is designed primarily to manage the interest rate sensitivity
of our assets and liabilities, to generate a favorable return without incurring
undue interest rate and credit risk, to complement our lending activities and
to provide and maintain liquidity within established guidelines. In
establishing our investment strategies, we consider our interest rate
sensitivity, the types of securities to be held, liquidity and other factors.
Federal chartered savings banks have authority to invest in various types of
assets, including U.S. Government obligations, securities of various federal
agencies, obligations of states and municipalities, mortgage-backed securities,
certain time deposits of insured banks and savings institutions, certain
bankers acceptances, repurchase agreements, loans of federal funds, and,
subject to certain limits, corporate debt and commercial paper.

Rome
Savings classifies securities as held to maturity or available for sale at the
date of purchase. Held to maturity securities are reported at cost, adjusted
for amortization of premium and accretion of discount. Available for sale
securities are reported at fair market value. Rome Savings classifies U.S.
Government securities and U.S. Government agency securities, as available for
sale. These securities predominately have maturities of less than five years
although Rome Savings also invests in adjustable rate U.S. Government agency
securities with maturities up to 15 years.

Rome
Savings also invests in privately insured state and municipal obligations with
a maturity of fifteen years or less rated AAA by Moodys, Standard & Poors,
or Fitch. Rome Savings invests in these securities because of their favorable
after tax yields in comparison to U.S. Government and U.S. Government Agency
securities of comparable maturity. These securities are classified as available
for sale. Rome Savings purchases A and AA rated corporate bonds, principally of
financial institutions, as means of increasing yields on available for sale
investments while minimizing risk. Finally, Rome Savings and Rome Bancorp have
investments in Federal Home Loan Bank (FHLB) stock and other equity
securities, which are classified as available for sale.

18

---



The
following table presents the composition of our securities portfolios in dollar
amount and in percentage of each investment type at the dates indicated. It
also presents the coupon type for the mortgage-backed securities portfolio.

|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|---------------------------------------- |  | ---------------------- | ------ | ----------- | - | --------------- |  | ----------- | ------ | --------------- | - | ----------- |  | - | ----- |  | - | ----- | 
|                                         |  | At December 31,        |       
|                                         |  |                        |       
|                                         |  | 2010                   |        | 2009        |   | 2008            | 
|                                         |  |                        |        |             |   |                 | 
|                                         |  | Amortized
 Cost        |        | Fair
 Value |   | Amortized
 Cost |  | Fair
 Value |        | Amortized
 Cost |   | Fair
 Value | 
|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             | 
|                                         |  | (Dollars in thousands) |       
|Held to Maturity:                        |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|Mortgage-backed securities               |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|                                        
|GNMA                                     |  | $                      |       |             | $ |                |  | $           | 1      |                 | $ | 1           |  | $ | 7     |  | $ | 7     | 
|U.S. Government securities               |  |                        | 1,309  |             |   | 1,352           |  |             | 1,316  |                 |   | 1,387       |  |   | 1,322 |  |   | 1,436 | 
|Other bonds                              |  |                        | 107    |             |   | 107             |  |             | 114    |                 |   | 114         |  |   | 118   |  |   | 118   | 
|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|Total held to maturity                   |  |                        | 1,416  |             |   | 1,459           |  |             | 1,431  |                 |   | 1,502       |  |   | 1,447 |  |   | 1,561 | 
|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|Available for sale:                      |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|Corporate bonds                          |  |                        | 10,672 |             |   | 10,926          |  |             | 6,597  |                 |   | 6,643       |  |   |      |  |   |      | 
|State and Municipal obligations          |  |                        | 1,670  |             |   | 1,785           |  |             | 2,294  |                 |   | 2,413       |  |   | 2,620 |  |   | 2,663 | 
|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|Mortgage-backed securities               |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|FHLMC                                    |  |                        |       |             |   |                |  |             |       |                 |   |            |  |   | 24    |  |   | 24    | 
|FNMA                                     |  |                        |       |             |   |                |  |             |       |                 |   |            |  |   | 4     |  |   | 4     | 
|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|Total available for sale debt securities |  |                        | 12,342 |             |   | 12,711          |  |             | 8,891  |                 |   | 9,056       |  |   | 2,648 |  |   | 2,691 | 
|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|Equity securities                        |  |                        | 350    |             |   | 359             |  |             | 872    |                 |   | 968         |  |   | 872   |  |   | 872   | 
|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|Total available for sale                 |  |                        | 12,692 |             |   | 13,070          |  |             | 9,763  |                 |   | 10,024      |  |   | 3,520 |  |   | 3,563 | 
|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|FHLB stock                               |  |                        | 3,385  |             |   | 3,385           |  |             | 3,222  |                 |   | 3,222       |  |   | 3,578 |  |   | 3,578 | 
|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 
|Total investment securities              |  | $                      | 17,493 |             | $ | 17,914          |  | $           | 14,416 |                 | $ | 14,748      |  | $ | 8,545 |  | $ | 8,702 | 
|                                         |  |                        |        |             |   |                 |  |             |        |                 |   |             |  |   |       |  |   |       | 

19

---



Carrying
Values, Yields and Maturities. The following table
sets forth the scheduled maturities, book value, market value and weighted
average yields for Rome Savings debt securities at December 31, 2010.

|                                    |  |                         |       |                                           |  |                                             |   |                          |       |                 |  |                          |   |                 |       |                          |  |                 |   |                          |     |  |  |      |   |   |        |  |  |      |  
|----------------------------------- |  | ----------------------- | ----- | ----------------------------------------- |  | ------------------------------------------- | - | ------------------------ | ----- | --------------- |  | ------------------------ | - | --------------- | ----- | ------------------------ |  | --------------- | - | ------------------------ | --- |  |  | ---- | - | - | ------ |  |  | ---- | -
|                                    |  | One Year
 or Less       |       | More Than
 One Year
 Less than Five Years |  | More Than
 Five Years 
 Less than Ten Years |   | More Than
 Ten Years     |       | Total           | 
|                                    |  |                         |       |                                           |  |                                             |   |                          |       |                 | 
|                                    |  |                         |       |                                           |  |                                             |   |                          |       |                 |  |                          |   |                 |       |                          |  |                 |   |                          |    
|                                    |  | Carrying
 Value         |       | Weighted
 Average
 Yield                  |  | Carrying
 Value                             |   | Weighted
 Average
 Yield |       | Carrying
 Value |  | Weighted
 Average
 Yield |   | Carrying
 Value |       | Weighted
 Average
 Yield |  | Carrying
 Value |   | Weighted
 Average
 Yield |    
|                                    |  |                         |       |                                           |  |                                             |   |                          |       |                 |  |                          |   |                 |       |                          |  |                 |   |                          |    
|                                    |  | (Dollars
 in thousands) |      
|Available
 for sale securities:     |  |                         |       |                                           |  |                                             |   |                          |       |                 |  |                          |   |                 |       |                          |  |                 |   |                          |     |  |  |      |   |   |        |  |  |      |  
|State and municipal obligations (1) |  | $                       |      |                                           |  |                                            |   | $                        | 1,057 |                 |  | 5.22                     | % | $               | 728   |                          |  | 5.63            | % | $                        |    |  |  |     |   | $ | 1,785  |  |  | 5.38 | %
|Corporate bonds                     |  |                         | 1,939 |                                           |  | 3.42                                        | % |                          | 8,104 |                 |  | 4.20                     | % |                 | 883   |                          |  | 3.58            |   |                          |    |  |  |     |   |   | 10,926 |  |  | 4.01 | %
|                                    |  |                         |       |                                           |  |                                             |   |                          |       |                 |  |                          |   |                 |       |                          |  |                 |   |                          |     |  |  |      |   |   |        |  |  |      |  
|Held to
 maturity securities:       |  |                         |       |                                           |  |                                             |   |                          |       |                 |  |                          |   |                 |       |                          |  |                 |   |                          |     |  |  |      |   |   |        |  |  |      |  
|U.S. Government securities          |  |                         | 1,000 |                                           |  | 4.61                                        | % |                          | 309   |                 |  | 2.25                     | % |                 |      |                          |  |                |   |                          |    |  |  |     |   |   | 1,309  |  |  | 4.05 | %
|Other                               |  |                         |      |                                           |  |                                            |   |                          |      |                 |  |                         |   |                 |      |                          |  |                |   |                          | 107 |  |  | 5.55 | % |   | 107    |  |  | 5.55 | %
|                                    |  |                         |       |                                           |  |                                             |   |                          |       |                 |  |                          |   |                 |       |                          |  |                 |   |                          |     |  |  |      |   |   |        |  |  |      |  
|                                    |  |                         |       |                                           |  |                                             |   |                          |       |                 |  |                          |   |                 |       |                          |  |                 |   |                          |     |  |  |      |   |   |        |  |  |      |  
|Total debt
 securities              |  | $                       | 2,939 |                                           |  | 3.82                                        | % | $                        | 9,470 |                 |  | 4.25                     | % | $               | 1,611 |                          |  | 4.51            | % | $                        | 107 |  |  | 5.55 | % | $ | 14,127 |  |  | 4.20 | %
|                                    |  |                         |       |                                           |  |                                             |   |                          |       |                 |  |                          |   |                 |       |                          |  |                 |   |                          |     |  |  |      |   |   |        |  |  |      |  

|    |                                                 
|--- | ------------------------------------------------
|   
|(1) | Yields are
 presented on a tax-equivalent basis.

20

---



Deposit Activity and Other Sources of Funds

General.
Deposits, borrowings, scheduled amortization and prepayments of loan principal,
maturities and calls of investments securities and funds provided by operations
are our primary sources of funds for use in lending, investing and for other
general purposes.

Deposits.
We offer a variety of deposit accounts having a range of interest rates and
terms. We currently offer regular savings deposits (consisting of passbook and
statement savings accounts), interest-bearing demand accounts,
non-interest-bearing demand accounts, money market accounts and time deposits.

Deposit
flows are influenced significantly by general and local economic conditions,
changes in prevailing interest rates, pricing of deposits and competition. Our
deposits are primarily obtained from areas surrounding our offices and we rely
primarily on paying competitive rates, service and long-standing relationships
with customers to attract and retain these deposits. We do not use brokers to
obtain deposits.

When we
determine our deposit rates, we consider local competition, U.S. Treasury
securities offerings and the rates charged on other sources of funds. Core
deposits (defined as savings deposits, money market accounts and demand
accounts) represented 69.3% and 66.8% of total deposits on December 31, 2010
and 2009, respectively. At December 31, 2010 and 2009, time deposits with
remaining terms to maturity of less than one year amounted to $48.8 million and
$50.4 million, respectively. See Managements Discussion and Analysis of
Financial Condition and Results of Operations - Analysis of Net Interest
Income for information relating to the average balances and costs of our
deposit accounts for the years ended December 31, 2010, 2009 and 2008.

At December
31, 2010, we had $17.0 million in time deposits with balances of $100,000 or
more maturing as follows:

|                                     |  |                |        | 
|------------------------------------ |  | -------------- | ------ | 
|Maturity Period                      |  | Amount         |       
|                                     |  |                |       
|                                     |  | (In thousands) |       
|Three months or less                 |  | $              | 3,579  | 
|Over three months through six months |  |                | 3,401  | 
|Over six months through 12 months    |  |                | 4,342  | 
|Over 12 months                       |  |                | 5,708  | 
|                                     |  |                |        | 
|Total                                |  | $              | 17,030 | 
|                                     |  |                |        | 

Borrowings.
At December 31, 2010, we had outstanding borrowings of $35.7 million which were
used to fund loans, purchase treasury stock and finance other investments. In
the future, we expect to continue to utilize borrowings as a funding source and
may borrow funds pursuant to repurchase agreements, whereby we sell an asset
with an agreement to repurchase it at some future date. We are a member of the
Federal Home Loan Bank of New York and have available a line of credit of $61.2
million, all of which million remained available at December 31, 2010. The
Company also had unused short term borrowing capacity at the Federal Reserve
Bank of New York totaling $8.3 million which is collateralized by a portion of
the consumer loan portfolio.

Subsidiary Activities

Rome
Savings has four subsidiaries: 100 On the Mall Corporation, Clocktower
Insurance Agency Incorporated, RSB Properties, Inc. and RSB Capital Inc. RSB
Properties, Inc. is a real estate investment trust. 100 On the Mall, Clocktower
Insurance and RSB Capital, Inc. are currently inactive.

Employees

At December
31, 2010, Rome Savings had 93 full-time employees and 7 part-time employees.
Rome Savings employees are not represented by a collective bargaining
agreement, and Rome Savings considers its relationship with its employees to be
good.

21

---



REGULATION AND SUPERVISION

General

Rome
Bancorp is regulated as a savings and loan holding company by the OTS. Rome
Savings, as a federally-chartered savings bank, is subject to regulation,
examination and supervision by the OTS, as its primary regulator, and the
Federal Deposit Insurance Corporation (the FDIC), as its deposit insurer.
Rome Savings must file reports with the OTS concerning its activities and
financial condition. Rome Bancorp is also required to file reports with, and
otherwise comply with, the rules and regulations of the OTS and of the SEC
under the federal securities laws. The OTS and the FDIC have significant
discretion in connection with their supervisory and enforcement activities and
examination policies or any other policies, including policies with respect to
Rome Savings capital levels, classification of assets and establishment of
adequate loan loss reserves for regulatory purposes. Any change in such
policies, whether by the OTS, the FDIC, the SEC or the United States Congress,
could have a material adverse impact on Rome Bancorp, Rome Savings, and their
operations and stockholders.

The
Dodd-Frank Wall Street Reform and Consumer Protection Act, signed by the
President on July 21, 2010 (the Dodd-Frank Act), provides for the regulation
and supervision of federal savings associations like Rome Savings to be
transferred to the Office of the Comptroller of the Currency (the OCC), the
agency that regulates national banks. The OCC will assume primary
responsibility for implementing and enforcing many of the laws and regulations applicable
to federal savings associations. The transfer will occur over a transition
period of up to one year, subject to a possible six month extension. At the
same time, the responsibility for supervising savings and loan holding
companies like Rome Bancorp will be transferred to the Federal Reserve Board.
The Dodd-Frank Act also provides for the creation of a new agency, the Consumer
Financial Protection Bureau, as an independent bureau of the Federal Reserve
Board, to take over the implementation of federal consumer financial protection
and fair lending laws from the depository institution regulators. However,
institutions of $10 billion or fewer in assets will continue to be examined for
compliance with such laws and regulations by, and subject to the enforcement
authority of, the prudential regulator rather than the Consumer Financial
Protection Bureau.

The
description of statutory provisions and regulations applicable to federally
chartered savings associations and their holding companies and of tax matters
set forth in this document does not purport to be a complete description of all
such statutes and regulations and their effects on Rome Bancorp and Rome
Savings.

Recent
Government Actions

On
July 21, 2010, President Obama signed the Dodd-Frank Act, which is legislation
that restructures the regulation of depository institutions. In addition to
eliminating the OTS and creating the Consumer Financial Protection Bureau, the
Dodd-Frank Act, among other things, requires changes in the way that institutions
are assessed for deposit insurance, mandates the imposition of consolidated
capital requirements on savings and loan holding companies, requires that
originators of securitized loans retain a percentage of the risk for the
transferred loans, reduces the federal preemption afforded to federal savings
associations and contains a number of reforms related to mortgage origination.
Many of the provisions of the Dodd-Frank Act require the issuance of
regulations before their impact on operations can be assessed by management.
However, there is a significant possibility that the Dodd-Frank Act will, at a
minimum, result in increased regulatory burden and increase compliance and
possibly interest expense costs for Rome Bancorp and Rome Savings.

Regulation
of Federal Savings Associations

Business Activities. Rome Savings derives its lending and investment powers from the Home
Owners Loan Act, as amended (the HOLA), and OTS regulations. Under these
laws and regulations, Rome Savings may invest in mortgage loans secured by
residential and commercial real estate, commercial and consumer loans, certain
types of debt securities, and certain other assets. Rome Savings may also
establish service corporations that may engage in activities not otherwise
permissible for Rome Savings, including certain real estate equity investments
and securities and brokerage activities. Rome Savings authority to make
certain types of loans or other investments is limited by federal law and
regulation.

The
Dodd-Frank Act authorizes depository institutions to pay interest on demand
deposits effective July 31, 2011. Depending upon competitive responses, that
change could have an adverse impact on Rome Savingss interest expense.

22

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Loans to One Borrower. Rome Savings is generally subject to the
same limits on loans to one borrower as a national bank. With specified
exceptions, Rome Savings total loans or extensions of credit to a single
borrower cannot exceed 15% of Rome Savings unimpaired capital and surplus
which does not include accumulated other comprehensive income. Rome Savings may
lend additional amounts up to 10% of its unimpaired capital and surplus which
does not include accumulated other comprehensive income, if the loans or
extensions of credit are fully-secured by readily-marketable collateral. Rome
Savings currently complies with applicable loans-to-one borrower limitations.

QTL Test. Under federal law, Rome Savings must comply with the qualified thrift
lender, or QTL test. Under the QTL test, Rome Savings is required to maintain
at least 65% of its portfolio assets in certain qualified thrift
investments in at least nine months of the most recent 12-month period.
Portfolio assets means, in general, Rome Savings total assets less the sum
of:

| |   |                                                               
| | - | --------------------------------------------------------------
| |  | specified liquid assets up
 to 20% of total assets;           
| |   |                                                               
| |  | goodwill and other
 intangible assets; and                    
| |   |                                                               
| |  | the value of property used
 to conduct Rome Savings business.

Rome
Savings may also satisfy the QTL test by qualifying as a domestic building and
loan association as defined in the Internal Revenue Code of 1986. Rome Savings
met the QTL test at December 31, 2009, and in each of the prior 12 months, and
therefore is a qualified thrift lender. If Rome Savings fails the QTL test,
and is unable to correct that failure for a period of time, it must either
operate under certain restrictions on its activities or convert to a bank
charter. The Dodd-Frank Act also makes noncompliance with the qualified thrift
lender test subject to agency enforcement action for a violation of law and a
basis for dividend restrictions.

Capital Requirements. OTS regulations require savings
associations to meet three minimum capital standards:

| |     |                                                                                                                                                                                                                                                      
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | a tangible capital ratio
 requirement of 1.5% of total assets as adjusted under the OTS regulations;                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                      
| | (2) | a leverage ratio
 requirement of 3.0% of core capital to such adjusted total assets, if a
 savings association has been assigned the highest composite rating of 1 under
 the Uniform Financial Institutions Rating System; and                      
| |     |                                                                                                                                                                                                                                                      
| | (3) | a total risk-based capital
 ratio requirement of 8.0% of core and supplementary capital to total
 risk-based assets, provided that the amount of supplementary capital used to
 satisfy this requirement shall not exceed the amount of core capital.

The
minimum leverage capital ratio for any other depository institution that does
not have a composite rating of 1 will be 4.0%, unless a higher leverage capital
ratio is warranted by the particular circumstances or risk profile of the
depository institution. In determining the amount of risk-weighted assets for
purposes of the risk-based capital requirement, a savings association must
compute its risk-based assets by multiplying its assets and certain off-balance
sheet items by risk-weights, which range from 0% for cash and obligations
issued by the United States Government or its agencies and certain other assets
to 100% for consumer, commercial, home equity and construction loans and
certain other assets, as assigned by the OTS capital regulations based on the
risks found by the OTS to be inherent in the type of asset.

Tangible
capital is defined, generally, as common stockholders equity (including
retained earnings), certain noncumulative perpetual preferred stock and related
earnings, minority interests in equity accounts of fully consolidated
subsidiaries, less intangible assets (other than certain servicing rights and
nonsecurity financial instruments) and investments in and loans to subsidiaries
engaged in activities not permissible for a national bank. Core capital (or
tier 1 capital) is defined similarly to tangible capital, but core capital also
includes certain qualifying supervisory goodwill and certain purchased credit
card relationships. Supplementary capital (or tier 2 capital) includes
cumulative and other preferred stock, mandatory convertible debt securities,
subordinated debt and intermediate preferred stock and the allowance for loan
and lease losses. In addition, up to 45% of unrealized gains on
available-for-sale equity securities with a readily determinable fair value may
be included in supplementary capital. The allowance for loan and lease losses
includable in tier 2 capital is limited to a maximum of 1.25% of risk-weighted
assets.

23

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At
December 31, 2010, Rome Savings met and exceeded each of its capital
requirements. The table below presents Rome Savings regulatory capital as
compared to the OTS regulatory capital requirements at December 31, 2010:

|                   |  |                 |        |                       |   |                 |  |   |        | 
|------------------ |  | --------------- | ------ | --------------------- | - | --------------- |  | - | ------ | 
|                   |  | Bank            |        | Capital
 Requirements |   | Excess
 Capital | 
|                  
|                   |  | (In
 thousands) |       
|                  
|Tangible capital   |  | $               | 57,829 |                       | $ | 13,165          |  | $ | 44,664 | 
|                  
|Core capital       |  | $               | 57,829 |                       | $ | 13,165          |  | $ | 44,664 | 
|                  
|Risk-based capital |  | $               | 60,319 |                       | $ | 18,993          |  | $ | 41,326 | 

Interest Rate Risk.The Federal
Deposit Insurance Corporation Improvement Act requires that the OTS and other
federal bank regulatory agencies (the Agencies) revise their risk-based
capital standards, with appropriate transition rules, to ensure that they take
into account IRR concentration of risk and the risks of non-traditional
activities. The OTS regulations do not include a specific IRR component of the
risk-based capital requirement. However, the OTS monitors the IRR of individual
institutions through a variety of means, including an analysis of the change in
net portfolio value, or NPV. NPV is defined as the net present value of the
expected future cash flows of an entitys assets and liabilities and,
therefore, hypothetically represents the value of an institutions net worth.
In addition, OTS Thrift Bulletin 13a provides guidance on the management of IRR
and the responsibility of boards of directors in that area.

In January 2010, the Agencies released an Advisory
on Interest Rate Risk Management (the IRR Advisory) to remind institutions of
the supervisory expectations regarding sound practices for managing IRR. While
some degree of IRR is inherent in the business of banking, the Agencies expect
institutions to have sound risk management practices in place to measure,
monitor and control IRR exposures, and IRR management should be an integral component of an institutions risk
management infrastructure. The Agencies
expect all institutions to manage their IRR exposures using processes and
systems commensurate with their earnings and capital levels, complexity,
business model, risk profile and scope of operations, and the IRR Advisory
reiterates the importance of effective corporate governance, policies
and procedures, risk measuring and monitoring systems, stress testing, and
internal controls related to the IRR exposures of institutions.

The IRR Advisory encourages institutions to use a variety of techniques to
measure IRR exposure, including simple maturity gap analysis, income
measurement and valuation measurement for assessing the impact of changes in
market rates, as well as simulation modeling to measure IRR exposure. Institutions
are encouraged to use the full complement of analytical capabilities of their
IRR simulation models. The IRR Advisory also reminds institutions that stress
testing, which includes both scenario and sensitivity analysis, is an integral
component of IRR management. The IRR Advisory indicates that institutions
should regularly assess IRR exposures beyond typical industry conventions,
including changes in rates of greater magnitude (e.g., up and down 300 and 400
basis points, as compared to up and down 200 basis points, which has been the
general practice) across different tenors to reflect changing slopes and twists
of the yield curve. The Company utilizes a simulation model to track liquidity,
portfolio value and interest rate sensitivity of its financial instruments over
a range of possible interest rate scenario. These results are reviewed at least
quarterly by the companys Asset Liability Committee, which includes certain
members of the Companys Board of Directors and Senior Management.

Community Reinvestment Act. Under the Community Reinvestment Act
(CRA), as implemented by OTS regulations, Rome Savings has a continuing and
affirmative obligation, consistent with its safe and sound operation, to
ascertain and help meet the credit needs of its entire community, including low
and moderate income neighborhoods. The CRA does not establish specific lending
requirements or programs for Rome Savings nor does it limit Rome Savings
discretion to develop the types of products and services that it believes are
best suited to its particular community, consistent with the CRA. Rather, the
CRA requires the OTS, in connection with its examination of a federally
chartered savings association, to assess the associations record of meeting
the credit needs of its community and to take such record into account in its
evaluation of certain applications by such association.

The
CRA regulations rate an institution on its actual performance in meeting
community needs. In particular, the assessment system focuses on three tests:

24

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| |   |                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a lending test, to
 evaluate the institutions record of making loans in its assessment areas;                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                           
| |  | an investment test, to
 evaluate the institutions record of investing in community development
 projects, affordable housing, and programs benefiting low or moderate income
 individuals and businesses in its assessment area or a broader area that
 includes its assessment area; and
| |   |                                                                                                                                                                                                                                                                                           
| |  | a service test, to
 evaluate the institutions delivery of services through its retail banking
 channels and the extent and innovativeness of its community development
 services.                                                                                                        

The
CRA also requires all institutions to make public disclosure of their CRA
ratings. Rome Savings received a Satisfactory CRA rating in its most recent
examination. Regulations require that Rome Savings publicly disclose certain
agreements that are in fulfillment of CRA. There are no such agreements at this
time.

Transactions with Affiliates. Rome Savings authority to engage in
transactions with its affiliates is limited by the Sections 23A and 23B of
the Federal Reserve Act (the FRA) and Regulation W issued by the Federal
Reserve Board, as made applicable to federal savings associations by the HOLA
and the OTS regulations. In general, these transactions must be on terms which
are as favorable to Rome Savings as comparable transactions with
non-affiliates. In addition, certain types of these transactions referred to as
covered transaction are subject to quantitative limits based on a percentage
of Rome Savings capital, thereby restricting the total dollar amount of
transactions Rome Savings may engage in with each individual affiliate and with
all affiliates in the aggregate. Affiliates must pledge qualifying collateral
in amounts between 100% and 130% of the covered transaction in order to receive
loans from Rome Savings. In addition, applicable regulations prohibit a savings
association from lending to any of its affiliates that engage in activities
that are not permissible for bank holding companies and from purchasing low-quality
(i.e., non-performing) assets from an affiliate or purchasing the securities of
any affiliate, other than a subsidiary.

Loans to Insiders. Rome Savings authority to extend credit to its directors, executive
officers and principal shareholders, as well as to entities controlled by such
persons, is currently governed by the requirements of Sections 22(g) and 22(h)
of the FRA and Regulation O issued by the Federal Reserve Board, as made
applicable to federal savings associations by the HOLA and the OTS regulations.
Among other things, these provisions require that extensions of credit to
insiders:

| |   |                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | be made on terms that are
 substantially the same as, and follow credit underwriting procedures that are
 not less stringent than, those prevailing for comparable transactions with
 third parties and that do not involve more that the normal risk of repayment
 or present other features that are unfavorable to Rome Savings; and
| |   |                                                                                                                                                                                                                                                                                                                                        
| |  | not exceed certain
 limitations on the amount of credit extended to such persons, individually
 and in the aggregate, which limits are based, in part, on the amount of Rome
 Savings capital.                                                                                                                                        

In addition, extensions for
credit in excess of certain limits must be approved by Rome Savings Board of
Directors.

Enforcement. The OTS has primary enforcement responsibility over federally
chartered savings associations, including Rome Savings. This enforcement
authority includes, among other things, the ability to assess civil money
penalties, to issue cease and desist orders and to remove directors and
officers. In general, these enforcement actions may be initiated in response to
violations of laws and regulations and to unsafe or unsound practices.

Standards for Safety and Soundness. Pursuant to the Federal Deposit Insurance
Act, the OTS has adopted a set of guidelines prescribing safety and soundness
standards. These guidelines establish general standards relating to internal
controls, information systems, internal audit systems, loan documentation,
credit underwriting, interest rate risk exposure, asset growth, asset quality,
earnings standards, compensation, fees and benefits. In general, the guidelines
require appropriate systems and practices to identify and manage the risks and
exposures specified in the guidelines.

In
addition, the OTS adopted regulations that authorize, but do not require, the
OTS to order a savings association that has been given notice that it is not
satisfying these safety and soundness standards to submit a compliance plan.
If, after being notified, a savings association fails to submit an acceptable
plan or fails in any material respect to implement an accepted plan, the OTS
must issue an order directing action to correct the deficiency. Further, the
OTS

25

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may
issue an order directing corrective actions and may issue an order directing
other actions of the types to which an undercapitalized association is subject
under the prompt corrective action provisions of federal law. If a savings
association fails to comply with such an order, the OTS may seek to enforce
such order in judicial proceedings and to impose civil money penalties.

Limitation on Capital Distributions. The OTS imposes various restrictions or
requirements on Rome Savings ability to make capital distributions, including
the payment of cash dividends. A savings association that is the subsidiary of
a savings and loan holding company must file a notice with the OTS at least 30
days before making a capital distribution. Rome Savings must file an
application for prior approval if the total amount of its capital
distributions, including the proposed distribution, for the applicable calendar
year would exceed an amount equal to Rome Savings net income for that year
plus Rome Savings retained net income for the previous two years.

The
OTS may disapprove a notice or application if:

| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | Rome Savings would be
 undercapitalized following the distribution;                                      
| |   |                                                                                                          
| |  | the proposed capital
 distribution raises safety and soundness concerns; or                              
| |   |                                                                                                          
| |  | the capital distribution
 would violate a prohibition contained in any statute, regulation or
 agreement.

Liquidity. Rome Savings is required to maintain a sufficient amount of liquid
assets to ensure its safe and sound operation.

Prompt Corrective Action Regulations. Under the OTS prompt corrective action
regulations, the OTS is required to take certain, and is authorized to take
other, supervisory actions against undercapitalized savings associations. For
this purpose, a savings association is placed in one of the following four
categories based on the associations capital:

| |   |                              
| | - | -----------------------------
| |  | well capitalized;            
| |   |                              
| |  | adequately capitalized;      
| |   |                              
| |  | undercapitalized; or         
| |   |                              
| |  | critically
 undercapitalized.

At
December 31, 2010, Rome Savings met the criteria for being considered
well-capitalized. When appropriate, the OTS can require corrective action by
a savings association holding company under the prompt corrective action
provision of federal law.

Insurance of Deposit Accounts. Rome Savings is a member of the Deposit
Insurance Fund (DIF) maintained by the FDIC, and Rome Savings pays its
deposit insurance assessments to the DIF. The DIF was formed on March 31, 2006,
following the merger of the Bank Insurance Fund and the Savings Association
Insurance Fund in accordance with the Federal Deposit Insurance Reform Act of 2005
(DIF Act). In addition to merging the insurance funds, the DIF Act
established a statutory minimum and maximum designated reserve ratio for the
Deposit Insurance Fund and granted the FDIC greater flexibility in establishing
the required reserve ratio.

As
a result of the recent failures of a number of banks and thrifts, there has
been a significant increase in the loss provisions of the DIF of the FDIC. This
has resulted in a decline in the DIF reserve ratio. Because the DIF reserve
ratio declined below 1.15% the FDIC was required to establish a restoration
plan to restore the reserve ratio to 1.15% within five years. In order to
restore the reserve ratio to 1.15%, the FDIC increased risk-based assessment
rates uniformly by 7 basis points (annualized) during the first quarter of
2009. Thereafter, the FDIC further increased the initial base assessment rates,
beginning with the second quarter of 2009, depending on an institutions risk
category, with adjustments resulting in increased assessment rates for institutions
with a significant reliance on secured liabilities and brokered deposits. In
May of 2009 the FDIC imposed a five basis point special assessment on each
insured depository institutions assets minus Tier 1 capital as of June 30,
2009. The special assessment was $142,000 for Rome Savings and was collected on
September 30, 2009.

On
September 29, 2009, the FDIC adopted an amendment to the restoration plan that
increases the deposit insurance

26

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assessment
rate schedule uniformly across all four risk categories by three basis points
(annualized) of insured deposits beginning January 1, 2011. In addition, on
November 17, 2009 the FDIC adopted a final rule which required insured
depository institutions to prepay their estimated quarterly risk-based assessments
for the fourth quarter of 2009 and for all of 2010, 2011 and 2012. The prepaid
assessment for these periods was collected on December 30, 2009 and Rome
Savings prepaid assessment was $752,000 which was recorded as a prepaid
expense.

The
Dodd-Frank Act increased the minimum target Deposit Insurance Fund ratio from
1.15% of estimated insured deposits to 1.35% of estimated insured deposits. The
FDIC must seek to achieve the 1.35% ratio by September 30, 2020. Insured
institutions with assets of $10 billion or more are supposed to fund the
increase. The Dodd-Frank Act eliminated the 1.5% maximum fund ratio, instead
leaving it to the discretion of the FDIC.

The
FDIC has authority to increase insurance assessments. A significant increase in
insurance premiums would likely have an adverse effect on the operating
expenses and results of operations of Rome Savings. Management cannot predict
what insurance assessment rates will be in the future.

In
addition, all FDIC-insured institutions are required to pay a pro rata portion
of the interest due on obligations issued by the Financing Corporation to fund
the closing and disposal of failed thrift institutions by the Resolution Trust
Corporation. At December 31, 2009, the FDIC assessed DIF-insured deposits 1.06
basis points per $100 of deposits to cover those obligations. The Financing
Corporation rate is adjusted quarterly to reflect changes in assessment bases
of the DIF. This obligation will continue until the Financing Corporation bonds
mature in 2017 through 2019.

Due
to the recent difficult economic conditions, deposit insurance per account
owner has been raised to $250,000. That limit was made permanent by the
Dodd-Frank Act.

Insurance
of deposits may be terminated by the FDIC upon a finding that the institution
has engaged in unsafe or unsound practices, is in an unsafe or unsound
condition to continue operations or has violated any applicable law,
regulation, rule, order or regulatory condition imposed in writing. The
management of Rome Savings does not know of any practice, condition or
violation that might lead to termination of deposit insurance.

Federal Home Loan Bank System. Rome Savings is a member of the FHLB of New
York, which is one of the regional FHLBs composing the FHLB System. Each FHLB
provides a central credit facility primarily for its member institutions. Rome
Savings, as a member of the FHLB of New York, is required to acquire and hold
shares of capital stock in the FHLB of New York. While the required percentages
of stock ownership are subject to change by the FHLB, Rome Savings was in
compliance with this requirement with an investment in FHLB of New York stock
at December 31, 2010 of $3.4 million. Any advances from a FHLB must be secured
by specified types of collateral, and all long-term advances may be obtained
only for the purpose of providing funds for residential housing finance.

The
FHLBs are required to provide funds for the resolution of insolvent thrifts and
to contribute funds for affordable housing programs. These requirements could
reduce the amount of earnings that the FHLBs can pay as dividends to their
members and could also result in the FHLBs imposing a higher rate of interest
on advances to their members. If dividends were reduced, or interest on future
FHLB advances increased, Rome Savings net interest income would be affected.

Federal Reserve System. Under regulations of the Federal Reserve
Board, Rome Savings is required to maintain noninterest-earning reserves
against its transaction accounts (primarily NOW and regular checking accounts).
The Federal Reserve Board regulations exempt $10.7 million of otherwise
reservable balances (subject to adjustment by the Federal Reserve Board) from
the reserve requirements. A 3% reserve is required for net transaction account
balances between $10.7 million and $55.2 million (subject to adjustment by the
Federal Reserve Board) plus a reserve requirement 10% (subject to adjustment by
the Federal Reserve Board between 8% and 14%) against that portion of total
transaction accounts in excess of $55.2 million. Rome Savings is in compliance
with the foregoing reserve requirements. Because required reserves must be
maintained in the form of vault cash, a noninterest-bearing account at a
Federal Reserve Bank, or a pass-through account as defined by the Federal
Reserve Board, the effect of this reserve requirement is to reduce the Banks
interest-earning assets. The balances maintained to meet the reserve
requirements imposed by the Federal Reserve Board may be used to satisfy
liquidity requirements imposed by the OTS. FHLB System members are also
authorized to borrow from the Federal Reserve discount window, but Federal
Reserve Board regulations require such institutions to exhaust all FHLB sources
before borrowing from a Federal Reserve Bank.

27

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Prohibitions Against Tying Arrangements. Federal savings associations are subject to
prohibitions on certain tying arrangements. A depository institution is
prohibited, subject to certain exceptions, from extending credit or offering
any other service, or fixing or varying the consideration for such extension of
credit or service, on the condition that the customer obtain some additional
product or service from the institution or its affiliates or not obtain
services of a competitor of the institution.

The Bank Secrecy Act. Rome Savings and Rome Bancorp are subject
to the Bank Secrecy Act, as amended by the USA PATRIOT Act, which gives the
federal government powers to address money laundering and terrorist threats
through enhanced domestic security measures, expanded surveillance powers, and
mandatory transaction reporting obligations. By way of example, the Bank
Secrecy Act imposes an affirmative obligation on Rome Savings to report
currency transactions that exceed certain thresholds and to report other
transactions determined to be suspicious.

Title
III of the USA PATRIOT Act takes measures intended to encourage information
sharing among financial institutions, bank regulatory agencies and law
enforcement bodies. Further, certain provisions of Title III impose affirmative
obligations on a broad range of financial institutions, including banks,
thrifts, brokers, dealers, credit unions, money transfer agents and parties
registered under the Commodity Exchange Act. Among other requirements, the USA
PATRIOT Act imposes the following obligations on financial institutions:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | financial institutions
 must establish anti-money laundering programs that include, at minimum: (i)
 internal policies, procedures, and controls, (ii) specific designation of an
 anti-money laundering compliance officer, (iii) ongoing employee training
 programs, and (iv) an independent audit function to test the anti-money
 laundering program;                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | financial institutions
 must establish and meet minimum standards for customer due diligence,
 identification and verification;                                                                                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | financial institutions
 that establish, maintain, administer, or manage private banking accounts or
 correspondent accounts in the United States for non-United States persons or
 their representatives (including foreign individuals visiting the United
 States) must establish appropriate, specific, and, where necessary, enhanced
 due diligence policies, procedures, and controls designed to detect and
 report money laundering through those accounts;
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | financial institutions are
 prohibited from establishing, maintaining, administering or managing
 correspondent accounts for foreign shell banks (foreign banks that do not
 have a physical presence in any country), and are subject to certain
 recordkeeping obligations with respect to correspondent accounts of foreign
 banks; and                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | bank regulators are
 directed to consider a banks or holding companys effectiveness in combating
 money laundering when ruling on Federal Reserve Act and Bank Merger Act
 applications.                                                                                                                                                                                                                                                                         

On July 26, 2010, Rome Savings stipulated
and consented to a Cease and Desist Order (the Order) issued by the Office of
Thrift Supervision. The Order became effective on July 26, 2010. The Order was
issued as a result of weaknesses in Rome Savingss Secrecy Act/Anti-Money
Laundering (BSA) compliance program identified this year. The Order requires
Rome Savings to cease and desist from violating certain BSA laws and regulation
identified in the Order, revise its current BSA compliance program, implement a
system of internal controls to ensure compliance with BSA laws and regulations
and to take certain other actions identified by the Office of Thrift
Supervision in the Order. Rome Savings believes that it has addressed all of
the matters mentioned in the Order and has completed all of the actions
required to be taken by the deadline dates stated in the Order. The Order will
not have a material impact on the financial condition or results of operations
of Rome Savings or Rome Bancorp.

Office of Foreign Asset Control. Rome Savings and Rome Bancorp, like all
United States companies and individuals, are prohibited from transacting
business with certain individuals and entities named on the Office of Foreign
Asset Controls list of Specially Designated Nationals and Blocked Persons.
Failure to comply may result in fines and other penalties. The Office of
Foreign Asset Control issued guidance directed at financial institutions in
which it asserted that it may, in its discretion, examine institutions
determined to be high-risk or to be lacking in their efforts to comply with
these prohibitions.

28

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Regulation
of Savings and Loan Holding Companies

Rome
Bancorp is a savings and loan holding company regulated by the OTS. As such,
Rome Bancorp is registered with and subject to OTS examination and supervision,
as well as certain reporting requirements. In addition, the OTS has enforcement
authority over Rome Bancorp and any of its non-savings association
subsidiaries. Among other things, this authority permits the OTS to restrict or
prohibit activities that are determined to be a serious risk to the financial
safety, soundness or stability of a subsidiary savings association.

In
general, a savings and loan holding company, with the prior approval of the
OTS, may engage in all activities that bank holding companies may engage in
under any regulation that the Federal Reserve Board has promulgated under
Section 4(c) of the BHC Act. Current regulations limit such authority to those
activities that the Federal Reserve Board has, by regulation, determined to be
permissible under Section 4(c)(8) of the BHC Act, as noted below. Prior
approval from the OTS is not required, however, if: (1) the savings and loan
holding company received a rating of satisfactory or above prior to January 1,
2008, or a composite rating of 1 or 2 thereafter, in its most recent
examination, and its not in troubled condition, and the holding company does
not propose to commence the activity by an acquisition of a going concern, or
(2) the activity is otherwise permissible under another provision of HOLA, for
which prior notice to or approval from the OTS is not required.

In
addition, a savings and loan holding company is precluded from acquiring more
than 5% of a non-subsidiary thrift unless the savings and loan holding company
receives prior approval from the OTS. No savings and loan holding company may,
directly or indirectly, or through one or more subsidiaries or through one or
more transactions, acquire control of an uninsured institution or retain, for
more than one year after the date any savings association subsidiary becomes
uninsured, control of such association.

Because
Rome Bancorp was organized after May 4, 1999, under the Gramm Leach Bliley Act
of 1999 (the GLB Act) it is prohibited from engaging in non-financial
activities. Unitary savings and loan holding companies that existed before this
date and that have not undergone certain reorganization or restructuring
transactions are grandfathered under the GLB Act and generally have no restrictions
on their business activities. Rome Bancorps activities, however, are
restricted to:

| |                                                                                                                                   |                                                                                                                                                                                                                                                    
| | --------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                  | furnishing or performing
 management services for its savings institution subsidiary;                                                                                                                                                              
| |                                                                                                                                   |                                                                                                                                                                                                                                                    
| |                                                                                                                                  | conducting an insurance
 agency or escrow business;                                                                                                                                                                                                
| |                                                                                                                                   |                                                                                                                                                                                                                                                    
| |                                                                                                                                  | holding, managing or
 liquidating assets owned or acquired from its savings institution subsidiary;                                                                                                                                                
| |                                                                                                                                   |                                                                                                                                                                                                                                                    
| |                                                                                                                                  | holding or managing
 properties used or occupied by its savings institution subsidiary;                                                                                                                                                            
| |                                                                                                                                   |                                                                                                                                                                                                                                                    
| |                                                                                                                                  | acting as trustee under a
 deed of trust;                                                                                                                                                                                                          
| |                                                                                                                                   |                                                                                                                                                                                                                                                    
| |                                                                                                                                  | any other activity (a)
 that the Federal Reserve Board, by regulation, has determined to be
 permissible for bank holding companies under Section 4(c) of the Bank Holding
 Company Act of 1956 (BHCA), unless the                               
| |                                                                                                                                   |                                                                                                                                                                                                                                                    
| |                                                                                                                                  | Director of the OTS, by
 regulation, prohibits or limits any such activity for savings and loan
 holding companies, or (b) in which multiple savings and loan holding
 companies were authorized by regulation to directly engage on March 5, 1987;
| |                                                                                                                                   |                                                                                                                                                                                                                                                    
| |                                                                                                                                  | purchasing, holding or
 disposing of stock acquired in connection with a qualified stock issuance if
 the purchase of such stock is approved by the Director of the OTS; and                                                                       
| |                                                                                                                                   |                                                                                                                                                                                                                                                    
| |                                                                                                                                  | any activity permissible
 for financial holding companies under section 4(k) of the BHCA.                                                                                                                                                          
| |                                                                                                                                   |                                                                                                                                                                                                                                                    
| | Permissible activities
 which are deemed to be financial in nature or incidental thereto under
 section 4(k) of the BHCA include:
| |                                                                                                                                   |                                                                                                                                                                                                                                                    
| |                                                                                                                                  | lending, exchanging,
 transferring, investing for others or safeguarding money or securities;                                                                                                                                                      
| |                                                                                                                                   |                                                                                                                                                                                                                                                    
| |                                                                                                                                  | insurance activities or
 providing and issuing annuities, and acting as principal, agent or broker;                                                                                                                                                

29

---



| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | financial, investment or
 economic advisory services;                                                                
| |   |                                                                                                                      
| |  | issuing or selling
 instruments representing interests in pools of assets that a bank is
 permitted to hold directly;
| |   |                                                                                                                      
| |  | underwriting, dealing in
 or making a market in securities;                                                          
| |   |                                                                                                                      
| |  | activities previously
 determined by the Federal Reserve Board to be closely related to banking;                     
| |   |                                                                                                                      
| |  | activities that bank
 holding companies are permitted to engage in outside of the U.S.; and                          
| |   |                                                                                                                      
| |  | portfolio investments made
 by an insurance company.                                                                 

Transactions
between the Rome Savings and Rome Bancorp and its other subsidiaries are
subject to various conditions and limitations. See Regulation of Federal
Savings Associations - Transactions with Affiliates and Regulation of Federal
Savings Associations - Limitation on Capital Distributions.

Consolidated Holding Company Capital Requirements. Unlike bank holding companies, federal
savings and loan holding companies are not currently subject to any regulatory
capital requirements or to supervision by the Federal Reserve Board. The Dodd-Frank Act requires the federal
banking agencies to establish consolidated risk-based and leverage capital
requirements for insured depository institutions, depository institution
holding companies and systemically important nonbank financial companies. These
requirements must be no less than those to which insured depository
institutions are currently subject, and the new requirements will effectively
eliminate the use of trust preferred securities as a component of Tier 1
capital for depository institution holding companies of our size. As a result,
not later than the fifth anniversary of the effective date of the Dodd-Frank
Act, the Company will become subject to consolidated capital requirements to
which it has not been subject to previously.

The Sarbanes-Oxley Act. As a public company, Rome Bancorp is
subject to the Sarbanes-Oxley Act of 2002, which implements a broad range of
corporate governance and accounting measures for public companies designed to
promote honesty and transparency in corporate America and better protect
investors from corporate wrongdoing. The Sarbanes-Oxley Acts principal
legislation and the derivative regulation and rule making promulgated by the
SEC includes:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the creation of an
 independent accounting oversight board;                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | auditor independence
 provisions which restrict non-audit services that accountants may provide to
 their audit clients;                                                                                                                                                                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | additional corporate
 governance and responsibility measures, including the requirement that the
 chief executive officer and chief financial officer certify financial
 statements;                                                                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | a requirement that
 companies establish and maintain a system of internal control over financial
 reporting and that a companys management provide an annual report regarding
 its assessment of the effectiveness of such internal control over financial
 reporting to the companys independent accountants and that such accountants
 provide an attestation report with respect to managements assessment of the
 effectiveness of the companys internal control over financial reporting;
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | the forfeiture of bonuses
 or other incentive-based compensation and profits from the sale of an
 issuers                                                                                                                                                                                                                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | securities by directors
 and senior officers in the twelve month period following initial publication
 of any financial statements that later require restatement;                                                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | an increase in the
 oversight of, and enhancement of certain requirements relating to audit
 committees of public companies and how they interact with the companys
 independent auditors;                                                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | requirement that audit
 committee members must be independent and are absolutely barred from
 accepting consulting, advisory or other compensatory fees from the issuer;                                                                                                                                                                                                                                                                                                                          

30

---



| |   |                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | requirement that companies
 disclose whether at least one member of the committee is a financial expert
 (as such term is defined by the Securities and Exchange Commission) and if
 not, why not;
| |   |                                                                                                                                                                                                     
| |  | expanded disclosure
 requirements for corporate insiders, including accelerated reporting of stock
 transactions by insiders and a prohibition on insider trading during pension
 blackout periods; 
| |   |                                                                                                                                                                                                     
| |  | a prohibition on personal
 loans to directors and officers, except certain loans made by insured financial
 institutions;                                                                           
| |   |                                                                                                                                                                                                     
| |  | disclosure of a code of
 ethics and filing a Form 8-K for a change or waiver of such code;                                                                                                          
| |   |                                                                                                                                                                                                     
| |  | mandatory disclosure by
 analysts of potential conflicts of interest; and                                                                                                                           
| |   |                                                                                                                                                                                                     
| |  | a range of enhanced
 penalties for fraud and other violations.                                                                                                                                      

Section
402 of the Sarbanes-Oxley Act of 2002 prohibits the extension of personal loans
to directors and executive officers of issuers. The prohibition, however, does
not apply to mortgages advanced by an insured depository institution, such as
Rome Savings, that are subject to the insider lending restrictions of Section
22(h) of the Federal Reserve Act.

Although
Rome Bancorp anticipates that it will incur additional expense in complying
with the provisions of the Sarbanes-Oxley Act and the resulting regulations,
management does not expect that such compliance will have a material impact on
its results of operations or financial condition.

Federal Securities Laws. Rome Bancorps common stock is registered
with the SEC under Section 12(b) of the Exchange Act. Rome Bancorp is subject
to information, proxy solicitation, insider trading restrictions and other
requirements under the Exchange Act.

Quotation on Nasdaq. Rome Bancorps common stock is quoted on The Nasdaq Global Market. In
order to maintain such quotation, Rome Bancorp is subject to certain corporate
governance requirements, including:

| |   |                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a majority of its board
 must be composed of independent directors;                                                                                                                                                          
| |   |                                                                                                                                                                                                                              
| |  | it is required to have an
 audit committee composed of at least three directors, each of whom is an
 independent director, as such term is defined by the rules of the Nasdaq
 Stock Market and the Exchange Act regulations;
| |   |                                                                                                                                                                                                                              
| |  | its nominating committee
 and compensation committee must also be composed entirely of independent directors;
 and                                                                                                           
| |   |                                                                                                                                                                                                                              
| |  | each of the audit
 committee, and nominating committee must have a publicly available written
 charter.                                                                                                                      

|                 |                           
|---------------- | --------------------------
|ITEM 1A.         | RISK
 FACTORS             
|Not
 applicable.
|                 |                           
|ITEM 1B.         | UNRESOLVED
 STAFF COMMENTS
|None.           

31

---



|        |                        
|------- | -----------------------
|ITEM 2. | DESCRIPTION OF PROPERTY

We conduct
our business through our executive office, operations center, which includes
both the Mortgage Center and the Accounting Center listed below, and four
banking offices. In addition, we have purchased land in Oneida, New York for
potential expansion into that market. At December 31, 2010, the net book value
of the computer equipment and other furniture, fixtures and equipment of Rome
Savings and Rome Bancorp at their offices totaled $724,000. For more information,
see Note 5 of Notes to Consolidated Financial Statements.

|                                      |  |                  |  |                         |  |  |                                                   | 
|------------------------------------- |  | ---------------- |  | ----------------------- |  |  | ------------------------------------------------- | 
|                                      |  |                  |  |                         |  |  |                                                   | 
|Location                              |  | Leased or
 Owned |  | Original Date
 Acquired |  |  | Net Book Value
 December 31, 2010
 (In thousands) | 
|                                      |  |                  |  |                         |  |  |                                                   | 
|Executive
 Office:                    |  |                  |  |                         |  |  |                                                   | 
|100
 West Dominick St.
 Rome, NY      |  | Owned            |  | 1956                    |  |  | $1,079                                            | 
|Branch
 Offices:                      |  |                  |  |                         |  |  |                                                   | 
|1629
 Black River Boulevard
 Rome, NY |  | Owned            |  | 1963                    |  |  | 207                                               | 
|                                      |  |                  |  |                         |  |  |                                                   | 
|1300
 Erie Boulevard
 Rome, NY        |  | Owned            |  | 1997                    |  |  | 954                                               | 
|                                      |  |                  |  |                         |  |  |                                                   | 
|82
 Seneca Turnpike
 New Hartford, NY |  | Owned            |  | 1983                    |  |  | 99                                                | 
|                                      |  |                  |  |                         |  |  |                                                   | 
|Rt.
 26 and Elmer Hill Rd
 Lee, NY    |  | Owned            |  | 2006                    |  |  | 1,593                                             | 
|                                      |  |                  |  |                         |  |  |                                                   | 
|Mortgage
 Center:                     |  |                  |  |                         |  |  |                                                   | 
|137
 West Dominick Street
 Rome, NY   |  | Owned            |  | 2002                    |  |  | 402                                               | 
|Accounting
 Center:                   |  |                  |  |                         |  |  |                                                   | 
|139
 West Dominick Street
 Rome, NY   |  | Owned            |  | 1995                    |  |  | 302                                               | 
|Undeveloped
 Land:                    |  |                  |  |                         |  |  |                                                   | 
|Oneida,
 NY                           |  | Owned            |  | 2006                    |  |  | 454                                               | 

|        |                  
|------- | -----------------
|ITEM 3. | LEGAL PROCEEDINGS

On October 18, 2010, Stephen Bushansky filed a stockholder class action
lawsuit in the Supreme Court of the State of New York, County of the Bronx, on
October 27, 2010, James and Liliana DiCastro filed a stockholder class action
lawsuit in the Chancery Court of the State of Delaware, and on November 15,
2010, and Samuel S. Rapasodi filed a stockholder class action lawsuit in the
Supreme Court of the State of New York, County of Oneida, each against Rome
Bancorp, Berkshire Hills, and the directors of Rome Bancorp. The lawsuit filed
in Delaware was subsequently withdrawn voluntarily. The Bushansky and Rapasodi
lawsuits purported to be brought on behalf of all of Rome Bancorps public
stockholders and alleged that the directors of Rome Bancorp breached their
fiduciary duties to Rome Bancorps stockholders by failing to take steps
necessary to obtain a fair and adequate price for Rome Bancorps common stock
and that Berkshire Hills knowingly aided and abetted Rome Bancorp directors
breach of fiduciary duty.

On February 23, 2011, solely to avoid the costs, risks and
uncertainties inherent in litigation and to allow stockholders to vote on the
proposals required in connection with the merger at the scheduled meeting, Rome
Bancorp entered into a memorandum of understanding with plaintiffs counsel and
other named defendants regarding the settlement of two putative class action
lawsuits filed in the Supreme Court of the State of New York, County of the
Bronx and the Supreme Court of the State of New York, County of Oneida on
behalf of Rome Bancorps stockholders following the public announcement of the
execution of the merger agreement with Berkshire (the Merger Agreement).

Under the terms of the memorandum negotiated by Rome Bancorp, Rome
Bancorp, the other named defendants and the plaintiffs have agreed to settle
the two lawsuits subject to court approval. If the court approves the
settlement contemplated in the memorandum, the lawsuits will be dismissed with
prejudice. Pursuant to the terms of the

32

---



memorandum, Rome Bancorp agreed to make available additional
information to its stockholders in a Current Report on Form 8-K filed with the
Commission on February 23, 2011. In return, the plaintiffs agreed to the
dismissal of the lawsuits and to withdraw all motions filed in connection with
such lawsuits. In connection with the settlement, plaintiffs intend to seek an
award of attorneys fees and expenses not to exceed $395,000, subject to court
approval. Rome Bancorp and its insurance carrier have agreed to pay the legal
fees and expenses of plaintiffs counsel, in an amount not to exceed $395,000
and ultimately to be determined by the court. This payment will not affect the
amount of merger consideration to be paid in the merger. If the settlement is
finally approved by the court, it is anticipated that it will resolve and
release all claims in all actions that were or could have been brought
challenging any aspect of the proposed merger, the Merger Agreement, and any
disclosure made in connection therewith (but excluding claims for appraisal
under Section 262 of the Delaware General Corporation Law). There can be no
assurance that the parties will ultimately enter into a stipulation of
settlement or that the court will approve the settlement even if the parties
were to enter into such stipulation. In such event, the proposed settlement as
contemplated by the memorandum of understanding may be terminated. The details
of the settlement will be set forth in a notice to be sent to Rome Bancorps
stockholders prior to a hearing before the court to consider both the
settlement and plaintiffs fee application.

The settlement will not affect the merger consideration to be paid to
stockholders of Rome Bancorp in connection with the proposed merger between
Rome Bancorp and Berkshire. Rome Bancorp and the other defendants deny all of
the allegations in the lawsuits and believe the disclosures are appropriate
under the law. Nevertheless, Rome Bancorp and the other defendants have agreed
to settle the putative class action litigation in order to avoid costly
litigation and reduce the risk of any delay to the closing of the merger.

Rome Bancorp and the other defendants have vigorously denied, and
continue to vigorously deny, that they have committed or aided and abetted in
the commission of any violation of law or engaged in any of the wrongful acts
that were or could have been alleged in the lawsuits, and expressly maintain
that, to the extent applicable, they diligently and scrupulously complied with
their fiduciary and other legal burdens and are entering into the contemplated
settlement solely to eliminate the burden and expense of further litigation, to
put the claims that were or could have been asserted to rest, and to avoid any
possible delay in the consummation of the merger. Nothing in the Companys
Exchange Act reports, the Memorandum of Understanding or any stipulation of
settlement shall be deemed an admission of the legal necessity or materiality
under applicable laws of any of the disclosures set forth herein.

As of the date of this Annual Report on Form 10-K, the Company is not
involved in any other pending legal proceedings other than routine legal
proceedings occurring in the ordinary course of business. The Company believes
believe that these routine legal proceedings, in the aggregate, are immaterial
to its financial condition and results of operations.

33

---



PART II

|        |                                                                                                               
|------- | --------------------------------------------------------------------------------------------------------------
|ITEM 5. | MARKET FOR ROME BANCORPS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

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

At December 31, 2010, the last trading date in Rome Bancorps fiscal
year, the common stock of Rome Bancorp closed at $12.02 per share. At March 2,
2011, there were 6,777,551 shares of Rome Bancorps common stock outstanding,
which were held of record by approximately 1,500 registered shareholders.

The table below shows the high and low sales price of Rome Bancorps
common stock during the periods indicated.

|                                  |  |              |       |     |   |           |  |   |       | 
|--------------------------------- |  | ------------ | ----- | --- | - | --------- |  | - | ----- | 
|                                  |  | Price
 Range |      
|                                  |  |              |      
|Date                              |  | High         |       | Low |   | Dividends | 
|                                  |  |              |       |     |   |           | 
|Year
 ended December 31, 2010     |  |              |       |     |   |           |  |   |       | 
|                                  |  |              |       |     |   |           |  |   |       | 
|Quarter ended March 31,
 2010     |  | $            | 9.66  |     | $ | 7.61      |  | $ | 0.09  | 
|Quarter ended June 30,
 2010      |  |              | 9.95  |     |   | 8.12      |  |   | 0.09  | 
|Quarter ended September
 30, 2010 |  |              | 9.90  |     |   | 8.73      |  |   | 0.09  | 
|Quarter ended December 31,
 2010  |  |              | 12.96 |     |   | 9.20      |  |   | 0.09  | 
|                                  |  |              |       |     |   |           |  |   |       | 
|Year
 ended December 31, 2009     |  |              |       |     |   |           |  |   |       | 
|                                  |  |              |       |     |   |           |  |   |       | 
|Quarter ended March 31,
 2009     |  | $            | 9.10  |     | $ | 7.00      |  | $ | 0.085 | 
|Quarter ended June 30,
 2009      |  |              | 9.70  |     |   | 7.52      |  |   | 0.085 | 
|Quarter ended September
 30, 2009 |  |              | 9.10  |     |   | 7.75      |  |   | 0.085 | 
|Quarter ended December 31,
 2009  |  |              | 8.69  |     |   | 7.70      |  |   | 0.085 | 

Rome Bancorp paid cash dividends of $0.36 per share in 2010. Rome
Bancorp also paid a 2011 quarterly cash dividend of $0.09 per share to
shareholders of record as of February 4, 2011. 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.

34

---



Stock Price Performance Graph

(LINE GRAPH)

|                   |  |               |        |          |  |          |  |          |        |          |  |          |  |  |        |  |  |        | 
|------------------ |  | ------------- | ------ | -------- |  | -------- |  | -------- | ------ | -------- |  | -------- |  |  | ------ |  |  | ------ | 
|                   |  | Period Ending |       
|                   |  |               |       
|Index              |  | 12/31/05      |        | 12/31/06 |  | 12/31/07 |  | 12/31/08 |        | 12/31/09 |  | 12/31/10 | 
|                   |  |               |        |          |  |          |  |          |        |          |  |          | 
|Rome Bancorp, Inc. |  |               | 100.00 |          |  | 120.51   |  |          | 112.25 |          |  | 87.07    |  |  | 82.92  |  |  | 130.20 | 
|NASDAQ Bank        |  |               | 100.00 |          |  | 113.82   |  |          | 91.16  |          |  | 71.52    |  |  | 59.87  |  |  | 68.34  | 
|NASDAQ Composite   |  |               | 100.00 |          |  | 110.39   |  |          | 122.15 |          |  | 73.32    |  |  | 106.57 |  |  | 125.91 | 

35

---



|        |                        
|------- | -----------------------
|ITEM 6. | SELECTED FINANCIAL DATA

|                                                     |  |                |         |      |   |         |  |   |         |  
|---------------------------------------------------- |  | -------------- | ------- | ---- | - | ------- |  | - | ------- | -
|                                                     |  | (in thousands) |        
|                                                     |  |                |         |      |   |         | 
|                                                     |  | 2010           |         | 2009 |   | 2008    | 
|                                                     |  |                |         |      |   |         | 
|                                                    
|Selected Financial Condition Data:                   |  |                |         |      |   |         |  |   |         |  
|Total assets                                         |  | $              | 327,211 |      | $ | 329,922 |  | $ | 337,886 |  
|Loans, net                                           |  |                | 265,937 |      |   | 285,617 |  |   | 298,453 |  
|Securities                                           |  |                | 17,871  |      |   | 14,677  |  |   | 8,588   |  
|Total cash
 and cash equivalents                     |  |                | 18,805  |      |   | 7,574   |  |   | 9,579   |  
|Total
 deposits                                      |  |                | 225,325 |      |   | 216,638 |  |   | 205,932 |  
|Borrowings                                           |  |                | 35,661  |      |   | 47,869  |  |   | 66,324  |  
|Total equity                                         |  |                | 60,655  |      |   | 60,365  |  |   | 60,344  |  
|Allowance
 for loan losses                           |  |                | 2,490   |      |   | 2,132   |  |   | 1,936   |  
|Non-performing
 loans                                |  |                | 3,039   |      |   | 1,915   |  |   | 1,273   |  
|Non-performing
 assets                               |  |                | 3,039   |      |   | 1,915   |  |   | 1,604   |  
|                                                     |  |                |         |      |   |         |  |   |         |  
|Selected Operating Data:                             |  |                |         |      |   |         |  |   |         |  
|Interest
 income                                     |  | $              | 16,687  |      | $ | 17,291  |  | $ | 17,954  |  
|Interest
 expense                                    |  |                | 3,017   |      |   | 4,250   |  |   | 4,887   |  
|                                                     |  |                |         |      |   |         |  |   |         |  
|Net interest
 income                                 |  |                | 13,670  |      |   | 13,041  |  |   | 13,067  |  
|Provision
 for loan losses                           |  |                | 1,796   |      |   | 300     |  |   | 300     |  
|                                                     |  |                |         |      |   |         |  |   |         |  
|Net interest
 income after provision for loan losses |  |                | 11,874  |      |   | 12,741  |  |   | 12,767  |  
|                                                     |  |                |         |      |   |         |  |   |         |  
|Non-interest
 income:                                |  |                |         |      |   |         |  |   |         |  
|Service charges and other income                     |  |                | 2,775   |      |   | 2,449   |  |   | 2,209   |  
|Net gain
 (loss) on securities and real estate       |  |                | 575     |      |   | 73      |  |   | (265    | )
|                                                     |  |                |         |      |   |         |  |   |         |  
|Total non-interest income                            |  |                | 3,350   |      |   | 2,522   |  |   | 1,944   |  
|Total non-interest expense                           |  |                | 11,861  |      |   | 10,689  |  |   | 10,410  |  
|                                                     |  |                |         |      |   |         |  |   |         |  
|Income
 before income taxes                          |  |                | 3,363   |      |   | 4,574   |  |   | 4,301   |  
|Income taxes                                         |  |                | 1,102   |      |   | 1,487   |  |   | 1,396   |  
|                                                     |  |                |         |      |   |         |  |   |         |  
|Net income                                           |  | $              | 2,261   |      | $ | 3,087   |  | $ | 2,905   |  
|                                                     |  |                |         |      |   |         |  |   |         |  

36

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|                                                                         |  |                                       |        |      |   |        |   |   |        |  
|------------------------------------------------------------------------ |  | ------------------------------------- | ------ | ---- | - | ------ | - | - | ------ | -
|                                                                         |  | At or for the Year Ended December 31, |       
|                                                                         |  |                                       |       
|                                                                         |  | 2010                                  |        | 2009 |   | 2008   |  
|                                                                         |  |                                       |        |      |   |        |  
|                                                                        
|Selected Financial Ratios and Other Data                                 |  |                                       |        |      |   |        |   |   |        |  
|Performance
 Ratios:                                                     |  |                                       |        |      |   |        |   |   |        |  
|Basic
 earnings per share                                                |  | $                                     | 0.35   |      | $ | 0.47   |   | $ | 0.42   |  
|Diluted
 earnings per share                                              |  | $                                     | 0.35   |      | $ | 0.47   |   | $ | 0.41   |  
|Return on
 average assets                                                |  |                                       | 0.69   | %    |   | 0.92   | % |   | 0.89   | %
|Return on
 average equity                                                |  |                                       | 3.80   | %    |   | 5.27   | % |   | 4.47   | %
|Net interest
 rate spread (tax equivalent)                               |  |                                       | 4.24   | %    |   | 3.85   | % |   | 3.90   | %
|Net interest
 margin (tax equivalent)                                    |  |                                       | 4.55   | %    |   | 4.24   | % |   | 4.40   | %
|Non-interest
 expense to average assets                                  |  |                                       | 3.61   | %    |   | 3.18   | % |   | 3.18   | %
|Efficiency
 ratio (1)                                                    |  |                                       | 72.11  | %    |   | 68.95  | % |   | 68.04  | %
|Average
 interest earning assets to average interest-bearing liabilities |  |                                       | 131.71 | %    |   | 128.39 | % |   | 130.86 | %
|                                                                         |  |                                       |        |      |   |        |   |   |        |  
|Capital Ratios:                                                          |  |                                       |        |      |   |        |   |   |        |  
|Average
 equity to average assets                                        |  |                                       | 18.16  | %    |   | 17.46  | % |   | 19.84  | %
|Equity to
 total assets at end of period                                 |  |                                       | 18.54  | %    |   | 18.30  | % |   | 17.86  | %
|Book value
 per share                                                    |  | $                                     | 8.95   |      | $ | 8.88   |   | $ | 8.55   |  
|                                                                         |  |                                       |        |      |   |        |   |   |        |  
|Bank Regulatory Capital Ratios:                                          |  |                                       |        |      |   |        |   |   |        |  
|Core capital
 (Tier 1 capital) (2)                                       |  |                                       | 17.57  | %    |   | 16.27  | % |   | 17.15  | %
|Total
 risk-based capital (2)                                            |  |                                       | 25.41  | %    |   | 23.04  | % |   | 24.45  | %
|                                                                         |  |                                       |        |      |   |        |   |   |        |  
|Asset Quality Ratios:                                                    |  |                                       |        |      |   |        |   |   |        |  
|Nonperforming loans as percent of loans                                  |  |                                       | 1.13   | %    |   | 0.67   | % |   | 0.42   | %
|Nonperforming
 assets as percent of total assets                         |  |                                       | 0.93   | %    |   | 0.58   | % |   | 0.47   | %
|Allowance
 for loan losses as a percent of loans                         |  |                                       | 0.93   | %    |   | 0.74   | % |   | 0.64   | %
|Allowance
 for loan losses as a percent of non-performing loans          |  |                                       | 81.9   | %    |   | 111.4  | % |   | 152.1  | %
|                                                                         |  |                                       |        |      |   |        |   |   |        |  
|Other Data:                                                              |  |                                       |        |      |   |        |   |   |        |  
|Number of:                                                               |  |                                       |        |      |   |        |   |   |        |  
|Deposit
 accounts                                                        |  |                                       | 34,029 |      |   | 34,618 |   |   | 35,159 |  
|Full service
 offices                                                    |  |                                       | 5      |      |   | 5      |   |   | 5      |  

|    |                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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,
 excluding investment gains/losses.
|    |                                                                                                                                                                                                      
|(2) | Regulatory
 capital ratios are computed for The Rome Savings Bank.                                                                                                                                   

37

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|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

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

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

General

Rome
Bancorp commenced operations on October 6, 1999, when Rome
Savings 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 FDIC to
a federal savings bank regulated by 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.

On
October 12, 2010, Berkshire Hills Bancorp, Inc., the parent company of
Berkshire Bank, and the Company entered into an Agreement and Plan of Merger
pursuant to which the Company will merge with and into Berkshire Hills Bancorp,
Inc. Concurrent with the merger, it is expected that the Bank will merge with
and into Berkshire Bank. The transaction is subject to customary closing
conditions, including the receipt of regulatory approvals and approval by the
shareholders of the Company, and is currently expected to be completed on or
about April 1, 2011.

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.

2010 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, 2010 and 2009 and Rome Bancorps results of operations for the
three years ended December 31, 2010. The consolidated financial statements and
related notes for the three years ended December 31, 2010 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

38

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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 and loans, 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 fund 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 2010 decreased to $2.3 million compared to $3.1 million
in the prior year. The significant factors and trends impacting 2010, which are
discussed in greater depth below, were as follows:

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Net interest income before loan loss provision for 2010 increased to
 $13.7 million from $13.0 million in 2009. Decreases in average year over year
 market rates resulted in declines in both the yields earned on earning assets
 and the Companys cost of funds. Rome Bancorps ratio of interest earning
 assets to interest bearing liabilities increased to 131.71% in 2010 from
 128.39% in the prior year, while the yield on earning assets decreased to
 5.56% in 2010 from 5.62% in 2009. The cost of funds decreased to 1.32% in
 2010 from 1.77% the previous year.
| | Rome Bancorps provision for loan losses increased to $1.8 million in
 2010 from $300,000 in 2009. The higher provision in 2010 was primarily
 necessitated by credit quality declines for two commercial credits and an
 increase in non-performing loans.                                                                                                                                                                                                                                                                                                                      
| | Non-interest income increased to $3.4 million in 2010 from $2.5
 million in 2009. This current year increase was primarily due to gains
 realized on the sales of real estate, securities and residential mortgage
 originations.                                                                                                                                                                                                                                                                                                                                                
| | Non-interest expense increased from $10.7 million in 2009 to $11.9 in
 2010. The majority of this increase is related to strategic planning and
 acquisition expenses 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 the notes to the Consolidated Financial Statements to obtain a
better understanding of how our financial performance is reported.

39

---



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 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 forecasted 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, 2010, based on simulation
model results, Rome Bancorp was within these guidelines.

40

---



The following table sets forth at December 31, 2010 and 2009 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.

|                                                |  |                            |   |                            |  |                                 |      |                 |  |                            |   |                                 |        |  |   |      |   |  |       |   
|----------------------------------------------- |  | -------------------------- | - | -------------------------- |  | ------------------------------- | ---- | --------------- |  | -------------------------- | - | ------------------------------- | ------ |  | - | ---- | - |  | ----- | --
|                                                |  | 2010                       |   | 2009                       | 
|                                                |  |                            |   |                            | 
|                                                |  | Annual Net Interest Income |   | Annual Net Interest Income | 
|                                                |  |                            |   |                            | 
|Change in
 Interest Rates 
 in
 Basis Points(1) |  | Dollar 
 Amount            |   | Dollar 
 Change
 From Base |  | Percentage
 Change 
 From
 Base |      | Dollar 
 Amount |  | Dollar 
 Change
 From Base |   | Percentage
 Change 
 From
 Base |       
|                                                |  |                            |   |                            |  |                                 |      |                 |  |                            |   |                                 |       
|                                                |  |                            |   |                            |  | (Dollars in thousands)          |      |                 |  |                            |  
|+300                                            |  |                            | $ | 13,362                     |  | $                               | 443  |                 |  | 3.43                       | % | $                               | 13,456 |  | $ | (280 | ) |  | (2.04 | )%
|+200                                            |  |                            |   | 13,217                     |  |                                 | 298  |                 |  | 2.31                       |   |                                 | 13,537 |  |   | (199 | ) |  | (1.45 | ) 
|+100                                            |  |                            |   | 13,067                     |  |                                 | 148  |                 |  | 1.15                       |   |                                 | 13,599 |  |   | (137 | ) |  | (1.00 | ) 
|Base                                            |  |                            |   | 12,919                     |  |                                 |     |                 |  |                           |   |                                 | 13,736 |  |   |     |   |  |      |   
|-100                                            |  |                            |   | 12,254                     |  |                                 | (665 | )               |  | (5.15                      | ) |                                 | 13,240 |  |   | (496 | ) |  | (3.61 | ) 

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

The
above table reflects that as of both December 31, 2010 and 2009, 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, 2010
exhibited positive variances in periods of rising interest rates and a negative
variance in a model depicting decreasing interest rates. In the upward rate
environments, the most immediate interest rate risk lies with the Companys
$69.2 million of time deposits, a portion of which will reprice upwards during the
period in relation to changes in prevailing interest rates. However, in the
simulation of a 100 basis point decrease in rates, the decrease in net interest
income is primarily attributable to assumed reductions in the rates on the
Companys loan portfolio which would not be entirely offset by the cost
decreases on interest bearing liabilities.

41

---



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, 2010                                                 |         | December 31, 2009        |   | December 31, 2008   |  
|                                                                 |  |                                                                   |         |                          |   |                     |  
|                                                                 |  | Average
Balance                                                   |         | Interest
Income/
Expense |   | Average
Yield/
Cost |   | Average
Balance |      | Interest
Income/
Expense |   | Average
Yield/
Cost |  | Average
Balance |        | Interest
Income/
Expense |  | Average
Yield/
Cost |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |  
|                                                                 |  | (Dollars in thousands)                                            |        
|Assets:                                                          |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Interest-earning assets:                                         |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Loans                                                            |  | $                                                                 | 279,391 |                          | $ | 15,968              |   |                 | 5.72 | %                        | $ | 289,010             |  | $               | 16,763 |                          |  | 5.80                | % | $ | 288,630 |  | $ | 17,561 |   |  | 6.08 | %
|Securities                                                       |  |                                                                   | 16,303  |                          |   | 715                 |   |                 | 4.38 |                          |   | 11,557              |  |                 | 529    |                          |  | 4.58                |   |   | 7,488   |  |   | 392    |   |  | 5.24 |  
|Federal funds sold & other interest bearing deposits             |  |                                                                   | 4,632   |                          |   | 8                   |   |                 | 0.17 |                          |   | 7,456               |  |                 | 11     |                          |  | 0.15                |   |   | 1,250   |  |   | 26     |   |  | 2.04 |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Total interest-earnings assets                                   |  |                                                                   | 300,326 |                          |   | 16,691              |   |                 | 5.56 |                          |   | 308,023             |  |                 | 17,303 |                          |  | 5.62                |   |   | 297,368 |  |   | 17,979 |   |  | 6.05 |  
|Noninterest-earning assets                                       |  |                                                                   | 28,086  |                          |   |                     |   |                 |      |                          |   | 27,609              |  |                 |        |                          |  |                     |   |   | 29,994  |  |   |        |   |  |      |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Total assets                                                     |  | $                                                                 | 328,412 |                          |   |                     |   |                 |      |                          | $ | 335,632             |  |                 |        |                          |  |                     |   | $ | 327,362 |  |   |        |   |  |      |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Liabilities and Shareholders Equity:                            |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Interest-bearing liabilities:                                    |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Savings accounts                                                 |  | $                                                                 | 84,776  |                          | $ | 339                 |   |                 | 0.40 |                          | $ | 82,315              |  | $               | 330    |                          |  | 0.40                |   | $ | 80,971  |  | $ | 446    |   |  | 0.55 |  
|Time deposits                                                    |  |                                                                   | 70,651  |                          |   | 1,252               |   |                 | 1.77 |                          |   | 72,291              |  |                 | 1,852  |                          |  | 2.56                |   |   | 72,347  |  |   | 2,634  |   |  | 3.64 |  
|Money market accounts                                            |  |                                                                   | 18,145  |                          |   | 176                 |   |                 | 0.97 |                          |   | 15,125              |  |                 | 189    |                          |  | 1.25                |   |   | 9,833   |  |   | 193    |   |  | 1.97 |  
|Other interest bearing deposits                                  |  |                                                                   | 15,481  |                          |   | 59                  |   |                 | 0.38 |                          |   | 13,970              |  |                 | 55     |                          |  | 0.40                |   |   | 13,357  |  |   | 69     |   |  | 0.51 |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Total interest-bearing deposits                                  |  |                                                                   | 189,053 |                          |   | 1,826               |   |                 | 0.97 |                          |   | 183,701             |  |                 | 2,426  |                          |  | 1.32                |   |   | 176,508 |  |   | 3,342  |   |  | 1.89 |  
|Borrowings                                                       |  |                                                                   | 38,970  |                          |   | 1,191               |   |                 | 3.06 |                          |   | 56,216              |  |                 | 1,824  |                          |  | 3.25                |   |   | 50,737  |  |   | 1,545  |   |  | 3.04 |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Total interest-bearing liabilities                               |  |                                                                   | 228,023 |                          |   | 3,017               |   |                 | 1.32 |                          |   | 239,917             |  |                 | 4,250  |                          |  | 1.77                |   |   | 227,245 |  |   | 4,887  |   |  | 2.15 |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Noninterest-bearing deposits                                     |  |                                                                   | 33,730  |                          |   |                     |   |                 |      |                          |   | 30,065              |  |                 |        |                          |  |                     |   |   | 29,331  |  |   |        |   |  |      |  
|Other liabilities                                                |  |                                                                   | 7,022   |                          |   |                     |   |                 |      |                          |   | 7,033               |  |                 |        |                          |  |                     |   |   | 5,849   |  |   |        |   |  |      |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Total liabilities                                                |  |                                                                   | 268,775 |                          |   |                     |   |                 |      |                          |   | 277,015             |  |                 |        |                          |  |                     |   |   | 262,425 |  |   |        |   |  |      |  
|Shareholders equity                                             |  |                                                                   | 59,637  |                          |   |                     |   |                 |      |                          |   | 58,617              |  |                 |        |                          |  |                     |   |   | 64,937  |  |   |        |   |  |      |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Total liabilities and shareholders equity                       |  | $                                                                 | 328,412 |                          |   |                     |   |                 |      |                          | $ | 335,632             |  |                 |        |                          |  |                     |   | $ | 327,362 |  |   |        |   |  |      |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Net interest income                                              |  |                                                                   |         |                          |   | 13,674              |   |                 |      |                          |   |                     |  |                 | 13,053 |                          |  |                     |   |   |         |  |   | 13,092 |   |  |      |  
|Tax equivalent adjustment on securities                          |  |                                                                   |         |                          |   | (4                  | ) |                 |      |                          |   |                     |  |                 | (12    | )                        |  |                     |   |   |         |  |   | (25    | ) |  |      |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Net interest income per consolidated financial statements        |  |                                                                   |         |                          | $ | 13,670              |   |                 |      |                          |   |                     |  | $               | 13,041 |                          |  |                     |   |   |         |  | $ | 13,067 |   |  |      |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|                                                                 |  |                                                                   |         |                          |   |                     |   |                 |      |                          |   |                     |  |                 |        |                          |  |                     |   |   |         |  |   |        |   |  |      |  
|Net interest rate spread                                         |  |                                                                   |         |                          |   |                     |   |                 | 4.24 | %                        |   |                     |  |                 |        |                          |  | 3.85                | % |   |         |  |   |        |   |  | 3.90 | %
|Net interest margin                                              |  |                                                                   |         |                          |   |                     |   |                 | 4.55 | %                        |   |                     |  |                 |        |                          |  | 4.24                | % |   |         |  |   |        |   |  | 4.40 | %
|Ratio of interest-earning assets to interest-bearing liabilities |  |                                                                   |         |                          |   |                     |   |                 | 1.32 | x                        |   |                     |  |                 |        |                          |  | 1.28                | x |   |         |  |   |        |   |  | 1.31 | x

42

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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, 2010
 Compared to Year Ended December 31, 2009 |      | Year Ended December 31, 2009
 Compared to Year Ended December 31, 2008 |  
|                                   |  |                                                                        |      |                                                                        |  
|                                   |  | Increases (decreases) due to                                           |      | Increases (decreases) due to                                           |  
|                                   |  |                                                                        |      |                                                                        |  
|                                   |  | Rate                                                                   |      | Volume                                                                 |   | Net  |   | Rate |        | Volume |   | Net    |  
|                                   |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |  
|                                   |  | ( in thousands)                                                        |     
|                                   |  |                                                                        |     
|Assets:                            |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |   |   |     |   |   |      |  
|Interest-earning assets:           |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |   |   |     |   |   |      |  
|Loans                              |  | $                                                                      | (245 | )                                                                      | $ | (550 | ) | $    | (795   | )      | $ | (837   | ) | $ | 39  |   | $ | (798 | )
|Securities                         |  |                                                                        | (32  | )                                                                      |   | 218  |   |      | 186    |        |   | (76    | ) |   | 213 |   |   | 137  |  
|Federal funds sold & other         |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |   |   |     |   |   |      |  
|Interest bearing deposits          |  |                                                                        | 1    |                                                                        |   | (4   | ) |      | (3     | )      |   | (142   | ) |   | 127 |   |   | (15  | )
|                                   |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |   |   |     |   |   |      |  
|Total interest-earnings assets     |  |                                                                        | (276 | )                                                                      |   | (336 | ) |      | (612   | )      |   | (1,055 | ) |   | 379 |   |   | (676 | )
|                                   |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |   |   |     |   |   |      |  
|Interest-bearing liabilities:      |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |   |   |     |   |   |      |  
|Savings accounts                   |  |                                                                        | (1   | )                                                                      |   | 10   |   |      | 9      |        |   | (123   | ) |   | 7   |   |   | (116 | )
|Time deposits                      |  |                                                                        | (558 | )                                                                      |   | (42  | ) |      | (600   | )      |   | (780   | ) |   | (2  | ) |   | (782 | )
|Money market accounts              |  |                                                                        | (50  | )                                                                      |   | 37   |   |      | (13    | )      |   | (109   | ) |   | 104 |   |   | (5   | )
|Other interest bearing deposits    |  |                                                                        | (2   | )                                                                      |   | 6    |   |      | 4      |        |   | (16    | ) |   | 3   |   |   | (13  | )
|                                   |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |   |   |     |   |   |      |  
|Total interest-bearing deposits    |  |                                                                        | (611 | )                                                                      |   | 11   |   |      | (600   | )      |   | (1,028 | ) |   | 112 |   |   | (916 | )
|                                   |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |   |   |     |   |   |      |  
|Borrowings                         |  |                                                                        | (74  | )                                                                      |   | (559 | ) |      | (633   | )      |   | 113    |   |   | 166 |   |   | 279  |  
|                                   |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |   |   |     |   |   |      |  
|Total interest-bearing liabilities |  |                                                                        | (685 | )                                                                      |   | (548 | ) |      | (1,233 | )      |   | (915   | ) |   | 278 |   |   | (637 | )
|                                   |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |   |   |     |   |   |      |  
|                                   |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |   |   |     |   |   |      |  
|Net change in interest income      |  | $                                                                      | 409  |                                                                        | $ | 212  |   | $    | 621    |        | $ | (140   | ) | $ | 101 |   | $ | (39  | )
|                                   |  |                                                                        |      |                                                                        |   |      |   |      |        |        |   |        |   |   |     |   |   |      |  

Comparison of Financial Condition at December
31, 2010 and December 31, 2009

Rome
Bancorps total assets at December 31, 2010 were $327.2 million, a decrease of
$2.7 million from $329.9 million at December 31, 2009. The majority of this
decrease was attributable to contraction of the Companys loan portfolio.

Cash
and cash equivalents increased to $18.8 million at December 31, 2010 from $7.6
million a year earlier due to deposit inflows and the proceeds from sales of
mortgages originated. Securities available for sale were $13.1 million at
December 31, 2010, an increase of $3.1 million from $10.0 million at December
31, 2009. This increase was due to the purchase of ten bonds, partially offset
by sales, principal reductions and maturities in the existing securities
portfolio.

Total gross loans decreased by $19.3 million, or 6.7%, to $268.4
million at December 31, 2010 from $287.7 million at December 31, 2009. During
the year ended December 31, 2010, Rome Bancorp originated approximately $56.9
million of loans. The Companys residential mortgage loan portfolio, decreased
by $13.8 million, or 8.7%, primarily due to the sale of the majority of the
Companys 2010 originations of thirty year termed fixed-rate mortgages into the
secondary market. The decision to sell these originations was made to control
potential interest rate risk in periods of future rising interest rates. The
Companys non-performing loans as a percentage of total loans increased to
1.13% at December 31, 2010 as compared to 0.67% at December 31, 2009, primarily
due to increased delinquencies and decreased loan balances. The allowance for
loan losses as a percent of non-performing loans decreased to 81.9% at December
31, 2010, from 111.4% at December 31, 2009.

43

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Total deposits increased by $8.7 million or 4.0% from $216.6 million at
December 31, 2009 to $225.3 million at December 31, 2010, as depositors chose
insured bank deposit accounts over other available investments. The Company
recorded growth in all deposit categories except for time deposits, which
declined by $2.7 million, or 3.8%. Money market balances grew by $3.8 million,
or 24.1%, in 2010, increasing from $15.7 million at December 31, 2009 to $19.5
million at December 31, 2010. Non-interest bearing deposits increased by $2.7
million, or 8.5%, over the past year. Savings deposits increased $3.2 million
from $82.0 million at December 31, 2009 to $85.2 million at December 31, 2010.
Other interest bearing deposits increased by $1.7 million, or 11.2%, from $15.2
million at December 31, 2009 to $16.9 million at year end 2010.

Comparison of Results of Operations for the
Years Ended December 31, 2010 and December 31, 2009

General. Net income
for the year ended December 31, 2010 decreased to $2.3 million from $3.1
million for the year ended December 31, 2009. The decrease in net income was
attributable to an increase the provision for loan losses of $1.5 million and
an increase in non-interest expense of $1.2 million which were partially offset
by increases in net interest income before provision for loan losses and
non-interest income of $629,000 and $828,000 respectively and a decrease in
income tax expense of $385,000.

Net Interest Income.
The Company recorded net interest income before provision for loan losses of
$13.7 million in 2010 and $13.0 million in 2009. The changes in the components
of net interest income are discussed in detail below.

Interest Income.
Interest income decreased by $604,000 for the year ended December 31, 2010,
from $17.3 million for the year ended December 31, 2009. Interest income earned
on the loan portfolio decreased to $16.0 million in 2010 from $16.8 million in
2009. Average balances of the loan portfolio declined to $279.4 million in 2010
from $289.0 million in 2009, primarily due to the continued sale of the
Companys residential mortgage originations into the secondary market. The
yield on loans in 2010 decreased to 5.72% compared to 5.80% in 2009 concurrent
with the decline in overall underlying interest rates. Interest and dividend
income on securities increased in 2010 primarily due to growth in the available
for sale portfolio. Average securities increased to $16.3 million in 2010 from
$11.6 million in 2009 while their tax equivalent yields decreased to 4.38% from
4.58% over the same period. Interest income of other short-term investments,
including federal funds sold, dropped from $11,000 in 2009 to $8,000 in 2010.

Interest Expense.
Interest expense decreased to $3.0 million in 2010 from $4.3 million in 2009
due to decreases in both the average balances of outstanding interest bearing
liabilities and the cost of those funds. Interest expense on borrowings
decreased from $1.8 million in 2009 to $1.2 million in 2010 as the average
balances decreased from $56.2 million in 2009 to $39.0 million in the current
year. The Company utilized deposit inflows and loan sale proceeds to reduce
fixed rate advances upon maturity. The average rate paid on borrowings
decreased to 3.06% in 2010 from 3.25% in 2009. The average rate paid on interest
bearing deposits in 2010 decreased to 0.97% from 1.32% in 2009, principally due
to lower rates paid on time deposits, consistent with current market trends.
The average balance of interest bearing deposits increased to $189.1 million in
2010 from $183.7 million in 2009.

Provision
for Loan Losses. The Company recorded a provision for
loan losses of $1.8 million in 2010, compared to $300,000 in 2009. The majority
of the loan loss provision is attributable to the decline in collateral value
securing one commercial credit facility and the charge-off of a large
commercial credit in the fourth quarter of 2010. This charge-off was
necessitated by deterioration late in 2010 of the borrowers financial
position, raising uncertainty as to the source of loan repayment. Management is
continuing to closely monitor these credits. In addition, the balance of
non-performing loans increased in 2010. The majority of the non-performing
loans are in the mortgage portfolio and management believes these loans are
generally well collateralized. The allowance for loan losses increased to $2.5
million or 0.93% of total loans at December 31, 2010 compared to $2.1 million
and 0.74% of total loans at December 31, 2009. The allowance for loan losses as
a percent of non-performing loans decreased to 81.9% at December 31, 2010 from
111.4% at December 31, 2009. Management considers these ratios to be
appropriate due to the current composition of the loan portfolio and level of
non-performing loans. Non-performing loans, consisting of non-accrual loans and
loans 90 days past due and still accruing, were $3.0 million or 1.13% of total
loans at December 31, 2010 compared to $1.9 million or 0.67% at December 31,
2009. Rome Savings does not originate or hold subprime mortgage loans or securities
collateralized by subprime loans.

44

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In determining the level of the provision for loan losses necessary to
absorb probable incurred credit losses, management considers historical loan
loss experience, review of specific loans, 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 $1.8 million was
appropriate in 2010.

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

|                             |  |      |       |      |   |          |  |          |     |   |  |        |  
|---------------------------- |  | ---- | ----- | ---- | - | -------- |  | -------- | --- | - |  | ------ | -
|                             |  | 2010 |       | 2009 |   | $ Change |  | % Change |    
|                             |  |      |       |      |   |          |  |          |    
|Gain on securities           |  | $    | 156   |      | $ | 73       |  | $        | 83  |   |  | 113.70 | %
|Gain on sale of real
 estate |  |      | 419   |      |   | 2        |  |          | 417 |   |  | 99.52  |  
|Gain on sale of loans        |  |      | 493   |      |   | 155      |  |          | 338 |   |  | 218.06 |  
|Service charges              |  |      | 1,861 |      |   | 1,815    |  |          | 46  |   |  | 2.53   |  
|Other income                 |  |      | 421   |      |   | 477      |  |          | (56 | ) |  | (11.74 | )
|                             |  |      |       |      |   |          |  |          |     |   |  |        |  
|Total non-interest income    |  | $    | 3,350 |      | $ | 2,522    |  | $        | 828 |   |  | 32.83  | %
|                             |  |      |       |      |   |          |  |          |     |   |  |        |  

Non-interest income increased $828,000 to $3.4 million in 2010 from
$2.5 million in 2009. During 2010, the Company sold six investment securities,
yielding gains of $156,000; in 2009, two investments were sold at a total gain
of $73,000. Also, in 2010, the Company sold a commercial real estate parcel
adjacent to one of its branch locations at a gain of $419,000. The increase in
gains realized on loan sales represents an increase in both the volume of loans
sold and the average gain per sale. Service charge income increased
commensurate with deposit and loan activity. The decrease in other income is
primarily attributable to the loss of rental income on the aforementioned
commercial real estate parcel sold.

Non-Interest Expense.Non-interest
expense increased to $11.9 million for the year ended December 31, 2010
compared to $10.7 million for the year ended December 31, 2009. The following
table summarizes changes in the major components of non-interest expense:

|                                          |  |      |        |      |   |          |  |           |       |   |  |        |  
|----------------------------------------- |  | ---- | ------ | ---- | - | -------- |  | --------- | ----- | - |  | ------ | -
|                                          |  | 2010 |        | 2009 |   | $ Change |  | %
 Change |      
|                                          |  |      |        |      |   |          |  |           |      
|Salaries and employee
 benefits           |  | $    | 6,295  |      | $ | 6,143    |  | $         | 152   |   |  | 2.47   | %
|Occupancy and equipment
 expense          |  |      | 1,941  |      |   | 1,918    |  |           | 23    |   |  | 1.20   |  
|Regulatory assessments                    |  |      | 321    |      |   | 416      |  |           | (95   | ) |  | (22.84 | )
|Outside consulting and
 professional fees |  |      | 1,414  |      |   | 421      |  |           | 993   |   |  | 235.87 |  
|Other expense                             |  |      | 1,890  |      |   | 1,791    |  |           | 99    |   |  | 5.53   |  
|                                          |  |      |        |      |   |          |  |           |       |   |  |        |  
|Total non-interest expense                |  | $    | 11,861 |      | $ | 10,689   |  | $         | 1,172 |   |  | 10.96  | %
|                                          |  |      |        |      |   |          |  |           |       |   |  |        |  

The increase in 2010 salaries and employee benefits expense is
principally due to higher costs related to stock-based benefit plans, which
increased directly with increases in the Companys average stock price
throughout 2010. The current year decline in regulatory assessment rates
reflects the special assessment charged in 2009 to all banks insured by the
FDIC. The 2010 increase in outside consulting and professional fees is the
result of costs incurred by the Company for strategic planning activities,
culminating with the impending merger with Berkshire Hills Bancorp, Inc., as
discussed in Note 20 of the Notes to the Consolidated Financial Statements.
Major components of the increase in other expenses were in the areas of
advertising, loan operations expense and insurance expense.

Income Tax Expense.Income
tax expense decreased to $1.1 million for 2010 from 2009 income tax expense of
$1.5 million. The decrease is attributable to lower pre-tax earnings, partially
offset by the nondeductible nature of some acquisition costs incurred.

Comparison of Results of Operations for the
Years Ended December 31, 2009 and December 31, 2008

General. Net income
for the year ended December 31, 2009 increased to $3.1 million from $2.9
million for the year ended December 31, 2008. The increase in net income was
attributable to an increase in non-interest income of $578,000, partially
offset by a decrease in net interest income before provision for loan losses of
$26,000, and increases in non-interest expense and income tax expense of
$279,000 and $91,000, respectively.

45

---



Net Interest Income.
The Company recorded net interest income of $13.0 million in 2009 and $13.1
million in 2008. The changes in the components of net interest income are
discussed in detail below.

Interest Income.
Interest income decreased by $663,000 for the year ended December 31, 2009,
from $18.0 million for the year ended December 31, 2008. Interest income earned
on the loan portfolio decreased to $16.8 million in 2009 from $17.6 million in
2008. Average balances of the loan portfolio remained constant at approximately
$289 million in both 2009 and 2008. The yield on loans in 2009 decreased to
5.80% compared to 6.08% in 2008 concurrent with the decline in overall
underlying interest rates. Interest and dividend income on securities increased
in 2009 primarily due to growth in the available for sale portfolio. Average
securities increased to $11.6 million in 2009 from $7.5 million in 2008 while
their tax equivalent yields decreased to 4.58% from 5.24% over the same period.
Interest income of other short-term investments, including federal funds sold,
dropped from $26,000 in 2008 to $11,000 in 2009, as a result of a decrease in
the yield earned on these funds, again driven by declines in market interest
rates throughout latter 2008 and into 2009.

Interest Expense.
Interest expense decreased to $4.3 million in 2009 from $4.9 million in 2008
primarily due to a decrease in the cost of funds, consistent with current
market trends, partially offset by increases in the average balances of
outstanding borrowings and deposits. Interest expense on borrowings increased
from $1.5 million in 2008 to $1.8 million in 2009 as the average balances
increased from $50.7 million in 2008 to $56.2 million in 2009. The average rate
paid on these borrowings increased to 3.25% in 2009 from 3.04% in 2008, as the
Company restructured its floating rate debt into longer term fixed-rate
maturities in order to take advantage of the historically low interest rate
levels. The average rate paid on interest bearing deposits in 2009 decreased to
1.32% from 1.89% in 2008, principally due to lower rates paid on time deposits
and savings accounts.

Provision for Loan Losses.
The Company recorded a provision for loan losses of $300,000 in both 2009 and
2008. While the level of non-performing loans has increased in 2009, the
Company had a reduction in its actual loan losses from 2008 levels. Net loan
charge-offs decreased to $104,000 in 2009 from $274,000 in the prior year. The
allowance for loan losses increased to $2.1 million or 0.74% of total loans at
December 31, 2009 compared to $1.9 million and 0.64% of total loans at December
31, 2008. The allowance for loan losses as a percent of non-performing loans
decreased to 111.4% at December 31, 2009 compared to 152.1% at December 31,
2008. Management considered these ratios to be appropriate due to the
composition of the loan portfolio and level of non-performing loans. Non-performing
loans, consisting of non-accrual loans and loans 90 days past due and still
accruing, were $1.9 million or 0.67% of total loans at December 31, 2009
compared to $1.3 million or 0.42% at December 31, 2008.

In determining the level of the provision for loan losses necessary to
absorb probable incurred credit losses, management considers historical loan
loss experience, review of specific loans, 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
2009.

46

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

|                          |  |      |       |      |   |           |   |           |     |   |  |        |  
|------------------------- |  | ---- | ----- | ---- | - | --------- | - | --------- | --- | - |  | ------ | -
|                          |  | 2009 |       | 2008 |   | $
 Change |   | %
 Change |    
|                          |  |      |       |      |   |           |   |           |    
|Gain (loss) on securities |  | $    | 73    |      | $ | (265      | ) | $         | 338 |   |  | 127.55 | %
|Gain on sale of loans     |  |      | 155   |      |   | 17        |   |           | 138 |   |  | 811.76 |  
|Service charges           |  |      | 1,815 |      |   | 1,706     |   |           | 109 |   |  | 6.39   |  
|Other income              |  |      | 479   |      |   | 486       |   |           | (7  | ) |  | (1.44  | )
|                          |  |      |       |      |   |           |   |           |     |   |  |        |  
|Total non-interest income |  | $    | 2,522 |      | $ | 1,944     |   | $         | 578 |   |  | 29.73  | %
|                          |  |      |       |      |   |           |   |           |     |   |  |        |  

Non-interest income increased $578,000 to $2.5 million in 2009 from
$1.9 million in 2008. During 2009, the Company sold two investment securities,
yielding gains of $73,000; no investments were sold in 2008. In contrast, in
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. In light of the low interest
rate environment existent in 2009, the Company opted to sell the majority of
its current year fixed-rate thirty year termed residential mortgage
originations into the secondary market. Loan sales increased to $11.2 million
in 2009, compared to $1.2 million in 2008, accounting for the increase in gains
on loan sales. Service charge income increased commensurate with deposit and
loan activity.

Non-Interest Expense.Non-interest
expense increased to $10.7 million for the year ended December 31, 2009
compared to $10.4 million for the year ended December 31, 2008. The following
table summarizes changes in the major components of non-interest expense:

|                                          |  |      |        |      |   |           |  |           |      |   |  |        |   
|----------------------------------------- |  | ---- | ------ | ---- | - | --------- |  | --------- | ---- | - |  | ------ | --
|                                          |  | 2009 |        | 2008 |   | $
 Change |  | %
 Change |     
|                                          |  |      |        |      |   |           |  |           |     
|Salaries and employee
 benefits           |  | $    | 6,143  |      | $ | 5,733     |  | $         | 410  |   |  | 7.15   | % 
|Occupancy and equipment
 expense          |  |      | 1,918  |      |   | 1,903     |  |           | 15   |   |  | 0.79   |   
|Regulatory assessments                    |  |      | 416    |      |   | 140       |  |           | 276  |   |  | 197.14 |   
|Outside consulting and
 professional fees |  |      | 421    |      |   | 580       |  |           | (159 | ) |  | (27.41 | ) 
|Other expense                             |  |      | 1,791  |      |   | 2,054     |  |           | (263 | ) |  | (12.80 | ) 
|                                          |  |      |        |      |   |           |  |           |      |   |  |        |   
|Total non-interest expense                |  | $    | 10,689 |      | $ | 10,410    |  | $         | 279  |   |  | (2.68  | )%
|                                          |  |      |        |      |   |           |  |           |      |   |  |        |   

The increase in salaries and employee benefits is largely related to
higher defined benefit pension plan expense resulting from a 2008 decline in
the market value of plan assets. Due to overall higher assessment rates charged
to all banks insured by the FDIC, as well as a special assessment, the
Companys FDIC and regulatory assessment expense increased to $416,000 in 2009
from $140,000 in the prior year. In 2009 the Company required less legal,
professional and consulting services. Major components of the decrease in other
expenses were in the areas of other real estate owned and contribution expense.
Due to a reduction in other real estate owned during 2009, the Companys
expense decreased by $98,000 to $10,000 in 2009. Contribution expense decreased
from $151,000 in 2008 to $17,000 in 2009 due to the 2008 donation of a parcel
of Company owned real estate to the Rome Rescue Mission, Inc.

Income Tax Expense.Income
tax expense was $1.5 million for 2009, an increase of $91,000 from 2008 income
tax expense of $1.4 million. The increase is 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 $61.2 million on a line of
credit. At December 31, 2010, Rome Savings had no outstanding borrowings
against this line of credit, but did have bullet maturity and amortizing notes
totaling $35.7 million. At December 31, 2010, the Company also had
approximately $8.3 million in unused short term borrowing capacity at the
Federal Reserve Bank of New York.

47

---



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 2010,
Rome Bancorp originated approximately $56.9 million in loans compared to
approximately $51.5 million in 2009. Purchases of investment securities were
$5.6 million in 2010 and $7.5 million in 2009. At December 31, 2010, Rome
Bancorp had loan commitments to borrowers of approximately $13.3 million, and
customer available letters and lines of credit of approximately $18.6 million.

Total deposits were $225.3 million at December 31, 2010, an increase of
4.0% from $216.6 million at December 31, 2009. Time deposit accounts scheduled
to mature within one year were $48.8 million at December 31, 2010. 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 2010 Rome Bancorp repurchased 22,568 outstanding shares of its
common stock at a total cost of $201,000. Rome Bancorp paid cash dividends of
$0.36 per share in 2010, requiring a cash outlay of $2.3 million.

At December 31, 2010 and 2009, Rome Savings exceeded each of the
applicable regulatory capital requirements. Rome Savings leverage (Tier 1)
capital at December 31, 2010 and 2009 was $57.8 million and $54.0 million or
17.57% and 16.27% of adjusted assets, respectively. In order to be classified
as well-capitalized by the OTS and the FDIC at December 31, 2010 and 2009,
Rome Savings was required to have leverage (Tier 1) capital of $16.5 million
and $16.6 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, 2010 and 2009, Rome
Savings had a risk-based total capital ratio of 25.41% and 23.04%,
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.

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 June 2009, FASB issued Accounting Standard Update (ASU) Number
2009-16, Accounting for Transfers of Financial Assets  an Amendment of FASB
Statement No. 140. The new accounting requirement amends previous guidance
relating to the transfers of financial assets and eliminates the concept of a
qualifying special purpose entity. This statement must be applied as of the
beginning of each reporting entitys first annual reporting period that begins
after November 15, 2009, for interim periods within that first annual reporting
period and for interim and annual reporting periods thereafter. This statement
must be applied to transfers occurring on or after the effective date.
Additionally, on and after the effective date, the concept of a qualifying
special-purpose entity is no longer relevant for accounting purposes.
Therefore, formerly qualifying special-purpose entities should be evaluated for
consolidation by reporting entities on and after the effective date in
accordance with the applicable consolidation guidance. Additionally, the
disclosure provisions of this statement were also amended and apply to
transfers that occurred both before and after the effective date of this
statement. The adoption did not have a material impact on the Companys
consolidated financial position, results of operations or cash flows.

48

---



ASC Topic 810-10-65-2, Amendments to FASB Interpretation No. 46(R),
which amended guidance for consolidation of variable interest entities by
replacing the quantitative-based risks and rewards calculation for determining
which enterprise, if any, has a controlling financial interest in a variable
interest entity with an approach focused on identifying which enterprise has
the power to direct the activities of a variable interest entity that most
significantly impact the entitys economic performance and (1) the obligation
to absorb losses of the entity of (2) the right to receive benefits from the
entity. This statement also requires additional disclosures about an enterprises
involvement in variable interest entities. This statement became effective as
of the beginning of each reporting entitys first annual reporting period that
begins after November 15, 2009, for interim periods within the first annual
reporting period, and for interim and annual reporting periods thereafter.
Early adoption is prohibited. The adoption did not have a material impact on
the Companys consolidated financial position, results of operations or cash
flows.

On July 21, 2010, the FASB issued ASU No 2010-20,Disclosures about the
Credit Quality of Financing Receivables and the Allowance for Credit Losses,
which requires significant new disclosures about the allowance for credit
losses and the credit quality of financing receivables. The requirements are
intended to enhance transparency regarding credit losses and the credit quality
of loan and lease receivables. Under this statement, allowance for credit
losses and fair value are to be disclosed by portfolio segment, which credit
quality information, impaired financing receivables and non-accrual status are
to be presented by class of financing receivable. The disclosures are to be
presented at the level of disaggregation that management uses when assessing
and monitoring the portfolios risk and performance. This ASU is effective for
interim and annual reporting periods on or after December 15, 2010. See Note 4
to the Notes to the Financial Statements  Loans.

In January 2011, FASB issued Accounting Standards Update No 2011-11,
Deferral of the Effective Date of Disclosures about Troubled Debt
Restructurings in Update No. 2010-20. The amendments in this update
temporarily delay the effective date of the disclosures about troubled debt
restructurings in Accounting Standards Update No. 2010-20, Receivables (Topic
310): Disclosures about the Credit Quality of Financing Receivables and the
Allowance for Credit Losses, for public entities. The delay is intended to
allow the Board time to complete its deliberations on what constitutes a troubled
debt restructuring. The effective date of the new disclosures about troubled
debt restructurings for public entities and the guidance for determining what
constitutes a troubled debt restructuring will then be coordinated.

|         |                                                            
|-------- | -----------------------------------------------------------
|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The
information is included in Managements Discussion and Analysis of Financial
Condition and Results of Operations - Management of Interest Rate Risk.

49

---



|        |                                            
|------- | -------------------------------------------
|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Rome Bancorp, Inc and Subsidiary
Index to Consolidated Financial Statements

|                                                                                                      |  |   
|----------------------------------------------------------------------------------------------------- |  | --
|Report of Independent Registered Accounting Firm                                                      |  | 51
|                                                                                                      |  |   
|Consolidated Balance Sheets at December 31, 2010 and 2009                                             |  | 52
|                                                                                                      |  |   
|Consolidated Statements of Operations for the years ended December
 31, 2010, 2009 and 2008           |  | 53
|                                                                                                      |  |   
|Consolidated Statements of Stockholders Equity for the years ended
 December 31, 2010, 2009 and 2008 |  | 54
|                                                                                                      |  |   
|Consolidated Statements of Cash Flows for the years ended December
 31, 2010, 2009 and 2008           |  | 55
|                                                                                                      |  |   
|Notes to Consolidated Financial Statements                                                            |  | 57

50

---



REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheets of Rome
Bancorp, Inc. and subsidiary as of December 31, 2010 and 2009 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, 2010. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these 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 consolidated financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control
over financial reporting. Accordingly, we express no such opinion. 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 consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Rome
Bancorp, Inc. and subsidiary as of December 31, 2010 and 2009 and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2010, in conformity with U.S. generally accepted
accounting principles.

|                       | 
|---------------------- | 
|/s/ Crowe
 Horwath LLP | 
|                       | 
|Crowe Horwath LLP      | 
|Cleveland,
 Ohio       | 
|March 18,
 2011        | 

51

---



ROME
BANCORP, INC. AND SUBSIDIARY

Consolidated
Balance Sheets

December 31, 2010 and 2009

(In thousands, except share data)

|                                                                                                                                                                                 |  |      |         |      |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | -
|                                                                                                                                                                                 |  | 2010 |         | 2009 |  
|Assets                                                                                                                                                                           |  |      |         |      |   |         |  
|Cash and due from banks                                                                                                                                                          |  | $    | 5,707   |      | $ | 6,547   |  
|Federal funds sold and other short-term
 investments                                                                                                                             |  |      | 13,098  |      |   | 1,027   |  
|                                                                                                                                                                                 |  |      |         |      |   |         |  
|Total cash and cash equivalents                                                                                                                                                  |  |      | 18,805  |      |   | 7,574   |  
|Securities available for sale, at fair
 value                                                                                                                                    |  |      | 13,070  |      |   | 10,024  |  
|Securities held to maturity (fair value of
 $1,459 and $1,502 at December 31, 2010 and 2009, respectively)                                                                       |  |      | 1,416   |      |   | 1,431   |  
|Federal Home Loan Bank stock                                                                                                                                                     |  |      | 3,385   |      |   | 3,222   |  
|Loans held for sale                                                                                                                                                              |  |      | 920     |      |   |        |  
|Loans, net of allowance of $2,490 and
 $2,132                                                                                                                                    |  |      | 265,937 |      |   | 285,617 |  
|                                                                                                                                                                                 |  |      |         |      |   |         |  
|Premises and equipment, net                                                                                                                                                      |  |      | 5,814   |      |   | 6,041   |  
|Accrued interest receivable                                                                                                                                                      |  |      | 1,100   |      |   | 1,117   |  
|Bank-owned life insurance                                                                                                                                                        |  |      | 9,812   |      |   | 9,415   |  
|Other assets                                                                                                                                                                     |  |      | 6,952   |      |   | 5,481   |  
|                                                                                                                                                                                 |  |      |         |      |   |         |  
|Total assets                                                                                                                                                                     |  | $    | 327,211 |      | $ | 329,922 |  
|                                                                                                                                                                                 |  |      |         |      |   |         |  
|                                                                                                                                                                                 |  |      |         |      |   |         |  
|Liabilities and Shareholders Equity                                                                                                                                             |  |      |         |      |   |         |  
|Liabilities:                                                                                                                                                                     |  |      |         |      |   |         |  
|Deposits:                                                                                                                                                                        |  |      |         |      |   |         |  
|Non-interest bearing                                                                                                                                                             |  | $    | 34,502  |      | $ | 31,790  |  
|Savings                                                                                                                                                                          |  |      | 85,211  |      |   | 82,031  |  
|Money market                                                                                                                                                                     |  |      | 19,516  |      |   | 15,726  |  
|Time                                                                                                                                                                             |  |      | 69,204  |      |   | 71,903  |  
|Other interest bearing                                                                                                                                                           |  |      | 16,892  |      |   | 15,189  |  
|                                                                                                                                                                                 |  |      |         |      |   |         |  
|Total deposits                                                                                                                                                                   |  |      | 225,325 |      |   | 216,639 |  
|                                                                                                                                                                                 |  |      |         |      |   |         |  
|Federal home Loan Bank advances                                                                                                                                                  |  |      | 35,661  |      |   | 47,869  |  
|Other liabilities                                                                                                                                                                |  |      | 5,570   |      |   | 5,049   |  
|                                                                                                                                                                                 |  |      |         |      |   |         |  
|Total liabilities                                                                                                                                                                |  |      | 266,556 |      |   | 269,557 |  
|                                                                                                                                                                                 |  |      |         |      |   |         |  
|Commitments and contingencies (Note 14)                                                                                                                                          |  |      |        |      |   |        |  
|                                                                                                                                                                                 |  |      |         |      |   |         |  
|Shareholders equity:                                                                                                                                                            |  |      |         |      |   |         |  
|Common stock, $.01 par value; 30,000,000
 shares authorized; issued: 9,895,757 shares; outstanding: 6,777,551 and
 6,800,119 shares at December 31, 2010 and 2009, respectively; |  |      | 99      |      |   | 99      |  
|Additional paid-in capital                                                                                                                                                       |  |      | 63,194  |      |   | 62,794  |  
|Retained earnings                                                                                                                                                                |  |      | 37,507  |      |   | 37,588  |  
|Treasury stock, at cost; 3,118,206 and
 3,095,638 shares at December 31, 2010 and 2009, respectively                                                                             |  |      | (36,921 | )    |   | (36,720 | )
|Accumulated other comprehensive income
 (loss)                                                                                                                                   |  |      | (1,621  | )    |   | (1,574  | )
|Unallocated shares of employee stock
 ownership plan (ESOP) 232,309 and 278,275 shares at December 31, 2010 and
 2009, respectively                                              |  |      | (1,603  | )    |   | (1,822  | )
|                                                                                                                                                                                 |  |      |         |      |   |         |  
|Total shareholders equity                                                                                                                                                       |  |      | 60,655  |      |   | 60,365  |  
|                                                                                                                                                                                 |  |      |         |      |   |         |  
|Total liabilities and shareholders equity                                                                                                                                       |  | $    | 327,211 |      | $ | 329,922 |  
|                                                                                                                                                                                 |  |      |         |      |   |         |  

See
accompanying notes to consolidated financial statements.

52

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ROME
BANCORP, INC. AND SUBSIDIARY

Consolidated
Statements of Income

Years ended December 31, 2010, 2009 and 2008

(In thousands, except share data)

|                                                     |  |      |        |      |   |        |  |   |        |  
|---------------------------------------------------- |  | ---- | ------ | ---- | - | ------ |  | - | ------ | -
|                                                     |  | 2010 |        | 2009 |   | 2008   | 
|Interest
 income:                                    |  |      |        |      |   |        |  |   |        |  
|Loans                                                |  | $    | 15,968 |      | $ | 16,763 |  | $ | 17,561 |  
|Securities                                           |  |      | 711    |      |   | 517    |  |   | 367    |  
|Other short-term investments                         |  |      | 8      |      |   | 11     |  |   | 26     |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Total interest income                                |  |      | 16,687 |      |   | 17,291 |  |   | 17,954 |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Interest
 expense:                                   |  |      |        |      |   |        |  |   |        |  
|Deposits                                             |  |      | 1,826  |      |   | 2,426  |  |   | 3,342  |  
|Borrowings                                           |  |      | 1,191  |      |   | 1,824  |  |   | 1,545  |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Total interest expense                               |  |      | 3,017  |      |   | 4,250  |  |   | 4,887  |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Net interest income                                  |  |      | 13,670 |      |   | 13,041 |  |   | 13,067 |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Provision for loan losses                            |  |      | 1,796  |      |   | 300    |  |   | 300    |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Net interest income after provision for loan
 losses |  |      | 11,874 |      |   | 12,741 |  |   | 12,767 |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Non-interest
 income:                                |  |      |        |      |   |        |  |   |        |  
|Service charges                                      |  |      | 1,861  |      |   | 1,815  |  |   | 1,706  |  
|Gain on sale of loans                                |  |      | 493    |      |   | 155    |  |   | 17     |  
|Net gain (loss) on securities                        |  |      | 156    |      |   | 73     |  |   | (265   | )
|Gain (loss) on sale of real estate                   |  |      | 419    |      |   | 2      |  |   | (18    | )
|Earnings on bank owned life insurance                |  |      | 397    |      |   | 409    |  |   | 408    |  
|Other income                                         |  |      | 24     |      |   | 68     |  |   | 96     |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Total non-interest income                            |  |      | 3,350  |      |   | 2,522  |  |   | 1,944  |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Non-interest
 expense:                               |  |      |        |      |   |        |  |   |        |  
|Salaries and employee benefits                       |  |      | 6,295  |      |   | 6,143  |  |   | 5,733  |  
|Building, occupancy and equipment                    |  |      | 1,941  |      |   | 1,918  |  |   | 1,903  |  
|FDIC and OTS assessments                             |  |      | 321    |      |   | 416    |  |   | 140    |  
|Outside consulting and professional fees             |  |      | 1,414  |      |   | 421    |  |   | 580    |  
|ATM service fees                                     |  |      | 210    |      |   | 251    |  |   | 236    |  
|Other                                                |  |      | 1,680  |      |   | 1,540  |  |   | 1,818  |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Total non-interest expense                           |  |      | 11,861 |      |   | 10,689 |  |   | 10,410 |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Income before income tax expense                     |  |      | 3,363  |      |   | 4,574  |  |   | 4,301  |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Income tax
 expense                                  |  |      | 1,102  |      |   | 1,487  |  |   | 1,396  |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Net income                                           |  | $    | 2,261  |      | $ | 3,087  |  | $ | 2,905  |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Basic
 earnings per share                            |  | $    | 0.35   |      | $ | 0.47   |  | $ | 0.42   |  
|                                                     |  |      |        |      |   |        |  |   |        |  
|Diluted
 earnings per share                          |  | $    | 0.35   |      | $ | 0.47   |  | $ | 0.41   |  
|                                                     |  |      |        |      |   |        |  |   |        |  

See accompanying notes to
consolidated financial statements.

53

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Shareholders
Equity and Comprehensive Income

Years ended December 31, 2010, 2009 and 2008

(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, 2007                                              |  | $             | 99 |                              | $ | 61,884             |  | $               | 36,179 |                                                 | $ | (26,488                   | ) | $     | (376   | ) | $ | (2,261 | ) | $ | 69,037 |  
|Comprehensive income:                                                      |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   |        |  
|Net income                                                                 |  |               |   |                              |   |                   |  |                 | 2,905  |                                                 |   |                          |   |       |       |   |   |       |   |   | 2,905  |  
|Other comprehensive income                                                 |  |               |   |                              |   |                   |  |                 |       |                                                 |   |                          |   |       | (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 | )
|ESOP shares released for allocation (45,965 shares)                        |  |               |   |                              |   | 276                |  |                 |       |                                                 |   |                          |   |       |       |   |   | 219    |   |   | 495    |  
|Adjustment to initially apply pension guidance, net of tax (Note 9)        |  |               |   |                              |   |                   |  |                 | 24     |                                                 |   |                          |   |       |       |   |   |       |   |   | 24     |  
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   |        |  
|Balances at December 31, 2008                                              |  |               | 99 |                              |   | 62,440             |  |                 | 36,721 |                                                 |   | (34,662                   | ) |       | (2,212 | ) |   | (2,042 | ) |   | 60,344 |  
|Comprehensive income:                                                      |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   |        |  
|Net income                                                                 |  |               |   |                              |   |                   |  |                 | 3,087  |                                                 |   |                          |   |       |       |   |   |       |   |   | 3,087  |  
|Other comprehensive loss                                                   |  |               |   |                              |   |                   |  |                 |       |                                                 |   |                          |   |       | 638    |   |   |       |   |   | 638    |  
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   |        |  
|Total comprehensive income                                                 |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   | 3,725  |  
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   |        |  
|Purchase of 260,788 treasury shares                                        |  |               |   |                              |   |                   |  |                 |       |                                                 |   | (2,058                    | ) |       |       |   |   |       |   |   | (2,058 | )
|Exercise of stock options and related tax benefit 2,041 shares, net        |  |               |   |                              |   |                   |  |                 |       |                                                 |   |                          |   |       |       |   |   |       |   |   |       |  
|Amortization and tax benefits of stock option and restricted share
 grants |  |               |   |                              |   | 190                |  |                 |       |                                                 |   |                          |   |       |       |   |   |       |   |   | 190    |  
|Dividends paid ($0.34 per share)                                           |  |               |   |                              |   |                   |  |                 | (2,220 | )                                               |   |                          |   |       |       |   |   |       |   |   | (2,220 | )
|ESOP shares released for allocation (45,964 shares)                        |  |               |   |                              |   | 164                |  |                 |       |                                                 |   |                          |   |       |       |   |   | 220    |   |   | 384    |  
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   |        |  
|Balances at December 31, 2009                                              |  |               | 99 |                              |   | 62,794             |  |                 | 37,588 |                                                 |   | (36,720                   | ) |       | (1,574 | ) |   | (1,822 | ) |   | 60,365 |  
|Comprehensive income:                                                      |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   |        |  
|Net income                                                                 |  |               |   |                              |   |                   |  |                 | 2,261  |                                                 |   |                          |   |       |       |   |   |       |   |   | 2,261  |  
|Other comprehensive loss                                                   |  |               |   |                              |   |                   |  |                 |       |                                                 |   |                          |   |       | (47    | ) |   |       |   |   | (47    | )
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   |        |  
|Total comprehensive income                                                 |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   | 2,214  |  
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   |        |  
|Purchase of 22,568 treasury shares                                         |  |               |   |                              |   |                   |  |                 |       |                                                 |   | (201                      | ) |       |       |   |   |       |   |   | (201   | )
|Amortization and tax benefits of stock option and restricted share
 grants |  |               |   |                              |   | 188                |  |                 |       |                                                 |   |                          |   |       |       |   |   |       |   |   | 188    |  
|Dividends paid ($0.36 per share)                                           |  |               |   |                              |   |                   |  |                 | (2,342 | )                                               |   |                          |   |       |       |   |   |       |   |   | (2,342 | )
|ESOP shares released for allocation (45,966 shares)                        |  |               |   |                              |   | 212                |  |                 |       |                                                 |   |                          |   |       |       |   |   | 219    |   |   | 431    |  
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   |        |  
|Balances at December 31, 2010                                              |  | $             | 99 |                              | $ | 63,194             |  | $               | 37,507 |                                                 | $ | (36,921                   | ) | $     | (1,621 | ) | $ | (1,603 | ) | $ | 60,655 |  
|                                                                           |  |               |    |                              |   |                    |  |                 |        |                                                 |   |                           |   |       |        |   |   |        |   |   |        |  

See accompanying notes to
consolidated financial statements.

54

---



ROME
BANCORP, INC. AND SUBSIDIARYConsolidated Statements of Cash Flows
Years ended December 31, 2010, 2009 and 2008
(In thousands)

|                                                                                    |  |      |         |      |   |         |   |   |         |  
|----------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | - | - | ------- | -
|                                                                                    |  | 2010 |         | 2009 |   | 2008    |  
|Cash
 flows from operating activities:                                              |  |      |         |      |   |         |   |   |         |  
|Net income                                                                          |  | $    | 2,261   |      | $ | 3,087   |   | $ | 2,905   |  
|Adjustments to reconcile net income to net cash provided by operating
 activities:  |  |      |         |      |   |         |   |   |         |  
|Depreciation                                                                        |  |      | 478     |      |   | 513     |   |   | 563     |  
|Decrease
 (increase) in accrued interest receivable                                 |  |      | 17      |      |   | (32     | ) |   | 39      |  
|Provision
 for loan losses                                                          |  |      | 1,796   |      |   | 300     |   |   | 300     |  
|Net
 loss on other than temporary securities impairment                             |  |      |        |      |   |        |   |   | 265     |  
|Net
 gains on securities transactions                                               |  |      | (156    | )    |   | (73     | ) |   |        |  
|Gain
 on sales of loans                                                             |  |      | (493    | )    |   | (155    | ) |   | (17     | )
|Proceeds
 from sale of loans                                                        |  |      | 20,067  |      |   | 11,173  |   |   | 1,180   |  
|Origination
 of loans for sale                                                      |  |      | (20,494 | )    |   | (11,018 | ) |   | (1,163  | )
|Net
 accretion/amortization on securities                                           |  |      | 121     |      |   | 7       |   |   | 3       |  
|Increase
 in cash surrender value of Bank-owned life insurance                      |  |      | (397    | )    |   | (409    | ) |   | (408    | )
|(Gain)
 loss on sale of other real estate                                           |  |      | (410    | )    |   | (2      | ) |   | 18      |  
|Increase
 (decrease) in other liabilities                                           |  |      | 521     |      |   | (237    | ) |   | (3,527  | )
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Deferred
 income tax (benefit) expense                                              |  |      | (143    | )    |   | (107    | ) |   | 126     |  
|(Increase)
 decrease in other assets                                                |  |      | (1,822  | )    |   | (526    | ) |   | 3,122   |  
|Allocation
 of ESOP shares                                                          |  |      | 431     |      |   | 384     |   |   | 495     |  
|Amortization
 of stock-based compensation                                           |  |      | 228     |      |   | 228     |   |   | 280     |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Net cash provided by operating activities                                           |  |      | 2,005   |      |   | 3,133   |   |   | 4,181   |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Cash flows from investing activities:                                               |  |      |         |      |   |         |   |   |         |  
|Net decrease (increase) in loans                                                    |  |      | 18,379  |      |   | 12,344  |   |   | (18,216 | )
|Proceeds from sales of securities available for sale                                |  |      | 1,303   |      |   | 1,314   |   |   |        |  
|Proceeds from maturities and principal reductions of securities
 available for sale |  |      | 1,198   |      |   | 349     |   |   | 921     |  
|Purchases of securities available for sale                                          |  |      | (5,553  | )    |   | (7,477  | ) |   | (3,244  | )
|Purchases of securities held to maturity                                            |  |      |        |      |   |        |   |   | (326    | )
|Proceeds from maturities and principal reductions of securities held
 to maturity   |  |      | 10      |      |   | 9       |   |   | 23      |  
|Proceeds from sale of real estate owned                                             |  |      | 205     |      |   | 525     |   |   | 253     |  
|Purchases of premises and equipment, net                                            |  |      | (251    | )    |   | (176    | ) |   | (361    | )
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Net cash provided by (used in) investing activities                                 |  |      | 15,291  |      |   | 6,888   |   |   | (20,950 | )
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Cash flows from financing activities:                                               |  |      |         |      |   |         |   |   |         |  
|Decrease in time deposits                                                           |  |      | (2,699  | )    |   | (235    | ) |   | (1,071  | )
|Increase in other deposits                                                          |  |      | 11,385  |      |   | 10,942  |   |   | 3,971   |  
|Repayments of borrowings                                                            |  |      | (27,083 | )    |   | (33,409 | ) |   | (12,709 | )
|Advances on borrowings                                                              |  |      | 14,875  |      |   | 14,954  |   |   | 38,700  |  
|Purchase of treasury stock                                                          |  |      | (201    | )    |   | (2,058  | ) |   | (8,174  | )
|Dividends                                                                           |  |      | (2,342  | )    |   | (2,220  | ) |   | (2,387  | )
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Net cash (used in) provided by financing activities                                 |  |      | (6,065  | )    |   | (12,026 | ) |   | 18,330  |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Net increase (decrease) in cash and cash equivalents                                |  |      | 11,231  |      |   | (2,005  | ) |   | 1,561   |  
|Cash and cash equivalents at beginning of year                                      |  |      | 7,574   |      |   | 9,579   |   |   | 8,018   |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  
|Cash and cash equivalents at end of year                                            |  | $    | 18,805  |      | $ | 7,574   |   | $ | 9,579   |  
|                                                                                    |  |      |         |      |   |         |   |   |         |  

(Continued)

55

---



ROME BANCORP, INC. AND SUBSIDIARY

Consolidated
Statements of Cash Flows (continued)

Years
ended December 31, 2010, 2009 and 2008

(In
thousands)

|                                          |  |      |       |      |   |       |  |   |       | 
|----------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|                                          |  | 2010 |       | 2009 |   | 2008  | 
|Other non-cash activities:                |  |      |       |      |   |       |  |   |       | 
|Transfers from loans to real estate owned |  | $    | 65    |      | $ | 192   |  | $ | 505   | 
|Financing of sale of real estate owned    |  |      | 563   |      |   |      |  |   |      | 
|Cash paid during the year
 for:           |  |      |       |      |   |       |  |   |       | 
|Interest                                  |  |      | 3,044 |      |   | 4,244 |  |   | 4,795 | 
|Income taxes                              |  |      | 2,075 |      |   | 1,097 |  |   | 1,514 | 

See accompanying notes to consolidated
financial statements.

56

---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 U.S. generally
 accepted accounting principles. Amounts in the prior years consolidated
 financial statements are reclassified when necessary to conform with the
 current years presentation. Reclassifications had no affect on prior year
 net income or shareholders equity. A description of the significant
 accounting policies is presented below. To prepare financial statements in
 conformity with 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. Equity securities with readily determinable
 fair values 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 deferred 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 | Management evaluates
 securities for other than temporary impairment (OTTI) at least on a
 quarterly basis and more frequently when economic or market conditions
 warrant such an evaluation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 | 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 on the accrual method. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                 | Management evaluates
 securities for other-than-temporary impairment (OTTI) on at least a
 quarterly basis, and more frequently when economic or market conditions
 warrant such an evaluation. For securities in an unrealized loss position,
 management considers the extent and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

57

---



| |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                         | duration of the
 unrealized loss, and the financial condition and near-term prospects of the
 issuer. Management also assesses whether it intends to sell, or it is more
 likely than not that it will be required to sell, a security in an unrealized
 loss position before recovery of its amortized cost basis. If either of the
 criteria regarding intent or requirement to sell is met, the entire
 difference between amortized cost and the fair market value is recognized as
 impairment through earnings. For debt securities that do not meet the
 aforementioned criteria, the amount of impairment is split into two
 components as follows: 1) OTTI related to credit loss, which must be
 recognized in the income statement and 2) OTTI related to other factors,
 which is recognized in other comprehensive income. The credit loss is defined
 as the difference between the present value of the cash flows expected to be
 collected and the amortized cost basis. For equity securities, the entire
 amount of impairment is recognized through earnings.
| |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                         | In order to determine
 OTTI for purchased beneficial interests that, on the purchase date, were not
 highly rated, the Company compares the present value of the remaining cash
 flows as estimated at the preceding evaluation date to the current expected
 remaining cash flows. OTTI is deemed to have occurred if there has been an
 adverse change in the remaining expected future cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (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 Held for Sale                
| |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                         | Mortgage loans originated and intended for sale in the secondary market
 are carried at the lower of the aggregate cost or fair value, as determined
 by outstanding commitments from investors. Net unrealized losses, if any, are
 recorded as a valuation reserve and charged to earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                         | Mortgage loans held for sale are generally sold with servicing rights
 retained. The carrying value of mortgage loans sold is reduced by the amount
 allocated to the servicing right. Gains and losses on sales of mortgage loans
 are based on the difference between the selling price and the carrying value
 of the related loan sold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (e) Loans                              
| |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                         | Loans are reported at
 the principal amount outstanding net of loans in process, net deferred loan
 fees 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.
 The majority of the Companys loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

58

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| |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ----------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                               | portfolio
 is 1-4 family real estate, commercial real estate and consumer loans. These
 loans are largely secured by underlying real estate or consumer collateral.
 Repayment of these loans is dependent on general economic conditions and
 unemployment levels in the Companys market area.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                               | The
 repayment of commercial loans depends on a large degree on the results of
 operations, cash flow and management of the related businesses. These loans
 may be affected to a greater extent by adverse commerce conditions or the
 economy in general. Accordingly, the nature of these loans makes them more
 difficult for management to monitor and evaluate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (f) Allowance for Loan Losses
| |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                               | The allowance for loan
 losses is a valuation allowance for probable incurred credit losses. The
 allowance for loan losses is increased by the provision for loan losses
 charged to operations and is decreased by the charge-off of loans, net of
 recoveries. Loans are charged off when management determines that ultimate
 success of the loans collectibility is remote.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                               | Managements evaluation
 of the adequacy of the allowance considers the Companys historical loan loss
 experience, review of specific loans, current economic conditions and such
 other factors considered appropriate to estimate losses. Management uses
 presently available information to estimate probable losses on loans;
 however, future additions to the allowance may be necessary based on changes
 in estimates, assumptions or economic conditions. In addition, various
 regulatory agencies, as an integral part of their examination process,
 periodically review the Companys allowance for loan losses and may require
 the Company to recognize additions to the allowance based on their judgment
 of information available to them at the time of their examination.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                               | The allowance consists
 of specific and general components. The specific component relates to loans
 that are individually classified as impaired or loans otherwise classified as
 substandard or doubtful. The general component covers non-classified loans
 and is based on historical loss experience adjusted for current factors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                               | The allowance for loan
 losses is evaluated on a quarterly basis by management in order to maintain
 the allowance at a level sufficient to absorb probable incurred loan losses
 based upon known and inherent risks in the loan portfolio.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                               | The Company estimates
 losses on impaired loans based on the present value of expected future cash
 flows (discounted at the loans effective interest rate) or the fair value of
 the underlying collateral if the loan is collateral dependent. An impairment
 loss exists if the recorded investment in a loan exceeds the value of the
 loan as measured by the aforementioned methods. Impairment losses are
 included as a component of the allowance for loan losses. A loan is
 considered impaired when it is probable that the Company will be unable to
 collect all amounts due according to the contractual terms of the loan
 agreement. Generally, all commercial mortgage loans and commercial loans
 greater than $250,000 in a non-accrual status are considered impaired.
 Commercial mortgage loans and commercial loans less than $250,000 and all
 residential mortgage loans, consumer loans and education loans are evaluated
 collectively for impairment 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. All classes of residential
 1-4 family, commercial real estate, commercial loans and other commercial
 loans that become delinquent beyond 90 days are analyzed and a charge-off is
 taken when it is determined that the underlying collateral, if any, is not
 sufficient to offset the indebtedness.

59

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| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                            | The
 general component covers non-impaired loans and is based on historical loss
 experience adjusted for current factors. The historical loss experience is
 determined by portfolio segment and is based on the actual loss history
 experienced by the Company over the most recent four years. This actual loss
 experience is supplemented with other economic factors based on the risks
 present for each portfolio segment. These economic factors include
 consideration of the following: levels of and trends in delinquencies and impaired
 loans; levels of and trends in charge-offs and recoveries; trends in volume
 and terms of loans; effects of any changes in underwriting standards; other
 changes in lending policies, procedures and practices; experience, ability
 and depth of lending management and other related staff; national and local
 economic trends and conditions; industry conditions and effects of changes in
 credit concentrations. The following portfolio segments have been identified:
 Residential 1-4 Family Mortgage, Commercial Real Estate, Commercial Loans,
 and Other Consumer Loans. The risk characteristics of each of the
 identified portfolio segments are as follows:
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                            | Residential 1-4 Family Mortgage- Subject to adverse
 employment conditions in the local economy leading to increased default rate;
 decreased market values from oversupply in a geographic area; impact to
 borrowers ability to maintain payments in the event of incremental rate
 increases on adjustable rate mortgages.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                            | Commercial Real Estate- Subject to adverse
 various market conditions that cause a decrease in market value or lease
 rates; the potential for environmental impairment from events occurring on
 subject or neighboring properties; obsolescence in location or function.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                            | Commercial Loans- Borrowers may be
 subject to industry conditions including decreases in product demand;
 increasing material or other production costs that cannot be immediately
 recaptured in the sales or distribution cycle; interest rate increases that
 could have an adverse impact on profitability; non-payment of credit that has
 been extended under normal vendor terms for goods sold or services extended;
 interruption related to the importing or exporting of production materials or
 sold products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                            | Other Consumer Loans- Subject to adverse
 employment conditions in the local economy which may lead to higher default
 rates; decreases in the value of underlying collateral.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                            | If a troubled debt
 restructuring is considered to be a collateral dependent loan, the loan is
 reported, net, at the fair value of the collateral. For troubled debt
 restructurings that subsequently default, the Company determines the amount
 of reserve in accordance with the accounting policy for the allowance for
 loan losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (g) 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (h) 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (i) Employee Benefit Plans

60

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| |                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ----------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                       | 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 losses not
 immediately recognized. The Companys funding policy is to contribute
 annually at least the minimum required to meet the funding standards set
 forth under provisions of the Employee Retirement Income Security Act of
 1974.
| |                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                       | The Company provides
 health care and life insurance benefits to certain retired full time
 employees. The estimated costs of providing benefits are accrued over the
 years the employees render services necessary to earn those benefits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                       | The Company has a
 defined contribution 401(k) Savings Plan for all employees. Employees are
 permitted to contribute up to 75% of base pay to the Savings Plan, subject to
 certain limitations. The Company matches 50% of each employees contributions
 up to a limit of 3% of the employees base pay.                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                       | The Company also
 sponsors a non-contributory Employee Stock Ownership Plan (ESOP) covering
 substantially all full time employees. The number of shares allocable to
 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.                                        
| |                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (j) Income Taxes                                     
| |                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                       | The Company and its
 subsidiaries file a consolidated tax return. Deferred tax assets and
 liabilities are the expected future amounts attributable to temporary
 differences between the financial statement carrying amounts of assets and
 liabilities and their respective tax bases. The effect on deferred tax assets
 and liabilities of a change in tax rates is recognized in the period that
 includes the enactment date.                                                                                                                                                                                                                                                                                               
| |                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                       | 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 Company recognizes interest and or penalties related to income
 tax matters in income tax expense.                                                                                                                                                                                                 
| |                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (k) Cash and Cash Equivalents                        
| |                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                       | For purposes of
 reporting cash flows, cash and cash equivalents include cash on hand, amounts
 due from banks, and federal funds sold which represents short-term highly
 liquid investments. Net cash flows are reported for customer loan and deposit
 transactions, interest bearing deposits in other financial institutions, and
 federal funds purchased agreements.                                                                                                                                                                                                                                                                                                                                                        
| |                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (l) Financial Instruments With Off-Balance Sheet Risk
| |                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                       | The Companys
 off-balance sheet financial instruments are limited to commitments to extend
 credit and standby letters of credit. The Companys policy is to record such
 instruments when funded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (m) Comprehensive Income                             

61

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| |                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                   | Comprehensive
 income consists of net income and other comprehensive income. Other
 comprehensive income includes unrealized gains and losses on securities
 available for sale and changes in the funded status of the pension plan,
 which are also recognized as separate components of equity.                                                                                                                                                                                                                                                                                                                                                                              
| |                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (n) Loss Contingencies           
| |                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                   | Loss
 contingencies, including claims and legal actions arising in the ordinary
 course of business, are recorded as liabilities when the likelihood of loss
 is probable and an amount or range of loss can be reasonably estimated.
 Management does not believe there now are such matters that will have a
 material effect on the financial statements.                                                                                                                                                                                                                                                                                                                    
| |                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (o) Earnings Per Share           
| |                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                   | Basic
 earnings per common share is net income divided by the weighted average
 number of common shares outstanding during the period. ESOP shares are
 considered outstanding for this calculation unless unearned. All outstanding
 unvested share-based payment awards that contain rights to nonforfeitable
 dividends are considered participating securities for this calculation.
 Diluted earnings per common share includes the dilutive effect of additional
 potential common shares issuable under stock options. Earnings and dividends
 per share are restated for all stock splits and stock dividends through the
 date of issuance of the financial statements.
| |                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (p) 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. While revenue streams and
 costs of various products and services are monitored, operations are managed
 and financial performance is evaluated on a Company-wide basis. Accordingly,
 the Company has determined that it has no reportable business segments.                                                                                                                                                                                                  
| |                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (q) Bank Owned Life Insurance    
| |                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                   | The Company has
 purchased life insurance policies on certain key officers and employees.
 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.                                                                                                                                                                                                                                                                                                                            
| |                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (r) 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
 Company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                                               
| |                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (s) Transfers of Financial Assets
| |                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                   | Transfers of financial
 assets are accounted for as sales, when control over the assets has been
 relinquished. Control over transferred assets is deemed to be surrendered
 when the assets have been isolated from the Company, the transferee obtains
 the right (free of conditions that constrain it from taking advantage of that
 right) to pledge or exchange the transferred assets,                                                                                                                                                                                                                                                                                   

62

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| |                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                | and the Company does
 not maintain effective control over the transferred assets through an
 agreement to repurchase them before their maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (t) Dividend Restriction                      
| |                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                | Banking regulations
 require maintaining certain capital levels and may limit the dividends paid
 by the bank to the holding company or by the holding company to shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (u) Fair Value of Financial Instruments       
| |                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                | Fair values of
 financial instruments are estimated using relevant market information and
 other assumptions, as more fully disclosed in a separate note. Fair value
 estimates involve uncertainties and matters of significant judgment regarding
 interest rates, credit risk, prepayments, and other factors, especially in
 the absence of broad markets for particular items. Changes in assumptions or
 in market conditions could significantly affect these estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (v) Recently Adopted Accounting Pronouncements
| |                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                | In June 2009, FASB
 issued Accounting Standard Update (ASU) Number 2009-16, Accounting for
 Transfers of Financial Assets  an Amendment of FASB Statement No. 140. The
 new accounting requirement amends previous guidance relating to the transfers
 of financial assets and eliminates the concept of a qualifying special
 purpose entity. This statement must be applied as of the beginning of each
 reporting entitys first annual reporting period that begins after November
 15, 2009, for interim periods within that first annual reporting period and
 for interim and annual reporting periods thereafter. This statement must be
 applied to transfers occurring on or after the effective date. Additionally,
 on and after the effective date, the concept of a qualifying special-purpose
 entity is no longer relevant for accounting purposes. Therefore, formerly
 qualifying special-purpose entities should be evaluated for consolidation by
 reporting entities on and after the effective date in accordance with the
 applicable consolidation guidance. Additionally, the disclosure provisions of
 this statement were also amended and apply to transfers that occurred both
 before and after the effective date of this statement. The adoption did not
 have a material impact on the Companys consolidated financial position,
 results of operations or cash flows.
| |                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                | ASC Topic 810-10-65-2,
 Amendments to FASB Interpretation No. 46(R), which amended guidance for
 consolidation of variable interest entities by replacing the quantitative-based
 risks and rewards calculation for determining which enterprise, if any, has a
 controlling financial interest in a variable interest entity with an approach
 focused on identifying which enterprise has the power to direct the
 activities of a variable interest entity that most significantly impact the
 entitys economic performance and (1) the obligation to absorb losses of the
 entity of (2) the right to receive benefits from the entity. This statement
 also requires additional disclosures about an enterprises involvement in
 variable interest entities. This statement became effective as of the
 beginning of each reporting entitys first annual reporting period that
 begins after November 15, 2009, for interim periods within the first annual
 reporting period, and for interim and annual reporting periods thereafter.
 Early adoption is prohibited. The adoption did not have a material impact on
 the Companys consolidated financial position, results of operations or cash
 flows.                                                                                                                                                                                        
| |                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                | On July 21, 2010, the FASB
 issued ASU No 2010-20,Disclosures about the Credit Quality of Financing
 Receivables and the Allowance for Credit Losses, which requires significant
 new disclosures about the allowance for credit losses and the credit quality
 of financing receivables. The requirements are intended to enhance
 transparency regarding credit losses and the credit quality of loan and lease
 receivables. Under this statement, allowance for credit losses and fair value
 are to be disclosed by portfolio segment, which credit quality information,
 impaired financing receivables and non-accrual status are to be presented by
 class of financing receivable. The disclosures are to be presented at the
 level of disaggregation that management                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

63

---



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | uses when assessing and
 monitoring the portfolios risk and performance. This ASU is effective for
 interim and annual reporting periods on or after December 15, 2010. See Note
 4 to the Notes to the Financial Statements  Loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | In January 2011, FASB
 issued Accounting Standards Update No 2011-11, Deferral of the Effective
 Date of Disclosures about Troubled Debt Restructurings in Update No.
 2010-20. The amendments in this update temporarily delay the effective date
 of the disclosures about troubled debt restructurings in Accounting Standards
 Update No. 2010-20, Receivables (Topic 310): Disclosures about the Credit
 Quality of Financing Receivables and the Allowance for Credit Losses, for
 public entities. The delay is intended to allow the Board time to complete
 its deliberations on what constitutes a troubled debt restructuring. The
 effective date of the new disclosures about troubled debt restructurings for
 public entities and the guidance for determining what constitutes a troubled
 debt restructuring will then be coordinated.

64

---



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

|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|--------------------------------------- |  | ----------------- | ------ | ------------------------ | - | ------------------------- |  | ----------- | -- |  | - | ------ | 
|                                        |  | December 31, 2010 |       
|                                        |  |                   |       
|                                        |  | Amortized
 Cost   |        | Gross
 unrealized
 gains |   | Gross
 unrealized
 losses |  | Fair
 value |   
|                                        |  |                   |        |                          |   |                           |  |             |   
|Available-for-sale:                     |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|State and municipal obligations         |  | $                 | 1,670  |                          | $ | 115                       |  | $           |   |  | $ | 1,785  | 
|Corporate bonds                         |  |                   | 10,672 |                          |   | 258                       |  |             | 4  |  |   | 10,926 | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|Total debt securities                   |  |                   | 12,342 |                          |   | 373                       |  |             | 4  |  |   | 12,711 | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|Equity and other securities             |  |                   | 350    |                          |   | 9                         |  |             |   |  |   | 359    | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|                                        |  | $                 | 12,692 |                          | $ | 382                       |  | $           | 4  |  | $ | 13,070 | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|Held-to-maturity:                       |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|U.S. Government securities              |  | $                 | 1,309  |                          | $ | 43                        |  | $           |   |  | $ | 1,352  | 
|Other bonds                             |  |                   | 107    |                          |   |                          |  |             |   |  |   | 107    | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|                                        |  | $                 | 1,416  |                          | $ | 43                        |  | $           |   |  | $ | 1,459  | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|                                        |  | December 31, 2009 |       
|                                        |  |                   |       
|                                        |  | Amortized
 Cost   |        | Gross
 unrealized
 gains |   | Gross
 Unrealized
 Losses |  | Fair
 value |   
|                                        |  |                   |        |                          |   |                           |  |             |   
|Available-for-sale:                     |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|State and municipal obligations         |  | $                 | 2,294  |                          | $ | 119                       |  | $           |   |  | $ | 2,413  | 
|Corporate bonds                         |  |                   | 6,597  |                          |   | 85                        |  |             | 39 |  |   | 6,643  | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|Total debt securities                   |  |                   | 8,891  |                          |   | 204                       |  |             | 39 |  |   | 9,056  | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|Equity and other securities             |  |                   | 872    |                          |   | 96                        |  |             |   |  |   | 968    | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|                                        |  | $                 | 9,763  |                          | $ | 300                       |  | $           | 39 |  | $ | 10,024 | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|Held-to-maturity:                       |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|U.S. Government securities              |  | $                 | 1,316  |                          | $ | 71                        |  | $           |   |  | $ | 1,387  | 
|Mortgage-backed securities-residential: |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|GNMA                                    |  |                   | 1      |                          |   |                          |  |             |   |  |   | 1      | 
|Other bonds                             |  |                   | 114    |                          |   |                          |  |             |   |  |   | 114    | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 
|                                        |  | $                 | 1,431  |                          | $ | 71                        |  | $           |   |  | $ | 1,502  | 
|                                        |  |                   |        |                          |   |                           |  |             |    |  |   |        | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 investment securities shown above with unrealized losses at December 31, 2010
 and 2009 were in a continuous loss position for less than 12 months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | As
 of December 31, 2010, the Companys security portfolio consisted of 43
 securities, 4 of which were in an unrealized loss position. All of unrealized
 losses are related to the Companys corporate bond portfolio. These bonds are
 of high credit quality (rated A or higher.) The fair value is expected to
 recover as the bond(s) approach maturity. Because the decline in fair value
 is attributable to changes in interest rates and current market conditions,
 and not credit quality, and because the Company does not have the intent to sell
 these securities and it is likely that it will not be required to sell the
 securities before their anticipated recovery, the Company does not consider
 these securities to be other-than-temporarily impaired at December 31, 2010.

65

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 then
 current fair market value of $472,000. This charge reduced 2008 net earnings
 by $162,000, net of tax, or $0.02 per diluted share. As this investment is
 classified as an available for sale security, shareholders 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. During the second quarter of 2010, the Company
 sold the majority of its investment in this security at a gain of $119,000.
 At December 31, 2010, the Companys remaining investment in this equity fund
 had an unrealized gain of $9,000.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The following table presents the amortized cost and fair value of
 debt securities based on the contractual maturity date (dollars 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, 2010 |       
|                                       |  |                   |       
|                                       |  | Amortized
 Cost   |        | Fair
 Value |  
|                                       |  |                   |        |             |  
|Available-for-sale:                    |  |                   |        |             |   |        | 
|Due within one year                    |  | $                 | 1,917  |             | $ | 1,939  | 
|Due after one year through five years  |  |                   | 8,872  |             |   | 9,161  | 
|Due after five years through ten years |  |                   | 1,553  |             |   | 1,611  | 
|Due after ten years                    |  |                   |       |             |   |       | 
|                                       |  |                   |        |             |   |        | 
|                                       |  | $                 | 12,342 |             | $ | 12,711 | 
|                                       |  |                   |        |             |   |        | 
|Held-to-maturity:                      |  |                   |        |             |   |        | 
|Due within one year                    |  | $                 | 1,000  |             | $ | 1,036  | 
|                                      
|Due after one year through five years  |  |                   | 309    |             |   | 316    | 
|Due after five years through ten years |  |                   |       |             |   |       | 
|Due after ten years                    |  |                   | 107    |             |   | 107    | 
|                                       |  |                   |        |             |   |        | 
|                                      
|                                       |  | $                 | 1,416  |             | $ | 1,459  | 
|                                       |  |                   |        |             |   |        | 

| |                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Gross gains
 of $156,000, $73,000 and $0 were realized on sales of securities in 2010,
 2009 and 2008, respectively. The proceeds from the sales of securities were
 $1.3 million, $1.3 million and $0 in 2010, 2009 and 2008, respectively. The
 tax provision related to these realized gains was $62,000, $29,000 and $0,
 respectively.
| |                                                                                                                                                                                                                                                                                                                                            
| | Securities pledged at both year ends 2010 and 2009 had a carrying
 amount of $1.3 million. These securities collateralize state and Treasury
 department programs. At year end 2010 and 2009, there were no holdings of
 securities of any one issuer in an amount greater than 10% of shareholders
 equity.                              

66

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

|                                   |  |      |         |      |   |         | 
|---------------------------------- |  | ---- | ------- | ---- | - | ------- | 
|                                   |  | 2010 |         | 2009 |  
|                                   |  |      |         |      |  
|Mortgage
 loans:                   |  |      |         |      |   |         | 
|Residential (1-4 family)           |  | $    | 141,741 |      | $ | 155,547 | 
|                                   |  |      |         |      |   |         | 
|Commercial                         |  |      | 48,510  |      |   | 52,557  | 
|Construction and land              |  |      | 2,951   |      |   | 4,381   | 
|                                   |  |      |         |      |   |         | 
|Total mortgage loans               |  |      | 193,202 |      |   | 212,485 | 
|                                   |  |      |         |      |   |         | 
|Other loans:                       |  |      |         |      |   |         | 
|Commercial                         |  |      | 29,994  |      |   | 30,429  | 
|Automobile loans                   |  |      | 7,526   |      |   | 9,377   | 
|Property improvement and equipment |  |      | 23,485  |      |   | 19,251  | 
|Other consumer                     |  |      | 14,220  |      |   | 16,207  | 
|                                   |  |      |         |      |   |         | 
|Total loans                        |  |      | 268,427 |      |   | 287,749 | 
|Allowance
 for loan losses         |  |      | 2,490   |      |   | 2,132   | 
|                                   |  |      |         |      |   |         | 
|Net loans                          |  | $    | 265,937 |      | $ | 285,617 | 
|                                   |  |      |         |      |   |         | 

| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | The Company
 serviced loans for third parties totaling $34,339,000 and $18,101,000 at
 December 31, 2010 and 2009, respectively.
| |                                                                                                                                 
| | Changes in
 the allowance for loan losses are summarized as follows (dollars in
 thousands):                                    

|                                 |  |                          |        |      |   |       |   |   |       |  
|-------------------------------- |  | ------------------------ | ------ | ---- | - | ----- | - | - | ----- | -
|                                 |  | Years ended December 31, |       
|                                 |  |                          |       
|                                 |  | 2010                     |        | 2009 |   | 2008  |  
|                                 |  |                          |        |      |   |       |  
|Balance at
 beginning of period  |  | $                        | 2,132  |      | $ | 1,936 |   | $ | 1,910 |  
|Provision
 charged to operations |  |                          | 1,796  |      |   | 300   |   |   | 300   |  
|Loans
 charged off               |  |                          | (1,505 | )    |   | (170  | ) |   | (348  | )
|Recoveries                       |  |                          | 67     |      |   | 66    |   |   | 74    |  
|                                 |  |                          |        |      |   |       |   |   |       |  
|                                 |  |                          |        |      |   |       |   |   |       |  
|Balance at
 end of period        |  | $                        | 2,490  |      | $ | 2,132 |   | $ | 1,936 |  
|                                 |  |                          |        |      |   |       |   |   |       |  

| |                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The recorded
 investment in loans presented in the tables that follow, includes principal
 outstanding adjusted for net unearned loan origination fees and costs. The
 recorded investment does not include accrued interest receivable, as the
 effect is not considered to be material.

67

---



| |                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 following table presents the balance in the allowance for loan losses and the
 recorded investment in loans by portfolio segment and based on impairment
 method as of December 31, 2010 (dollars in thousands):

|                                      |  |                          |         |                         |   |                     |  |                   |       |             |   |                              |  |                        |       |              |   |        |  |   |        |  |   |         | 
|------------------------------------- |  | ------------------------ | ------- | ----------------------- | - | ------------------- |  | ----------------- | ----- | ----------- | - | ---------------------------- |  | ---------------------- | ----- | ------------ | - | ------ |  | - | ------ |  | - | ------- | 
|                                      |  | Residential
 Real Estate |         | Commercial
 Real Estate |   | Construction
 Loans |  | Commercial
 Loans |       | Auto
 Loans |   | Property
 Improvement
 Loans |  | Other
 Consumer
 Loans |       | Total
 Loans |  
|                                      |  |                          |         |                         |   |                     |  |                   |       |             |   |                              |  |                        |       |              |  
|Allowance for loan losses:            |  |                          |         |                         |   |                     |  |                   |       |             |   |                              |  |                        |       |              |   |        |  |   |        |  |   |         | 
|Ending allowance balance              |  |                          |         |                         |   |                     |  |                   |       |             |   |                              |  |                        |       |              |   |        |  |   |        |  |   |         | 
|Attributable to loans:                |  |                          |         |                         |   |                     |  |                   |       |             |   |                              |  |                        |       |              |   |        |  |   |        |  |   |         | 
|Individually evaluated for impairment |  | $                        |        |                         | $ | 267                 |  | $                 |      |             | $ | 580                          |  | $                      |      |              | $ |       |  | $ |       |  | $ | 847     | 
|Collectively evaluated for impairment |  |                          | 251     |                         |   | 246                 |  |                   | 2     |             |   | 679                          |  |                        | 63    |              |   | 191    |  |   | 211    |  |   | 1,643   | 
|                                      |  |                          |         |                         |   |                     |  |                   |       |             |   |                              |  |                        |       |              |   |        |  |   |        |  |   |         | 
|Total ending allowance balance        |  | $                        | 251     |                         | $ | 513                 |  | $                 | 2     |             | $ | 1,259                        |  | $                      | 63    |              | $ | 191    |  | $ | 211    |  | $ | 2,490   | 
|                                      |  |                          |         |                         |   |                     |  |                   |       |             |   |                              |  |                        |       |              |   |        |  |   |        |  |   |         | 
|                                      |  |                          |         |                         |   |                     |  |                   |       |             |   |                              |  |                        |       |              |   |        |  |   |        |  |   |         | 
|Loans:                                |  |                          |         |                         |   |                     |  |                   |       |             |   |                              |  |                        |       |              |   |        |  |   |        |  |   |         | 
|Individually evaluated for impairment |  | $                        |        |                         | $ | 944                 |  | $                 |      |             | $ | 2,232                        |  | $                      |      |              | $ |       |  | $ |       |  | $ | 3,176   | 
|Collectively evaluated for impairment |  |                          | 141,741 |                         |   | 47,566              |  |                   | 2,951 |             |   | 27,762                       |  |                        | 7,526 |              |   | 23,485 |  |   | 14,220 |  |   | 265,251 | 
|                                      |  |                          |         |                         |   |                     |  |                   |       |             |   |                              |  |                        |       |              |   |        |  |   |        |  |   |         | 
|Total ending loans balance            |  | $                        | 141,741 |                         | $ | 48,510              |  | $                 | 2,951 |             | $ | 29,994                       |  | $                      | 7,526 |              | $ | 23,485 |  | $ | 14,220 |  | $ | 268,427 | 
|                                      |  |                          |         |                         |   |                     |  |                   |       |             |   |                              |  |                        |       |              |   |        |  |   |        |  |   |         | 

| |                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------
| | The Company
 has no commitments to lend additional amounts to customers with loans that
 are classified as troubled debt restructurings.

68

---



| |                                                                                      
| | -------------------------------------------------------------------------------------
| | Impaired
 loans were as follows at December 31, 2010 and 2009 (dollars in thousands):

|                                                              |  |      |       |      |   |     | 
|------------------------------------------------------------- |  | ---- | ----- | ---- | - | --- | 
|                                                              |  | 2010 |       | 2009 |  
|                                                              |  |      |       |      |   |     | 
|                                                             
|Year end loans  with no
 allocated allowance for loan losses |  | $    |      |      | $ | 165 | 
|Year end loans  with
 allocated allowance for loan losses    |  |      | 3,176 |      |   | 533 | 
|                                                              |  |      |       |      |   |     | 
|Amount of the allowance
 for loan losses allocated            |  |      | 847   |      |   | 242 | 
|                                                              |  |      |       |      |   |     | 
|Net investment in impaired loans                              |  | $    | 2,329 |      | $ | 456 | 
|                                                              |  |      |       |      |   |     | 

Following
is information related to impaired loans for the three years ended December 31,
2010 (dollars in thousands):

|                                                    |  |      |       |      |   |      |  |   |     | 
|--------------------------------------------------- |  | ---- | ----- | ---- | - | ---- |  | - | --- | 
|                                                    |  | 2010 |       | 2009 |   | 2008 | 
|                                                    |  |      |       |      |   |      | 
|                                                    |  |      |       |      |   |      |  |   |     | 
|Average of individually
 impaired loans during year |  | $    | 2,356 |      | $ | 704  |  | $ | 904 | 
|Interest income recognized
 during impairment       |  |      | 63    |      |   |     |  |   |    | 
|Cash-basis interest income
 recognized              |  |      | 63    |      |   |     |  |   |    | 

The following
table presents loans individually evaluated for impairment by class of loans as
of December, 31, 2010. All evaluated loans had related loan loss allowances
(dollars in thousands):

|                       |  |                            |       |                      |   |                                        |  |   |     | 
|---------------------- |  | -------------------------- | ----- | -------------------- | - | -------------------------------------- |  | - | --- | 
|                       |  | Unpaid
 Principal
 Balance |       | Recorded
 Investment |   | Allowance
 for
 Loan Losses
 Allocated | 
|                       |  |                            |       |                      |   |                                        | 
|Commercial Real Estate |  | $                          | 944   |                      | $ | 944                                    |  | $ | 267 | 
|Commercial Loans       |  |                            | 2,232 |                      |   | 2,232                                  |  |   | 580 | 
|                       |  |                            |       |                      |   |                                        |  |   |     | 
|Total                  |  | $                          | 3,176 |                      | $ | 3,176                                  |  | $ | 847 | 
|                       |  |                            |       |                      |   |                                        |  |   |     | 

The principal balances of loans not accruing interest amounted to $2.2
million and $1.9 million at December 31, 2010 and 2009, respectively.
Loans 90 days or more past due and accruing interest amounted to $847,000 and
$43,000 at December 31, 2010 and 2009, respectively. The balance of impaired
loans is higher than loans in non-accrual status at December 31, 2010 because a
commercial credit that has been identified as impaired due to a decline in
collateral value continues to perform in accordance with the terms of the loan.
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, 2010, 2009 and 2008 was $33,800, $65,300 and $85,800,
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.

69

---



The following table presents the recorded investment in nonaccrual and
loans past due over 90 days still on accrual by class of loans as of December
31, 2010 (dollars in thousands):

|                             |  |                   |       |                                               |   |     | 
|---------------------------- |  | ----------------- | ----- | --------------------------------------------- | - | --- | 
|                             |  | Nonaccrual
 Loans |       | Loans
 Past Due
 Over 90 Days
 Still Accruing |  
|                             |  |                   |       |                                               |  
|                            
|Residential Mortgages        |  | $                 | 609   |                                               | $ | 837 | 
|Commercial Mortgages         |  |                   | 981   |                                               |   |    | 
|Construction and Land
 Loans |  |                   |      |                                               |   |    | 
|Commercial Loans             |  |                   | 311   |                                               |   |    | 
|Auto Loans                   |  |                   | 42    |                                               |   |    | 
|Property Improvement Loans   |  |                   | 232   |                                               |   | 10  | 
|Other Consumer Loans         |  |                   | 17    |                                               |   |    | 
|                             |  |                   |       |                                               |   |     | 
|Total                        |  | $                 | 2,192 |                                               | $ | 847 | 
|                             |  |                   |       |                                               |   |     | 

| |                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following table presents the aging of the recorded investment in
 past due loans, including nonaccrual loans, as of December 31, 2010 by class
 of loans (dollars in thousands):

|                             |  |                       |       |                       |   |                                  |  |                  |       |                        |   |       |  |   |         | 
|---------------------------- |  | --------------------- | ----- | --------------------- | - | -------------------------------- |  | ---------------- | ----- | ---------------------- | - | ----- |  | - | ------- | 
|                             |  | 30-59
 Days
 Past Due |       | 60-89
 Days
 Past Due |   | Greater
 than
 90 Days
 Past Due |  | Total
 Past
 Due |       | Loans
 Not
 Past 
 Due |  
|                             |  |                       |       |                       |   |                                  |  |                  |       |                        |  
|                            
|Residential Mortgages        |  | $                     | 826   |                       | $ | 449                              |  | $                | 1,446 |                        | $ | 2,721 |  | $ | 139,020 | 
|Commercial Mortgages         |  |                       |      |                       |   | 227                              |  |                  | 981   |                        |   | 1,208 |  |   | 47,302  | 
|Construction and Land
 Loans |  |                       |      |                       |   |                                 |  |                  |      |                        |   |      |  |   | 2,951   | 
|Commercial Loans             |  |                       | 221   |                       |   | 137                              |  |                  | 311   |                        |   | 669   |  |   | 29,325  | 
|Auto Loans                   |  |                       | 109   |                       |   | 62                               |  |                  | 42    |                        |   | 213   |  |   | 7,313   | 
|Property Improvement Loans   |  |                       |      |                       |   | 30                               |  |                  | 242   |                        |   | 272   |  |   | 23,213  | 
|Other Consumer Loans         |  |                       | 245   |                       |   | 25                               |  |                  | 17    |                        |   | 287   |  |   | 13,933  | 
|                             |  |                       |       |                       |   |                                  |  |                  |       |                        |   |       |  |   |         | 
|Total                        |  | $                     | 1,401 |                       | $ | 930                              |  | $                | 3,039 |                        | $ | 5,370 |  | $ | 263,057 | 
|                             |  |                       |       |                       |   |                                  |  |                  |       |                        |   |       |  |   |         | 

The
Company categorizes loans into risk categories based on relevant information
about the ability of borrowers to service their debt such as: current financial
information, historical payment experience, credit documentation, public
information, and current economic trends, among other factors. The Company
analyzes loans individually by classifying the loans as to credit risk. This
analysis includes loans with an outstanding balance greater than $400,000 and
non-homogeneous loans, such as commercial and commercial real estate loans.
This analysis is performed on an annual basis. The Company uses the following
definitions for risk ratings:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Special Mention.Loans classified as special mention are
 generally protected but have one or more potential weaknesses that deserves
 managements close attention. If left uncorrected, these potential weaknesses
 may result in deterioration of the repayment prospects for the loan or of the
 institutions credit position at some future date.                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                
| | Substandard.Loans classified as substandard are inadequately protected by the
 current net worth and paying capacity of the obligor or of the collateral
 pledged, if any. Loans so classified have a well-defined weakness or
 weaknesses that jeopardize the liquidation of the debt. They are
 characterized by the distinct possibility that the institution will sustain
 some loss if the deficiencies are not corrected.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                
| | Doubtful. Loans classified as doubtful have all the weaknesses inherent in
 those classified as substandard, with the added characteristic that the
 weaknesses make collection or liquidation in full, on the basis of currently
 existing facts, conditions, and values, highly questionable and improbable.                                                                                                                 

Loans not meeting the
criteria above that are analyzed individually as part of the above described
process are

70

---



considered
to be pass rated loans. Loans listed as not rated are either less than $400,000
or are included in groups of homogeneous loans. As of December 31, 2010, and
based on the most recent analysis performed, the risk category of loans by
class of loans is as follows (dollars in thousands:

|                      |  |            |         |      |   |                  |  |                |       |          |   |              |  |   |    |  |   |         | 
|--------------------- |  | ---------- | ------- | ---- | - | ---------------- |  | -------------- | ----- | -------- | - | ------------ |  | - | -- |  | - | ------- | 
|                      |  | Not
 Rated |         | Pass |   | Special
 Mention |  | Sub-
 standard |       | Doubtful |   | Total
 Loans | 
|                      |  |            |         |      |   |                  |  |                |       |          |   |              | 
|Residential Mortgages |  | $          | 139,609 |      | $ | 686              |  | $              |      |          | $ | 1,446        |  | $ |   |  | $ | 141,741 | 
|Commercial Mortgages  |  |            | 10,027  |      |   | 34,634           |  |                | 227   |          |   | 3,622        |  |   |   |  |   | 48,510  | 
|Construction Loans    |  |            | 2,951   |      |   |                 |  |                |      |          |   |             |  |   |   |  |   | 2,951   | 
|Commercial Loans      |  |            | 11,043  |      |   | 13,572           |  |                | 2,084 |          |   | 3,276        |  |   | 19 |  |   | 29,994  | 
|Consumer Loans        |  |            | 43,831  |      |   | 1,400            |  |                |       |          |   |             |  |   |   |  |   | 45,231  | 
|                      |  |            |         |      |   |                  |  |                |       |          |   |              |  |   |    |  |   |         | 
|Total Loans           |  | $          | 207,461 |      | $ | 50,292           |  | $              | 2,311 |          | $ | 8,344        |  | $ | 19 |  | $ | 268,427 | 
|                      |  |            |         |      |   |                  |  |                |       |          |   |              |  |   |    |  |   |         | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 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
 (dollars in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|                                                |  |      |        |      |   |        | 
|----------------------------------------------- |  | ---- | ------ | ---- | - | ------ | 
|                                                |  | 2010 |        | 2009 |  
|                                                |  |      |        |      |   |        | 
|                                               
|Land                                            |  | $    | 2,627  |      | $ | 2,638  | 
|Buildings
 and improvements                     |  |      | 6,407  |      |   | 6,374  | 
|Furniture
 and equipment                        |  |      | 8,356  |      |   | 8,186  | 
|                                                |  |      |        |      |   |        | 
|                                                |  |      | 17,390 |      |   | 17,198 | 
|Less
 accumulated depreciation and amortization |  |      | 11,576 |      |   | 11,157 | 
|                                                |  |      |        |      |   |        | 
|                                               
|                                                |  | $    | 5,814  |      | $ | 6,041  | 
|                                                |  |      |        |      |   |        | 

| |                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Depreciation and amortization expense included in building, occupancy
 and equipment expense amounted to $478,000, $513,000 and $563,000 during the
 years ended December 31, 2010, 2009 and 2008, respectively.

71

---



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

|                          |  |      |        | 
|------------------------- |  | ---- | ------ | 
|                          |  | 2010 |       
|                          |  |      |       
|                         
|Within one
 year          |  | $    | 48,834 | 
|One through
 two years    |  |      | 11,178 | 
|Two through
 three years  |  |      | 2,591  | 
|Three
 through four years |  |      | 3,565  | 
|Four through
 five years  |  |      | 3,036  | 
|                          |  |      |        | 
|Total time deposits       |  | $    | 69,204 | 
|                          |  |      |        | 

| |                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| | At December 31, 2010 and 2009, time deposits with balances of
 $100,000 or more totaled approximately $17,030,000 and $16,485,000,
 respectively.
| |                                                                                                                                                  
| | Interest expense on deposits for the years ended December 31 is
 summarized as follows (dollars in thousands):                                   

|                        |  |      |       |      |   |       |  |   |       | 
|----------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | 
|                        |  | 2010 |       | 2009 |   | 2008  | 
|                        |  |      |       |      |   |       | 
|                        |  |      |       |      |   |       |  |   |       | 
|Savings                 |  | $    | 339   |      | $ | 330   |  | $ | 446   | 
|Money market            |  |      | 176   |      |   | 189   |  |   | 193   | 
|Time                    |  |      | 1,252 |      |   | 1,852 |  |   | 2,634 | 
|Other
 interest bearing |  |      | 59    |      |   | 55    |  |   | 69    | 
|                        |  |      |       |      |   |       |  |   |       | 
|                        |  | $    | 1,826 |      | $ | 2,426 |  | $ | 3,342 | 
|                        |  |      |       |      |   |       |  |   |       | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(7) | Federal Home Loan Bank Advances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | 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 $98.8 million of 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 (dollars in thousands):

|                          |  |      |        |      |   |        | 
|------------------------- |  | ---- | ------ | ---- | - | ------ | 
|                          |  | 2010 |        | 2009 |  
|                          |  |      |        |      |  
|                          |  |      |        |      |   |        | 
|Overnight
 line of credit |  | $    |       |      | $ | 1,100  | 
|Fixed rate
 advances      |  |      | 35,661 |      |   | 46,769 | 
|                          |  |      |        |      |   |        | 
|Total
 borrowings         |  | $    | 35,661 |      | $ | 47,869 | 
|                          |  |      |        |      |   |        | 

72

---



| |                                                                                      
| | -------------------------------------------------------------------------------------
| | Advances at December 31,
 2010 have maturity dates as follows (dollars in thousands):

|                |  |                |   |              |      |         |  |   |        | 
|--------------- |  | -------------- | - | ------------ | ---- | ------- |  | - | ------ | 
|                |  | Range of Rates |   | Average Rate |      | Balance | 
|                |  |                |   |              |      |         | 
|               
|2011            |  | 1.27% - 3.91   | % |              | 3.20 | %       |  | $ | 11,267 | 
|2012            |  | 1.31% - 2.75   | % |              | 2.68 | %       |  |   | 9,132  | 
|2013            |  | 1.84% - 3.36   | % |              | 3.10 | %       |  |   | 4,712  | 
|2014            |  | 2.45% - 3.64   | % |              | 3.27 | %       |  |   | 3,931  | 
|2015            |  | 2.07% - 4.24   | % |              | 3.35 | %       |  |   | 3,619  | 
|Due after
 2015 |  | 4.29% - 4.36   | % |              | 4.34 | %       |  |   | 3,000  | 
|                |  |                |   |              |      |         |  |   |        | 
|Total           |  |                |   |              |      |         |  | $ | 35,661 | 
|                |  |                |   |              |      |         |  |   |        | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | At
 December 31, 2010, the Company had additional availability on its FHLB line
 of credit of $61.2 million. This line of credit is subject to periodic review
 and renewal. At December 31, 2010, the Company also had approximately $8.3
 million in unused short term borrowing capacity at the Federal Reserve Bank
 of New York, which is collateralized by a portion of the consumer loan
 portfolio.
|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|(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):                                                                                                                                                                                                                                                          

|                         |  |      |       |      |   |       |   |   |       |  
|------------------------ |  | ---- | ----- | ---- | - | ----- | - | - | ----- | -
|                         |  | 2010 |       | 2009 |   | 2008  |  
|                         |  |      |       |      |   |       |  
|Current:                 |  |      |       |      |   |       |   |   |       |  
|Federal                  |  | $    | 1,112 |      | $ | 1,513 |   | $ | 1,143 |  
|State                    |  |      | 133   |      |   | 81    |   |   | 127   |  
|                         |  |      |       |      |   |       |   |   |       |  
|                         |  |      | 1,245 |      |   | 1,594 |   |   | 1,270 |  
|                         |  |      |       |      |   |       |   |   |       |  
|Deferred:                |  |      |       |      |   |       |   |   |       |  
|Federal                  |  |      | 12    |      |   | (130  | ) |   | 172   |  
|State                    |  |      | (155  | )    |   | 23    |   |   | (46   | )
|                         |  |      |       |      |   |       |   |   |       |  
|                         |  |      | (143  | )    |   | (107  | ) |   | 126   |  
|                         |  |      |       |      |   |       |   |   |       |  
|                         |  |      |       |      |   |       |   |   |       |  
|Total income tax expense |  | $    | 1,102 |      | $ | 1,487 |   | $ | 1,396 |  
|                         |  |      |       |      |   |       |   |   |       |  

73

---



| |                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 (dollars in thousands):

|                                                               |  |      |       |      |   |       |   |   |       |  
|-------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | - | - | ----- | -
|                                                               |  | 2010 |       | 2009 |   | 2008  |  
|                                                               |  |      |       |      |   |       |  
|Computed
 expected tax expense                               |  | $    | 1,143 |      | $ | 1,555 |   | $ | 1,462 |  
|Increases (decreases) in income taxes
 resulting from:         |  |      |       |      |   |       |   |   |       |  
|State taxes, net of Federal tax benefit                        |  |      | (14   | )    |   | 69    |   |   | 54    |  
|Tax exempt interest, net                                       |  |      | (6    | )    |   | (11   | ) |   | (19   | )
|Tax exempt increase in cash surrender value
 of life insurance |  |      | (135  | )    |   | (139  | ) |   | (139  | )
|Non-deductible ESOP expense                                    |  |      | 24    |      |   | 16    |   |   | 57    |  
|Non-deductible transaction costs                               |  |      | 92    |      |   |      |   |   |      |  
|Other, net                                                     |  |      | (2    | )    |   | (3    | ) |   | (19   | )
|                                                               |  |      |       |      |   |       |  
|                                                              
|                                                               |  | $    | 1,102 |      | $ | 1,487 |   | $ | 1,396 |  
|                                                               |  |      |       |      |   |       |  
|Effective tax rate                                             |  |      | 32.7  | %    |   | 32.5  | % |   | 32.5  | %
|                                                               |  |      |       |      |   |       |  

| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 (dollars in thousands):

|                                                                              |  |      |       |      |   |       |  
|----------------------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | -
|                                                                              |  | 2010 |       | 2009 |  
|                                                                              |  |      |       |      |   |       |  
|Deferred tax
 assets:                                                         |  |      |       |      |   |       |  
|Allowance for loan losses                                                     |  | $    | 963   |      | $ | 758   |  
|Accrued postretirement benefits                                               |  |      | 1,080 |      |   | 922   |  
|Deferred compensation                                                         |  |      | 674   |      |   | 639   |  
|Stock-based compensation and benefits                                         |  |      | 412   |      |   | 488   |  
|Unrealized loss on investments due to other
 than temporary impairment charge |  |      | 2     |      |   | 100   |  
|Accrued pension cost                                                          |  |      | 366   |      |   | 329   |  
|Nonaccrual interest                                                           |  |      | 63    |      |   | 53    |  
|Other                                                                         |  |      | 48    |      |   | 9     |  
|                                                                              |  |      |       |      |   |       |  
|Total gross deferred tax assets                                               |  |      | 3,608 |      |   | 3,298 |  
|                                                                              |  |      |       |      |   |       |  
|                                                                              |  |      |       |      |   |       |  
|Deferred tax
 liabilities:                                                    |  |      |       |      |   |       |  
|Depreciation                                                                  |  |      | (215  | )    |   | (217  | )
|Undistributed income of subsidiary                                            |  |      | (67   | )    |   |      |  
|Unrealized gains on available-for-sale
 securities                            |  |      | (151  | )    |   | (104  | )
|Deferred loan costs                                                           |  |      | (86   | )    |   | (113  | )
|Mortgage servicing rights                                                     |  |      | (105  | )    |   | (49   | )
|Other                                                                         |  |      | (1    | )    |   | (8    | )
|                                                                              |  |      |       |      |   |       |  
|Total gross deferred tax liabilities                                          |  |      | (625  | )    |   | (491  | )
|                                                                              |  |      |       |      |   |       |  
|Net deferred tax assets                                                       |  | $    | 2,983 |      | $ | 2,807 |  
|                                                                              |  |      |       |      |   |       |  

74

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 ASC 740, 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, 2010, 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 Rome Bancorp, Inc. The unrecognized deferred
 tax liability at December 31, 2010 with respect to the base-year reserve was
 approximately $1.3 million.                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | At December 31, 2010 and 2009, the Company had approximately $52,000
 and $27,000, respectively, of unrecognized tax benefits and interest. As of
 December 31, 2010 and 2009, $52,000 and $27,000, respectively, of these tax
 benefits would affect the effective tax rate if recognized. As of December
 31, 2010 and 2009, accrued interest related to uncertain tax positions was
 $4,000 and $3,000, respectively, net of the related federal 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 2007 and for New York State examination for years prior to
 2006. The Companys 2006-2008 tax years are currently under New York State
 examination. Management anticipates no material impact to the Companys
 financial position as a result of this 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):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|                                                              |  |   |      |   |   |      |  |   |      |  
|------------------------------------------------------------- |  | - | ---- | - | - | ---- |  | - | ---- | -
|                                                              |  |   | 2010 |   |   | 2009 |  |   | 2008 |  
|                                                              |  |   |      |   |   |      | 
|Balance at January 1                                          |  | $ | 34   |   | $ | 24   |  | $ | 64   |  
|Additions based on tax
 positions related to the current year |  |   | 31   |   |   | 3    |  |   | 3    |  
|Additions based on tax
 positions of prior years              |  |   | 5    |   |   | 7    |  |   | 21   |  
|Reductions for tax positions
 of prior years                  |  |   | (9   | ) |   |     |  |   |     |  
|Reductions due to statute
 of limitations                     |  |   | (2   | ) |   |     |  |   |     |  
|Settlements                                                   |  |   |     |   |   |     |  |   | (64  | )
|                                                              |  |   |      |   |   |      |  |   |      |  
|Balance at December 31                                        |  | $ | 59   |   | $ | 34   |  | $ | 24   |  
|                                                              |  |   |      |   |   |      |  |   |      |  

|    |                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(9) | Pension and Postretirement Benefits                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                  
|    | 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. In addition, the Company provides health
 care and life insurance benefits to certain retired full time employees.
|    |                                                                                                                                                                                                                                                                                                                                                                                  
|    | 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, 2010 and 2009(dollars in thousands):                                                                                          

75

---



|                                                                    |  |                  |       |                         |   |       |   |      |        |   |   |        |  
|------------------------------------------------------------------- |  | ---------------- | ----- | ----------------------- | - | ----- | - | ---- | ------ | - | - | ------ | -
|                                                                    |  | Pension benefits |       | Postretirement benefits |  
|                                                                    |  |                  |       |                         |  
|                                                                   
|                                                                    |  | 2010             |       | 2009                    |   | 2010  |   | 2009 |       
|                                                                    |  |                  |       |                         |   |       |   |      |       
|Change in benefit obligation:                                       |  |                  |       |                         |   |       |   |      |        |   |   |        |  
|Benefit obligation at beginning of year                             |  | $                | 6,043 |                         | $ | 5,951 |   | $    | 2,363  |   | $ | 2,564  |  
|Service cost                                                        |  |                  |      |                         |   |      |   |      | 17     |   |   | 19     |  
|Interest cost                                                       |  |                  | 351   |                         |   | 346   |   |      | 138    |   |   | 149    |  
|Amendments and settlements                                          |  |                  | (95   | )                       |   | (112  | ) |      |       |   |   |       |  
|Actuarial(gain)/ loss                                               |  |                  | 273   |                         |   | 204   |   |      | 292    |   |   | (315   | )
|Benefits paid                                                       |  |                  | (340  | )                       |   | (346  | ) |      | (105   | ) |   | (97    | )
|Participant contributions                                           |  |                  |      |                         |   |      |   |      | 47     |   |   | 43     |  
|                                                                    |  |                  |       |                         |   |       |   |      |        |   |   |        |  
|Benefit obligation at end of year                                   |  |                  | 6,232 |                         |   | 6,043 |   |      | 2,752  |   |   | 2,363  |  
|                                                                    |  |                  |       |                         |   |       |   |      |        |   |   |        |  
|Change in plan assets:                                              |  |                  |       |                         |   |       |   |      |        |   |   |        |  
|Fair value of plan assets at beginning of year                      |  |                  | 5,306 |                         |   | 4,971 |   |      |       |   |   |       |  
|                                                                   
|Actual return on plan assets                                        |  |                  | 522   |                         |   | 793   |   |      |       |   |   |       |  
|                                                                   
|Employer contributions                                              |  |                  |      |                         |   |      |   |      | 58     |   |   | 54     |  
|Settlements                                                         |  |                  | (95   | )                       |   | (112  | ) |      |       |   |   |       |  
|Participant contributions                                           |  |                  |      |                         |   |      |   |      | 47     |   |   | 43     |  
|Benefits paid                                                       |  |                  | (340  | )                       |   | (346  | ) |      | (105   | ) |   | (97    | )
|                                                                    |  |                  |       |                         |   |       |   |      |        |   |   |        |  
|Fair value of plan assets at end of year                            |  |                  | 5,393 |                         |   | 5,306 |   |      |       |   |   |       |  
|                                                                    |  |                  |       |                         |   |       |   |      |        |   |   |        |  
|                                                                    |  |                  |       |                         |   |       |   |      |        |   |   |        |  
|Funded status at end of year (plan assets less benefit obligations) |  | $                | (839  | )                       | $ | (737  | ) | $    | (2,752 | ) | $ | (2,363 | )
|                                                                    |  |                  |       |                         |   |       |   |      |        |   |   |        |  
|                                                                    |  |                  |       |                         |   |       |   |      |        |   |   |        |  
|Assumptions as of measurement dates - December 31, 2010 and 2009:   |  |                  |       |                         |   |       |   |      |        |   |   |        |  
|Discount rate                                                       |  |                  | 5.50  | %                       |   | 6.00  | % |      | 5.50   | % |   | 6.00   | %
|Expected return on plan assets                                      |  |                  | 9.00  | %                       |   | 9.00  | % |      |       |   |   |       |  
|                                                                   
|Rate of compensation increase                                       |  |                  | N/A   |                         |   | N/A   |   |      |       |   |   |       |  

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

|                             |  |                  |        |                         |   |        |   |      |    |  |   |     | 
|---------------------------- |  | ---------------- | ------ | ----------------------- | - | ------ | - | ---- | -- |  | - | --- | 
|                             |  | Pension benefits |        | Postretirement benefits |  
|                             |  |                  |        |                         |  
|                            
|                             |  | 2010             |        | 2009                    |   | 2010   |   | 2009 |   
|                             |  |                  |        |                         |   |        |   |      |   
|Net actuarial gain (loss)    |  | $                | (1,918 | )                       | $ | (1,988 | ) | $    | 58 |  | $ | 240 | 
|Prior service credit
 (cost) |  |                  |       |                         |   |       |   |      | 12 |  |   | 17  | 
|                             |  |                  |        |                         |   |        |   |      |    |  |   |     | 
|Total                        |  | $                | (1,918 | )                       | $ | (1,988 | ) | $    | 70 |  | $ | 257 | 
|                             |  |                  |        |                         |   |        |   |      |    |  |   |     | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 $(317,000) and $7,000, 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

76

---



| |                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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, 2010 and 2009, by asset category are summarized in the following table:                                                   

|                  |  |                             |     |      |  |     |  
|----------------- |  | --------------------------- | --- | ---- |  | --- | -
|                  |  | Plan assets at December 31, |    
|                  |  |                             |    
|Asset
 Category   |  | 2010                        |     | 2009 | 
|                  |  |                             |     |      | 
|Equity Securities |  |                             | 65  | %    |  | 63  | %
|Debt Securities   |  |                             | 35  | %    |  | 37  | %
|                  |  |                             |     |      |  |     |  
|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
 private placement investment fund. The investment funds include a series of
 equity and bond mutual funds or commingled trust funds, each with its own
 investment objectives, investment strategies and risks, as detailed in the
 statement of Investment Objectives and Guidelines. 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). The Trust is
 prohibited from investing in securities of investment companies. 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 equity and fixed income allocations vary by more than 10% from
 their respective targets (i.e., a 20% policy range guideline).
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The long-term investment objectives are to maintain plan assets at a
 level that will sufficiently cover long-term obligations and to generate a
 return on plan assets that will meet or exceed the rate at which long-term
 obligations will grow. The investment goal is to achieve investment results
 that will contribute o the proper funding of the pension plan by exceeding
 the rate of inflation over the long-term. In addition, investment managers
 for the Trust are expected to provide above average performance when compared
 to their peer managers. Performance volatility is also monitored. Risk/volatility
 is further managed by the distinct investment objectives of each of the Trust
 funds and the diversification within each fund.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Fair Value of Plan Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | Fair value is the exchange price that would be received for an asset
 in the principal or most advantageous market for the asset in an orderly
 transaction between market participants on the measurement date. There are
 three levels of inputs that may be used to measure fair value. Entities are
 required to maximize the use of observable inputs and minimize the use of
 unobservable inputs when measuring fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The Company used the following methods and significant assumptions to
 estimate the fair value of the investments held as plan assets. The fair
 values for investment securities are determined by quoted market prices, if
 available (Level 1). For securities where quoted prices are not available,
 fair values are calculated based on market prices of similar securities
 (Level 2). For securities where quoted prices or market prices of similar
 securities are not available, fair values are calculated using discounted
 cash flows or other market indicators (Level 3). The Plan assets include no
 investments that are classified as Level 3 for basis of fair market
 valuation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

77

---



| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | The fair value
 of plan assets at December 31, 2010, by asset category, is as follows
 (dollars in thousands):

|                     |  |                 |       |                                                                    |   |                                      |  |   |       | 
|-------------------- |  | --------------- | ----- | ------------------------------------------------------------------ | - | ------------------------------------ |  | - | ----- | 
|                     |  |                 |       | Fair Value Measurements at
 December 31, 2010 Using:               |  
|Plan Assets:         |  | Carrying
 Value |       | Quoted Prices
 in Active
 Markets for
 Identical Assets
 (Level 1) |   | SignificantobservableInputs(Level 2) | 
|                     |  |                 |       |                                                                    |   |                                      | 
|Equity Mutual Funds: |  |                 |       |                                                                    |   |                                      |  | $ |      | 
|                     |  |                 |       |                                                                    |   |                                      | 
|Large-Cap Funds      |  | $               | 487   |                                                                    |   | 487                                  |  |   |      | 
|                     |  |                 |       |                                                                    |   |                                      | 
|Small-Cap Funds      |  |                 | 646   |                                                                    |   | 646                                  |  |   |      | 
|Equity Trusts:       |  |                 |       |                                                                    |   |                                      |  |   |       | 
|Large-Cap            |  |                 | 1,631 |                                                                    |   |                                     |  |   | 1,631 | 
|International        |  |                 | 741   |                                                                    |   |                                     |  |   | 741   | 
|Fixed Income Trusts  |  |                 | 1,888 |                                                                    |   |                                     |  |   | 1,888 | 
|                     |  |                 |       |                                                                    |   |                                      |  |   |       | 
|Total                |  | $               | 5,393 |                                                                    | $ | 1,133                                |  | $ | 4,260 | 
|                     |  |                 |       |                                                                    |   |                                      |  |   |       | 

| |                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For the fiscal year ended December 31, 2011, the Company expects to
 make the minimum required contribution of $5,000 to the pension plan. The
 following estimated future benefit payments, which reflect expected future
 service, as appropriate, are expected to be paid (dollars in thousands):

|                 |  |                  |   |                         |  |  |  |   |     |  | 
|---------------- |  | ---------------- | - | ----------------------- |  |  |  | - | --- |  | 
|Asset Category   |  | Pension Benefits |   | Postretirement Benefits | 
|                 |  |                  |   |                         | 
|Fiscal 2011      |  |                  | $ | 365                     |  |  |  | $ | 141 |  | 
|Fiscal 2012      |  |                  |   | 383                     |  |  |  |   | 144 |  | 
|Fiscal 2013      |  |                  |   | 409                     |  |  |  |   | 152 |  | 
|Fiscal 2014      |  |                  |   | 419                     |  |  |  |   | 155 |  | 
|Fiscal 2015      |  |                  |   | 434                     |  |  |  |   | 155 |  | 
|Fiscal 2016-2020 |  |                  |   | 2,288                   |  |  |  |   | 816 |  | 
|                 |  |                  |   |                         |  |  |  |   |     |  | 

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

|                                                                              |  |                  |      |                         |   |      |   |      |       |      |   |      |   |   |      |   |   |     |  
|----------------------------------------------------------------------------- |  | ---------------- | ---- | ----------------------- | - | ---- | - | ---- | ----- | ---- | - | ---- | - | - | ---- | - | - | --- | -
|                                                                              |  | Pension benefits |      | Postretirement benefits |  
|                                                                              |  |                  |      |                         |  
|                                                                              |  | 2010             |      | 2009                    |   | 2008 |   | 2010 |       | 2009 |   | 2008 |  
|                                                                              |  |                  |      |                         |   |      |   |      |       |      |   |      |  
|Service cost                                                                  |  | $                |     |                         | $ |     |   | $    |      |      | $ | 17   |   | $ | 19   |   | $ | 21  |  
|Interest cost                                                                 |  |                  | 351  |                         |   | 346  |   |      | 353   |      |   | 138  |   |   | 149  |   |   | 147 |  
|Expected return on assets                                                     |  |                  | (460 | )                       |   | (431 | ) |      | (673  | )    |   |     |   |   |     |   |   |    |  
|Settlement charge                                                             |  |                  |     |                         |   |     |   |      | 134   |      |   |     |   |   |     |   |   |    |  
|Amortization                                                                  |  |                  | 325  |                         |   | 383  |   |      |      |      |   | (19  | ) |   | (8   | ) |   | (8  | )
|                                                                              |  |                  |      |                         |   |      |   |      |       |      |   |      |   |   |      |   |   |     |  
|                                                                              |  |                  |      |                         |   |      |   |      |       |      |   |      |   |   |      |   |   |     |  
|Net periodic cost (benefit)                                                   |  |                  | 216  |                         |   | 298  |   |      | (186  | )    |   | 136  |   |   | 160  |   |   | 160 |  
|                                                                              |  |                  |      |                         |   |      |   |      |       |      |   |      |   |   |      |   |   |     |  
|Net (gain) loss                                                               |  |                  | 211  |                         |   | (157 | ) |      | 3,280 |      |   | 292  |   |   | (315 | ) |   | (30 | )
|Recognition of loss                                                           |  |                  |     |                         |   |     |   |      | (134  | )    |   |      |   |   |     |   |   |    |  
|Amortization of prior
 service cost                                           |  |                  | (325 | )                       |   | (383 | ) |      |      |      |   | 19   |   |   | 8    |   |   | 8   |  
|                                                                              |  |                  |      |                         |   |      |   |      |       |      |   |      |   |   |      |   |   |     |  
|Total recognized in other
 comprehensive income                               |  |                  | (114 | )                       |   | (540 | ) |      | 3,146 |      |   | 311  |   |   | (307 | ) |   | (22 | )
|                                                                              |  |                  |      |                         |   |      |   |      |       |      |   |      |   |   |      |   |   |     |  
|Total recognized in net
 periodic benefit cost and other comprehensive income |  | $                | 102  |                         | $ | (242 | ) | $    | 2,960 |      | $ | 447  |   | $ | (147 | ) | $ | 138 |  
|                                                                              |  |                  |      |                         |   |      |   |      |       |      |   |      |   |   |      |   |   |     |  

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

78

---



|     |                                                                                                                                                                                                                                                                               
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | Directors amended the defined benefit pension plan to cease the
 accrual of further benefits. There is no assumed increase in the per capita
 cost of current health care benefits since the employer contributions are
 fixed with the retiree paying for any cost increases.
|     |                                                                                                                                                                                                                                                                               
|(10) | Stock Option Plan                                                                                                                                                                                                                                                             

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

Under the
2000 Stock Option Plan, 517,952 shares of authorized but unissued common stock
are reserved for issuance upon option exercises. The Company also has the
alternative to fund the 2000 Stock Option Plan with treasury stock. Options
under the plan may be either non-qualified stock options or incentive stock
options. Each option entitles the holder to purchase one share of common stock
at an exercise price equal to the fair market value on the date of grant. On
June 28, 2000, 382,357 options were awarded at an exercise price of $2.19 per
share. These options have a ten-year term and vested at a rate of 20% per year
from the grant date. At December 31, 2010 and 2009 the remaining contractual
life of these options was 0 years and 0.5 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, 2010 and December 31, 2009 the remaining contractual life of these options
was 5.4 years and 6.4 years, respectively.

Under FASB
guidance, 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 for each of the three years ended
December 31, 2010.

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

|                                                |  |      |   |      |   |        |  |   |        | 
|----------------------------------------------- |  | ---- | - | ---- | - | ------ |  | - | ------ | 
|                                                |  | 2010 |   | 2009 |   | 2008   | 
|                                                |  |      |   |      |   |        | 
|                                               
|Intrinsic value of options
 exercised           |  | $    |  |      | $ | 18,000 |  | $ | 25,000 | 
|Cash received from option
 exercises            |  |      |  |      |   |       |  |   |       | 
|Tax benefit realized from
 option exercises     |  |      |  |      |   |       |  |   |       | 
|Weighted average fair
 value of options granted |  |      |  |      |   |       |  |   |       | 

| |                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of December 31, 2010, there was $21,000 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 0.42
 years. At December 31, 2010, the intrinsic value of all outstanding options
 and exercisable options was $0.

79

---



The
following table presents the stock option activity for the year ended December
31, 2010:

|                                  |  |        |         |                                  |   |       | 
|--------------------------------- |  | ------ | ------- | -------------------------------- | - | ----- | 
|                                  |  | 2010   |        
|                                  |  |        |        
|                                  |  | Shares |         | Weighted Average
 Exercise Price |  
|                                  |  |        |         |                                  |  
|                                 
|Outstanding at beginning
 of year |  |        | 354,000 |                                  | $ | 12.84 | 
|Exercised                         |  |        |        |                                  |   |      | 
|Granted                           |  |        |        |                                  |   |      | 
|                                  |  |        |         |                                  |   |       | 
|Outstanding at end of year        |  |        | 354,000 |                                  | $ | 12.84 | 
|                                  |  |        |         |                                  |   |       | 
|Exercisable at end of year        |  |        | 283,200 |                                  | $ | 12.84 | 
|                                  |  |        |         |                                  |   |       | 

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | All outstanding stock options are expected to vest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(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 $178,000, $178,000 and $231,000 related to RRP awards was recorded
 in 2010, 2009 and 2008, 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,
 2010   |  |        | 67,320 |                                         |   |      | 
|Granted                         |  |        |       |                                         |   |      | 
|Vested                          |  |        | 33,660 |                                         | $ | 12.84 | 
|Forfeited                       |  |        |       |                                         |   |      | 
|                                |  |        |        |                                         |   |       | 
|Nonvested at December 31,
 2010 |  |        | 33,660 |                                         | $ | 12.84 | 
|                                |  |        |        |                                         |   |       | 

As of December 31, 2010, there was $74,000 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 0.4 years. The
total fair value of shares vested during the years ended December 31, 2010,
2009 and 2008 was $303,000, $300,000 and $384,000.

80

---



|     |                        
|---- | -----------------------
|(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 $92,000, $88,000 and $86,000 during the years ended December 31,
 2010, 2009 and 2008, respectively.                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | In connection with establishing an ESOP in 1999, the ESOP borrowed
 $933,000 from the Company to purchase 453,488 shares of the Companys common
 stock. The loan bears interest at 8% and is payable in fifteen annual
 installments. At December 31, 2010, 362,780 of the original ESOP shares had
 been released or committed to be released of which 90,708 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, 2010, 94,399 of these shares had been released or committed to be
 released and 141,601 remained as unallocated shares.                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | The fair value of the unallocated shares on December 31, 2010 was
 $2.9 million. The Company recognized compensation expense of $431,000,
 $384,000 and $495,000 in 2010, 2009 and 2008, 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 $665,000 and $527,000 at
 December 31, 2010 and December 31, 2009, respectively.

81

---



|     |                                                                                                                                                                                                                                                                                                                                                                              
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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) (dollars in thousands):

|                                                                                 |  |                          |      |      |   |       |   |   |        |  
|-------------------------------------------------------------------------------- |  | ------------------------ | ---- | ---- | - | ----- | - | - | ------ | -
|                                                                                 |  | Years ended December 31, |     
|                                                                                 |  |                          |     
|                                                                                 |  | 2010                     |      | 2009 |   | 2008  |  
|                                                                                 |  |                          |      |      |   |       |  
|Unrealized holding gains (losses) arising
 during the period                     |  | $                        | 78   |      | $ | 1,136 |   | $ | (3,325 | )
|Reclassification adjustment for net
 realized (gain) loss included in net income |  |                          | (156 | )    |   | (73   | ) |   | 265    |  
|                                                                                 |  |                          |      |      |   |       |   |   |        |  
|                                                                                 |  |                          |      |      |   |       |   |   |        |  
|Other comprehensive income (loss), before
 tax                                   |  |                          | (78  | )    |   | 1,063 |   |   | (3,060 | )
|Deferred tax expense (benefit)                                                   |  |                          | (31  | )    |   | 425   |   |   | (1,224 | )
|                                                                                 |  |                          |      |      |   |       |   |   |        |  
|                                                                                 |  |                          |      |      |   |       |   |   |        |  
|Other comprehensive income (loss), net of
 tax                                   |  | $                        | (47  | )    | $ | 638   |   | $ | (1,836 | )
|                                                                                 |  |                          |      |      |   |       |   |   |        |  

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

|                                                                 |  |                       |        |              |   |                       |   |   |        |  
|---------------------------------------------------------------- |  | --------------------- | ------ | ------------ | - | --------------------- | - | - | ------ | -
|                                                                 |  | Balance
 at
 12/31/09 |        | 2010
 Change |   | Balance
 at
 12/31/10 |  
|                                                                 |  |                       |        |              |   |                       |  
|Unrealized gains on available for sale securities                |  | $                     | 156    |              | $ | 71                    |   | $ | 227    |  
|Unrealized gains (losses) on pension and postretirement benefits |  |                       | (1,730 | )            |   | (118                  | ) |   | (1,848 | )
|                                                                 |  |                       |        |              |   |                       |   |   |        |  
|                                                                 |  | $                     | (1,574 | )            | $ | (47                   | ) | $ | (1,621 | )
|                                                                 |  |                       |        |              |   |                       |   |   |        |  

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

82

---



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | At December 31, 2010 and 2009 the Company was committed to originate
 mortgage and other loans of approximately $13.3 million and $7.5 million,
 respectively. At December 31, 2010 and December 31, 2009, the Companys fixed
 rate loan commitments totaled $12.6 million and $7.5 million, respectively.
 The range of interest rates on these fixed rate commitments was 4.125% to
 7.00% at December 31, 2010 and 4.50% to 6.75% at December 31, 2009.
 Commitments under unused lines of credit and letters of credit were approximately
 $18.6 million and $19.4 million at December 31, 2010 and 2009, respectively.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | The Companys exposure to credit loss in the event of nonperformance
 by the other party to the financial instrument for loan commitments is
 represented by the contractual or notional amount of these instruments. The
 Company uses the same credit policies in making commitments as it does for
 on-balance sheet instruments. The Company controls its credit risk through
 credit approvals, limits, and monitoring procedures.                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | In the normal course of business, there are various outstanding legal
 proceedings. In the opinion of management, the aggregate amount involved in
 such proceedings is not material to the financial condition or results of
 operations of the Company.                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(15) | Earnings Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | The following summarizes the computation of earnings per share for
 the years ended December 31 (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|                                           |  |      |       |      |   |       |   |   |       |  
|------------------------------------------ |  | ---- | ----- | ---- | - | ----- | - | - | ----- | -
|                                           |  | 2010 |       | 2009 |   | 2008  |  
|                                           |  |      |       |      |   |       |  
|Basic earnings per share:                  |  |      |       |      |   |       |   |   |       |  
|Net Income                                 |  | $    | 2,261 |      | $ | 3,087 |   | $ | 2,905 |  
|                                           |  |      |       |      |   |       |   |   |       |  
|Weighted
 average basic shares outstanding |  |      | 6,784 |      |   | 6,900 |   |   | 7,353 |  
|Less:
 Average unallocated ESOP shares     |  |      | (261  | )    |   | (307  | ) |   | (353  | )
|                                           |  |      |       |      |   |       |   |   |       |  
|Average basic shares                       |  |      | 6,523 |      |   | 6,593 |   |   | 7,000 |  
|Basic
 earnings per share                  |  | $    | 0.35  |      | $ | 0.47  |   | $ | 0.42  |  
|                                           |  |      |       |      |   |       |   |   |       |  
|Diluted earnings per share:                |  |      |       |      |   |       |   |   |       |  
|Net Income                                 |  | $    | 2,261 |      | $ | 3,087 |   | $ | 2,905 |  
|                                           |  |      |       |      |   |       |   |   |       |  
|Weighted
 average basic shares outstanding |  |      | 6,523 |      |   | 6,593 |   |   | 7,000 |  
|Effect of
 dilutive securities:            |  |      |       |      |   |       |   |   |       |  
|Stock options                              |  |      |      |      |   | 1     |   |   | 3     |  
|                                           |  |      |       |      |   |       |   |   |       |  
|                                           |  |      | 6,523 |      |   | 6,594 |   |   | 7,003 |  
|Diluted
 earnings per share                |  | $    | 0.35  |      | $ | 0.47  |   | $ | 0.41  |  
|                                           |  |      |       |      |   |       |   |   |       |  

|     |                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | Stock options for 354,000 shares of common stock were not considered
 in computing diluted earnings per common share for each of the three years
 ended December 31, 2010 because they were anti-dilutive.                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                        
|(16) | Shareholders Equity and Regulatory Matters                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | 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.

83

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 $1.9 million at December
 31, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 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.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 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 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 May 17, 2010, 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, 2010, 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.                                                                                                                                                                                                                                                                                                                                                               

84

---



| |                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 |        | adequacyrequirements |       | To be classified as
 Well-capitalized
 under prompt
 corrective action
 provisions |  
|                                          |  |        |        |                      |       |                                                                                    |  
|                                          |  | Amount |        | Ratio                |       | Amount                                                                             |   | Ratio  |  | Amount |   | Ratio |       
|                                          |  |        |        |                      |       |                                                                                    |   |        |  |        |   |       |       
|As of December 31, 2010:                  |  |        |        |                      |       |                                                                                    |   |        |  |        |   |       |        |  |      |  
|                                          |  |        |        |                      |       |                                                                                    |   |        |  |        |   |       |        |  |      |  
|Total capital (to risk weighted assets):  |  | $      | 60,319 |                      | 25.41 | %                                                                                  | $ | 18,993 |  | >=8    | % | $     | 23,741 |  | >=10 | %
|                                          |  |        |        |                      |       |                                                                                    |   |        |  |        |   |       |        |  |      |  
|Tier 1 Capital (to risk weighted assets): |  |        | 57,829 |                      | 24.36 | %                                                                                  |   | 9,497  |  | >=4    | % |       | 14,245 |  | >=6  | %
|                                          |  |        |        |                      |       |                                                                                    |   |        |  |        |   |       |        |  |      |  
|Tier 1 Capital (to adjusted assets):      |  |        | 57,829 |                      | 17.57 | %                                                                                  |   | 13,165 |  | >=4    | % |       | 16,456 |  | >=5  | %
|                                          |  |        |        |                      |       |                                                                                    |   |        |  |        |   |       |        |  |      |  
|As of December 31, 2009:                  |  |        |        |                      |       |                                                                                    |   |        |  |        |   |       |        |  |      |  
|Total capital (to risk weighted assets):  |  | $      | 55,866 |                      | 23.04 | %                                                                                  | $ | 19,394 |  | >=8    | % | $     | 24,243 |  | >=10 | %
|                                          |  |        |        |                      |       |                                                                                    |   |        |  |        |   |       |        |  |      |  
|Tier 1 Capital (to risk weighted assets): |  |        | 54,046 |                      | 22.29 | %                                                                                  |   | 9,697  |  | >=4    | % |       | 14,546 |  | >=6  | %
|                                          |  |        |        |                      |       |                                                                                    |   |        |  |        |   |       |        |  |      |  
|Tier 1 Capital (to adjusted assets):      |  |        | 54,046 |                      | 16.27 | %                                                                                  |   | 9,963  |  | >=3    | % |       | 16,605 |  | >=5  | %

85

---



| |                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Following is
 a reconciliation of Rome Savings GAAP shareholders equity to regulatory
 Tier 1 capital at December 31, 2010 and 2009 (dollars in thousands).

|                                                                                                    |  |                    |        |                    |   |        |  
|--------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | ------------------ | - | ------ | -
|                                                                                                    |  | December 31,
 2010 |        | December 31,
 2009 |  
|                                                                                                    |  |                    |        |                    |  
|GAAP Shareholders Equity                                                                           |  | $                  | 56,473 |                    | $ | 52,540 |  
|Plus: Minority interest in consolidated subsidiary and other
 comprehensive loss related to ASC 715 |  |                    | 1,848  |                    |   | 1,730  |  
|Less: Disallowed assets and unrealized gains on available-for- sale
 securities, net of tax         |  |                    | (492   | )                  |   | (224   | )
|                                                                                                    |  |                    |        |                    |   |        |  
|                                                                                                    |  |                    |        |                    |   |        |  
|Tier 1 Capital                                                                                      |  |                    | 57,829 |                    |   | 54,046 |  
|                                                                                                    |  |                    |        |                    |   |        |  
|                                                                                                    |  |                    |        |                    |   |        |  
|Plus: Allowance for loan losses                                                                     |  |                    | 2,490  |                    |   | 2,132  |  
|Allowed unrealized gain on available-for-sale securities                                            |  |                    |       |                    |   |       |  
|Less: Real estate held for investment                                                               |  |                    |       |                    |   | (312   | )
|                                                                                                    |  |                    |        |                    |   |        |  
|                                                                                                    |  |                    |        |                    |   |        |  
|Total Regulatory Capital                                                                            |  | $                  | 60,319 |                    | $ | 55,866 |  
|                                                                                                    |  |                    |        |                    |   |        |  

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                       
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(17) | Fair Value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                       
|     | Fair value is the exchange
 price that would be received for an asset or paid to transfer a liability
 (exit price) in the principal or most advantageous market for the asset or
 liability in an orderly transaction between market participants on the
 measurement date. There are three levels of inputs that may be used to
 measure fair values:                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 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 independent
 appraisers to adjust for differences between the comparable sales and income
 data available. Such adjustments are usually significant and typically result
 in a Level 3 classification of the inputs for determining fair value.

86

---



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

|                                 |  |                                                                    |       |                                                   |   |        | 
|-------------------------------- |  | ------------------------------------------------------------------ | ----- | ------------------------------------------------- | - | ------ | 
|                                 |  | Fair Value Measurements
 at December 31, 2010 Using                |      
|                                 |  |                                                                    |      
|                                 |  | Quoted Prices in
 Active Markets
 for Identical
 Assets
 (Level 1) |       | Significant
 Other
 Observable
 Inputs
 (Level 2) |  
|                                 |  |                                                                    |       |                                                   |  
|Available for sale
 securities:  |  |                                                                    |       |                                                   |   |        | 
|State and municipal
 obligations |  | $                                                                  |      |                                                   | $ | 1,785  | 
|Corporate bonds                  |  |                                                                    | 1,605 |                                                   |   | 9,321  | 
|Equity and other
 securities     |  |                                                                    | 39    |                                                   |   | 320    | 
|                                 |  |                                                                    |       |                                                   |   |        | 
|Total                            |  | $                                                                  | 1,644 |                                                   | $ | 11,426 | 
|                                 |  |                                                                    |       |                                                   |   |        | 

|                                 |  |                                                                    |     |                                                   |   |       | 
|-------------------------------- |  | ------------------------------------------------------------------ | --- | ------------------------------------------------- | - | ----- | 
|                                 |  | Fair Value Measurements
 at December 31, 2009 Using                |    
|                                 |  |                                                                    |    
|                                 |  | Quoted Prices in
 Active Markets
 for Identical
 Assets
 (Level 1) |     | Significant
 Other
 Observable
 Inputs
 (Level 2) |  
|                                 |  |                                                                    |     |                                                   |  
|Available for sale securities:   |  |                                                                    |     |                                                   |   |       | 
|State and municipal
 obligations |  | $                                                                  |    |                                                   | $ | 2,413 | 
|Corporate bonds                  |  |                                                                    |    |                                                   |   | 6,643 | 
|Equity and other
 securities     |  |                                                                    | 568 |                                                   |   | 400   | 
|                                 |  |                                                                    |     |                                                   |   |       | 
|Total                            |  | $                                                                  | 568 |                                                   | $ | 9,456 | 
|                                 |  |                                                                    |     |                                                   |   |       | 

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

|                       |  |                                                                    |   |                                                   |   |                                              |  |   |       | 
|---------------------- |  | ------------------------------------------------------------------ | - | ------------------------------------------------- | - | -------------------------------------------- |  | - | ----- | 
|                       |  | Fair Value Measurements
 at December 31, 2010 Using                |  
|                       |  |                                                                    |  
|                       |  | Quoted Prices in
 Active Markets
 for Identical
 Assets
 (Level 1) |   | Significant
 Other
 Observable
 Inputs
 (Level 2) |   | Significant
 Unobservable
 Inputs
 (Level 3) | 
|                       |  |                                                                    |   |                                                   |   |                                              | 
|Impaired loans:        |  |                                                                    |   |                                                   |   |                                              |  |   |       | 
|Commercial real estate |  | $                                                                  |  |                                                   | $ |                                             |  | $ | 677   | 
|Commercial loans       |  |                                                                    |  |                                                   |   |                                             |  |   | 1,652 | 
|                       |  |                                                                    |   |                                                   |   |                                              |  |   |       | 
|Total                  |  | $                                                                  |  |                                                   | $ |                                             |  | $ | 2,329 | 
|                       |  |                                                                    |   |                                                   |   |                                              |  |   |       | 

|                       |  |                                                                    |   |                                                   |   |                                              |  |   |     | 
|---------------------- |  | ------------------------------------------------------------------ | - | ------------------------------------------------- | - | -------------------------------------------- |  | - | --- | 
|                       |  | Fair Value Measurements
 at December 31, 2009 Using                |  
|                       |  |                                                                    |  
|                       |  | Quoted Prices in
 Active Markets
 for Identical
 Assets
 (Level 1) |   | Significant
 Other
 Observable
 Inputs
 (Level 2) |   | Significant
 Unobservable
 Inputs
 (Level 3) | 
|                       |  |                                                                    |   |                                                   |   |                                              | 
|Impaired loans:        |  |                                                                    |   |                                                   |   |                                              |  |   |     | 
|Commercial real estate |  | $                                                                  |  |                                                   | $ |                                             |  | $ | 396 | 
|Commercial loans       |  |                                                                    |  |                                                   |   |                                             |  |   | 60  | 
|                       |  |                                                                    |   |                                                   |   |                                              |  |   |     | 
|Total                  |  | $                                                                  |  |                                                   | $ |                                             |  | $ | 456 | 
|                       |  |                                                                    |   |                                                   |   |                                              |  |   |     | 

87

---



|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 $3.2 million, with a valuation allowance of $847,000, resulting in a
 $348,000 additional provision for loan losses for the year ended December 31,
 2010. At December 31, 2009, impaired loans had a carrying amount of $698,000,
 with a valuation allowance of $242,000, resulting in no additional provision
 for loan losses for the year ended December 31, 2009.
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                          | The following methods and assumptions were used by the Company 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, 2010 and 2009.                       
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 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.
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | FHLB advances: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.                                                                    

88

---



| |                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The estimated carrying values and fair values of the Companys
 financial instruments, not previously presented, for December 31 are as
 follows (in thousands):

|                              |  |                  |         |             |   |                  |  |             |         |  |   |         | 
|----------------------------- |  | ---------------- | ------- | ----------- | - | ---------------- |  | ----------- | ------- |  | - | ------- | 
|                              |  | 2010             |         | 2009        |  
|                              |  |                  |         |             |  
|                              |  | Carrying
 amount |         | Fair
 value |   | Carrying
 amount |  | Fair
 value |        
|                              |  |                  |         |             |   |                  |  |             |        
|Financial assets:             |  |                  |         |             |   |                  |  |             |         |  |   |         | 
|Cash and cash equivalents     |  | $                | 18,805  |             | $ | 18,805           |  | $           | 7,574   |  | $ | 7,574   | 
|Securities available for sale |  |                  | 13,070  |             |   | 13,070           |  |             | 10,024  |  |   | 10,024  | 
|Securities held to maturity   |  |                  | 1,416   |             |   | 1,459            |  |             | 1,431   |  |   | 1,502   | 
|Loans, net                    |  |                  | 265,937 |             |   | 269,942          |  |             | 285,617 |  |   | 288,524 | 
|Loans held for sale           |  |                  | 920     |             |   | 937              |  |             |        |  |   |        | 
|Federal Home Loan Bank        |  |                  | 3,385   |             |   | n/a              |  |             | 3,222   |  |   | n/a     | 
|Stock                         |  |                  |         |             |   |                  |  |             |         |  |   |         | 
|Accrued interest receivable   |  |                  | 1,100   |             |   | 1,100            |  |             | 1,117   |  |   | 1,117   | 
|Financial liabilities:        |  |                  |         |             |   |                  |  |             |         |  |   |         | 
|Non-interest bearing deposits |  |                  | 34,502  |             |   | 34,502           |  |             | 31,790  |  |   | 31,790  | 
|Interest bearing deposits     |  |                  | 190,823 |             |   | 191,028          |  |             | 184,849 |  |   | 185,320 | 
|FHLB advances                 |  |                  | 35,661  |             |   | 36,580           |  |             | 47,869  |  |   | 48,342  | 
|Accrued interest payable      |  |                  | 100     |             |   | 100              |  |             | 127     |  |   | 127     | 

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 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.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(18) | Parent Company Only
 Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | Presented below is the condensed balance sheet of the Parent Company
 as of December 31, 2010 and 2009 and statement of income and statement of
 cash flows for the years ended December 31, 2010, 2009 and 2008 (in
 thousands):                                                                                                                                                                                                                                                                    

|                                           |  |      |        |      |   |        | 
|------------------------------------------ |  | ---- | ------ | ---- | - | ------ | 
|Condensed
 Balance Sheets                  |  | 2010 |        | 2009 |  
|                                           |  |      |        |      |  
|Assets:                                    |  |      |        |      |   |        | 
|Cash and due from banks                    |  | $    | 1,736  |      | $ | 4,106  | 
|Investment in subsidiary bank              |  |      | 56,403 |      |   | 52,470 | 
|                                           |  |      |        |      |   |        | 
|Loan receivable from ESOP                  |  |      | 1,862  |      |   | 2,075  | 
|Other assets                               |  |      | 850    |      |   | 1,756  | 
|                                           |  |      |        |      |   |        | 
|Total assets                               |  | $    | 60,851 |      | $ | 60,407 | 
|                                           |  |      |        |      |   |        | 
|                                           |  |      |        |      |   |        | 
|Total liabilities                          |  | $    | 196    |      | $ | 42     | 
|Total shareholders equity                 |  |      | 60,655 |      |   | 60,365 | 
|                                           |  |      |        |      |   |        | 
|Total liabilities and shareholders equity |  | $    | 60,851 |      | $ | 60,407 | 
|                                           |  |      |        |      |   |        | 

89

---



|                                                                                                                            |  |      |        |      |   |        |   |   |        |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------ | - | - | ------ | -
|Condensed
 Statements of Income                                                                                             |  | 2010 |        | 2009 |   | 2008   |  
|                                                                                                                            |  |      |        |      |   |        |  
|Interest and investment
 income                                                                                             |  | $    | 279    |      | $ | 182    |   | $ | 172    |  
|Dividends from subsidiary
 bank                                                                                             |  |      |       |      |   | 8,000  |   |   | 10,300 |  
|                                                                                                                            |  |      |        |      |   |        |   |   |        |  
|Total operating income                                                                                                      |  |      | 279    |      |   | 8,182  |   |   | 10,472 |  
|                                                                                                                            |  |      |        |      |   |        |   |   |        |  
|                                                                                                                            |  |      |        |      |   |        |   |   |        |  
|Net loss on securities                                                                                                      |  |      |       |      |   |       |   |   | 265    |  
|Other operating expenses                                                                                                    |  |      | 1,414  |      |   | 507    |   |   | 574    |  
|                                                                                                                            |  |      |        |      |   |        |   |   |        |  
|Income
 (loss) before income taxes and dividends in excess of net income/equity in
 undistributed income of subsidiary bank |  |      | (1,135 | )    |   | 7,675  |   |   | 9,633  |  
|Equity in undistributed income (dividends in excess of net income) of
 subsidiary bank                                      |  |      | 3,396  |      |   | (4,588 | ) |   | (6,728 | )
|                                                                                                                            |  |      |        |      |   |        |   |   |        |  
|                                                                                                                            |  |      |        |      |   |        |   |   |        |  
|Net income                                                                                                                  |  | $    | 2,261  |      | $ | 3,087  |   | $ | 2,905  |  
|                                                                                                                            |  |      |        |      |   |        |   |   |        |  

|                                                                                             |  |      |        |      |   |        |   |   |         |  
|-------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------ | - | - | ------- | -
|Condensed
 Statements of Cash Flows                                                          |  | 2010 |        | 2009 |   | 2008   |  
|                                                                                             |  |      |        |      |   |        |  
|Operating activities:                                                                        |  |      |        |      |   |        |   |   |         |  
|Net income                                                                                   |  | $    | 2,261  |      | $ | 3,087  |   | $ | 2,905   |  
|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 |  |      | (3,396 | )    |   | 4,588  |   |   | 6,728   |  
|Amortization of stock-based compensation                                                     |  |      | 228    |      |   | 228    |   |   | 280     |  
|Net loss on securities other than temporarily impaired                                       |  |      |       |      |   |       |   |   | 265     |  
|Decrease (increase) in other assets                                                          |  |      | 311    |      |   | (99    | ) |   | (139    | )
|Increase (decrease) in other liabilities                                                     |  |      | 154    |      |   | (43    | ) |   | 29      |  
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|Net
 cash (used in) provided by operating activities                                         |  |      | (442   | )    |   | 7,761  |   |   | 10,068  |  
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|Investing activities:                                                                        |  |      |        |      |   |        |   |   |         |  
|Decrease in loan to ESOP                                                                     |  |      | 213    |      |   | 202    |   |   | 190     |  
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|Net
 cash provided by investing activities                                                   |  |      | 213    |      |   | 202    |   |   | 190     |  
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|Financing activities:                                                                        |  |      |        |      |   |        |   |   |         |  
|Purchase of treasury stock                                                                   |  |      | (201   | )    |   | (2,058 | ) |   | (8,174  | )
|Dividends                                                                                    |  |      | (2,342 | )    |   | (2,220 | ) |   | (2,387  | )
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|Net
 cash used in financing activities                                                       |  |      | (2,141 | )    |   | (4,278 | ) |   | (10,561 | )
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|Net (decrease) increase in
 cash and cash equivalents                                        |  |      | (2,370 | )    |   | 3,685  |   |   | (303    | )
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|Cash and cash equivalents
 at beginning of year                                              |  |      | 4,106  |      |   | 421    |   |   | 724     |  
|                                                                                             |  |      |        |      |   |        |   |   |         |  
|Cash and cash equivalents
 at end of year                                                    |  | $    | 1,736  |      | $ | 4,106  |   | $ | 421     |  
|                                                                                             |  |      |        |      |   |        |   |   |         |  

90

---



(19) Selected Quarterly Financial Data
(Unaudited)

Selected
quarterly financial data for 2010 and 2009 are as follows:

|                                                    |  |                                          |       |          |   |               |  |              |       |  |   |       |  
|--------------------------------------------------- |  | ---------------------------------------- | ----- | -------- | - | ------------- |  | ------------ | ----- |  | - | ----- | -
|                                                    |  | 2010 Quarter Ending                      |      
|                                                    |  |                                          |      
|                                                    |  | March 31,                                |       | June 30, |   | September 30, |  | December 31, |      
|                                                    |  | (In thousands, except per share amounts)
|Net interest income                                 |  | $                                        | 3,467 |          | $ | 3,434         |  | $            | 3,436 |  | $ | 3,333 |  
|Net interest income after provision for loan losses |  |                                          | 3,417 |          |   | 3,019         |  |              | 3,361 |  |   | 2,077 |  
|Net income                                          |  |                                          | 1,146 |          |   | 694           |  |              | 838   |  |   | (417  | )
|Earnings per
 common share:                         |  |                                          |       |          |   |               |  |              |       |  |   |       |  
|Basic:                                              |  | $                                        | 0.18  |          | $ | 0.11          |  | $            | 0.13  |  | $ | (0.06 | )
|Diluted                                             |  |                                          | 0.18  |          |   | 0.11          |  |              | 0.13  |  |   | (0.06 | )

The 2010
fourth quarter loss was primarily the result of the recording of a loan loss
provision of $1.3 million.

|                                                     |  |                                          |       |          |   |               |  |              |       |  |   |       | 
|---------------------------------------------------- |  | ---------------------------------------- | ----- | -------- | - | ------------- |  | ------------ | ----- |  | - | ----- | 
|                                                     |  | 2009 Quarter Ending                      |      
|                                                     |  |                                          |      
|                                                     |  | March 31,                                |       | June 30, |   | September 30, |  | December 31, |      
|                                                     |  | (In thousands, except per share amounts) |      
|Net interest
 income                                 |  | $                                        | 3,250 |          | $ | 3,230         |  | $            | 3,257 |  | $ | 3,304 | 
|Net interest
 income after provision for loan losses |  |                                          | 3,250 |          |   | 3,030         |  |              | 3,257 |  |   | 3,204 | 
|Net income                                           |  |                                          | 707   |          |   | 647           |  |              | 908   |  |   | 825   | 
|Earnings per
 common share:                          |  |                                          |       |          |   |               |  |              |       |  |   |       | 
|Basic:                                               |  | $                                        | 0.11  |          | $ | 0.10          |  | $            | 0.14  |  | $ | 0.13  | 
|Diluted                                              |  |                                          | 0.11  |          |   | 0.10          |  |              | 0.14  |  |   | 0.13  | 

(20) Impending Merger

On October 12, 2010, Berkshire Hills Bancorp, Inc. (Berkshire), the
parent company of Berkshire Bank, and the Company entered into an Agreement and
Plan of Merger pursuant to which the Company will merge with and into
Berkshire. Under the terms of the Merger Agreement, 70% of the outstanding
shares of Rome Bancorp common stock will be converted into the right to receive
0.5658 shares of Berkshire common stock for each share of Rome Bancorp and the
remaining 30% of outstanding shares of Rome Bancorp will be exchanged for
$11.25 in cash. Rome Bancorp stockholders will have the right to elect to
receive cash or Berkshire common stock as outlined above, subject to 70% of
Rome Bancorp common stock receiving Berkshire common stock and the proration
procedures contained in the Merger Agreement. Concurrent with the merger, it is
expected that the Bank will merge with and into Berkshire Bank. The transaction
is subject to customary closing conditions, including the receipt of regulatory
approvals and approval by the shareholders of the Company, and is currently
expected to be completed on or about April 1, 2011. The directors and executive
officers of Rome Bancorp have agreed to vote their shares in favor of the
approval of the Merger Agreement at the stockholders meeting to be held to vote
on the proposed transaction. If the merger is not consummated under certain
circumstances, Rome Bancorp has agreed to pay Berkshire a termination fee of
$3.5 million.

91

---



|        |                                                                                   
|------- | ----------------------------------------------------------------------------------
|ITEM 9. | CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS
 ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

|         |                        
|-------- | -----------------------
|ITEM 9A. | CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management, including the Companys President and Chief Executive
Officer and Executive Vice President and Chief Financial Officer, has evaluated
the effectiveness of the Companys disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the
period covered by this report. Based upon that evaluation, the Companys
President and Chief Executive Officer and Executive Vice President and Chief
Financial Officer concluded that the disclosure controls and procedures were
effective to ensure that information required to be disclosed in the reports
the Company files and submits under the Exchange Act is (i) recorded,
processed, summarized and reported as and when required, and (ii) accumulated and
communicated to the Companys management, including the President and Chief
Executive Officer and Executive Vice President and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure.

MANAGEMENTS REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING

The management of Rome Bancorp is responsible for establishing and
maintaining adequate internal control over financial reporting. Rome Bancorp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 U.S. generally
accepted accounting principles. Rome Bancorp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; (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 are being made only in accordance with authorizations of management and
directors of Rome Bancorp and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of Rome Bancorp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s internal control over
financial reporting as of December 31, 2010. 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 maintained effective internal control over financial
reporting as of December 31, 2010.

92

---



This annual report does not contain an attestation report of the
Companys registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by the
Companys registered public accounting firm pursuant to temporary rules of the
SEC that permit the Company to provide only managements report in this annual
report.

|                                                              | 
|------------------------------------------------------------- | 
|/s/ Charles
 M. Sprock                                        | 
|                                                              | 
|Charles M.
 Sprock                                           
|Chairman of the
 Board, President and Chief Executive Officer
|March 18,
 2011                                               | 
|                                                              | 
|/s/ David C.
 Nolan                                           | 
|                                                              | 
|David C.
 Nolan                                              
|Executive
 Vice President and Chief Financial Officer        
|March 18,
 2011                                              

There have been no changes in the Companys internal control over
financial reporting identified in connection with the evaluation that occurred
during the Companys last fiscal quarter that has materially affected, or that
is reasonably likely to materially affect, the Companys internal control over
financial reporting.

|         |                  
|-------- | -----------------
|ITEM 9B. | OTHER INFORMATION

None.

93

---



PART III

|         |                                                       
|-------- | ------------------------------------------------------
|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The names
of the directors and certain other information about them as of December 31,
2010 are set forth below:

|                      |  |        |  |              |  |                                                    |  |                 |     | 
|--------------------- |  | ------ |  | ------------ |  | -------------------------------------------------- |  | --------------- | --- | 
|Name                  |  | Age(1) |  | Term Expires |  | Position(s)
 Held with Rome Bancorp                |  | Director
 Since |    
|                      |  |        |  |              |  |                                                    |  |                 |    
|Bruce R.
 Engelbert   |  | 73     |  | 2013         |  | Director                                           |  | 1982            | (2) | 
|                      |  |        |  |              |  |                                                    |  |                 |     | 
|David C.
 Grow        |  | 67     |  | 2013         |  | Director                                           |  | 1992            | (2) | 
|                      |  |        |  |              |  |                                                    |  |                 |     | 
|Kirk B.
 Hinman       |  | 59     |  | 2011         |  | Director                                           |  | 1994            | (2) | 
|                      |  |        |  |              |  |                                                    |  |                 |     | 
|Dale A.
 Laval        |  | 62     |  | 2012         |  | Director                                           |  | 2006            |     | 
|                      |  |        |  |              |  |                                                    |  |                 |     | 
|John A.
 Reinhardt    |  | 73     |  | 2013         |  | Director                                           |  | 2007            |     | 
|                      |  |        |  |              |  |                                                    |  |                 |     | 
|Charles M.
 Sprock    |  | 71     |  | 2011         |  | Chairman,
 President and 
 Chief Executive Officer |  | 1980            | (2) | 
|                      |  |        |  |              |  |                                                    |  |                 |     | 
|Michael J.
 Valentine |  | 68     |  | 2011         |  | Director                                           |  | 1993            | (2) | 

|    |                                                                                                | 
|--- | ---------------------------------------------------------------------------------------------- | 
|    |                                                                                               
|(1) | As of December 31, 2010.                                                                      
|(2) | Includes service as a
 trustee of Rome Savings prior to the formation of Rome Bancorp in 1999.

The principal occupation and business experience of each director and
named executive officer is set forth below. Unless otherwise indicated, each of
the following persons has held his or her present position for the last five
years.

Bruce R. Engelbert
is a retired President of Engelberts Jewelers, Inc., a retail jewelry
business.

David C. Grow
has been a partner at the law firm of McMahon and Grow since 1975. The firm
serves as counsel to Rome Savings.

Kirk B. Hinman
has served as the President of Rome Strip Steel Company, Inc. since 1989.

Dale A. Laval is the retired
Chairman of Independent Audit Associates, Inc. (IAA), a regional outsource
company specializing in financial institution internal audit and loan review.
Mr. Laval has over thirty-seven years experience in the financial services
industry.

John A. Reinhardt is a retired Executive Director of the
Madison County Industrial Development Agency. In addition, Mr. Reinhardt has
over thirty years experience in the financial services industry. Mr. Reinhardt
was elected to the Madison County Board of Supervisors in November 2007.

Charles M. Sprock
is the Chairman of the Board, President and Chief Executive Officer of Rome
Savings and Rome Bancorp.

Michael J. Valentine
is the Chairman and retired President of Mele Manufacturing Company, Inc.,
which manufactures and imports products in the jewel case, stationery, custom
packaging and sports flooring businesses.

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Executive Officers Who Are Not Directors

David C. Nolan,
age 57, was named Executive Vice-President and Chief Financial Officer of Rome
Bancorp in January of 2006. Prior to being named Executive Vice-President he
served as Treasurer and Chief Financial Officer of Rome Bancorp since its
inception and Rome Savings since 1984.

The Board of Directors annually elects the executive officers of Rome
Bancorp. The elected officers hold office until their respective successors
have been elected and qualified, or until death, resignation or removal by the
Board of Directors.

Meetings of the Board of Directors and
Committees

Rome Bancorps Board of Directors currently consists of seven members.
Rome Bancorps Certificate of Incorporation provides that the Board shall be
divided into three classes, as nearly equal in number as possible. The Board of
Directors oversees our business and monitors the performance of our management.
In accordance with our corporate governance procedures, the Board of Directors
does not involve itself in the day-to-day operations of Rome Bancorp. Rome
Bancorps executive officers and management oversee the day-to-day operations
of Rome Bancorp. Our directors fulfill their duties and responsibilities by
attending regular meetings of the Board which are held on a monthly basis. Our
directors also discuss business and other matters with the Chairman, other key
executives, and our principal external advisers (legal counsel, auditors,
financial advisors and other consultants).

The Board of Directors held 13 meetings during the fiscal year ended
December 31, 2010. Each incumbent director attended at least 75% of the
meetings of the Board of Directors.

Committees of the Board

The Board of Directors of Rome Bancorp has established the following
committees:

Executive Committee.
The Executive Committee exercises the powers of the Board of Directors between
Board meetings. It approves loans within Rome Savings authority and reviews
the loan portfolio. Directors Grow, Reinhardt, Sprock and Valentine currently
serve as members of the committee. Mr. Sprock is the Chairman of the Committee.
The Executive Committee met twelve times in the 2010 fiscal year.

Management Committee.
The Management Committee assesses the structure of the management team and the
overall performance of Rome Bancorp and Rome Savings. The Committee oversees
executive compensation by approving salary increases and reviews general
personnel matters such as staff performance evaluations. Directors Engelbert,
Hinman and Valentine serve on the committee. Mr. Valentine is the Chairman of
the Committee. All members of the Management Committee are independent
directors as defined in The Nasdaq Stock Market listing standards. The Management
Committee met one time in the 2010 fiscal year.

Audit Committee.
The Audit Committee oversees and monitors our financial reporting process and
internal control system, reviews and evaluates the audit performed by our
independent auditors and reports any substantive issues found during the audit
to the Board. The Audit Committee is directly responsible for the appointment,
compensation and oversight of the work of our independent auditors. The
Committee also reviews and approves all transactions with affiliated parties.
The Audit Committee is chaired by Director Hinman, with Directors Engelbert and
Valentine as members. The Board of Directors of Rome Bancorp adopted a written
charter for the Audit Committee, a copy of which was attached as Appendix A
to the proxy statement filed by Rome Bancorp on April 1, 2010. All members of
the Audit Committee are independent directors as defined in The Nasdaq Stock
Market listing standards and the Securities Exchange Act of 1934, as amended,
and the regulations promulgated thereunder. Rome Bancorp believes that Director
Hinman qualifies as an audit committee financial expert, as that term is
defined by applicable SEC regulations, and the Board of Directors has
designated him as such. The committee met four times in the 2010 fiscal year.

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Nominating and
Corporate Governance Committee. The Nominating and
Corporate Governance Committee meets to recommend the nomination of Directors
to the full Board to fill the terms for the upcoming year or to fill vacancies
during a term. The Nominating and Corporate Governance Committee will consider
recommendations from shareholders if submitted in a timely manner in accordance
with the procedures established in the bylaws and will apply the same criteria
to all persons being considered. Directors Engelbert, Grow, Laval and Reinhardt
currently serve on the Committee with Director Engelbert serving as Chairman of
the Committee. All members of the Nominating and Corporate Governance Committee
are independent directors as defined in The Nasdaq Stock Market listing
standards. The Nominating and Corporate Governance Committee met one time
during the 2010 fiscal year. The Board of Directors has adopted a written
charter for the Nominating and Corporate Governance Committee, which was attached
as Appendix B to the proxy statement filed by Rome Bancorp on March 30,
2007.

In accordance with our bylaws, recommendations or nominations of
individuals for election to the Board at an annual meeting of shareholders may
be made by any shareholder of record of Rome Bancorp entitled to vote for the
election of directors at such meeting who provides timely notice in writing to
the secretary. With respect to an election of directors to be held at an annual
meeting of shareholders, to be timely, a shareholders notice must be delivered
to or received by the secretary not later than sixty (60) days in advance of
such meeting if such meeting is to be held on a day which is within thirty (30)
days preceding the anniversary of the previous years annual meeting, or ninety
(90) days in advance of the meeting if the meeting is to be held on or after
the anniversary of the previous years annual meeting. With respect to an
election to be held at an annual meeting of shareholders held at another time,
or at a special meeting of shareholders for the election of directors, a
shareholders notice must be received by the secretary by the close of business
on the tenth (10th) day following the date on which notice of such meeting is
first given to shareholders. The shareholders notice to the secretary must set
forth certain information regarding the proposed nominee and the shareholder
making such recommendation or nomination. If a nomination is not properly
brought before the meeting in accordance with Rome Bancorps bylaws, the
chairperson of the meeting may determine that the nomination was not properly
brought before the meeting and shall not be considered. For additional
information about Rome Bancorps director nomination requirements, please see
Rome Bancorps bylaws.

It is the policy of the Committee to select individuals as director
nominees who shall have the highest personal and professional integrity, who
shall have demonstrated exceptional ability and judgment and who shall be most
effective, in conjunction with the other nominees to the Board, in collectively
serving the long-term interests of the shareholders. Shareholder nominees are
analyzed by the Committee in the same manner as nominees that are identified by
the Committee. Rome Bancorp does not pay a fee to any third party to identify
or evaluate nominees.

Code of Ethics

Rome Bancorp has adopted a Code of Conduct and Ethics, which applies to
all employees, directors and officers of Rome Bancorp including the principal
executive officer, principal financial officer, principal accounting officer,
or controller, or persons performing similar functions. The Code of Conduct and
Ethics meets the requirements of a code of ethics as defined by Item 406 of
Regulation S-K. The Code of Conduct and Ethics was filed as Exhibit 14.1 to the
Form 10-KSB for the year ended December 31, 2003, and has not changed.

You may obtain
a copy of the Code of Conduct and Ethics, free of charge, by sending a request
in writing to Crystal M. Seymore, Secretary, Rome Bancorp, Inc., 100 W.
Dominick Street, Rome, New York 13440-5810.

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|         |                       
|-------- | ----------------------
|ITEM 11. | EXECUTIVE COMPENSATION

Director Compensation

Meeting Fees. Each
non-employee director of Rome Bancorp receives an annual retainer equal to
$8,000. In addition, the non-employee Chairmen of the Audit and Management
Committees receive annual retainers of $5,000 and $2,000, respectively. Other
non-employee members of the Audit Committee also receive an annual retainer of
$2,500. Employee directors of Rome Bancorp do not receive fees for attendance
at Board of Directors or committee meetings. Each non-employee director
receives the following fees:

|  |                                                                          
|- | -------------------------------------------------------------------------
| | fee of $800
 per Board of Directors meeting attended;                    
|  |                                                                          
| | fee of $375
 per Executive Committee meeting attended;                   
|  |                                                                          
| | fee of $325
 per committee meeting attended for all other committees; and
|  |                                                                          
| | fee of $275
 per conference attended.                                    

Total
directors meeting and committee fees for fiscal 2010 were $180,200. Directors
are also entitled to the protection of certain indemnification provisions in
our Certificate of Incorporation and bylaws.

Deferred Compensation Plan, Recognition and Retention
Plans and Stock Option Plans. In addition,
our directors are eligible to participate the in Directors Deferred Compensation
Plan of Rome Bancorp, Inc. as well as each of the two Stock Option Plans and
Recognition and Retention Plans maintained by Rome Bancorp. These benefit plans
are discussed under Deferred Compensation Plan, Stock Option Plans and
Recognition and Retention Plans.

The
following table sets forth information regarding compensation earned by the
non-employee directors of Rome Bancorp during the last fiscal year.

|                     |  |                                       |        |                       |  |                        |  |          |       |  |  |        | 
|-------------------- |  | ------------------------------------- | ------ | --------------------- |  | ---------------------- |  | -------- | ----- |  |  | ------ | 
|Name                 |  | Fees
 Earned or
 Paid in Cash
 ($)(1) |        | Stock
 Awards
 ($)(2) |  | Option
 Awards
 ($)(3) |  | Total($) |      
|                     |  |                                       |        |                       |  |                        |  |          |      
|Bruce R. Engelbert   |  |                                       | 39,275 |                       |  | 30,302                 |  |          | 9,986 |  |  | 79,563 | 
|David C. Grow        |  |                                       | 29,925 |                       |  | 30,302                 |  |          | 9,986 |  |  | 70,213 | 
|Kirk B. Hinman       |  |                                       | 35,125 |                       |  | 30,302                 |  |          | 9,986 |  |  | 75,413 | 
|Dale A. Laval        |  |                                       | 22,755 |                       |  | 30,302                 |  |          | 9,986 |  |  | 63,043 | 
|John A. Reinhardt    |  |                                       | 29,725 |                       |  |                       |  |          |      |  |  | 29,725 | 
|Michael J. Valentine |  |                                       | 39,720 |                       |  | 30,302                 |  |          | 9,986 |  |  | 80,008 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(1) | Includes
 retainer payments, meeting fees, and committee and/or chairmanship fees
 earned during the fiscal year, whether such fees were paid currently or
 deferred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | Represents
 the aggregate grant date fair value calculated in accordance with FASB ASC
 718 for financial statement purposes. For more information concerning the
 assumptions used for these calculations, please refer to the footnotes to the
 audited financial statements. This amount does not reflect the value of
 dividends paid on unvested restricted stock. The total number of unvested
 restricted stock awards outstanding to each non-employee director at December
 31, 2010 was: Director Engelbert, 2,360; Director Grow, 2,360; Director
 Hinman, 2,360; Director Laval, 2,360; Director Reinhardt, 0; Director
 Valentine, 2,360.
|(3) | Represents
 the aggregate grant date fair value calculated in accordance with FASB ASC
 718 for financial statement purposes. For more information concerning the
 assumptions used for these calculations, please refer to the footnotes to the
 audited financial statements. The total number of unexercised options
 outstanding to each non-employee director at December 31, 2010 was: Director
 Engelbert, 29,500; Director Grow, 29,500; Director Hinman, 29,500; Director
 Laval, 29,500; Director Reinhardt, 0; Director Valentine, 29,500.                                                                                                 

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Executive
Compensation

The
table below sets forth the compensation of each of our named executive officers
for 2010 and 2009.

SUMMARY COMPENSATION TABLE

|                              |  |      |      |              |  |             |  |                       |   |                        |  |                                                 |  |                                                        |   |                             |  |            |  |  |   |  |  |        |  |  |         | 
|----------------------------- |  | ---- | ---- | ------------ |  | ----------- |  | --------------------- | - | ---------------------- |  | ----------------------------------------------- |  | ------------------------------------------------------ | - | --------------------------- |  | ---------- |  |  | - |  |  | ------ |  |  | ------- | 
|Name and
 Principal Positions |  | Year |      | Salary(1)($) |  | Bonus(1)($) |  | Stock
 Awards(2)
 ($) |   | Option
 Awards(3)
 ($) |  | Nonequity
 Incentive Plan
 Compensation(1)
 ($) |  | Nonqualified
 Deferred
 Compensation
 Earnings(4)
 ($) |   | All OtherCompensation(5)($) |  | Total
 ($) | 
|                              |  |      |      |              |  |             |  |                       |   |                        |  |                                                 |  |                                                        |   |                             |  |            | 
|Charles M. Sprock,            |  |      |      |              |  |             |  |                       |   |                        |  |                                                 |  |                                                        |   |                             |  |            |  |  |   |  |  |        |  |  |         | 
|Chairman, President           |  |      |      |              |  |             |  |                       |   |                        |  |                                                 |  |                                                        |   |                             |  |            |  |  |   |  |  |        |  |  |         | 
|and Chief Executive           |  |      | 2010 |              |  | 275,000     |  |                       | 0 |                        |  | 0                                               |  |                                                        | 0 |                             |  | 0          |  |  | 0 |  |  | 84,337 |  |  | 359,337 | 
|Officer                       |  |      |      |              |  |             |  |                       |   |                        |  |                                                 |  |                                                        |   |                             |  |            |  |  |   |  |  |        |  |  |         | 
|                              |  |      | 2009 |              |  | 275,000     |  |                       | 0 |                        |  | 0                                               |  |                                                        | 0 |                             |  | 55,000     |  |  | 0 |  |  | 77,084 |  |  | 407,084 | 
|                              |  |      |      |              |  |             |  |                       |   |                        |  |                                                 |  |                                                        |   |                             |  |            |  |  |   |  |  |        |  |  |         | 
|David C. Nolan,               |  |      |      |              |  |             |  |                       |   |                        |  |                                                 |  |                                                        |   |                             |  |            |  |  |   |  |  |        |  |  |         | 
|Executive Vice                |  |      |      |              |  |             |  |                       |   |                        |  |                                                 |  |                                                        |   |                             |  |            |  |  |   |  |  |        |  |  |         | 
|President and Chief           |  |      | 2010 |              |  | 136,000     |  |                       | 0 |                        |  | 0                                               |  |                                                        | 0 |                             |  | 0          |  |  | 0 |  |  | 38,479 |  |  | 174,479 | 
|Financial Officer             |  |      |      |              |  |             |  |                       |   |                        |  |                                                 |  |                                                        |   |                             |  |            |  |  |   |  |  |        |  |  |         | 
|                              |  |      | 2009 |              |  | 136,000     |  |                       | 0 |                        |  | 0                                               |  |                                                        | 0 |                             |  | 0          |  |  | 0 |  |  | 32,894 |  |  | 168,894 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(1) | The
 figures shown for salary and bonus represent amounts earned for the fiscal
 year, whether or not actually paid during such year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(2) | Represents
 aggregate grant date fair value calculated in accordance with FASB ASC 718
 for financial statement purposes. For more information concerning the
 assumptions used for these calculations, please refer to the audited
 financial statements. This amount does not reflect the value of dividends
 paid on unvested restricted stock, which are included in the Summary
 Compensation Table under the caption All Other Compensation. Under the
 provisions of FASB ASC 718, because Mr. Sprock and Mr. Nolan met the
 eligibility criteria for retirement or early retirement under the Companys
 defined benefit plan, their grants were expensed in 2006, even though the
 awards vest ratably over a five year period.                                    
|(3) | Represents
 the aggregate grant date fair value calculated in accordance with FASB ASC
 718 for financial statement purposes. For more information concerning the
 assumptions used for these calculations, please refer to the footnotes to the
 audited financial statements. Under the provisions of FASB ASC 718, because
 Mr. Sprock and Mr. Nolan met the eligibility criteria for retirement or early
 retirement under the Companys defined benefit plan, their grants were
 expensed in 2006, even though the awards vest ratably over a five year
 period.                                                                                                                                                                                                         
|(4) | Includes
 for each named executive officer (a) the increase (if any) for the fiscal
 year in the present value of the individuals accrued benefit (whether not
 vested) under each tax-qualified and non-qualified actuarial or defined
 benefit plan calculated by comparing the present value of each individuals
 accrued benefit under each such plan in accordance with FASB ASC 715 as of
 the plans measurement date in such fiscal year to the present value of the
 individuals accrued benefit as of the plans measurement date in the prior
 fiscal year.                                                                                                                                                                                                     
|(5) | For
 2010, represents 401(k) plan contributions of $6,280 and $4,080, ESOP plan
 allocations of $43,924 and $31,083, interest and dividends earned on unvested
 RRP shares of $8,290 and $3,316 and Benefit Restoration Plan contributions of
 $25,843 and $0 for Mr. Sprock and Mr. Nolan, respectively. The named
 executive officers participate in certain group life, health, disability
 insurance and medical reimbursement plans, not disclosed in the Summary
 Compensation Table, that are generally available to salaried employees and do
 not discriminate in scope, terms and operation. We provide certain non-cash
 perquisites and personal benefits to Mr. Sprock that do not exceed $10,000 in
 the aggregate and are not included in the reported figures.

Compensation Plan

Recognition and Retention Plans.The
Rome Bancorp, Inc. 2000 Recognition and Retention Plan and the Rome Bancorp,
Inc. 2006 Recognition and Retention Plan have each been adopted by our Board of
Directors and approved by our shareholders. The Recognition and Retention Plans
provide for the grant of restricted stock awards to certain officers, employees
and non-employee directors of Rome Bancorp, Rome Savings or any affiliate
approved by the administrative committee. These restricted stock awards
(Awards) constitute a right to receive a certain number of shares of common
stock of Rome Bancorp upon the Award holders satisfaction of certain requirements,
such as completion of five years of service with Rome Bancorp, with accelerated
vesting upon death, disability, retirement or change in control as defined in
the plan. As a general rule, if the Award holder fails to fulfill the
requirements contained in the restricted stock award, the Award will not vest.
Instead, the Award will be forfeited and canceled. The Recognition and
Retention Plans are not subject to the Employee Retirement Income Security Act
of 1974, as amended, and are not a tax-qualified plan under the Internal
Revenue Code.

As required
by the terms of the Recognition and Retention Plans, Rome Bancorp has
established a trust and contributed certain amounts of money or property as
determined by the Board of Directors, in its discretion.

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No contributions by participants will be permitted. The trustee will
invest the assets of the trust primarily in the shares of our common stock that
will be used to make restricted stock awards. The trust currently holds 118,000
shares available for future awards.

The
Recognition and Retention Plans are administered by the Board, which has broad
discretionary powers under the plans. The Board of Directors has the authority
to suspend or terminate the plans in whole or in part at any time by giving
written notice to the administrative committee, but the Recognition and
Retention Plans may not be terminated while there are outstanding Awards that
will vest in the future.

Stock Option Plans. The Rome Bancorp, Inc. 2000 Stock Option
Plan and the Rome Bancorp, Inc. 2006 Stock Option Plan have each been adopted
by our Board of Directors and approved by our shareholders. The Option Plans
provide for the grant, to certain officers, employees and outside directors of
Rome Bancorp, Rome Savings or any affiliate approved by the administrative
committee, of options to purchase common stock of Rome Bancorp (Options) at a
stated price during a specified period or term. If the Option is not exercised
during its term, it will expire. The Stock Option Plans currently have 359,003
options reserved that may be granted in future. Options vest on a change in
control as defined in the Option Plans. The Option Plans are not subject to the
Employee Retirement Income Security Act of 1974, as amended, and are not
tax-qualified plans under the Internal Revenue Code.

There were
no stock-based grants made to the named executive officers in the last fiscal
year.

Stock Awards and Stock Option Grants
Outstanding

The
following tables set forth information regarding stock awards, stock options
and similar equity compensation outstanding at December 31, 2010, whether
granted in 2010 or earlier, including awards that have been transferred other
than for value.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

|                  |  |                                                                           |         |                                                                             |     |                             |        |                          |       |                                                              |  |                                                                   |  |  |        |     |  |         | 
|----------------- |  | ------------------------------------------------------------------------- | ------- | --------------------------------------------------------------------------- | --- | --------------------------- | ------ | ------------------------ | ----- | ------------------------------------------------------------ |  | ----------------------------------------------------------------- |  |  | ------ | --- |  | ------- | 
|                  |  | Option Awards                                                             |         | Stock Awards                                                                |    
|                  |  |                                                                           |         |                                                                             |    
|Name              |  | Number of
 Securities
 Underlying
 Unexercised
 Options
 (#)
 Exercisable |         | Number of
 Securities
 Underlying
 Unexercised
 Options
 (#)
 Unexercisable |     | Option
 Exercise Price
 ($) |        | Option
 Expiration
 Date |       | Number of
 Shares
 or Units of
 Stock
 That Have
 Not Vested |  | Market Value
 of Shares or
 Units of Stock
 That Have Not
 Vested | 
|                  |  |                                                                           |         |                                                                             |     |                             |        |                         
|                  |  |                                                                           |         |                                                                             | (#) |                             | ($)(1) |                         
|                  |  |                                                                           |         |                                                                             |     |                             |        |                          |       |                                                              |  |                                                                   | 
|Charles M. Sprock |  |                                                                           | 118,000 |                                                                             |     | 29,500                      | (2)    |                          | 12.84 |                                                              |  | 5/24/2016                                                         |  |  | 11,800 | (2) |  | 141,836 | 
|                  |  |                                                                           |         |                                                                             |     |                             |        |                          |       |                                                              |  |                                                                   |  |  |        |     |  |         | 
|David C. Nolan    |  |                                                                           | 47,200  |                                                                             |     | 11,800                      | (2)    |                          | 12.84 |                                                              |  | 5/24/2016                                                         |  |  | 4,720  | (2) |  | 56,734  | 

|    |                                                                                                                                                                                  | 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|    |                                                                                                                                                                                 
|(1) | Market value is calculated
 on the basis of $12.02 per share, which is the closing sales price for our
 common stock on December 31, 2010.                                      
|(2) | Vest in 20% installments per
 year with first installment vesting on May 24, 2007 and each anniversary
 thereafter. Options vest on a change in control as defined in the plans.

Pension Benefits

Pension Plan. Rome
Savings maintains a tax-qualified pension plan that covers substantially all
employees who are age 21 or older and have at least one year of service. Rome
Savings froze benefits under this tax-qualified pension plan as of December
2002. Rome Savings continues to maintain this plan to provide benefits to those
individuals who were participants and had accrued a benefit prior to December
2002.

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Other Benefits

Employee
Stock Ownership Plan. This plan is a tax-qualified
plan that covers substantially all employees who have at least one year of
service and are age 21 or older. Rome Bancorp has lent this plan enough money
to purchase 232,309 shares that are currently unallocated.

Although
contributions to this plan are discretionary, Rome Savings intends to
contribute enough money each year to make the required principal and interest
payments on the loans from Rome Bancorp. The plan has pledged the shares as
collateral for the loans and is holding them in a suspense account.

The plan will release a portion of the pledged shares annually,
allocating the shares released each year among the accounts of participants in
proportion to their salary for the year. For example, if a participants salary
for a year represents 1% of the total salaries of all participants for the
year, the plan would allocate to that participant 1% of the shares released for
the year. Participants direct the voting of shares allocated to their accounts.
Shares in the suspense account will usually be voted in a way that mirrors the
votes which participants cast for shares in their individual accounts. On a
change in control as defined in the ESOP, all amounts are vested, the loan
under the ESOP will repaid from the proceeds of unallocated shares, the
remaining unallocated shares will be allocated to participants in the ESOP and
the ESOP is terminated..

Benefit
Restoration Plan.Rome Bancorp has also adopted a Benefit Restoration Plan for Mr.
Sprock. This plan provides Mr. Sprock 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. At the closing date of the Merger, the Benefit Restoration Plan
will be terminated and Mr. Sprock will be entitled to a cash lump sum payment
equal to $358,560, subject to applicable withholding. Deferred Compensation Plan. Rome Savings has
established the Directors Deferred Compensation Plan of Rome Bancorp, Inc. for
the benefit of non-employee directors. Under the Directors Deferred
Compensation Plan, each non-employee director may make an annual election to
defer receipt of all or a portion of his or her director fees received from
Rome Bancorp and Rome Savings. The deferred amounts are allocated to a deferral
account and credited with interest at an annual rate equal to the rate on the
highest yielding one-year certificate of deposit issued by Rome Savings during
the year or according to the investment return of other assets as may be
selected by the Board of Directors.

The
Directors Deferred Compensation Plan is an unfunded, non-qualified plan that
provides for distribution of the amounts deferred to participants or their
designated beneficiaries upon the occurrence of certain events such as death,
retirement, disability or termination of employment (as those terms are defined
in the Directors Deferred Compensation Plan). We have established an
irrevocable grantor trust to hold assets for the payment of benefits under
the Directors Deferred Compensation Plan. The assets of the trust are
considered to be part of the general assets of Rome Savings and will be subject
to the claims of its general creditors. Earnings on the trusts assets will be
taxable to Rome Savings. At the closing date of the Merger, the Directors
Deferred Compensation Plan will be terminated and payments will be made to
directors from the trust.

Termination
and Change in Control Benefits

Employment
Agreements. Rome Bancorp and Rome Savings have
each entered into an employment agreement with Charles M. Sprock to secure his
services as Chairman, President and Chief Executive Officer. The employment
agreement with Rome Bancorp has a three-year term that will be automatically
extended on a daily basis so that the remaining term will always be three years
unless written notice of non-renewal is given by the Board of Directors of Rome
Bancorp or Mr. Sprock. The employment agreement with Rome Savings also has a
three-year term which may be extended by the Board in the absence of an
objection by Mr. Sprock for an additional year upon the anniversary date of the
agreement so that the remaining unexpired term will be three years. These
agreements provide for a minimum annual salary of $275,000, and participation
on generally applicable terms and conditions in other compensation and fringe
benefit plans. They also guarantee customary

100

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corporate indemnification and errors and omissions insurance coverage
throughout the employment term and for six years after termination.

Rome
Bancorp and Rome Savings may terminate Mr. Sprocks employment, and he may
resign, at any time with or without cause. However, in the event of termination
by Rome Bancorp or Rome Savings during the term without cause, Rome Bancorp and
Rome Savings will owe Mr. Sprock severance benefits generally equal to the
value of the cash compensation and fringe benefits that he would have received
if he had continued working for an additional three years. In particular, Mr.
Sprock would be entitled to: (i) a lump sum payment equal to the present value
of the amount he would have earned in salary had he continued working an
additional three years, and (ii) a lump sum payment equal to the present value
of the additional contributions or benefits that he would have earned under the
Rome Savings pension plan, 401(k) plan, and ESOP had he continued to work an
additional three years. The employment agreements also provide for the cash out
of any stock options, stock appreciation rights, or restricted stock as if Mr.
Sprock were fully vested at the time of his termination and the continuation of
coverage under the life, health, and disability insurance plans of Rome Savings
or Rome Bancorp for an additional three years. The same severance benefits
would be payable if he resigns during the term following: (i) a loss of title,
office or membership on the Board of Directors, (ii) a material reduction in
duties, functions, or responsibilities, (iii) the involuntary relocation of Mr.
Sprocks principal place of employment to a location over 50 miles in distance
from Rome Savings principal office in Rome, New York, or (iv) any other material
breach of contract by Rome Bancorp that is not cured within 30 days. Mr. Sprock
may resign for any reason following a change in control and collect severance
benefits as if he had been discharged without cause. The employment agreements
also provide certain uninsured death and disability benefits.

Under the
employment agreements, Mr. Sprock has agreed that in the event his employment
terminates, either voluntarily or involuntarily, under circumstances in which
he is not entitled to severance benefits, he will not compete with Rome Savings
or Rome Bancorp or take a position with any of its competitors within Oneida
County, New York for a period of one year following termination.

If Rome
Bancorp or Rome Savings experiences a change in ownership, a change in
effective ownership or control or a change in the ownership of a substantial
portion of their assets as contemplated by section 280G of the Internal Revenue
Code, a portion of any severance payments under the employment agreement might
constitute an excess parachute payment under current federal tax laws. Any
excess parachute payment would be subject to a 20% federal excise tax payable
by the executive. Neither Rome Savings nor Rome Bancorp could claim a federal
income tax deduction for an excess parachute payment. The employment agreement
with Rome Bancorp requires Rome Bancorp to indemnify Mr. Sprock against the
financial effects of such an excise tax.

Contemporaneously
with the execution of the Merger Agreement, Berkshire, Berkshire Bank, Rome
Bancorp and Rome Savings entered into a settlement agreement (Settlement
Agreement) with Mr. Sprock. In accordance with Mr. Sprocks Settlement
Agreement, at the closing date of the merger, Mr. Sprocks employment
agreements will be terminated and he will be entitled to a cash lump sum
payment from Rome Bancorp equal to $1,025,067, in lieu of the payment due under
the employment agreements. However, because Mr. Sprock is considered a
specified employee under Section 409A of the Internal Revenue Code, such
payment cannot be made to him until six months following his separation from
service (as defined in Internal Revenue Code Section 409A) with Rome Bancorp
or its successor, Berkshire. Accordingly, the Settlement Agreement provides for
the cash severance payment to be held in a rabbi trust for the benefit of Mr.
Sprock and invested in investment-grade fixed-income securities, mutual funds
or other pooled investment vehicles. The cash severance payment, as adjusted
for investment experience, will be distributed on the first day of the seventh
month following Mr. Sprocks separation from service, subject to applicable
income withholding taxes.

Berkshire
and Berkshire Bank have entered into a Non-Competition and Consulting Agreement
with Mr. Sprock pursuant to which Mr. Sprock will perform consulting services
as a liaison to The Rome Savings Bank Foundation for a period of six months
following the merger. In addition, Mr. Sprock will agree not to compete with
Berkshire and Berkshire Bank for a period of eighteen months following the
merger for the benefit of any business within 25 miles of any office of
Berkshire or Berkshire Bank or any subsidiary. During such eighteen month
period, Mr. Sprock has also agreed not to solicit or offer employment to any

101

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employee of
Berkshire or Berkshire Bank or any of their subsidiaries or affiliates that
would cause such person(s) to terminate employment and accept employment with
or provide services to any business that competes with Berkshire or Berkshire
Bank within 25 miles of any office of Berkshire or Berkshire Bank or any
subsidiary. In exchange for the consulting services and the agreement not to
compete or solicit, Berkshire and Berkshire Bank have agreed to pay Mr. Sprock $225,000,
payable in monthly installments over the consulting period.

Change
of Control Agreement. Rome Savings has entered into a three-year change of control agreement
with Mr. David C. Nolan and into two-year change of control agreements with four
other officers of Rome Savings and a one-year change in control agreement with
one other officer of Rome Savings. The term of these agreements is for three
years for Mr. Nolan and for one or two years for the other officers with annual
one-year extensions. Generally, Rome Savings may terminate the employment of
any officer covered by these agreements, with or without cause, at any time
prior to a change of control without obligation for severance benefits. Rome
Savings would pay severance benefits if the officer is terminated without cause
within 12 months following a change of control (as such term is defined in the
agreements) or if the officer resigns within 12 months after a change of
control following a loss of title, office or membership on the Board of
Directors, material reduction in duties, functions, compensation or
responsibilities, or involuntary relocation of his or her principal place of
employment to a location over 30 miles from Rome, New York. The severance
benefits would generally be equal to the compensation reflected in the
officers salary and bonus earned for the year prior to the year in which the
change of control occurs multiplied by three in the case of Mr. Nolan and one
or two in the case of the other officers.

If
Rome Savings or Rome Bancorp experiences a change in ownership, a change in
effective ownership or control or a change in the ownership of a substantial
portion of their assets as contemplated by section 280G of the Internal Revenue
Code, a portion of any severance payments under the change of control
agreements might constitute an excess parachute payment under current federal
tax laws. Any excess parachute payment would be subject to a federal excise tax
payable by the officer and would be non-deductible by Rome Savings and Rome
Bancorp for federal income tax purposes. The change of control agreements do
not provide a tax indemnity for such amounts.

Rome Bancorp provides additional benefits,
not included in the previous tables, to the named executive officers in the
event of retirement or termination
of employment in certain circumstances and in the event of a change in control.

Contemporaneously
with the execution of the Merger Agreement, Berkshire, Berkshire Bank, Rome
Bancorp and Rome Savings entered into settlement agreements (Settlement
Agreements) with Mr. Nolan and five other senior officers of the Rome Bancorp
and Rome Savings in order to quantify and settle the benefits owed to the
executives under the Change of Control Agreements. In accordance with their respective Settlement
Agreements, the change in control agreements for Mr. Nolan and five other
senior officers of Rome Savings will be terminated, effective as of the closing
date of the Merger, and in lieu of any payments or benefits under such change
in control agreements, the executives will be entitled to the payments set
forth in the Settlement Agreements on the earlier of the date of executives
termination of employment by Berkshire, Berkshire Bank, Rome Bancorp or Rome Savings
or 90 days after the closing date at which time, the executives employment
will terminate. Notwithstanding the foregoing, an executive who is terminated
for cause will not be entitled to any payment under either the change in
control agreement or Settlement Agreement. For this purpose, cause will be
defined as personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other than traffic violations
or similar offenses) or a final cease and desist order and will be determined
in the good faith and sole discretion of Mr. Sprock. Rome Savings or Berkshire
Bank will pay lump sum cash severance payments to Mr. Nolan in the amount of
$408,018, less tax withholding, and to the other five senior officers who are
entitled to such payments under the Settlement Agreements an aggregate amount
of $737,714, less tax withholding.

During the
period prior to their termination of employment, the cash severance payment
will be held in a

102

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rabbi trust for the benefit of each officer and invested in
investment-grade fixed-income securities, mutual funds or other pooled
investment vehicles. Upon termination of employment, the cash severance
payment, as adjusted for investment experience and subject to applicable
withholding tax, will be distributed to the officer. In addition, for the
period that each executive continues in the employment of Berkshire and
Berkshire Bank following the closing date, such officers base salary will be
increased to two times the officers current base salary.

|         |                                                                                                
|-------- | -----------------------------------------------------------------------------------------------
|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
 OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Principal Shareholders of Rome Bancorp

The
following table shows certain information for persons who we know beneficially
owned 5% or more of our common stock as of December 31, 2010. In general,
beneficial ownership includes those shares over which a person has voting or
investment power. In this proxy statement, voting power is the power to vote
or direct the voting of shares, and investment power includes the power to
dispose or direct the disposition of shares. Beneficial ownership also includes
the number of shares that a person has the right to acquire within 60 days
(such as through the exercise of stock options) after December 31, 2010. We
obtained the information provided in the following table from filings with the
SEC and with Rome Bancorp.

|                                                                                                                   |  |                                            |     |            |       |   | 
|------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------ | --- | ---------- | ----- | - | 
|Name and Address of
 Beneficial Owner                                                                              |  | Amount and Nature of
 Beneficial Ownership |     | Percent(1) |      
|                                                                                                                   |  |                                            |     |            |      
|Employee
 Stock Ownership Plan Trust of Rome Bancorp, Inc. 
 100 West Dominick Street 
 Rome, New York 13440-5810  |  | 689,488                                    | (2) |            | 10.17 | % | 
|                                                                                                                  
|Dimensional
 Fund Advisors LP 
 Palisades West, Bldg. 1, 6300 Bee Cave Road 
 Austin, Texas 78746                  |  | 460,673                                    | (3) |            | 6.80  | % | 
|                                                                                                                  
|Charles M.
 Sprock, Chairman, CEO & President 
 Rome Bancorp, Inc. 
 100 W. Dominick Street 
 Rome, New York 13440 |  | 438,592                                    | (4) |            | 6.47  | % | 
|                                                                                                                  
|Water Island
 Capital LLC 
 41 Madison Avenue, Floor 42 
 New York, NY 10010                                       |  | 417,872                                    | (5) |            | 6.17  |   | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(1) | Percentages
 with respect to each person or group of persons have been calculated based
 upon 6,777,551 shares of Rome Bancorp common stock, the number of shares
 outstanding as of December 31, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(2) | The ESOP is administered by an ESOP Committee (ESOP Committee) and
 its assets are held in trust by a trustee (Plan Trustee). The number of
 shares listed as beneficially owned represents the entire number of shares of
 Rome Bancorp common stock held by RSGroup Trust Company, as Plan Trustee, as
 of December 31, 2010. As of December 31, 2010, 457,179 of such shares of Rome
 Bancorp common stock had been allocated to individual accounts established
 for participating employees and their beneficiaries, and 232,309 of such
 shares were held, unallocated, for allocation in future years. In general,
 participating employees and their beneficiaries have the power and authority
 to direct the voting of shares of Rome Bancorp common stock allocated to their
 individual accounts. Such allocated shares are, therefore, not included as
 shares over which the reporting person has sole or shared voting power. The
 reporting person, through the Plan Trustee, has shared voting power over
 unallocated Rome Bancorp common stock. Any unallocated Rome Bancorp common
 stock is generally required to be voted by the Plan Trustee in the same
 proportion as Rome Bancorp common stock which has been allocated to
 participants is directed to be voted. The ESOP, through the Plan Trustee (who
 is instructed by the ESOP Committee) shares dispositive power over all
 unallocated common stock held by the reporting person. The ESOP,

103

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | 
|    | acting through the Plan Trustee (who is instructed by the ESOP
 Committee) shares dispositive power over allocated Rome Bancorp common stock
 with participating employees and their beneficiaries, who have the right to
 determine whether Rome Bancorp common stock allocated to their respective
 accounts will be tendered in response to a tender offer but otherwise have no
 dispositive power. Any unallocated Rome Bancorp common stock is generally
 required to be tendered by the Plan Trustee in the same proportion as Rome
 Bancorp common stock which has been allocated to Participants is directed to
 be tendered. In limited circumstances, ERISA may confer upon the Plan Trustee
 the power and duty to control the voting and tendering of Rome Bancorp common
 stock allocated to the accounts of participating employees and beneficiaries
 who fail to exercise their voting and/or tender rights. The ESOP disclaims
 voting power with respect to such allocated Rome Bancorp common stock.
|(3) | Based on a Schedule 13G/A dated December 31, 2010 and filed with the
 SEC on February 11, 2011 by Dimensional Fund Advisors LP. Dimensional Fund Advisors
 LP is an investment advisor to four investment companies registered under the
 Investment Company Act of 1940, and serves as investment manager to certain
 other commingled group trusts and separate accounts. In its role as
 investment advisor or manager, Dimensional Fund Advisors LP possesses
 investment and/or voting power over the shares owned by the investment
 companies, the trusts and the accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(4) | Details of
 Mr. Sprocks beneficial ownership are detailed on the Security Ownership of
 Management table, on the following page of this document.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(5) | Based on a
 Schedule 13G dated December 31, 2010 and filed with the SEC on February 9,
 2011 by Water Island Capital LLC. Water Island Capital LLC is an investment
 advisor registered under the Investment Company Act of 1940.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Security Ownership of Management

The
following table shows the number of shares of Rome Bancorps common stock
beneficially owned by each director and executive officer and all directors and
executive officers of Rome Bancorp as a group, as of December 31, 2010. Except
as otherwise indicated, each person and each group shown in the table has sole
voting and investment power with respect to the shares of common stock listed
next to their name. See Principal Shareholders of Rome Bancorp for a
definition of beneficial ownership.

|                                                                 |  |                                                       |  |                                                    |  |                                            |       |   | 
|---------------------------------------------------------------- |  | ----------------------------------------------------- |  | -------------------------------------------------- |  | ------------------------------------------ | ----- | - | 
|Name                                                             |  | Position with Rome 
 Bancorp(1)                       |  | Amount and Nature of 
 Beneficial Ownership(2)(10) |  | Percent of 
 Common Stock 
 Outstanding(3) |      
|                                                                 |  |                                                       |  |                                                    |  |                                            |      
|                                                                 |  |                                                       |  |                                                    |  |                                            |       |   | 
|Bruce R.
 Engelbert (4)                                          |  | Director                                              |  | 126,565                                            |  |                                            | 1.87  | % | 
|                                                                 |  |                                                       |  |                                                    |  |                                            |       |   | 
|David C.
 Grow (5)                                               |  | Director                                              |  | 128,434                                            |  |                                            | 1.89  | % | 
|                                                                 |  |                                                       |  |                                                    |  |                                            |       |   | 
|Kirk B.
 Hinman (6)                                              |  | Director                                              |  | 326,123                                            |  |                                            | 4.81  | % | 
|                                                                 |  |                                                       |  |                                                    |  |                                            |       |   | 
|Dale A.
 Laval (7)                                               |  | Director                                              |  | 39,900                                             |  |                                            | *     |   | 
|                                                                 |  |                                                       |  |                                                    |  |                                            |       |   | 
|David C.
 Nolan (8)                                              |  | Executive
 Vice President and Chief Financial Officer |  | 194,748                                            |  |                                            | 2.87  | % | 
|                                                                 |  |                                                       |  |                                                    |  |                                            |       |   | 
|John A.
 Reinhardt (11)                                          |  | Director                                              |  | 1,450                                              |  |                                            | *     |   | 
|                                                                 |  |                                                       |  |                                                    |  |                                            |       |   | 
|Charles M.
 Sprock (9)                                           |  | Chairman,
 President and Chief Executive Officer      |  | 438,592                                            |  |                                            | 6.47  | % | 
|                                                                 |  |                                                       |  |                                                    |  |                                            |       |   | 
|Michael J.
 Valentine                                            |  | Director                                              |  | 156,296                                            |  |                                            | 2.31  | % | 
|                                                                 |  |                                                       |  |                                                    |  |                                            |       |   | 
|All
 directors and executive officers as a group (8 persons)(12) |  |                                                       |  | 1,690,383                                          |  |                                            | 24.94 | % | 

|                                                                          |                                                                                                                                                                                                                                                                                                                                                     |  | 
|------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|                                                                          |                                                                                                                                                                                                                                                                                                                                                    
|* Less than one
 percent of the total outstanding shares of common stock.
|(1)                                                                       | Titles are for both Rome Bancorp and Rome Savings.                                                                                                                                                                                                                                                                                                 
|(2)                                                                       | Includes unvested restricted stock awards of 2,360 shares made to
 each outside director, with the exception of Mr. Reinhardt, under the Rome
 Bancorp, Inc. 2006 Recognition and Retention Plan. Includes unvested
 restricted stock awards of 11,800 and 4,720 shares awarded to Mr. Sprock and
 Mr. Nolan, respectively, under the Rome Bancorp,

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|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|     | Inc. 2006 Recognition and Retention Plan. Each recipient of a
 restricted share award has sole voting power, but no investment power, over
 the common stock covered by the award. The restricted stock will vest at the
 rate of 20% per year on each anniversary date of the grant, with accelerated
 vesting upon death, disability, retirement or change in control.                                                                                                                                                                                                                                                                                                                   
|(3)  | Based on a total of 6,777,551 shares of Rome Bancorps common stock
 outstanding as of December 31, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(4)  | Includes 20,784 shares held in Mr. Engelberts Individual Retirement
 and Deferred Compensation Accounts and 16,918 shares held by Mr. Engelberts
 spouse.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(5)  | Includes 24,152 shares held in Mr. Grows Individual Retirement
 Account and 2,381 shares held individually by Mr. Grows spouse.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(6)  | Includes 3,401 shares held in Mr. Hinmans Individual Retirement
 Account; 111,016 shares held jointly with Mr. Hinmans spouse; 5,401 shares
 held as custodian for a minor; 5,000 shares held by a trust over which Mr.
 Hinman exercises control; and 125,123 shares held by Rome Strip Steel Co.,
 Inc. of which Mr. Hinman serves as President.                                                                                                                                                                                                                                                                                                                                       
|(7)  | Includes 3,500 shares held in Mr. Lavals Individual Retirement
 Account.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(8)  | Includes 22,401 shares held in trust pursuant to the Employee Stock
 Ownership Plan that have been allocated as of December 31, 2010 over which
 Mr. Nolan has voting power, subject to the legal duties of the ESOP Trustee,
 but no investment power, except in limited circumstances.                                                                                                                                                                                                                                                                                                                                                                                                   
|(9)  | Includes 8,118 shares held individually by Mr. Sprocks spouse and
 34,011 shares held in trust pursuant to the ESOP that have been allocated as
 of December 31, 2010 over which Mr. Sprock has voting power, subject to the
 legal duties of the ESOP trustee, but no investment power, except in limited
 circumstances.                                                                                                                                                                                                                                                                                                                                                                
|(10) | Includes 23,600 shares of common stock that may be acquired by each
 outside director with the exception of Mr. Reinhardt, pursuant to vested
 options granted to them under the Rome Bancorp, Inc. 2006 Stock Option Plan.
 Includes 47,200 and 118,000 shares of common stock that may be acquired by
 Mr. Nolan and Mr. Sprock, respectively, pursuant to vested options granted to
 them under the Rome Bancorp, Inc. 2006 Stock Option Plan.                                                                                                                                                                                                                                          
|(11) | Includes 750 shares held jointly with Mr. Reinhardts spouse and 700
 shares held in Mr. Reinhardts spouses IRA.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(12) | The number of shares for all executive officers and directors as a
 group of eight persons includes 232,309 shares held by the ESOP Trust that
 have not been allocated to eligible participants as of December 31, 2010,
 over which certain directors and executive officers may be deemed to have
 shared investment power, thereby causing such directors and executive
 officers to be beneficial owners of such shares. Each of such directors and
 executive officers disclaims beneficial ownership of such shares and
 accordingly, such shares are not attributed to them individually. The
 individual participants in the ESOP have shared voting power with the ESOP
 Trustee.

The
following table sets forth the aggregate information of our equity compensation
plans in effect as of December 31, 2010.

|                                                            |  |                                                                                                   |  |                                                                                   |  |                                                                                                                                                      |  |   |       |  |  |  |  |         |  | 
|----------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ----- |  |  |  |  | ------- |  | 
|Plan category                                               |  | Number of securities
 to be issued
 upon exercise of 
 outstanding options, 
 warrants and rights |  | Weighted-average 
 exercise price of 
 outstanding options, 
 warrants and rights |  | Number of securities remaining 
 available for future issuance 
 under equity compensation 
 plans (excluding securities 
 reflected in column (a))1 | 
|                                                            |  |                                                                                                   |  |                                                                                   |  |                                                                                                                                                      | 
|                                                            |  | (a)                                                                                               |  | (b)                                                                               |  | (c)                                                                                                                                                  | 
|Equity compensation plans approved by
 security holders     |  |                                                                                                   |  | 354,000                                                                           |  |                                                                                                                                                      |  | $ | 12.84 |  |  |  |  | 490,061 |  | 
|                                                            |  |                                                                                                   |  |                                                                                   |  |                                                                                                                                                      |  |   |       |  |  |  |  |         |  | 
|Equity compensation plans not approved by
 security holders |  |                                                                                                   |  |                                                                                  |  |                                                                                                                                                      |  |   |      |  |  |  |  |        |  | 
|                                                            |  |                                                                                                   |  |                                                                                   |  |                                                                                                                                                      |  |   |       |  |  |  |  |         |  | 
|                                                            |  |                                                                                                   |  |                                                                                   |  |                                                                                                                                                      |  |   |       |  |  |  |  |         |  | 
|Total                                                       |  |                                                                                                   |  | 354,000                                                                           |  |                                                                                                                                                      |  | $ | 12.84 |  |  |  |  | 490,061 |  | 
|                                                            |  |                                                                                                   |  |                                                                                   |  |                                                                                                                                                      |  |   |       |  |  |  |  |         |  | 

|    |                                                                                                                                                                                                                                                                                                                                              | 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|    |                                                                                                                                                                                                                                                                                                                                             
|(1) | The number of securities remaining for future issuance under equity
 compensation plans includes: 136,061 shares available for issuance under the
 2000 Stock Option Plan, 236,000 shares available for issuance under the 2006
 Stock Option Plan and 118,000 shares available for issuance under the 2006
 Recognition and Retention Plan.

105

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|         |                                                                           
|-------- | --------------------------------------------------------------------------
|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
 INDEPENDENCE

Certain Relationships and Related Party
Transactions

Rome Savings has made loans or extended credit to its executive
officers and directors and also to certain persons related to executive
officers and directors. All such loans were made by Rome Savings in the
ordinary course of business and were not made on more favorable terms, nor did
they involve more than the normal risk of collectibility or present unfavorable
features. Residential mortgage loans are made to employees who are not offered
a reduced rate. The mortgage loans have the same underwriting terms that apply
to non-employee borrowers. All loans made by Rome Savings to related persons
and employees were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable loans with
persons not related to the lender.

Rome Bancorps authority to extend credit to directors, executive
officers, and 10% shareholders, as well as entities controlled by such persons,
is currently governed by the requirements of Sections 22(g) and 22(h) of the
Federal Reserve Board and Regulation O of the Federal Reserve Board thereunder.
Among other things, these provisions require that extensions of credit to
insiders: (i) be made on terms that are substantially the same as, and follow
credit underwriting procedures that are not less stringent than, those
prevailing for comparable transactions with unaffiliated persons and that do not
involve more than the normal risk of repayment or present other unfavorable
features; and (ii) do not exceed certain limitations on the amount of credit
extended to such persons, individually and in aggregate, which limits are
based, in part, on the amount of Rome Bancorps capital. Rome Bancorp intends
that any transactions in the future between Rome Bancorp and its executive
officers, directors, holders of 10% or more of the shares of any class of its
common stock and affiliates thereof, will contain terms no less favorable to
Rome Bancorp than could have been obtained by it in arms-length negotiations
with unaffiliated persons and will be approved by a majority of independent
outside directors of Rome Bancorp not having any interest in the transaction.

We retain the services of the law firm of McMahon and Grow. David C.
Grow, a director of Rome Bancorp and Rome Savings, is a partner of McMahon and
Grow. For 2010, we paid $35,433 in legal fees to this law firm. All future
affiliated transactions will be made or entered into on terms that are no less
favorable to Rome Bancorp than those that can be obtained from an unaffiliated
third party. All related party transactions are approved by the Audit
Committee.

Board of Directors Independence

The Board of Directors is comprised of a majority of directors who
qualify as independent according to NASDAQ market listing standards. Based upon
the term independent as defined by NASDAQ Stock Market listing standards, the
Board of Directors has determined that six of our seven directors (Bruce R.
Engelbert, David C. Grow, Kirk B. Hinman, Dale A. Laval, John A. Reinhardt and
Michael J. Valentine) are independent. All members of each the Audit Committee
and Compensation Committee are independent directors.

106

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Annually, the Board of Directors reviews the relationships that each
director has with the Company as well as the criteria and standards for
determining independence. Upon review the Board of Directors affirmatively
determines which directors are considered independent

Charles
M. Sprock is the only executive officer who served as a member of the Companys
Board of Directors. Mr. Sprock did not serve as a member of the Compensation
Committee or similar board committee of another entity during 2010, which
entity had an executive officer serving on the Board of Directors of Rome
Bancorp or its Compensation Committee. Consequently, there are no interlocking
relationships that might affect the determination of the compensation of
executive officers of Rome Bancorp.

|         |                                       
|-------- | --------------------------------------
|ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES

During
the fiscal years ended December 31, 2010 and December 31, 2009, Rome Bancorp
retained and paid Crowe Horwath LLP, its independent registered public
accounting firm, to provide audit and other services. The following table
displays the aggregate fees for professional audit services for the audit of
the financial statements for the years ended December 31, 2010 and 2009 and
fees billed for other services during those periods by our independent
registered public accounting firm.

|                       |  |            |         |      |   |         | 
|---------------------- |  | ---------- | ------- | ---- | - | ------- | 
|                       |  | Audit Fees |        
|                       |  |            |         |      |  
|                       |  | 2010       |         | 2009 |  
|                       |  |            |         |      |  
|Audit fees (1)         |  | $          | 174,405 |      | $ | 160,000 | 
|Audit related-fees (2) |  |            | 14,110  |      |   |        | 
|Tax fees (3)           |  |            | 22,300  |      |   | 19,100  | 
|All other fees         |  |            | 16,020  |      |   |        | 
|                       |  |            |         |      |   |         | 
|Total                  |  | $          | 226,835 |      | $ | 179,100 | 
|                       |  |            |         |      |   |         | 

|    |                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Audit
 fees consisted of audit work performed in the preparation of financial
 statements as well as work generally only the independent auditors can
 reasonably be expected to provide, such as statutory audits.                                                                                                                                  
|(2) | Audit
 related fees consist of fees for services that are reasonably related to the
 performance of the audit of the consolidated financial statements and are not
 reported under Audit Fees. This category includes fees related to the
 issuance of consents issued for inclusions of the audited financial
 statements in S-4 and 10-K filings.
|(3) | Tax
 fees consisted of assistance with matters related to tax compliance and
 consulting.                                                                                                                                                                                                                                                            
|(4) | Other
 fees include services related to strategic planning and acquisition
 activities.                                                                                                                                                                                                                                                              

Audit Committee Preapproval Policy

The
Audit Committee shall preapprove all auditing services and permitted non-audit
services (including the fees and terms) to be performed for Rome Bancorp by its
independent registered public accounting firm, subject to the de minimis
exception for non-audit services described below which are approved by the
Committee prior to completion of the audit.

Exception. The preapproval requirement set forth above,
shall not be applicable with respect to non-audit services if:

|  |                                                                                                                                                                                                                                                                  
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the
 aggregate amount of all such services provided constitutes no more than five
 percent of the total amount of revenues paid by Rome Bancorp to its
 independent registered public accounting firm during the fiscal year in which
 the services are provided;
|  |                                                                                                                                                                                                                                                                  
| | such
 services were not recognized by Rome Bancorp at the time of the engagement to
 be non-audit services; and                                                                                                                                                  

107

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|  |                                                                                                                                                                                                                                                                                                                
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | such
 services are promptly brought to the attention of the Committee and approved
 prior to the completion of the audit by the Committee or by one or more
 members of the Committee who are members of the Board of Directors to whom
 authority to grant such approvals has been delegated by the Committee.

Delegation. The
Committee may delegate to one or more designated members of the Committee the
authority to grant required preapprovals. The decisions of any member to whom
authority is delegated under this paragraph to preapprove activities under this
subsection shall be presented to the full Committee at its next scheduled
meeting.

The
Audit Committee preapproved all of the services performed by Crowe Horwath LLP
pursuant to the policies outlined above.

PART IV

|         |                               
|-------- | ------------------------------
|ITEM 15. | EXHIBITS, FINANCIAL STATEMENTS

|                                            |                                                                                                       
|------------------------------------------- | ------------------------------------------------------------------------------------------------------
|(a)
 Documents filed as part of the report:
|                                            |                                                                                                       
|                                            | Report of
 Independent Registered Accounting Firm                                                     
|                                            | Consolidated
 Balance Sheets at December 31, 2010 and 2009                                            
|                                            | Consolidated
 Statements of Operations for the years ended December 31, 2010, 2009 and 2008           
|                                            | Consolidated
 Statements of Stockholders Equity for the years ended December 31, 2010,
 2009 and 2008
|                                            | Consolidated
 Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008           

(b) The
following exhibits are either filed as part of this report or are incorporated
herein by reference:

|      |                                                                                                                                                        
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1   | Amended and Restated Plan
 of Conversion and Agreement and Plan of Reorganization. (1)                                                                 
|2.2   | Agreement and Plan of
 Merger By and Between Berkshire Hills Bancorp, Inc. and Rome Bancorp, Inc.
 (9)                                                 
|3.1   | Certificate of
 Incorporation of New Rome Bancorp, Inc. (1)                                                                                            
|3.2   | Bylaws of New Rome
 Bancorp, Inc. (1)                                                                                                                  
|4.1   | Form of Stock Certificate
 of New Rome Bancorp, Inc. (1)                                                                                               
|10.1  | Form of Employee Stock
 Ownership Plan of Rome Bancorp, Inc. (2)                                                                                       
|10.2  | Amendment No. 1 to
 Employee Stock Ownership Plan of Rome Bancorp, Inc. (1)                                                                            
|10.3  | Amendment No. 2 to
 Employee Stock Ownership Plan of Rome Bancorp, Inc. (1)                                                                            
|10.4  | Form of Executive
 Employment Agreement by and between Charles M. Sprock and Rome Bancorp, Inc.
 (2)                                                   
|10.5  | Amended and restated form
 of One Year Change in Control Agreement by and among certain officers and
 Rome Bancorp, Inc. and The Rome Savings Bank. (8)
|10.6  | Amended and restated form
 of Employment Agreement between New Rome Bancorp, Inc. and Charles M. Sprock.
 (8)                                          
|10.7  | Amended and Restated form
 of Employment Agreement between The Rome Savings Bank and Charles M. Sprock.
 (8)                                           
|10.8  | Rome Bancorp, Inc. 2000
 Stock Option Plan. (3)                                                                                                        
|10.9  | Rome Bancorp, Inc. 2000
 Recognition and Retention Plan. (3)                                                                                           
|10.10 | Amended and Restated
 Benefit Restoration Plan of Rome Bancorp, Inc. (4)                                                                               
|10.11 | Amended and Restated
 Directors Deferred Compensation Plan of Rome Bancorp, Inc. (4)                                                                  
|10.12 | Loan Agreement by and
 between the Employee Stock Ownership Plan Trust of Rome Bancorp, Inc. and
 Rome Bancorp, Inc. (5)                               
|10.13 | Amendment No. 3 to the
 Employee Stock Ownership Plan of Rome Bancorp, Inc. (6)                                                                        
|10.14 | Rome Bancorp, Inc. 2006
 Stock Option Plan. (7)                                                                                                        

108

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|      |                                                                                                                                               
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------
|10.15 | Rome Bancorp, inc. 2006
 Recognition and Retention Plan. (7)                                                                                  
|10.16 | Amendment No. 4 to the
 Employee Stock Ownership Plan of Rome Bancorp, Inc.                                                                   
|10.17 | Amendment to the Amended
 and Restated Directors Deferred Compensation Plan of Rome Bancorp, Inc.                                            
|10.18 | Amendment to the Amended
 and Restated Benefit Restoration Plan of Rome Bancorp, Inc.                                                         
|10.19 | Settlement Agreement
 between Berkshire Hills Bancorp, Inc., Berkshire Bank, Rome Bancorp, Inc.,
 The Rome Savings Bank and Charles M. Sprock.
|10.20 | Settlement Agreement
 between Berkshire Hills Bancorp, Inc., Berkshire Bank, Rome Bancorp, Inc.,
 The Rome Savings Bank and David C. Nolan.   
|10.21 | Non-Competition and
 Consulting Agreement between Berkshire Hills Bancorp, Inc., Berkshire Bank
 and Charles M. Sprock.14.1                   
|14.1  | Code of Conduct and
 Ethics. (7)                                                                                                              
|21.1  | Subsidiaries of the
 Company. (1)                                                                                                             
|23.1  | Consent of Crowe Horwath
 LLP.                                                                                                                
|31.1  | Rule 13a-14a/15d-14a
 Certifications.                                                                                                         
|32.1  | Section 1350
 Certifications.                                                                                                                 

|    |                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Incorporated by reference
 to Rome Bancorp, Inc.s Form S-1 (Registration No. 333-121245), filed with
 the Commission on December 14, 2004, as amended.      
|(2) | Incorporated by reference
 to Rome Bancorp, Inc.s Form SB-2 (Registration No. 333-80487), filed with
 the Commission on June 11, 1999, as amended.          
|(3) | Incorporated by reference
 to Rome Bancorp, Inc.s Proxy Statement on Schedule 14A, filed with the
 Commission on April 5, 2000 and amended on April 2, 2001.
|(4) | Incorporated by reference
 to Rome Bancorp, Inc.s Form 8-K filed with the Commission on December 27,
 2005.                                                 
|(5) | Incorporated by reference
 to Rome Bancorp, Inc.s Form 8-K filed with the Commission on March 29, 2005.                                                     
|(6) | Incorporated by reference
 to Rome Bancorp, Inc.s Form 8-K filed with the Commission on August 29,
 2005.                                                   
|(7) | Incorporated by reference
 to Rome Bancorp, Inc.s Form S-8 filed with the commission on May 19, 2006,
 as amended.                                          
|(8) | Incorporated
 by reference to Rome Bancorp Inc.s Form 8-K filed with the commission on
 December 3, 2007.                                                   
|(9) | Incorporated by reference
 to Rome Bancorp, Inc.s Proxy Statement on Schedule 14A, filed with the
 Commission on February 2, 2011.                          

109

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SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

| |                                     
| | ------------------------------------
| | ROME BANCORP, INC.                  
|
| | By: /s/Charles
 M. Sprock           
| | President, Chairman of the Board and
| | Chief Executive Officer             

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

|                         |  |                                                                                                |  |                
|------------------------ |  | ---------------------------------------------------------------------------------------------- |  | ---------------
|Name                     |  | Title                                                                                          |  | Date           
|                         |  |                                                                                                |  |                
|/s/Charles
 M. Sprock    |  | Chairman of
 the Board,
 President and Chief
 Executive Officer
 (Principal Executive Officer) |  | March 18,
 2011
|                         |  |                                                                                                | 
|Charles M.
 Sprock       |  |                                                                                                | 
|                         |  |                                                                                                | 
|                         |  |                                                                                                |  |                
|/s/David C.
 Nolan       |  | Executive
 Vice-President
 and Chief Financial Officer
 (Principal Financial Officer)          |  | March 18,
 2011
|                         |  |                                                                                                | 
|David C.
 Nolan          |  |                                                                                                | 
|                         |  |                                                                                                |  |                
|/s/Mary
 Faith Messenger |  | Vice
 President and
 Controller
 (Principal Accounting
 Officer)                               |  | March 18,
 2011
|                         |  |                                                                                                | 
|                         |  |                                                                                                | 
|                         |  |                                                                                                | 
|                         |  |                                                                                                |  |                
|/s/Bruce R.
 Engelbert   |  | Director                                                                                       |  | March 18,
 2011
|                         |  |                                                                                                |  |                
|Bruce R.
 Engelbert      |  |                                                                                                |  |                
|                         |  |                                                                                                |  |                
|/s/David C.
 Grow        |  | Director                                                                                       |  | March 18,
 2011
|                         |  |                                                                                                |  |                
|David C.
 Grow           |  |                                                                                                |  |                
|                         |  |                                                                                                |  |                
|/s/Kirk B.
 Hinman       |  | Director                                                                                       |  | March 18,
 2011
|                         |  |                                                                                                |  |                
|Kirk B.
 Hinman          |  |                                                                                                |  |                
|                         |  |                                                                                                |  |                
|/s/Michael
 J. Valentine |  | Director                                                                                       |  | March 18,
 2011
|                         |  |                                                                                                |  |                
|Michael J.
 Valentine    |  |                                                                                                |  |                
|                         |  |                                                                                                |  |                
|/s/Dale A.
 Laval        |  | Director                                                                                       |  | March 18,
 2011
|                         |  |                                                                                                |  |                
|Dale A.
 Laval           |  |                                                                                                |  |                
|                         |  |                                                                                                |  |                
|/s/John A. Reinhardt     |  | Director                                                                                       |  | March 18,
 2011
|                         |  |                                                                                                |  |                
|John A.
 Reinhardt       |  |                                                                                                |  |                

110

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